Rule 115 Explained: How to Convert Foreign Income to INR
This article covers:
Key Takeaways
- Rule 115 mandates one rate: the SBI Telegraphic Transfer Buying Rate (TTBR) — not your bank statement rate or the RBI reference rate.
- The specified date is the last day of the month before you received the income — never the receipt date itself.
- RSUs are taxed twice — salary at vesting, capital gains at sale — with a separate TTBR lookup at each stage.
- Paid tax abroad? Claim a Foreign Tax Credit via Form 67. Rule 115 applies to that conversion too.
Why the Right Exchange Rate Matters
If you earn foreign income and file Indian taxes, one question determines whether your return is correct: which exchange rate did you use? The USD/INR rate can swing ₹1–3 in a single week — on a $10,000 receipt, that is a ₹10,000–₹30,000 swing in taxable income. Rule 115 of the Income Tax Rules, 1962 removes the guesswork: it specifies the exact rate and date every taxpayer must use.
What Is Rule 115?
Rule 115 prescribes two things for any foreign currency income taxable in India: use the SBI Telegraphic Transfer Buying Rate (TTBR), on a specified date that varies by income type. It covers salaries, freelance fees, dividends, capital gains on foreign stocks, and RSU vesting values — any income you earn or receive in foreign currency that appears on your Indian tax return.
What Is the SBI TTBR?
The SBI TTBR is the price the State Bank of India pays to buy foreign currency from you — a few paise below the live mid-market rate. Rule 115 accepts this rate and no other.
| Rate | Accepted Under Rule 115? |
|---|---|
| SBI TT Buying Rate | Yes — the only permitted rate |
| RBI Reference Rate | No — close but not the same |
| Bank statement / app rate | No — wrong rate and wrong date |
Find historical rates on the SBI website under Treasury/Forex, or via ClearTax and EZTax.
How the Specified Date Works
The specified date is always the last day of the month before the month of receipt. Income received on 15 July? Use the TTBR from 30 June.
| Income Type | Specified Date |
|---|---|
| Salary | Last day of month before salary is due or received, whichever is earlier |
| Business / freelance income | Last day of month before receipt or accrual |
| Dividends | Last day of month before declaration or distribution |
| Capital gains (foreign assets) | Last day of month before the sale date |
| Income subject to TDS | Date on which TDS was required to be deducted (Chapter XVII-B) |
Example: $5,000 salary received 15 July 2025 → specified date = 30 June 2025. SBI TTBR = ₹83.50 → taxable income = ₹4,17,500.
Rule 115 by Income Type
| Income Type | Specified Date Logic | Key Watch-Out |
|---|---|---|
| Remote salary | Last day of month before receipt | Use due date or receipt date — whichever is earlier |
| Freelance / consulting | Last day of month before any payment that month | All receipts in the same month share one TTBR date |
| Capital gains on foreign stocks | Two lookups: month before purchase and month before sale | Never blend into one rate |
| RSUs at vesting | Last day of month before vesting date | Vesting FMV is salary income (perquisite) |
| RSUs at sale | Last day of month before sale date | Gain above vesting FMV is capital gain |
| Foreign dividends | Last day of month before declaration or distribution | Use the earlier of the two dates |
RSU note: Two events, two specified dates, two Rule 115 calculations. Missing either stage is one of the most common ITR errors we see.
Common Filing Mistakes
- Bank statement rate on receipt day — wrong rate, wrong date.
- RBI reference rate instead of SBI TTBR — Rule 115 mandates SBI specifically.
- One rate for buy and sell when computing capital gains — each date needs its own lookup.
- Current month’s end, not the preceding month’s — income on 15 July uses 30 June TTBR, not 31 July.
- Ignoring the TDS carveout — TDS situations use the deduction date, not the month-end formula.
- Rule 115 vs Rule 115A — NRI capital gains on Indian company shares use Rule 115A, which averages buying and selling rates.
Rule 115 and NRIs
Rule 115 applies automatically to residents (ROR and RNOR). For NRIs, it applies only when the income is taxable in India — for example, NRO account interest, Indian property rental income, or salary from an Indian employer credited abroad. Foreign income earned and kept entirely outside India is generally not in scope. If your residential status recently changed, check with a CA before filing.
DTAA and Foreign Tax Credit
If you paid income tax abroad, you can claim a Foreign Tax Credit under Section 90 or 91 by filing Form 67 before your ITR. Rule 115 applies twice: once to convert your foreign income to INR, and once to convert the foreign tax paid. Both sides of the FTC calculation use the SBI TTBR.
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Impact by Taxpayer Type
| Who You Are | How Rule 115 Applies | Watch Out For |
|---|---|---|
| Remote worker | Salary converted using prev. month-end TTBR | Due date or receipt date — whichever is earlier |
| Freelancer | All payments in a month share one TTBR date | Do not pick different dates within the same month |
| US stock investor | Separate TTBR for purchase and sale dates | Hold over 24 months for LTCG treatment |
| RSU / ESOP holder | Two-stage: TTBR at vesting + TTBR at sale | Do not skip either stage or blend the rates |
| NRI returning to India | Applies once resident status is confirmed | DTAA and FTC can reduce total tax burden |
| Foreign dividend earner | TTBR on last day of month before declaration | Use whichever date is earlier: declared or distributed |
Frequently Asked Questions
Send Your Earnings Home Smarter
Getting Rule 115 right is one part of managing cross-border income. The other is making sure you do not lose a chunk of those earnings to high transfer fees when you remit them home. At Instarem, we help global Indians move money efficiently — transparent rates, no hidden markups, and fast INR settlement across USD, GBP, EUR, AUD, and SGD.
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Disclaimer: This article is for educational purposes only and does not constitute tax or legal advice. Tax laws are subject to change through Finance Acts, CBDT notifications, and judicial decisions. Please consult a qualified CA or tax advisor for advice specific to your situation.
