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income tax
is foreign exchange gain or loss allowed in calculation of taxable income
Replies (1)
forex gain or loss-
if its in revenue nature then it will be taxed under pgbp income and similarly it will be allowed as expense u/s 37(1)
if it in capital nature then no treatment(i.e. capital receipt in case of income and capital loss in case of loss)
An exception is there to the above rule is Sec.43A i.e. any forex gain or loss w.r.t. capital asset purchased will be adjusted to the WDV of the asset in the year of payment.
P.S. - in case claiming an expense w.r.t. revenue nature of forex loss one should follow accural basis(woodward governor india pvt ltd vs.cit)
if its in revenue nature then it will be taxed under pgbp income and similarly it will be allowed as expense u/s 37(1)
if it in capital nature then no treatment(i.e. capital receipt in case of income and capital loss in case of loss)
An exception is there to the above rule is Sec.43A i.e. any forex gain or loss w.r.t. capital asset purchased will be adjusted to the WDV of the asset in the year of payment.
P.S. - in case claiming an expense w.r.t. revenue nature of forex loss one should follow accural basis(woodward governor india pvt ltd vs.cit)
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