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April 23, 2026

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Rule 115 of income tax rules: important points for taxpayers

Have you ever worked as a freelancer for a US client, received dividends from foreign stocks, or earned a salary in Euro while living in India? Then you should know about the Rule 115 of Income tax Rules. It is an exciting feeling to see foreign currency hit your account.But once tax filing season starts, the Income Tax Department of India is not going to accept “Dollars” and “Pounds,” everything needs to be filed in the Indian Rupee (INR).

As of 2026, with increasing numbers of Indians engaging in investments in the international market and remote work, Rule 115 of the Income Tax Rules, 1962, has become an essential part of tax compliance. You cannot simply use the exchange rate you see on Google or the rate your bank gave you on the day of transfer. There is a very specific legal “formula” for this conversion.

This guide explores the essential points of Rule 115. We will break down the “Telegraphic Transfer Buying Rate,” explain how to identify the “Specified date” for different types of Income, and show you how to avoid common mistakes that lead to tax notices.

SBI telegraphic transfer buying rate (TTBR)

Rule 115 removes all guesswork by mandating a single source for exchange rates. You are legally required to use the Telegraphic Transfer Buying Rate or TTBR of the State Bank of India or SBI.

Why TTBR?

It is the rate at which the bank buys foreign currency from a customer. It is generally lower than the selling rate, which is slightly more favourable for taxpayers as it results in lower taxable amount in INR.

‍Where to find it: SBI publishes these rates daily. In 2026, you can easily access the “Historical TTBR” archives on the official SBI website or through authorised tax portals.

‍Read about: Income Tax Rules

Identifying the “specific date”

Nature of Income	Specified Date for Exchange Rate
Salary	Last day of the month before the month in which the salary is due or paid.
Interest on Securities	The last day of the month before the month in which the interest is due
Dividends	The last day of the month before the month in which the dividend is declared or paid
Business/Profession	The last day of the previous year (financial year end)
Capital Gains	The last day of the month before the month in which the asset is transferred or sold

Example: If you have received a foreign dividend on July 15, 2025, you must use the SBI TTBR rate from June 30, 2925 to convert that amount into INR for your 2026 tax filing

Rule 115 and capital gains on foreign stocks

If you are an Indian resident selling shares in companies like Apple or Google, Rule 115 is vital for calculating your Capital Gains.

‍Cost of Acquisition: Convert the buying price into INR using the TTBR of the month-end before the purchase.

‍Sale Consideration: Convert the selling price into INR using the TTBR of the month-end before the sale.

‍The Result: The difference between these two “Rupee values” is your taxable gain. This protects you or sometimes penalises you against fluctuations in the currency exchange rate over the years.

‍Read about GST on Stock Transfer.

Important points for NRIs and RORs

In 2026, your residential status determines how strictly you must follow the Rule 115

‍Resident and Ordinarily Resident (ROR): If you live in India, your global income is taxable. You must use Rule 115 for every cent earned abroad.

‍NRIs and RNORs: You are generally only taxed on income earned or received in India. However, if you have a business controlled from India that earns foreign currency, Rule 115 still applies to that specific portion of your income.

‍Double taxation or DTAA: Even after converting your income via Rule 115, you can still claim Foreign Tax Credit or FTC using Form 67 to ensure you are not getting taxed twice on the same amount.

Conclusion

Rule 115 of the Income Tax Rules is the bridges between the global economy and the Indian tax system. While it might seem like a small technicality, using the wrong exchange rate can lead to a discrepancy in your Annual Information Statement (AIS) which often triggers an automated tax notice.

As we move through the 2026 tax season, the key to a stress-free filing is documentation. Maintain a folder with your foreign bank statements, the specific SBI TTBR charts for your “specified dates,” and any tax certificates from abroad. By following the 64-year-old wisdom of Rule 115, you ensure that your global success doesn’t result in a local headache!

FAQs

Q1: Can I use the average exchange rate for the year?

No. Rule 115 is very specific about using the rate of the “Specific Date.” Using an average rate is legally incorrect and may lead to a reassessment of your tax liability.

Q2: What if SBI doesn’t have a rate for a specific currency?

For most major currencies (USD, GBP, EUR, JPY), SBI always has a rate. For very rate currencies, you may need to convert to a major currency first and then to INR, or consult a tax professional for the RBI-approved secondary method.

Q3: Does Rule 115 apply to money i bring back to india?

Not necessarily. Rule 115 is for calculating tax on income earned. The physical act of “remitting” or bringing money to India is a FEMA (Foreign Exchange Management Act) matter, though the values should ideally match for audit purposes.

Q4: Is the TTBR the same as the “interbank rate”?

No. The interbank rate is what banks charge each other. The TTBR is lower because it includes the bank’s margin. This is actually a small “hidden benefit” for taxpayers, as it slightly reduces the taxable value in INR.

Q5: Do i need to attach the SBI rate chart to my ITR?

You don’t need to attach it to the ITR itself, but you must keep it in your records. If the Income Tax Department asks for a “Scrutiny” of your foreign income, you will need to produce the specific rate chart you used.

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