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Since section 43A is applicable for a foreign currency liability in respect of an asset acquired from a country outside India, then how the exchange difference is recognised in case of a foreign currency liability for purchase of an asset in India.

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Dated: 30-8-2017

Manual - ICDS VI : Effects of Changes in Foreign Exchange Rates

In case of a foreign currency liability for purchase of an asset in India Section 43A will not be applicable and it shall be recognised as per this ICDS. Therefore, the foreign exchange gain/loss in respect of a liability for purchase of an asset not covered by section 43A, would be  subject to the treatment as per para 5(i) of ICDS VI. Hence, in case of monetary items the gain/loss would be recognised in profit and loss  account and in case of non-monetary items, the gain/loss would be neither taxable nor deductible.



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