Foreign Exchange Gains and Losses allowed under Income Tax only as per ICDS, Not as per Audited Books any More

Foreign Exchange Gains and Losses allowed under Income Tax only
as per ICDS, Not as per Audited Books any More

By CA Ankit Gulgulia (Jain)

Finance
Bill, 2018 will Newly Insert Section 43AA which reads as under:-

“43AA.(
1) Subject to the provisions of section 43A,
any gain or loss arising on account of any change in foreign exchange rates
shall be treated as income or loss, as the case may be, and such gain or loss
shall be computed in accordance with the income computation and disclosure
standards notified under sub-section (2) of
section 145.

(2) For the
purposes of sub-section ( 1), gain or loss arising on account of
the effects of change in foreign exchange rates shall be in respect of all foreign currency transactions, including
those          relating to–          

(1) monetary items
and non-monetary items;

(it) translation of financial statements of
foreign operations;

(iii) forward exchange contracts;

(iv) foreign currency
translation reserves.”.