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
Exporters' Forex Gains: No VAT on Exchange Rate Fluctuations, Follow Indian Accounting Standards for Documentation. A discussion forum addressed the applicability of VAT on foreign currency exchange earnings for exporters. An exporter received excess income due to the conversion of USD to INR and questioned if this exchange difference is subject to VAT. Three respondents clarified that VAT is not applicable on such exchange rate fluctuations. It was emphasized that gains or losses from foreign exchange must be recorded per Indian Accounting Standards, and no VAT is chargeable if relevant documents are submitted to VAT authorities during assessment. (AI Summary)
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