Dear All,
I have some confusion regarding accounting/tax effect for forex gain /loss on account of following :
1) The company has taken foreign currency loan for purchase of Fixed asset for which every quarter company pays loan instalment.
2) Exchange gain /loss on account of realisation proceed of debtors.
Thanks and Regards
Prashant Bhole
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Forex fluctuation accounting
Replies (1)
As regards forex fluctuation (i.e on realisation difference)on debtors it will be treated as per AS 11 and credited /debited to profit.even expense /income on restatement of forex debtors will be routed through p/loss a/c.
above will be normal for Tax too and same A/c done as per AS11 will be valid for tax too,as Sec 145 doesnt prescribe any spl treatment for this case.
As regards forex fluctuation on both- Restatement and on realisation of money- connected to acqn of a capital asset ,-all the forex rate differences will be adjusted to the cost of the asset -as per Sch 6 -for accounting and as per Sec 43A -for tax effect.
above will be normal for Tax too and same A/c done as per AS11 will be valid for tax too,as Sec 145 doesnt prescribe any spl treatment for this case.
As regards forex fluctuation on both- Restatement and on realisation of money- connected to acqn of a capital asset ,-all the forex rate differences will be adjusted to the cost of the asset -as per Sch 6 -for accounting and as per Sec 43A -for tax effect.
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