Export Accounting & Ind-AS / GAAP Compliance

Ind AS 115 (Revenue from Contracts with Customers) governs all export revenue recognition. The five-step model applies to export contracts. Foreign currency export receivables are then measured under Ind AS 21 (The Effects of Changes in Foreign Exchange Rates): the sale is recorded at the spot rate on the transaction date and the receivable is restated at the closing rate each balance sheet date, with exchange differences recognised in profit or loss.

Export incentives are treated as government grants under Ind AS 20 (Accounting for Government Grants and Disclosure of Government Assistance). RoDTEP scrips and duty drawback receivable are recognised only when there is reasonable assurance that the exporter will comply with conditions and that the grant will be received. Income-linked grants (duty drawback tied to export turnover) are recognised in profit or loss on a systematic basis over the period in which the related export costs are recognised.

If the exporter designates the forward contract as a cash flow hedge of a highly probable export sale or an existing export receivable, Ind AS 109 (Financial Instruments) hedge accounting applies. The effective portion of the gain or loss on the hedging instrument is recognised in Other Comprehensive Income (OCI) and reclassified to profit or loss when the hedged item affects profit or loss. The ineffective portion is recognised immediately in profit or loss. For non-designated contracts, all fair value changes go directly to profit or loss each reporting period.

Pre-shipment and post-shipment export credit from banks are financial liabilities measured at amortised cost under Ind AS 109. They are classified as current liabilities if settlement is expected within 12 months of the reporting date (Ind AS 1, paragraph 69). Interest is accrued using the effective interest rate method. Concessional rates under RBI Master Direction on Export Credit do not change the amortised cost calculation, but the below-market rate benefit must be disclosed under Ind AS 107.

Under Section 44AB of ITA 1961 (Section 63 of ITA 2025 for TY 2026-27 onwards), a tax audit is required if export turnover crosses the prescribed threshold (Rs 1 crore for business; enhanced limit of Rs 10 crore where cash transactions are within 5% per Section 44AB proviso). Under Companies Act 2013, statutory audit under Section 143 covers export transactions including Schedule III foreign currency disclosures. The GST audit under Section 35(5) of CGST Act 2017 was prospectively removed from FY 2020-21; exporters must instead file GSTR-9 and GSTR-9C (self-certified reconciliation) if annual turnover exceeds Rs 5 crore.