Central Board of Direct Taxes’ Rule Revision
The Ministry of Finance, through the Central Board of Direct Taxes, has issued a notification on August 17, 2023, pertaining to amendments in the Income-tax Rules, 1962. The amendment, designated as the Income-tax (Seventeenth Amendment) Rules, 2023, introduces changes related to the deduction of tax on income payable in foreign currency. The new rules specify the rate of exchange for calculating the value in rupees for such foreign currency income, considering various scenarios including payments to foreign entities and units located in International Financial Services Centres.
MINISTRY OF FINANCE
(Department of Revenue)
(CENTRAL BOARD OF DIRECT TAXES)
NOTIFICATION
New Delhi, the 17th August, 2023
INCOME-TAX
G.S.R. 607(E).-In exercise of the powers conferred by section 295 of the Income-tax Act 1961 (hereinafter referred to as ‘Act’), the Central Board of Direct Taxes hereby makes the following rules further to amend the Income-tax Rules, 1962, namely:–
Short title and commencement.– (1) These rules may be called the Income-tax (Seventeenth Amendment) Rules, 2023.
(2) They shall come into force from the date of their publication in the Official Gazette.
2. In the Income-tax Rules, 1962 (hereinafter referred to as the principal rules), for rule 26, the following rule shall be substituted, namely:–
“26. Rate of exchange for the purpose of deduction of tax at source on income payable in foreign currency.–
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–
(i) to an assessee outside India;
(ii) to a Unit located in an International Financial Services Centre;
(iii) by a Unit located in an International Financial Services Centre to an assessee in 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, –
(i) “International Financial Services Centre” shall have the meaning assigned to it in clause (q) of section 2 of the Special Economic Zones Act, 2005 (28 of 2005);
(ii) “telegraphic transfer buying rate”, in relation to a foreign currency, means 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, 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;
(iii) “Unit” shall have the meaning assigned to it in clause (zc) of section 2 of the Special Economic Zones Act, 2005 (28 of 2005).”.
[Notification No. 64/2023/F.No. 370142/27/2023-TPL]
JIVITESH ANAND, Under Secy. (Tax Policy and Legislation Division)
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