The question that at what amount TDS should be deducted in case of foreign payments, is asked very frequently by the businesses when they start to deal with foreign payments.

Rule 26 of Income Tax Rules, 1962 provides that rate of exchange shall be TTBR (Telegraphic Transfer Buying Rate) for the purpose of calculating the amount in rupees on which tax is to be deducted.

Rule 26 reads out as follows:

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

TTBR has been assigned meaning through an explanation to the rule. The explanation reads out as follows:

For the purposes of this rule, 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.