§ 43
Chapter IV — Computation Of Total Income
Taxation of foreign exchange fluctuation
Income-tax Act, 2025
Business owners should be aware that gains or losses from foreign exchange rate changes are considered income or loss. This applies to various foreign currency transactions, including
- monetary and non-monetary items
- translation of foreign operation financial statements
- forward exchange contracts
- foreign currency translation reserves
📜 Official text of the section +
43. (1) Subject to the provisions of section 42, any gain or loss arising on
account of change in foreign exchange rates on foreign currency transactions
shall be treated as income or loss, as the case may be, and shall be computed as per
the income computation and disclosure standards notified under section 276(2).
(2) The provisions of sub-section (1) shall be applicable to all foreign currency
transactions, including those relating to—
( a) monetary items and non-monetary items;
( b) translation of financial statements of foreign operations;
( c) forward exchange contracts; and
( d) foreign currency translation reserves.
Amortisation of certain preliminary expenses.
Plain-language summary — not the official text. Refer to the bare Act and confirm with a professional for your specific case.