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of <h1>Clause 42 requires capitalising foreign-exchange variations by computing A = B - C, affecting asset cost, depreciation and capital gains</h1> Clause 42 mandates capitalising foreign-exchange variations by computing A = B - C where B is INR paid during the year (excluding third-party payments) and C is the INR liability at acquisition; the resulting variation adjusts asset cost, capital expenditure or acquisition cost, affecting depreciation and capital gains. The enacted Act rephrases and relocates the third-party exclusion, clarifies conversion timing as 'expressed in Indian currency at the time when it is made,' and alters cross-references to sections handling capital expenditure, potentially narrowing or changing covered categories. Forward contracts with authorised dealers use the contract rate for covered amounts; record-keeping and hedging documentation are crucial.
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