TaxTMI 
TaxTMI 
The client had booked foreign exchange translation and transaction income on account of appreciation in US$ rate. This was religiously reported in GSTR-9C for reconciliation purposes. Department is now demanding GST on this amount. This simply is a notional entry to be mandatorily provided as per Accounting Standard-11 and Rule 34. There is no supply here. There are case laws of the Service-tax era. Sincerely request experts to provide their valuable suggestions. Thanks
Foreign exchange fluctuation income booked
28 Jul 2026 
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Notional foreign exchange translation gains: GST analysis distinguishes accounting reconciliation entries from consideration for taxable supplies.
Unrealised foreign exchange translation gains recognised on year-end restatement under AS-11 or Ind AS 21 are described as notional accounting adjustments, not consideration for a supply. Their disclosure in GSTR-9C serves reconciliation between financial statements and GST returns and does not itself establish taxability. The discussion distinguishes such unrealised gains from realised gains on settlement of an underlying taxable supply, which may affect that supply's value. A response should explain the accounting treatment and demonstrate that the reported amount is a non-supply reconciliation item. (AI Summary)
Unrealised foreign exchange translation gains recognised on year-end restatement under AS-11 or Ind AS 21 are described as notional accounting adjustments, not consideration for a supply. Their disclosure in GSTR-9C serves reconciliation between financial statements and GST returns and does not itself establish taxability. The discussion distinguishes such unrealised gains from realised gains on settlement of an underlying taxable supply, which may affect that supply's value. A response should explain the accounting treatment and demonstrate that the reported amount is a non-supply reconciliation item. (AI Summary)