18 September 2016
Can anyone advise me in this connection ? We update our export sales as per shipping bill issued by the custom authorities but there are so many consultants who have advised me to update the export sales as per the realized value against your export sale invoice because of which gross profit will look much bigger and there would be very dim chance of income tax scrutiny.
Actually always the rate of US Dolllar as per the shipping bill issued by the custom authorities remains less but the payments gets realized always at higher rate because of fluctuation in rate of US Dollar. If we are updating our export sale invoice with the realized value of the export bill, it would mean that we have clubbed the exchange difference with the value of invoice as per custom rate and nothing else and finally gross profit will go up. But whatabout the payment which is realised after filing income tax return. Consultants have advised me to update the receivables at 31st March with the prevailing rate of RBI and finally during the next financial year exchange difference will reflect as nominal as possible.
I will appreciate views of the expert on this issue.
19 September 2016
Dear Tarique Rizvi,
I'm surprised no one has answered your query yet.
1st - Continue 'your practise' of accounting for the billing I.e. as per customs rate.
I gather your concepts are strong so don't fall for such advise. if amount is realised in current year it'd be a forex gain or loss in c.y.
2nd - yes the consultant has rightly said to re state your receivables as on balance sheet date. It is in line with AS-11.
I disagree with booking sale at realised amount.
19 September 2016
Exchange Difference whatever comes during the current year or during the next year should be reflected under the head of other income of under the head of business income.
CAclubindia
