Latest Expert Exchange Queries

GST Demo Service software link:
Username: demouser Password: demopass
Get your inventory and invoicing software GST Ready from Binarysoft
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing | GST - Goods and Services Tax
Popular Search: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: empanelment :: cpt :: ARTICLES ON INPUT TAX CREDIT IN VAT :: ACCOUNTING STANDARD :: articles on VAT and GST in India :: VAT Audit :: TAX RATES - GOODS TAXABLE @ 4% :: list of goods taxed at 4% :: Central Excise rule to resale the machines to a new company :: form 3cd :: ACCOUNTING STANDARDS :: TDS :: VAT RATES :: due date for vat payment
« News Headlines »
 How to save income tax? Here are 6 investments with tax free income
 10 Top salary deductions that can save tax for you
 What are the tax saving options beyond Section 80C?
 The penalties for not paying tax on time
 How to make your salary tax efficient
 I-T Department may go into overdrive this quarter
 Ways to reduce the TDS deduction from your salary
 4 Tips for choosing who prepares your 2017 Tax Returns
 Processing of income-tax returns under section 143(1) of the Income-tax Act which were filed in Forms ITR-1 to 6 & applicability of section 143(1)(a)(vi)
 Price Waterhouse gets 2-year ban in Satyam case
 How to save income tax under section 80C

Firms get govt breather on forex earnings
October, 17th 2011

The ministry of corporate affairs, or MCA, has given Indian firms another year to spread their liabilities on account of foreign exchange borrowings accruing from fluctuations in foreign exchange, or forex, rates.

While getting more time to amortize such liabilities will come as a breather for a large number of companies that have raised loans abroad, it has perturbed chartered accountants, who say this is the governments way of signalling a delay in the implementation of International Financial Reporting Standards (IFRS). They also contend that the government should refrain from tinkering with IFRS-compliant accounting standards that have been notified, but are yet to be implemented.

IFRS guidelines are more stringent and allow accounting for such gains or losses to be charged in the profit and loss account. I feel we need to take a long-term view on adopting global standards, and that ad hoc changes dont help, said Jamil Khatri, executive director and head of accounting advisory services at KPMG in India.

The rupee has been weakening against the dollar in the past few months because of global economic turmoil. It has dropped 10.5% against the US currency since July.


File photo/Bloomberg

Khatri said that deferring losses because of forex fluctuation under Indian GAAP (generally accepted accounting principles) will only provide temporary relief, which is neither desirable nor justified.

According to AS11 (the current accounting standard), losses occurring because of the fluctuation of the rupee can be absorbed in two ways.

While this can be depreciated for the life of the plant or machinery for capital expenditure, when it comes to other segments, such as working capital, it could be spread over certain quarters.

MCA last week extended the date for amortizing gains or losses on money raised overseas on or after December 2006 till March 2012, against the previous deadline of March 2011.
The Institute of Chartered Accountants of India (Icai), the auditing and accounting regulator, had amended its guidelines accordingly with an exemption granted until 2011. This, too, has now been extended by another year after the MCA relaxation.

On 26 February, MCA notified 35 accounting standards required to make Indian accounting standards (Ind-AS) compliant with IFRS and said they will be implemented on 1 April.

Aligning with IFRS norms will help Indian firms raise cheaper capital overseas, besides making overseas listings and setting up subsidiaries and joint ventures abroad less cumbersome. More than 150 countries have adopted IFRS, created by the International Accounting Standards Board, an independent, privately funded standards body based in London.

The move is a clear indication by the government that IFRS will not be implemented before 2013, said Amarjit Chopra, former Icai president. He said this was unfortunate as it disrupts the implementation of the new standards.

The institutes position is that Ind-AS (norms) are ready, he said. These are in line with global practices and should not be tampered with, he said.

With the dollar strengthening against the rupee, exporters have benefited in the last few months, he said, but questioned what will happen when the US currency weakens.

Playing around with volatility is not good practice, he said.

Vinayak Pai, a Bangalore-based independent consultant on IFRS and business solutions, was critical of the MCA move.

Already some tweaking or carve-outs have been made in Ind-AS. If the government goes on making exemptions the spirit of adopting IFRS is defeated, Pai said.

India gave a pledge at the G-20 in 2009 that it would implement IFRS by 2011.

The ministry is committed to IFRS implementation but unless the direct taxes code is implemented, which has to be done through a parliamentary Act, the ministry can do little about implementation, a senior government official said.

The minimum alternate tax will be affected once Ind-As is implemented as the method of calculating the levy will change.

According to a road map issued last year, companies with a net worth of Rs.1,000 crore or more and publicly traded companies were supposed to align their accounts with IFRS in the first phase, starting 1 April.

Home | About Us | Terms and Conditions | Contact Us
Copyright 2018 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Binarysoft Technologies - Our Team

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions