Latest Expert Exchange Queries

GST Demo Service software link: https://ims.go2customer.com
Username: demouser Password: demopass
Get your inventory and invoicing software GST Ready from Binarysoft info@binarysoft.com
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: VAT RATES :: cpt :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: form 3cd :: ARTICLES ON INPUT TAX CREDIT IN VAT :: empanelment :: due date for vat payment :: ACCOUNTING STANDARDS :: ACCOUNTING STANDARD :: VAT Audit :: Central Excise rule to resale the machines to a new company :: articles on VAT and GST in India :: TAX RATES - GOODS TAXABLE @ 4% :: list of goods taxed at 4% :: TDS
 
 
« News Headlines »
 Infosys to configure GST network for filing returns
 Save income tax through mutual fund investment. All you need to know
 Income tax returns (ITR): On sale of property, here is what you should know
 Section 35 of the Income-tax Act?
 Notification regarding extension of last date w.r.t submission of closing stock by dealer.
 Integrated Goods and Services Tax (IGST) Rules, 2017 (As on 15.11.2017)
 Central Goods and Services Tax (CGST) Rules,2017 (As on 15.11.2017)
  101st Constitution Amendment Act, 2016
 Pr. Commissioner Of Income Tax-6 Vs. Mccain Foods India Pvt. Ltd.
 Section 10 of the Income-tax Act, 1961
 Income tax returns filing: No tax on gift received from relatives in form of cash

Tax board orders scrutiny of firms taking AS-11 relief
August, 26th 2009

Move to check whether forex borrowings are genuine or speculative

The Central Board of Direct Taxes (CBDT) has advised its field formations to scrutinise all cases in which companies have amortised foreign exchange losses under the one-time discretion allowed by the government through an amendment to Accounting Standard 11 (AS-11).

In its discussions with chief commissioners last week, the board asked the tax departments to scrutinise long-term foreign currency monetary items in all company returns, especially in the light of this new amendment. Sources close to the development said the scrutiny will assess the nature of foreign exchange losses typically on overseas borrowings.

The temporary relief on AS-11 was permitted on March 31 against the background of the sharp depreciation of the rupee against the dollar, euro, pound and Swiss franc in 2008. As a result of this, several companies with significant foreign currency loans had to suffer mark-to-market losses.

Under AS-11, gains or losses from foreign exchange fluctuations have to be recognised in the profit and loss account. The amendment to AS-11 provided an option to capitalise or amortise exchange differences on long-term foreign currency positions (typically overseas borrowings) with retrospective effect from December 2006.

This was done by adding or deducting such losses from the cost of fixed assets if, and only if, the money was borrowed for acquiring an asset. This treatment enabled companies to make adjustments directly on the balance-sheet by bypassing provisioning in the profit and loss account.

The CBDT think the amendment has substantial revenue implications on corporate earnings since this option, once exercised, is irrevocable. Since almost every company has forex exposures, the losses could have run into thousands of crores, tax officials said.

"One has to see whether these borrowings are for the acquisition of capital assets or a part of speculative or treasury operations just to manage currencies," a source said.

There have been several reports of positions being taken on currency movements just for speculative gains, officials said. In that case, they pointed out, there is no justification for the company to take advantage of this one-time relief granted by the government

"The amortisation will be allowed if the reason is genuine; otherwise or the amortisation will be cancelled," they added.

 
 
Home | About Us | Terms and Conditions | Contact Us
Copyright 2017 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Content Management System development CMS development Content Management Solutions CMS Solutions Content Management Services CMS Services CMS Software

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