## Changes in the Rate of Exchange of Currency — Section 43A
Where an asset is acquired from a foreign country for business/profession, and there is an increase or decrease in liability due to a change in the foreign exchange rate at the time of:
- settlement of the liability, or
- repayment of a loan specifically borrowed to acquire the asset,
then the rate variation is adjusted to the cost of the asset.
### Key points
- Applies to all capital expenditures referred to under Section 43(1) (actual cost), 35(1) (scientific research), 36(1)(ix), and the cost of acquisition of non-depreciable assets.
- The revised amount becomes the actual cost / capital expenditure / cost of acquisition.
- Forward exchange contract (hedging): If a forward contract is entered into for hedging, the rate as per the forward contract is used.
> Note: The adjustment is on an actual settlement/repayment basis, not a notional year-end restatement.