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of <h1>New Income Tax Bill Clause 42: Adjust Asset Costs for Foreign Exchange Fluctuations, Impacting Business Profits and Gains</h1> Clause 42 of the Income Tax Bill, 2025, addresses the capitalization of foreign exchange fluctuations for assets acquired for business or professional purposes. It mandates adjustments to asset costs based on exchange rate changes, affecting the computation of business profits and gains. The clause provides a structured formula for calculating variations in liabilities due to exchange rate changes and adjusting asset costs accordingly. It emphasizes consistency and transparency in financial reporting, particularly for businesses engaged in international transactions. Compared to Section 43A of the Income-tax Act, 1961, Clause 42 applies to assets acquired in the tax year and incorporates provisions from the Foreign Exchange Management Act, 1999.
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