Rule 206 of the Draft Income-tax Rules, 2026 prescribes the method for converting income expressed in foreign currency into Indian rupees. It provides that the value of income accruing, arising, deemed to accrue or arise, received, or deemed to be received in foreign currency shall be calculated using the telegraphic transfer buying rate as on the “specified date.” The term “telegraphic transfer buying rate” carries the meaning assigned in rule 207. The rule further defines different specified dates depending on the nature of income. For salary income, it is the last day of the month immediately preceding the month in which salary is due, paid in advance, or paid in arrears. For interest on securities, it is the last day of the preceding month in which income becomes due. For income under the heads “Income from house property,” “Profits and gains of business or profession” (other than shipping business of non-residents), and “Income from other sources” (excluding dividends and interest on securities), it is the last day of the tax year. Separate dates are prescribed for shipping income of non-residents, dividends, and capital gains. Where tax is deducted at source on foreign currency income, the specified date shall be the date on which tax was required to be deducted. The rule excludes certain incomes received or brought into India before the specified date under the Foreign Exchange Regulation Act, 1973.
Extract of Rule No. 206 of Draft Income-tax Rules, 2026
Rule 206
Rate of exchange for conversion into rupees of income expressed in foreign currency.
(1) The rate of exchange for the calculation of the value in rupees of any income accruing or arising or deemed to accrue or arise to the assessee in foreign currency or received or deemed to be received by him or on his behalf in foreign currency shall be the telegraphic transfer buying rate of such currency as on the specified date.
(2) For the purposes of this rule-
(a)”telegraphic transfer buying rate” shall have the same meaning as defined in rule 207;
(b) the “specified date” in in respect of the nature of income referred in column B of the
Table below shall be as given in column C.
Table
| Sl. No. | Types of Income | Specified Date |
| A | B | C |
| 1. | Income chargeable under the head “Salaries”. | Last day of the month immediately preceding the month in which salary is due, or is paid in advance, or arrears. |
| 2. | Income by way of Interest on securities. | Last day of the month immediately preceding the month in which the income is due. |
| 3. | Income chargeable under the heads “Income from House property”, “Profits and gains of business or profession” (not being income referred to in Sl.No 4), and “Income from other sources” (excluding dividends and interest on securities). | Last day of the tax year of the assessee. |
| 4. | Income chargeable under the head “Profits and gains of business or profession” in the case of a non- resident engaged in the business of operation of ships. | Last day of the month immediately preceding the month in which the income is deemed to arise in India. |
| 5. | Income by way of Dividends. | Last day of the month immediately preceding the month in which dividend is declared, distributed, or paid by the company. |
| 6. | Income chargeable under the head “Capital gains”. | Last day of the month immediately preceding the month of in which the capital asset in the table is transferred. |
(c) The specified date, in respect of income referred to in clause (b), payable in foreign currency and from which tax has been deducted at source under rule 207, shall be the date on which the tax was required to be deducted under the provisions of the Chapter XIX-B.
(3) Nothing contained in sub-rule (1) shall apply in respect of income referred to in sub-rule (2)(b) [Table: Sl.No 3] where such income is received in, or brought into India by the assessee or on his behalf before the specified date in accordance with the provisions of the Foreign Exchange Regulation Act, 1973 (46 of 1973).
