Refund of purchase price by foreign exporter

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Imported equipment was sent back to foreign supplier under GR waiver for repair. Found design mismatch from ordered item. They will refund purchase price plus customs duty. Both are related party.

Whether indian parent company cum importer will raise export invoice wrt shipping bill or debit note on wholly owned subsidiary. There is some profit element ..to be considered for accounts consolidation purpose per AS  ,IFRS.

PL guide

Rgds

Jayanta Bandyopadhyay

Kolkata

8.9.21

 

Replies (5)

Rise debit note, clearing it out of customs will be lesser hectic. Follow your FX translation procedures and I’m not sure about transfer pricing, maybe you can set it to hedge FX fluctuation since it’s your own submarine.

***Raise

**** Subsidiary

Explore transfer pricing options, I’ll research on m this and let you know if I find a solution

FX translation measurements- historical, current, and average valuation. Historical exchange rates may be used for some accounts. Here current and temporal methods needs to be used and first will recognise losses in equity and latter will recognise losses in income statements. Instead, make a deal to return the asset back at the same price without considering inflation and current cost of machinery moments. https://core.ac.uk/download/pdf/268107086.pdf

page 38.

Contact me and let’s discuss if you have any doubts. 

100$ sold

500₹ purchased

debit note raised and current FX valued the asset to 

75$ sales return

525 purchase returns

now they have to pay more money plus asset value is lost. Currently, so, record the same value on returns

100$ sales return 

500₹ purchase returns

what will happen if this happens before year end? Nothing will happen because these are intragroup sales. Please enlighten me if someone has that knowledge.

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