For US Tax purposes, do we get the US$-INR conversion rate, end of the year or the US$-INR conversion rate on the DAY when the accrual was made in Indian Financial Instruments?
Same way, when filing GOI taxes, to convert US earned income/dividends into INR, what date is to be used or what is the guideline for US Financial Instruments?
INR-US$ Conversion Rule for US/GOI Taxes?
INR-US$ Conversion Rule for US/GOI Taxes?
Admin: Can you move this thread to the tax forum? Thanks.
Mulder: The questions posed are important, and I will take a shot after it has been moved to the appropriate forum.
Mulder: The questions posed are important, and I will take a shot after it has been moved to the appropriate forum.
INR-US$ Conversion Rule for US/GOI Taxes?
Admin OldSpice: Thanks for moving the thread
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Mulder:
Conversion of non USD income to USD for US Tax Reporting Purposes
IRS requires that the exchange rate prevailing on the date of receipt of income in foreign currency be used to convert to USD. The IRS does not publish daily exchange rates. Any exchange rate provided/posted by an authorised dealer of foreign exchange may be used, and for consistency it helps to use the same source.
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Mulder:
Conversion of non USD income to USD for US Tax Reporting Purposes
IRS requires that the exchange rate prevailing on the date of receipt of income in foreign currency be used to convert to USD. The IRS does not publish daily exchange rates. Any exchange rate provided/posted by an authorised dealer of foreign exchange may be used, and for consistency it helps to use the same source.
INR-US$ Conversion Rule for US/GOI Taxes?
Conversion of non-Rupee Income into Rupees for GOI Tax Reporting Purposes
IT Rule 115 is reproduced below - the exchange rate to be used depends on the Indian tax law head of income that an item of income falls under.
29[30Rate of exchange for conversion into rupees of income expressed in foreign currency.31
115. 32[(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.
Explanation : For the purposes of this rule,
(1) telegraphic transfer buying rate shall have the same meaning as in the Explanation to rule 26;
(2) specified date means
(a) in respect of income chargeable under the head Salaries, the last day of the month immediately preceding the month in which the salary is due, or is paid in advance or in arrears;
(b) in respect of income 33[by way of] interest on securities, the last day of the month immediately preceding the month in which the income is due;
(c) in respect of income chargeable under the heads Income from house property, Profits and gains of business or profession [not being income referred to in clause (d)] and Income from other sources (not being income by way of dividends 34[and Interest on securities]), the last day of the previous year of the assessee;
(d) in respect of 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, the last day of the month immediately preceding the month in which such income is deemed to accrue or arise in India ;
(e) in respect of income by way of dividends, the last day of the month immediately preceding the month in which the dividend is declared, distributed or paid by the company;
(f) in respect of income chargeable under the head Capital gains, the last day of the month immediately preceding the month in which the capital asset is transferred :]
35[Provided that the specified date, in respect of income referred to in sub-clauses (a) to (f) payable in foreign currency and from which tax has been deducted at source under rule 26, shall be 36[the date on which the tax was required to be deducted] under the provisions of the Chapter XVII-B.]
37[(2) Nothing contained in sub-rule (1) shall apply in respect of income referred to in clause (c) of the Explanation to sub-rule (1) 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)38.]
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I now reproduce below IT Rule 26 that defines TT buying rate.
86[87Rate of exchange for the purpose of deduction of tax at source on income payable in foreign currency.
26. For the purpose of deduction of tax at source on any income payable in foreign currency, the rate of exchange for the calculation of the value in rupees of such income payable to an assessee outside India shall be the telegraphic transfer buying rate of such currency as on the date on which the tax is required to be deducted at source under the provisions of Chapter XVIIB by the person responsible for paying such income.
Explanation : For the purposes of this rule, telegraphic transfer buying rate, in relation to a foreign currency, means 88[the rate or rates of exchange] adopted by the State Bank of India constituted under the State Bank of India Act, 1955 (23 of 1955), for buying such currency 89[, having regard to the guidelines specified from time to time by the Reserve Bank of India for buying such currency,] where such currency is made available to that bank through a telegraphic transfer.]
IT Rule 115 is reproduced below - the exchange rate to be used depends on the Indian tax law head of income that an item of income falls under.
29[30Rate of exchange for conversion into rupees of income expressed in foreign currency.31
115. 32[(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.
Explanation : For the purposes of this rule,
(1) telegraphic transfer buying rate shall have the same meaning as in the Explanation to rule 26;
(2) specified date means
(a) in respect of income chargeable under the head Salaries, the last day of the month immediately preceding the month in which the salary is due, or is paid in advance or in arrears;
(b) in respect of income 33[by way of] interest on securities, the last day of the month immediately preceding the month in which the income is due;
(c) in respect of income chargeable under the heads Income from house property, Profits and gains of business or profession [not being income referred to in clause (d)] and Income from other sources (not being income by way of dividends 34[and Interest on securities]), the last day of the previous year of the assessee;
(d) in respect of 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, the last day of the month immediately preceding the month in which such income is deemed to accrue or arise in India ;
(e) in respect of income by way of dividends, the last day of the month immediately preceding the month in which the dividend is declared, distributed or paid by the company;
(f) in respect of income chargeable under the head Capital gains, the last day of the month immediately preceding the month in which the capital asset is transferred :]
35[Provided that the specified date, in respect of income referred to in sub-clauses (a) to (f) payable in foreign currency and from which tax has been deducted at source under rule 26, shall be 36[the date on which the tax was required to be deducted] under the provisions of the Chapter XVII-B.]
37[(2) Nothing contained in sub-rule (1) shall apply in respect of income referred to in clause (c) of the Explanation to sub-rule (1) 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)38.]
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I now reproduce below IT Rule 26 that defines TT buying rate.
PART VI
DEDUCTION OF TAX AT SOURCE
86[87Rate of exchange for the purpose of deduction of tax at source on income payable in foreign currency.
26. For the purpose of deduction of tax at source on any income payable in foreign currency, the rate of exchange for the calculation of the value in rupees of such income payable to an assessee outside India shall be the telegraphic transfer buying rate of such currency as on the date on which the tax is required to be deducted at source under the provisions of Chapter XVIIB by the person responsible for paying such income.
Explanation : For the purposes of this rule, telegraphic transfer buying rate, in relation to a foreign currency, means 88[the rate or rates of exchange] adopted by the State Bank of India constituted under the State Bank of India Act, 1955 (23 of 1955), for buying such currency 89[, having regard to the guidelines specified from time to time by the Reserve Bank of India for buying such currency,] where such currency is made available to that bank through a telegraphic transfer.]