CBIC may soon use Automated Mechanism for releasing daily Currency Exchange Rates

The CBIC is expected to implement a system of broadcasting daily currency exchange rates on the integrated customs portal soon, replacing the current approach of reporting rates every two weeks.

The reform would allow importers and exporters to more precisely compute customs taxes based on daily exchange rate swings.

Currently, the Central Board of Indirect Taxes and Customs (CBIC) manually notifies exchange rates of 22 currencies every fortnight based on rates collected from the State Bank of India (SBI) on the first and third Thursday of each month. The notified rate takes effect at midnight the next day.

According to an official, the entire procedure would be automated, beginning with SBI providing exchange rate data to ICEGATE.

The daily exchange rates obtained from SBI will be adjusted to the nearest five paise, integrated with the Indian Customs EDI System (ICES), and published on the Indian Customs National Trade Portal (ICEGATE) by 6:00 p.m.

“In order to better capture exchange rate fluctuations, the CBIC has decided to publish daily exchange rates of 22 currencies on the ICEGATE website.” “Stakeholder consultations are underway, and the system will be implemented soon,” stated the official.

According to the proposal, on holidays when SBI does not announce rates, the prevailing rates will apply the following day.

At the moment, if the exchange rate of a currency moves by more than 5% after a fortnightly notice, the rate for that currency is re-notified as of the next day.

Experts believe that the benefits of the proposed approach for setting and publishing daily exchange rates will allow importers and exporters to make more informed decisions about their transactions. The exchange rates will be more accurate and timely, reflecting current market conditions.

The new system includes a backup plan in the event of any technical glitches or problems in electronic transmission, ensuring constant access to exchange rates at all times.

AMRG & Associates Senior Partner Rajat Mohan stated that it would aid in the detection of improper customs duty calculations caused by fluctuating exchange rates. “Daily floating exchange rates will be marginal for small consignments, but tax differentials for large consignments could be colossal. This shift demonstrates that the Indian economy is getting more digital in every way as compared to other industrialised countries,” Mohan remarked.