Tds (exchange rate difference)

This query is : Resolved

C.A. Deepak Kakkar (Querist)
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09 May 2012
Dear All

I have a query on the entry of TDS on foreign remittance.

Suppose, i have to pay foreign party a sum of US $ 100. At the time of
date of form 15CA, exchange rate is Rs. 50. So after TDS @10%, i have
to pay Rs. 4500 to party & Rs. 500 will be TDS payable.

15CA is filed in income tax on the basis of that TDS in CA
certificate.If we declare the amount in CA certificate to income tax
then the entry of same amount of tds should appear in accounts.

But suppose while making actual remittance after 3-4 days, exchange
rate is Rs. 60. Now as per revised calculations, my liability is Rs.
5400 and TDS payable is Rs. 600 /-.

At the date of payment by bank, the difference should be recognized in
foreign exchange fluctuations or not?? because we have to show TDS as
Rs. 500 only.

Kindly revert back with your suggestion.

Thanks and Regards,

Deepak Kakkar

jaimin shah

jaimin shah (Expert)
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12 May 2012 As per me when you booked bill in your accounts, exchange rate on that day should be considered for deduction of T.D.S and while you are making payment, the difference should be either foreign exchange gain or loss.

Jaimin Shah