As per Section 192 of the Income Tax Act, “any person responsible for paying any amount under the head salaries is required to deduct tax at source at the time of payment”
In case of salary is payable in foreign currency, the amount of TDS deducted is to be calculated after converting the salary payable into Indian Currency at the ‘Telegraphic Transfer Buying Rate’ as adopted by State Bank of India on the date of deduction of tax in Rule No. 26, under Section 192(6).
It is to be noted, that this rule is applicable only for determination of TDS.
However, in the case of computing the salary income, the rate of conversion to be applied is the telegraphic transfer-buying rate on the last day of month immediately preceding the month in which the salary is due or is paid in advance or arrears, as under Rule No. 115.
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