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Accounting for Export Transactions of Goods – GST viz a viz Accounting Standard AS 9 and 11

This Article deals with the nuances of the GST framework for Export Trade viz a viz the challenges laid down while adhering to the Accounting Standard AS 9 – Revenue Recognition and 11 – The  Effects of Changes in Foreign Exchange Rates

Lets understand a typical Export illustration –


Transaction Customs Rate RBI Rate SBI Rate
Preferred by Auditors (though RBI archives do not provide now and it is now sourced from Preferred by Company’s Management
24.03.2021 Exporter Makes the Sales Invoice 1 USD = INR 73.25 1 USD = INR 73.50 1 USD = 74.05
26.03.2021 An Exporter from India files the shipping bill having invoice value of USD 10,000 on CIF basis payable in 90 days from B/L 1 USD = INR 73.25 1 USD = INR 73.35 1 USD = INR 73.80
31.03.2021 Year End Date 1 USD = INR 73.35 1 USD = INR 73.50 1 USD = INR 74.00
01.04.2021 Date on the Bill of Lading 1 USD = INR 73.25 1 USD = INR 73.40 1 USD = INR 73.85
02.04.2021 The Customer receives the documents viz Bill of Lading, Invoice copy, Packing List. The date of invoice is of 24.03.2021 1 USD = INR 73.25 1 USD = INR 73.00 1 USD = INR 73.50

Under CIF the risk in the goods passes from the seller to the buyer at the time the goods are loaded and stowed on board the vessel. – Assumed


Answer as Per Accounting Standard
When should the Seller should account for this sales The Seller should recognise the Export Sales on 01.04.2021 ideally but since there is no document available as on that date, it is advisable to record the Export Sales on 02.04.2021 (the date on which the bill of lading copy etc is received from the CHA )
Whether the outstanding amount of USD 10000 receivable from the African Buyer be restated as per AS 11 on 31.03.2021 ? The revenue is not recognised in FY 2020-21. Hence the question of restating shall not arise.
How would such stock not lying with us be reported in the Financials as on 31.03.2021 ? Will it be restated ? The Stock though not lying with us immediately but the risks and rewards of the stock are now lying with us, hence such stock would be reported in the financials as “Goods In Transit” forming a part of the “Closing Stock” under “Current Assets”. As per AS 11, Stock being a Non-Monetary item shall not be restated.
How will a query from the GST Department for a shipping bill in FY 2020-21 without any corresponding export sales invoice corresponding to such shipping bill be explained ? The explanation would suggest that the transaction is a part of the reconciliation of the total sale of goods being goods in transit.
How will a query from the GST Department for Export Booking in FY 2021-22 without any corresponding shipping bill (of the same financial year) corresponding to such export invoice be explained ? The explanation would suggest that the transaction is a part of the reconciliation of the total sale of goods being goods in transit.

If you thought all you questions were answered satisfactorily, then lets come to the confusing part.

Confusion 1 – If the date of recording is finalised, lets finalise which conversion rate we shall apply.

Confusion 2 – While the customs shipping bill suggests a very conclusive proof for a conversion rate which is acceptable and also be easily explained to the GST Department or for that matter Income Tax department however, the date of recording of the Export Sales would again have a different conversion rate.

Confusion 3

The Export Sales price on the date of accounting i.e 02.04.2021 is INR 7,30,000 (RBI Rate – preferred by Auditors)

Hence the actual sales value of my goods on the day the shipping bill was filed would be INR 7,33,500 (as per Customs rate)

Further, if the sales is converted at the SBI rate which is closest rate at which the actual inward remittance would take place, the stock would value at INR 7,35,000


1. So the Management is now worried to the fact if the language of business is the language of accounts ?

2. Whether the selling price of the stock provided by the Accountant is correct or they are actually reporting lesser sales turnover ( and more exchange gain loss ) based on exchange rate difference ?

3. And if recording the transactions in line with the Accounting standards but not in ease of the GST and Income Tax Law , where they would end up paying more administrative costs ?

4. And if the recording of transactions in line with accounting standards only would lead to a material misstatement while the financial statements are drawn up ?

Accounting for Export Transactions of Goods – GST viz a viz AS AS 9 & 11


1. Whatever conversion rate you choose i.e RBI / SBI / Customs / / – apply consistently year on year basis.

2. If you felt that the difference in sales amounts above from 7.3 Lakhs to 7.335 Lakhs to 7.35lakhs is not something material, imagine that if it’s a contract worth USD 10 lakh or the changes in exchange rate is atleast 3 to 5 Rupees which is very much possible or if you are an Exporter having atleast 10 consignments which are in Transit as on the year end 31st March

3. In case of Third Country Exports i.e OUT AND OUT Sales, purchase and sales shall be recorded on the invoice date at the customs rate effective on the said date

IN MY OPINION – emphasis supplied

There is only one straight jacket formula or opinion in this case –

It is advisable to record a Export Sales on the date of invoice itself with the applicable conversion rate mentioned on the shipping bill

This would achieve

1. Sales Turnover of the Stock would be more appropriate

2. Clarity during GST as well as Income Tax Assessments

3. Will not be a Material Misstatement of the Financial Statements

4. Ease of Recording – to the Accountant

5. Administrative Convenience – No reconciliations

6. Mismatch possibilities reduced between the Customs and the Income Tax Data

Let me know your feedbacks and questions on this.

Author Details: CA Raj Doshi, Prop. R C  D & Co., Chartered Accountants Email :, Mobile : 9820803593

Disclaimer: The contents of this article are for information purposes only and do not constitute an advice or a legal opinion and are personal views of the author. It is based upon relevant law and/or facts available at that point of time and prepared with due accuracy & reliability. Readers are requested to check and refer relevant provisions of statute, latest judicial pronouncements, circulars, clarifications etc before acting on the basis of the above write up.  The possibility of other views on the subject matter cannot be ruled out. By the use of the said information, you agree that Author is not responsible or liable in any manner for the authenticity, accuracy, completeness, errors or any kind of omissions in this piece of information for any action taken thereof. This is not any kind of advertisement or solicitation of work by a professional.

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R C D & Co. is a modern age CA firm providing robust people, process and technology solutions in multi-disciplinary fields. View Full Profile

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May 2024