External Currency Borrowing

[CABIJENDERKUMAR BANSAL]

Dear Sir,

Our company is having ECB (external currency borrowings) from Japan.

What is the overall compliance required for ECB loan.

Further we have made currency swap with bank for securing movement in USD. So Interest rate and principal amount is fixed in INR terms. ( How accounting will be made for extra interest paid in INR.)

We have taken this loan for a project, whether Interest can be capitalized in that project.

Project is final to be set up but still No land and machinery is purchased. travelling is being done for ensuring all the facilities and negotiation is going on for purchasing land and other things.

What is treatment:-

Companies act,

Income tax act,

RBI

Kindly calrify.

AI Summary

Company Seeks Guidance on Capitalizing ECB Interest from Japan under Companies Act, Income Tax Act, and RBI Regulations A company inquired about the compliance requirements for external currency borrowings (ECB) from Japan, including accounting for extra interest paid in INR due to a currency swap. They sought clarification on whether the interest could be capitalized for a project that is still in the planning phase, with no land or machinery purchased yet. The company requested guidance on the treatment under the Companies Act, Income Tax Act, and RBI regulations. The response advised conducting a detailed analysis and consulting a professional for specific advice.