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CS Executive · Tax Laws and Practice · Income under the Head Salary

An employee's salary is paid in US dollars by a foreign-linked employer in India. Under section 392(8) of the Income-tax Act, 2025, how is the rupee value determined for deducting tax on it?

The rupee value of foreign-currency salary for tax deduction is calculated at the rate of exchange as may be prescribed under the Act's rules. It is not fixed by agreement, by the joining-date rate or by any multi-year average.

  1. AAt such rate of exchange as may be prescribedCorrect
  2. BAt the rate on the date of the employee's joining
  3. CAt the average rate of the previous five years
  4. DAt whatever rate the employer and employee agree

Explanation

Section 392(8) provides that for tax deduction on salary payable in foreign currency, the rupee value is calculated at the rate of exchange as may be prescribed. Joining-date, five-year average or agreed rates are not provided in the section.

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