CBDT Includes ‘IFSC Unit’ in Scope of ‘TT Buying Rate’ for Computing TDS on Foreign Currency Income

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foreign currency tax deduction rate

Notification No. 64/2023, dated 17-08-2023

Rule 26 of the Income Tax Rule, 1962 prescribes a rate of exchange for the purpose of deduction of tax at source on income payable in foreign currency. It provides that for any person responsible for paying any income in foreign currency to an assessee outside India, the telegraphic transfer buying rate of such currency as on the date on which tax is required to be deducted must be considered.

The Central Board of Direct Taxes (CBDT) substituted Rule 26 vide Income-tax (Seventeenth Amendment) Rules, 2023, to include a ‘Unit located in an International Financial Services Centre’ within its scope. Subsequent to this notification, the rate of exchange, i.e., telegraphic transfer buying rate to be used for the purpose of tax deduction if foreign currency income is payable:

i) to an assessee outside India;

ii) to a Unit located in an International Financial Services Centre;

iii) by a Unit located in an International Financial Services Centre to an assessee in India.

Click Here To Read The Full Notification

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