Purchase date and value in case of import (trading)

2737 views 3 replies

We import prodcuts for trading purpose on CNF basis. Supplier raises Invocie in USD the date on which Bill Of lading is provided by shipping line.

Our payments are 20% advance agaisnt PI and Balance on reciept of documents.

Question:

What date should be taken as the pruchase date ?

  1. Date of Invocie
  2. Date when I receive the Copy/Original Invoice
  3. Date on which final / balance 80% payment is made
  4. Date when vessel reaches Port 
  5. Date of Bill of Entry is passed by customs 

Which exchange rate to use for the conversion ?

 

  1. Actual rate at time of payments
  2. RBI referecne rate as on date of purchase
  3. Customs reference rate on date of pruchase

In case the USD rate from Q2 is 2 or 3, then how / under which ledger to account for the difference in purchase cost and actual amount remitted.

 

Replies (3)

Hi Ashish

As per provisions of accounting, a product is deemed to be the property of transferee(buyer) when both possession and payment for the same has been made to transferer(seller). In your case the date on which balance payment is made should be taken as record date for Purchase of goods. As you have recieved the possession but the adequate consideration is made only after the product is there in INDIA, thats with customs. 

 

The exchange rate should be considered the rate on Date of Purchase. The diff should be recorded as 'Difference in Exchange Rate' which may be debit if rate increased or credit if rate decreased. 

 

Please clarify : "In your case the date on which balance payment is made should be taken as record date for Purchase of goods. As you have recieved the possession but the adequate consideration is made only after the product is there in INDIA, thats with customs. " 

Full payment is made against documents i.e. before the goods reach the Indian border.

"The exchange rate should be considered the rate on Date of Purchase." - Which rate, the rate at which we remit or RBI rate or customs rate ?

 

Rate will be the rate on which bill of entry filled by you and rate will be the rate notified by custom department for valuation under custom

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