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Effects of Changes in Foreign Exchange Rates - only for AY 2016-17

ICDS - 06 (old) - Rules - Old - ICDS for AY 2016-17 (Since withdrawn) - Accounting Standards U/s 145(2) - ICDS - 06 (old) - ICDS VI - Effects of Changes in Foreign Exchange Rates [See: Notification No. 32/2015 Dated:- 31-3-2015] [ Came into force with effect from 1st day of April, 2015, - Only for AY 2016-17] Since Withdrawn vide notification no. 86/2016 dated 29-9-2016 F. INCOME COMPUTATION AND DISCLOSURE STANDARD VI RELATING TO THE EFFECTS OF CHANGES IN FOREIGN EXCHANGE RATES Preamble This Inc .....

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xchange rate at the last day of the previous year. (c) "Exchange difference" is the difference resulting from reporting the same number of units of a foreign currency in the reporting currency of a person at different exchange rates. (d) "Exchange rate" is the ratio for exchange of two currencies. (e) "Foreign currency" is a currency other than the reporting currency of a person. (f) "Foreign operations of a person" is a branch, by whatever name called, of .....

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ndian currency" shall have the meaning as assigned to it in section 2 of the Foreign Exchange Management Act, 1999 (42 of 1999); (k) "Integral foreign operation" is a foreign operation, the activities of which are an integral part of the operation of the person; (l) "Monetary items" are money held and assets to be received or liabilities to be paid in fixed or determinable amounts of money. Cash, receivables, and payables are examples of monetary items; (m)"Non-inte .....

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e at the date of the transaction may be used for all transaction in each foreign currency occurring during that period. If the exchange rate fluctuates significantly, the actual rate at the date of the transaction shall be used. Conversion at Last Date of Previous Year 4. At last day of each previous year: - (a) foreign currency monetary items shall be converted into reporting currency by applying the closing rate; (b) where the closing rate does not reflect with reasonable accuracy, the amount .....

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t be recognised as income or as expense in that previous year. Exceptions to Paragraphs 3, 4 and 5 6. Notwithstanding anything contained in paragraph 3, 4 and 5; initial recognition, conversion and recognition of exchange difference shall be subject to provisions of section 43A of the Act or Rule 115 of Income-tax Rules, 1962, as the case may be. Financial Statements of Foreign Operations Classification of Foreign Operations 7. (1) The method used to translate the financial statements of a forei .....

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ther than Indian currency; (f) cash flows of the person are insulated from the day-to-day activities of the foreign operation; (g) sales prices for the foreign operation's products or services are not primarily responsive on a short-term basis to changes in exchange rates but are determined more by local competition or local government regulation; (h) there is an active local sales market for the foreign operation's products or services, although there also might be significant amounts o .....

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e Act or Rule 115 of Income-tax Rules, 1962 shall be carried out in accordance with the provisions contained in that section or that Rule, as the case may be. Change in the Classification of a Foreign Operation 10 (1) When there is a change in the classification of a foreign operation, the translation procedures applicable to the revised classification should be applied from the date of the change in the classification. (2) The consistency principle requires that foreign operation once classifie .....

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ll not apply to the contract that is entered into to hedge the foreign currency risk of a firm commitment or a highly probable forecast transaction. For this purpose, firm commitment, shall not include assets and liabilities existing at the end of the previous year. (4) The premium or discount that arises on the contract is measured by the difference between the exchange rate at the date of the inception of the contract and the forward rate specified in the contract. Exchange difference on the c .....

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vious year commencing on the 1st day of April, 2015 or on conversion thereof at the last day of the previous year commencing on the 1st day of April, 2015, shall be recognised in accordance with the provisions of this standard after taking into account the amount recognised on the last day of the previous year ending on the 31st March,2015 for an item, if any, which is carried forward from said previous year. (3) The financial statements of foreign operations for the previous year commencing on .....

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