---
title: "TDS on Foreign Payments: Exchange Rate under Rule 26 for Section 195, Form 15CA and 15CB"
description: "When an Indian payer deducts tax on a payment to a non-resident, Rule 26 fixes the conversion: the SBI telegraphic transfer buying rate on the date tax was required to be deducted. What that date is, how it interacts with Rule 115 and DTAA rates, how to fill Form 15CA/15CB consistently, and how to pull the rate automatically."
canonical: https://allratestoday.com/blog/rule-26-tds-exchange-rate-foreign-payments/
source: AllRatesToday (https://allratestoday.com/) — Markdown mirror of the page above; index of all pages at https://allratestoday.com/llms.txt
generated: 2026-11-09T23:03:01.269Z
---

Every payment from India to a non-resident for royalties, fees for technical services, interest, software licences, cloud subscriptions or contractor work passes through **section 195**. The payer deducts tax, files **Form 15CA**, often obtains a **Form 15CB** from a chartered accountant, and reports the deduction in Form 27Q. All of those documents need the foreign-currency payment stated in rupees, and the Income-tax Rules say exactly how to convert it. This guide covers Rule 26, the date it points to, and how to make payroll, AP and the CA use the same number.

 **Not tax advice.** This is a practical summary for people who build the spreadsheets, scripts and working papers. Confirm your own case with a chartered accountant and read the instructions issued with the current year's ITR forms.

## What Rule 26 says

Rule 26 of the Income-tax Rules, 1962 provides that for the purpose of deducting tax at source on any income payable in foreign currency, the rate of exchange for calculating the rupee value is the **telegraphic transfer buying rate of the State Bank of India** on the **date on which the tax is required to be deducted**. Two choices are therefore made for you:

- **The rate:** SBI's TT buying rate, from its daily forex card rate sheet. Not the RBI reference rate, not the rate your bank applied to the outward remittance, not an average.
- **The date:** the date tax had to be deducted, which section 195(1) fixes as the *earlier* of credit of the income to the payee's account (including a suspense or payable account) or actual payment.

## Finding the deduction date in practice

| Situation | Date tax is required to be deducted | Rule 26 rate date |
| --- | --- | --- |
| Vendor invoice booked to accounts payable on 10 June, paid 25 June | 10 June (credit precedes payment) | 10 June |
| Advance paid 3 May, invoice booked 20 May | 3 May (payment precedes credit) | 3 May |
| Monthly SaaS charge auto-debited to a card on 1 July, booked the same day | 1 July | 1 July |
| Interest credited to a non-resident lender's account on 31 March, paid in April | 31 March | 31 March (or the last SBI sheet before it if 31 March is a holiday) |

The common error is to convert at the rate on the *remittance* date because that is the date the bank gives you a rate for. Where credit came first, that is the wrong date, and the TDS deposited will be a little over or under the amount the Form 27Q arithmetic implies.

## Worked example

An Indian company books a USD 50,000 invoice for technical services from a US vendor on 10 June 2026 and remits on 25 June. Tax is deductible at 10% (plus applicable surcharge and cess, ignored here for clarity) under the treaty, with a valid TRC and Form 10F on file.

| Step | Figure |
| --- | --- |
| Rule 26 rate date | 10 June 2026 (date of credit) |
| SBI TT buying rate, USD, that day (illustrative) | 93.10 |
| Rupee value of the payment | 50,000 × 93.10 = ₹46,55,000 |
| TDS at 10% | ₹4,65,500 |
| Bank's rate on 25 June (illustrative) | 93.60; irrelevant to the TDS computation |

Form 15CB should carry ₹46,55,000 and ₹4,65,500; Form 15CA Part C repeats them; Form 27Q reports the same amounts against the deductee. If the AP system instead posts the invoice at the 25 June bank rate, the ledger will show ₹46,80,000 and someone will spend an afternoon explaining a ₹25,000 difference that is purely a rate-date choice.

## How Rule 26 meets Rule 115

Rule 115 converts the *payee's* income, and its proviso says that where tax has been deducted at source, the specified date is the date on which the tax was required to be deducted. So for any TDS case the payer's Rule 26 date and the payee's Rule 115 date coincide, and both use the SBI TT buying rate for that day. If the non-resident files an Indian return to claim a refund, their income figure should match your Form 27Q to the rupee. The [Rule 115 guide](https://allratestoday.com/blog/sbi-tt-buying-rate-income-tax-rule-115/) has the full specified-date table for income that is not subject to TDS.

## Grossing up and net-of-tax contracts

Where the contract says the vendor receives USD 50,000 net and the Indian payer bears the tax, section 195A requires grossing up. The grossing up is done in rupees at the Rule 26 rate on the deduction date, and the grossed-up rupee income is what appears in Form 27Q. Doing the gross-up in dollars and then converting gives the same answer only if you use the same rate for both steps, which is another reason to fix the rate date first and compute everything from it.

## Getting the SBI TT buying rate for the deduction date

SBI's card rate is a PDF that is overwritten daily, so the deduction-date rate has to be captured on the day or taken from an archive. The current board as JSON:

```
curl "https://allratestoday.com/api/open/bank-rates/in/sbi?ccy=USD"
# "buy": 93.6   <- TT buying rate
# "bank_updated_at": "09-11-2026 Time 1:08 PM"
```

Add `&date=2026-06-10` to read a stored past snapshot (kept from October 2026 onwards). For an AP system, the simplest control is a daily job that stores the USD, EUR and GBP TT buying rates with SBI's time stamp, and a lookup from the invoice-booking date. Keep SBI's own sheet as the evidence; the `attribution.bank_url` field in every response points at it.

For FEMA-side reporting and as a reasonableness check, the [RBI reference rate](https://allratestoday.com/central-bank-rates-api/rbi/) for the same date is available keyless; it was `93.8579` against SBI's `93.60` on 9 November 2026.

## FAQ

### Which exchange rate is used for TDS on payments to non-residents?

Rule 26 of the Income-tax Rules: the telegraphic transfer buying rate of the State Bank of India on the date on which tax is required to be deducted at source. For section 195 that is the earlier of credit to the payee's account or actual payment.

### Is it the rate on the payment date or the invoice date?

Neither as such. It is the rate on the date tax had to be deducted, which under section 195 is the earlier of credit or payment. If you book the invoice as a credit to the vendor on 10 June and pay on 25 June, the deduction date, and so the rate date, is 10 June.

### What rate goes in Form 15CB?

The chartered accountant certifies the rupee amount of the remittance and the tax, so the conversion should use the Rule 26 rate on the deduction date. Using the bank's actual remittance rate on the day of transfer produces a different rupee figure and a reconciliation note in the audit.

### Does Rule 26 apply to the payee's income as well?

Rule 115 governs the payee's income, and its proviso says that where tax has been deducted at source the specified date is the date on which tax was required to be deducted. So for TDS cases Rule 115 and Rule 26 land on the same date and the same SBI rate.

### Can I use the RBI reference rate instead?

Not for the TDS computation. Rule 26 names the SBI TT buying rate. The RBI reference rate is appropriate for FEMA reporting and as a reasonableness check, and it is typically 0.2% to 0.4% higher than the SBI TT buying rate.

## One rate date, every form

SBI's TT board and the RBI reference rate as JSON for AP, payroll and the CA. Dated tables and history on paid plans.

 [See plans](https://allratestoday.com/pricing/)

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- [RBI exchange rate API — today's table and endpoints](https://allratestoday.com/central-bank-rates-api/rbi/)
- [SBI exchange rates today — TT board as JSON](https://allratestoday.com/bank-exchange-rate-api/in/sbi/)
- [SBI TT buying rate for income-tax Rule 115](https://allratestoday.com/blog/sbi-tt-buying-rate-income-tax-rule-115/)
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