Rule 115 of the Income Tax Rules 1962 — Foreign Currency Conversion Explained

By GainSutra · Updated May 2026 · 6 min read

Rule 115 of the Income Tax Rules 1962 prescribes how foreign currency amounts must be converted to Indian rupees for the purpose of computing income and capital gains. For Indian residents receiving income from foreign RSUs — including vesting income, sale proceeds and dividends — Rule 115 determines both the rate to use and the date on which that rate applies.

Rule 115 — exact text: "For the purposes of an agreement for avoidance of double taxation, or for the purposes of the Act, the rate of exchange for the conversion of the amount expressed in foreign currency into Indian currency shall be the telegraphic transfer buying rate of such currency as on the last day of the month immediately preceding the month in which the income is received or paid or accrued or arises."

Three Key Points from Rule 115

1. Use TT Buy rate, not TT Sell. The rate prescribed is the "telegraphic transfer buying rate" — the rate at which the bank buys foreign currency from the customer. This is always lower than the TT Sell rate.

2. Use the last day of the preceding month. If income is received in March, use the rate on the last working day of February. Not the rate on the day income was received. Not an average. The last day of the prior month.

3. Applies to income received, paid, accrued or arising. This covers RSU vest income (perquisite under Section 17(2)), RSU sale proceeds (capital gains), and RSU dividends.

How Rule 115 Applies to Different RSU Transactions

Transaction	Rule 115 rate date	Used for
RSU Vesting (perquisite income)	Last working day of month preceding vest month	Cost of acquisition for future capital gains; employer TDS computation
RSU Sale (capital gains)	Last working day of month preceding sale month	Sale consideration in INR for capital gains computation
RSU Dividend received	Last working day of month preceding receipt month	Dividend income in INR; Form 67 computation
Schedule FA A3 initial value	Rate on the day of investment	Initial investment value in INR for Schedule FA

Why Getting This Wrong Matters

Under Section 270A of the Income Tax Act, under-reporting of income attracts a penalty of 50% of the tax on the under-reported amount. Misreporting — which includes using a wrong rate — attracts 200% of tax. The assessing officer comparing your filed return with officially published SBI TT Buy rates can identify rate errors precisely.

Rule 115 applied automatically

GainSutra maintains SBI TT Buy rates from 2001 to present and applies the correct Rule 115 rate to every transaction in your broker statement — automatically, without manual lookup.

Calculate with Correct Rates →

Does Rule 115 apply to both cost of acquisition and sale price?

Yes. Both the cost of acquisition (vest date FMV) and the sale consideration are converted using Rule 115. The rate for cost of acquisition is the last working day of the month before vesting. The rate for sale consideration is the last working day of the month before the sale.

Is Rule 115 the same for all foreign currencies?

Yes. Rule 115 applies identically to all foreign currencies — USD, EUR, GBP, AUD, DKK, SGD and others. The SBI TT Buy rate for the specific currency on the last day of the preceding month is used regardless of which currency your RSU is denominated in.