Foriegn currency Exchange earnings- Vat Applicable or Not

[Binu Karuthedath]

Dear Sir

One of the direct exporters have received the excess amount from the foreign currency conversion to INR and exporter have shown this as exchange difference income in their books and also 13 & 13 A Statement. Excess amount they have received due to foreign currency exchange rate difference(USD to INR) .is this applicable VAT ? is there any case law regarding this

[Ganeshan Kalyani]

In my view vat is not applicable on exchange rate fluctuation gain /loss.

[DR.MARIAPPAN GOVINDARAJAN]

VAT is not applicable.

[YAGAY andSUN]

There is no tax on Export except few scenario. Gain/loss due Foreign Exchange fluctuations needs to be accounted for according to Indian Accounting Standards. No VAT is chargeable provided you submit Copies of the S/Bs, B/L, EBRC to the VAT Authorities at the time of assessment.

AI Summary

Foreign exchange fluctuation gains: not subject to VAT when arising on export realizations, subject to accounting treatment and documentation. Foreign exchange fluctuation gains realized by exporters on conversion of export proceeds into INR are treated as exchange difference income under accounting standards and are not treated as additional consideration for VAT; such gains are not chargeable to VAT provided the exporter accounts for them per Indian Accounting Standards and produces export realization documents (shipping bills, bills of lading, EBRC) at assessment.