Exchange rate difference

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Shariq (Querist)
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23 March 2011 I am a 100% Exporter. I sold my goods in foreign currency Euro. suppose I have sold some goods under export invoice of Euro 10000.00 on dt. 25.03.2010 but I have recd the the payment on dt. 25.05.2010 & on the realisation date Euro exchange rate was 1 Euro = 65 INR so how will I calculate my sale & what should I do with exchange rate diff. Pls explain according to Income tax act. Pls also send me the act reference with any illustration.

Thanks.

Keyur Anandjiwala

Keyur Anandjiwala (Expert)
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23 March 2011 I assume that the Risk releted to goods sold at the time of Sales Invoice (ie 25th March) So sales could be recognised on the same date's exchange rate.
On 31st march (Assuming Book Closure) diff between the 25th and 31st Exch rate is charged to P&L. The same treatment is to be given at the time of actual realisation. means exch. rate diff from 31st to 25th May is again charged to P&L.

I think the same treatment will be there in Income tax. It differs in case of Capital Assets purchase.