Dear Sir/Madam,
We are importing raw materials & after production we export the same to many countries and these transactions takes place in US Dollars.
1) For Imports - We book the Bill of Entry rate (Customs monthly notified rate) for import purchases and for payment on due dates i.e after 60 / 90 days, our account gets debited at the currency prevailing on that date. But, We get the Bank Selling Rate on the payment date and the difference between Bill of Entry rate and the bank's selling rate is the resultant exchange loss / gain. Is the method correct? Pls clarity / discuss in detail.
2) For Exports - We book the Bill of Shipping rate (Customs monthly notified rate) for exports and for payment received from our customers in USD on the due dates i.e after 60 / 90 days, we get the Bank's Selling Rate on the Foreign currency credited days and the bank's selling rate is the resultant exchange loss / gain. Is the method correct?. Pls clarify / discuss in detail.
Is there any other simpler method acceptable by ICAI. If so pls explain in detail.
Thanks & Regards
T.Ram Mohan , Chennai