Foreign Interest Tax Calculator India FY 2025-26 — Free

Free foreign interest income tax calculator India FY 2025-26. Calculate tax on overseas bank interest, bonds & deposits. Covers Sec 5(1) & FTC under Sec 91.

Reviewed by Toolisky Team|Accuracy verified|Last Updated: Apr 2026

Foreign Interest Tax Calculator India FY 2025-26 — Free

For Indian residents (ROR) earning overseas income. Calculate Indian tax liability with DTAA Foreign Tax Credit (FTC) for interest, salary, and company profits from USA/abroad. NRIs: Foreign income is not taxable in India.

About accuracy: This calculator uses FY 2025-26 tax rules including Section 5(1) (global income), Section 91 (Foreign Tax Credit), and New Regime slabs with surcharge and 4% cess. For methodology details, see our Accuracy and Limitations page.

Highlights

FY 2025-26 updated

Free foreign interest income tax calculator India FY 2025-26. Calculate tax on overseas bank interest, bonds & deposits. Covers Sec 5(1) & FTC under Sec 91.

Section 5(1), Section 90, Section 91, Rule 115, Rule 128, Finance Act 2025

What Is This Calculator?

If you are an Indian Resident (Resident and Ordinarily Resident — ROR) and you earn interest from an overseas bank account, an international fixed deposit, or any foreign financial institution, India taxes that income. This is because India follows the global income principle — residents pay interest income tax on their worldwide earnings, not just what they earn in India.

This calculator is built specifically for Indian Residents earning foreign bank interest for FY 2025–26. It applies the correct New Regime slab rates, adds surcharge and Health & Education Cess where applicable, applies the Section 87A rebate where eligible, and then calculates double taxation relief under Section 90 (DTAA countries) or Section 91 (non-DTAA countries) — so you know exactly what you owe after all credits.

For NRIs: Under Section 5(2) of the Income Tax Act, 1961, non-residents are taxed ONLY on Indian-source income. Foreign interest earned outside India is completely exempt from Indian taxation for NRIs. This calculator returns ₹0 for all NRI cases.

Whether your money is parked in a UK savings account, a US Treasury bond, an Australian term deposit, or a Singapore fixed deposit, this calculator walks you through the exact Indian interest income tax calculation step by step.

Why Is This So Confusing?

Foreign interest income tax is genuinely complicated. Here are the five main reasons people get it wrong:

1. Foreign taxes already paid: You may have already paid tax in the foreign country before you even think about India. That foreign tax is not automatically credited — you need to actively claim it through the right relief section.

2. Currency conversion using the correct rate: Under Rule 115 of the Income Tax Rules, 1962, you must use the SBI Telegraphic Transfer Buying Rate (TTBR) on the last day of the month preceding the month in which the income is received. Using today's rate, your bank's rate, or any other rate is incorrect.

3. Progressive New Regime slab rates: The tax is not a flat percentage. It is calculated progressively across multiple slabs, with surcharge and 4% cess added on top. You can compare both regimes using our Old vs New Tax Regime Calculator.

4. Section 90 vs Section 91 confusion: If India has a Double Taxation Avoidance Agreement (DTAA) with the country where your interest was earned (UK, USA, Australia, Singapore, etc.), you claim relief under Section 90. Section 91 (unilateral relief) only applies when NO DTAA exists. This is a common source of error.

5. The NRI misconception: Many NRIs incorrectly calculate 30% Indian tax on their overseas interest. Foreign interest income is taxable in India at 0% for NRIs — full stop.

How the Interest Income Tax Calculation Works

This calculator applies the statutory provisions for FY 2025–26 as follows:

For Resident Individuals (ROR):

Step 1 — Convert to INR: Convert your foreign interest income to INR using the SBI TTBR on the last day of the month before the month in which the interest was credited (Rule 115).

Step 2 — Apply New Regime slabs: Your foreign interest income is added to your other total income and taxed progressively under New Regime slabs (0% to 30%).

Step 3 — Apply Section 87A Rebate (if eligible): Foreign bank interest is classified as Income from Other Sources — a normal slab-rate income. If your total income is ₹12,00,000 or less, Section 87A rebate of up to ₹60,000 applies, which can reduce your net tax to ₹0. This rebate does NOT apply to capital gains (Section 111A/112/112A) — but it fully applies to foreign bank interest.

Step 4 — Add surcharge (if applicable): If total income exceeds ₹50 lakh, surcharge is applied on the tax amount (10%, 15%, or 25% depending on income level under the New Regime).

Step 5 — Add Health & Education Cess: 4% cess is added on (tax + surcharge) at all income levels.

Step 6 — Apply Double Taxation Relief: If DTAA exists (Section 90), or if no DTAA exists (Section 91), you can claim the LOWER of: (a) foreign tax paid, or (b) Indian tax on that income. This amount reduces your final payable.

For NRIs: Foreign interest income is taxed at 0% in India. Section 5(2) of the Income Tax Act, 1961 limits an NRI's Indian tax liability to Indian-source income only. No calculation is needed for foreign interest.

Step-by-Step Guide to Using This Calculator

Step 1: Select Residency Status
Choose Resident (ROR) or Non-Resident Indian (NRI). This one choice determines your entire interest income tax treatment. If you are unsure of your status, consult your Chartered Accountant — residency is determined each year based on physical presence rules under Section 6 of the Income Tax Act.
Step 2: Enter Foreign Interest Income in INR
Convert your foreign interest to INR using Rule 115. Use the SBI Telegraphic Transfer Buying Rate (TTBR) as of the last day of the month before the month in which the interest was credited. Do NOT use today's exchange rate, the RBI's reference rate, or your bank's conversion rate — only the SBI TTBR qualifies under Indian tax rules.
Step 3: Enter Foreign Tax Already Paid
Enter the total foreign tax paid on this interest in the foreign country. This is the total tax liability settled in that country for the year — it may include TDS withheld by your bank plus any additional taxes assessed, minus any refunds received. It is NOT limited to just the amount withheld at source.
Step 4: Apply the Tax Calculation
The calculator applies the New Regime slab rates on your total income (including foreign interest), applies Section 87A rebate if your income is ₹12L or less, calculates surcharge if applicable, adds 4% cess, and then calculates your Foreign Tax Credit (FTC) — all in one go.
Step 5: Review Your Results (Residents)
You will see: base Indian slab tax, Section 87A rebate (if applicable), tax after rebate, surcharge (if any), 4% cess, gross Indian tax, FTC relief (capped at the lower of foreign tax paid vs. Indian tax on that income), and net payable to India.
Step 6: File Form 67 Before Your ITR
To actually claim FTC in your ITR, you must file Form 67 on the Income Tax e-filing portal BEFORE you file your ITR. Form 67 details the foreign income and foreign tax paid. Missing this step means your FTC claim can be rejected even if the calculation is correct.

New Regime Tax Slabs FY 2025–26 (AY 2026–27)

Income Range	Tax Rate
₹0 - ₹4,00,000	0% (Nil)
₹4,00,001 - ₹8,00,000	5%
₹8,00,001 - ₹12,00,000	10%
₹12,00,001 - ₹16,00,000	15%
₹16,00,001 - ₹20,00,000	20%
₹20,00,001 - ₹24,00,000	25%
Above ₹24,00,001	30%

Surcharge & Health & Education Cess (New Regime)

Surcharge is an additional tax levied on the income tax amount (not on income directly) for high-income taxpayers. Important: Under the New Tax Regime (Section 115BAC), the maximum surcharge rate is capped at 25%. The 37% surcharge applies ONLY under the Old Regime. Surcharge is triggered only when total income exceeds ₹50,00,000 — income of exactly ₹50L does not attract surcharge.

Surcharge Slabs (New Regime)

Up to ₹50,00,000: Nil (no surcharge) | ₹50,00,001 – ₹1,00,00,000: 10% on tax | ₹1,00,00,001 – ₹2,00,00,000: 15% on tax | Above ₹2,00,00,000: 25% on tax (maximum under New Regime)

Health & Education Cess

4% on (Income Tax + Surcharge) for ALL taxpayers at ALL income levels. There is no threshold for cess — it applies from the first rupee of tax liability.

Section 90 vs Section 91 — Which Relief Applies to You?

This is one of the most misunderstood areas of foreign interest income tax. The correct section depends entirely on whether India has a DTAA (Double Taxation Avoidance Agreement) with the country where your interest was earned. In both cases, the Foreign Tax Credit (FTC) is calculated as the LOWER of: (a) foreign tax paid on that income in the foreign country, OR (b) Indian tax due on that income under the New Regime. India has DTAAs with over 94 countries as of 2025. For the full list, refer to the official Income Tax India DTAA page.

Section 90 — Bilateral Relief (DTAA Countries)

Applies when India has a signed DTAA with the country where interest was earned (e.g., UK, USA, Australia, Singapore, Canada, Germany, France, UAE, Netherlands, Japan, and 80+ more). Relief = LOWER of foreign tax paid OR Indian tax on that income.

Section 91 — Unilateral Relief (No DTAA)

Applies ONLY when India has NO DTAA with the foreign country (e.g., certain African or Pacific nations). India voluntarily gives credit for foreign taxes paid. Relief = LOWER of foreign tax rate applicable OR Indian tax rate on that income.

NRI — Any Country

Not applicable. Under Section 5(2), NRIs owe ₹0 Indian tax on foreign interest regardless of the country, the amount, or any foreign taxes paid.

How to Convert Foreign Interest to INR — Rule 115

The exchange rate rule for Indian income tax purposes is defined in Rule 115 of the Income Tax Rules, 1962. This is the rule that determines which exchange rate you must use when converting foreign income to INR.

The correct rate: Use the SBI Telegraphic Transfer Buying Rate (TTBR) published by the State Bank of India.

The correct date: Use the TTBR from the LAST DAY OF THE MONTH immediately preceding the month in which the interest was credited to your account.

Example: If you received USD 1,000 in bank interest on July 10, 2025 — use the SBI TTBR as of June 30, 2025. If you received interest on August 3, 2025 — use the TTBR as of July 31, 2025.

Common mistake to avoid: Many people refer to the 'RBI reference rate' or 'today's exchange rate' for this calculation. Under Rule 115, only the SBI TTBR on the specified date qualifies. Keep a printed or saved record of the SBI TTBR on the correct date for every transaction — the Income Tax Department may ask for this during scrutiny.

Similarly, when converting foreign taxes paid for the purpose of claiming FTC under Rule 128, you use the SBI TTBR on the last day of the month immediately preceding the month in which the foreign tax was paid or deducted.

Real-Life Situations

1. Retired Resident in the UK with a Savings Account

A retired Indian resident (ROR) living in the UK earns GBP interest from a UK savings account. Here is how the interest income tax calculation works:

• Convert GBP interest to INR using the SBI TTBR on the last day of the month before the interest credit date (Rule 115).
• Add this INR amount to your total income. Apply New Regime progressive slabs.
• If total income (including this interest) is ₹12L or less, Section 87A rebate applies — net tax may be ₹0.
• If total income exceeds ₹12L, add surcharge (if income exceeds ₹50L) and 4% Health & Education Cess.
• Claim FTC under Section 90 (India has a DTAA with the UK). FTC = lower of UK tax paid or Indian tax on that income.
• File Form 67 on the Income Tax e-filing portal before filing your ITR.

2. Software Engineer with a US Bank Account

A software engineer based in India holds a US bank account and earns USD interest while maintaining Indian residency. The income is taxable as foreign interest income tax in India.

• Convert USD interest using SBI TTBR on the last day of the preceding month (Rule 115).
• Aggregate with other Indian income to determine applicable New Regime slab rate.
• If combined total income is ₹12L or less, Section 87A rebate applies — net Indian tax may be ₹0.
• If total income exceeds ₹12L, calculate income tax, add surcharge if income exceeds ₹50L, add 4% cess.
• Claim FTC under Section 90 (India-US DTAA exists). FTC capped at Indian tax on that income.
• File Form 67 before ITR filing due date.

3. Multi-Country Interest Portfolio (UK, Singapore, Australia)

A resident individual with interest spread across GBP, SGD, and AUD accounts must handle each currency separately.

• Convert each currency to INR using the SBI TTBR on the last day of the preceding month for each respective interest receipt date.
• Sum all foreign interest income to get total foreign interest in INR.
• Add to other income and compute tax on total global income under New Regime slabs. Apply Section 87A rebate if total income ≤ ₹12L.
• Claim FTC for each country separately (all three — UK, Singapore, Australia — have DTAAs with India, so Section 90 applies to all). Full DTAA list available on the Income Tax India website.
• Total FTC across all countries cannot exceed Indian tax on total foreign interest.

4. Senior Citizen (60+) with International Investments

A senior citizen with overseas interest income has additional compliance requirements:

• Report all foreign interest in Schedule FA (Foreign Assets) of your ITR on the Income Tax e-filing portal.
• Report gross foreign interest under Schedule FSI (Foreign Source Income).
• Claim Section 90/91 FTC in Schedule TR (Tax Relief) — this auto-populates from Schedule FSI.
• File Form 67 before ITR due date with documentary proof: foreign bank statements, tax certificates, TRC (Tax Residency Certificate) if applicable.
• Include SBI TTBR rate used for conversion with documentation from SBI's published rate tables.
• Keep all records for at least 6 years in case of Income Tax Department inquiry.

5. Business Owner with Foreign Subsidiary Accounts

An Indian business owner with foreign subsidiary accounts earning interest across multiple currencies needs to:

• Aggregate all foreign interest income (from ALL foreign accounts and sources).
• Convert each amount individually using Rule 115 — each on its own specific date.
• This income is part of global income taxable under Section 5(1) of the Income Tax Act.
• Calculate tax on aggregate global income (Indian + foreign) under New Regime slabs with applicable surcharge and cess.
• Claim FTC country-wise using Form 67. The total FTC is the sum of individual country credits, each capped at the Indian tax on income from that country.

Common Mistakes to Avoid

Mistake 1 — Using the Wrong Exchange Rate: The Income Tax Rules require the SBI TTBR on the last day of the month preceding the income receipt month (Rule 115). Using today's rate, the RBI reference rate, or your personal bank's conversion rate can result in incorrect tax computation and potential issues during scrutiny.

Mistake 2 — Applying Section 91 When Section 90 Should Apply: If India has a DTAA with the country where you earned interest (UK, USA, Australia, Singapore, Canada, UAE, and 90+ others), you MUST use Section 90, not Section 91. Section 91 is a fallback for countries where no DTAA exists. Using the wrong section can lead to incorrect FTC claims. Check the official DTAA list on the Income Tax India website.

Mistake 3 — Assuming Foreign Tax Automatically Credits: FTC is NOT automatic. You must file Form 67 on the Income Tax portal BEFORE filing your ITR. Without Form 67, your FTC claim can be disallowed entirely, even if you paid tax in the foreign country.

Mistake 4 — Ignoring the FTC Cap: If you paid more foreign tax than your Indian tax liability on that income, the FTC is capped at the Indian tax. The excess foreign tax is forfeited. It cannot be carried forward, set off against other income, or claimed as a deduction.

Mistake 5 — NRI Incorrectly Calculating 30% Tax on Overseas Interest: If you are an NRI, your Indian tax on foreign interest is ₹0. Period. Only Indian-source income is taxable for NRIs under Section 5(2). Foreign-earned interest has no Indian tax liability.

Mistake 6 — Using 37% Surcharge Under the New Regime: The 37% surcharge applies only under the Old Tax Regime. Under the New Regime (Section 115BAC), the maximum surcharge is 25%. Using 37% overstates your tax liability significantly. Compare both regimes with our Old vs New Tax Regime Calculator.

Mistake 7 — Omitting Foreign Income From Your ITR: All worldwide income must be declared in your Indian ITR, even if tax was fully paid abroad. The Income Tax Department can issue scrutiny notices for undeclared foreign income. Penalties can apply even when no additional tax is due.

Mistake 8 — Not Knowing Your Residency Status: Residency (ROR, RNOR, or NRI) is determined fresh every financial year based on physical presence in India (Section 6). If you moved between India and abroad during the year, consult your CA to confirm your status before using this calculator.

Mistake 9 — Ignoring Section 87A Rebate on Foreign Interest Income: Foreign bank interest is Income from Other Sources taxed at normal slab rates. If your total income (including foreign interest) is ₹12L or less, the Section 87A rebate of up to ₹60,000 fully applies. Many people overpay tax by not applying this rebate. Note: 87A rebate does NOT apply to capital gains (Section 111A/112/112A) — but it does apply to foreign bank interest.

Mistake 10 — Applying Surcharge at ₹50L (not above ₹50L): Surcharge under the New Regime applies only when total income EXCEEDS ₹50,00,000. Income of exactly ₹50,00,000 does not attract surcharge. The 10% surcharge applies from ₹50,00,001 onwards.

Legal Basis & Official Statutory References

Section 5(1) — Income Tax Act, 1961

This is the foundation of India's global income taxation principle. Under Section 5(1)(c), a Resident and Ordinarily Resident (ROR) is taxable on all income that accrues or arises outside India. This means all foreign bank interest is included in the total income of a Resident for the relevant financial year, regardless of whether it was brought to India or not.

Section 5(2) — Income Tax Act, 1961

Non-residents are taxed only on income received or accrued in India. Foreign interest earned by an NRI in an overseas bank account does not accrue or arise in India and does not meet the criteria for Indian taxability. Indian interest income tax liability for NRIs on foreign interest = ₹0.

Section 87A — Tax Rebate (Finance Act 2025)

Under the New Regime, resident individuals with total taxable income up to ₹12,00,000 are eligible for a rebate of up to ₹60,000, which can reduce net tax payable to ₹0. Foreign bank interest is classified as normal slab-rate income (Income from Other Sources) — this rebate fully applies. The rebate does NOT apply to capital gains taxable under Section 111A, Section 112, or Section 112A. This is confirmed by the CBDT's Key Highlights of Finance Bill 2025 circular.

Section 90 — Bilateral Relief (DTAA Countries)

When India has a signed Double Taxation Avoidance Agreement (DTAA) with the country where the income was earned, Section 90 applies. Relief is given as a Foreign Tax Credit equal to the LOWER of: (a) the tax paid in the foreign country, or (b) the Indian tax calculated on that income. India has DTAAs with over 94 countries including the UK, USA, Australia, Singapore, Germany, Canada, UAE, Netherlands, France, Japan, and many more. Full list available on the Income Tax India official website.

Section 91 — Unilateral Relief (No DTAA)

When India does NOT have a DTAA with the foreign country, Section 91 provides unilateral relief. India voluntarily allows a credit for foreign taxes paid, calculated as the LOWER of: (a) the foreign tax rate applicable, or (b) the Indian tax rate on that income. This section ensures Indian residents are not doubly taxed even when no bilateral treaty exists.

Rule 115 — Income Tax Rules, 1962 (Currency Conversion)

Rule 115 specifies the exchange rate for converting foreign income to INR. For interest income (classified as Income from Other Sources), you use the SBI Telegraphic Transfer Buying Rate (TTBR) on the last day of the month immediately preceding the month in which the income is received or becomes due, whichever is earlier.

Rule 128 — Income Tax Rules, 1962 (Foreign Tax Credit Procedure)

Rule 128 governs the procedure for claiming Foreign Tax Credit (FTC) in India. Key provisions: FTC must be claimed in the same year the foreign income is offered for Indian taxation. Form 67 must be filed on the e-filing portal before the ITR due date. The credit is computed separately for each source of income from each country. For currency conversion of the foreign tax paid, use the SBI TTBR on the last day of the month preceding the month in which the foreign tax was paid.

Finance Act, 2025 — New Regime Tax Slabs & Key Changes

Finance Act 2025 introduced the revised New Regime slab structure for FY 2025–26 (AY 2026–27): 0% (up to ₹4L), 5% (₹4L–₹8L), 10% (₹8L–₹12L), 15% (₹12L–₹16L), 20% (₹16L–₹20L), 25% (₹20L–₹24L), 30% (above ₹24L). Section 87A rebate raised to ₹60,000 for income up to ₹12L. Rebate confirmed NOT applicable to capital gains (111A/112/112A) — but fully applicable to foreign bank interest. Maximum surcharge under New Regime: 25%. Health & Education Cess: 4% on (tax + surcharge).

Section 115BAC — New Tax Regime

The New Tax Regime under Section 115BAC is the default regime for individuals from AY 2024–25 onwards (as amended by Finance Act 2024). It offers lower slab rates but disallows most deductions and exemptions. Foreign interest income for Residents is taxed under these slab rates as normal income.

Section 115A — NOT Applicable to Foreign Bank Interest

Section 115A applies only to certain income types such as dividends, royalties, and fees for foreign technical services received by non-residents. Foreign bank interest income earned by Indian Residents is taxed under the standard New Regime slab rates as Income from Other Sources — NOT under Section 115A.

Verified Accuracy — 14 Test Cases Passed

14/14

Test Cases Passed

Jan 2026

Last Verified

100%

Accuracy Rate

Test Case Coverage — Verified Against Finance Act 2025

All 14 test cases verified against CBDT guidelines and Finance Act 2025 provisions. Last verification: January 2026.

TC1 — Resident, ₹50,000 interest, ₹10,000 foreign tax

Net payable: ₹0. Reason: Income ₹50,000 is below the ₹4,00,000 basic exemption slab — slab tax = ₹0. FTC does not apply (there is no Indian tax to offset).

TC2 — Resident, ₹5,00,000 interest, ₹50,000 foreign tax

Net payable: ₹0. Reason: Slab tax = ₹5,000. Section 87A rebate = ₹5,000 (income ₹5L ≤ ₹12L). Tax after rebate = ₹0. FTC is irrelevant — there is no Indian tax liability.

TC3 — Resident, ₹25,00,000 interest, ₹2,50,000 foreign tax

Net payable: ₹93,200. Slab tax = ₹3,30,000. No Section 87A rebate (income > ₹12L). No surcharge (income ₹25L does NOT exceed ₹50L threshold). Cess 4% = ₹13,200. Gross Indian tax = ₹3,43,200. FTC = ₹2,50,000 (lower of foreign tax vs Indian tax). Net = ₹93,200.

TC4 — Resident, ₹1,00,000 interest, no foreign tax

Net payable: ₹0. Income ₹1,00,000 is below the ₹4,00,000 basic exemption slab — slab tax = ₹0.

TC5 — Resident, ₹10,00,000 interest, ₹50,000 foreign tax

Net payable: ₹0. Slab tax = ₹40,000. Section 87A rebate = ₹40,000 (income ₹10L ≤ ₹12L). Tax after rebate = ₹0. FTC is irrelevant — Indian tax is nil after rebate.

TC6 — Resident, ₹50,00,000 interest, ₹2,50,000 foreign tax

Net payable: ₹8,73,200. Slab tax = ₹10,80,000. No surcharge (income ₹50,00,000 is exactly at threshold — surcharge requires income to EXCEED ₹50L). Cess 4% = ₹43,200. Gross Indian tax = ₹11,23,200. FTC = ₹2,50,000. Net = ₹8,73,200.

TC7 — Resident, ₹1,50,00,000 interest, ₹5,00,000 foreign tax

Net payable: ₹43,79,680. Slab tax = ₹40,80,000. 15% surcharge = ₹6,12,000 (income > ₹1Cr). Cess 4% = ₹1,87,680. Gross Indian tax = ₹48,79,680. FTC = ₹5,00,000. Net = ₹43,79,680.

TC8 — NRI, ₹50,000 foreign bank interest, any foreign tax

Indian tax: ₹0. NRI foreign bank interest is not taxable in India under Section 5(2). The source is foreign — it neither accrues nor arises in India.

TC9 — NRI, ₹10,00,000 foreign bank interest, ₹50,000 foreign tax

Indian tax: ₹0. NRI foreign bank interest is not taxable in India under Section 5(2). No Indian tax liability regardless of amount or foreign taxes paid.

TC10 — NRI, ₹1,00,00,000 foreign bank interest, ₹10,00,000 foreign tax

Indian tax: ₹0. NRI foreign bank interest is not taxable in India under Section 5(2). No Indian tax liability regardless of amount or foreign taxes paid.

TC11 — Resident, ₹4,00,000 interest (slab boundary), no foreign tax

Net payable: ₹0. Income = ₹4,00,000 = exactly the top of the 0% slab. Slab tax = ₹0.

TC12 — Resident, ₹4,00,001 interest (₹4L + ₹1), no foreign tax

Net payable: ₹0. Slab tax = ₹0.05 (₹1 × 5%). Section 87A rebate applies (income ₹4,00,001 ≤ ₹12L) — rebate = ₹0.05. Tax after rebate = ₹0.

TC13 — Resident, ₹12,00,000 interest, no foreign tax

Net payable: ₹0. Slab tax = ₹60,000. Section 87A rebate = ₹60,000 (income exactly ₹12L — rebate fully covers slab tax). Tax after rebate = ₹0. No surcharge (income ₹12L is far below ₹50L threshold).

TC14 — Resident, ₹20,00,000 interest, ₹3,00,000 foreign tax (FTC cap test)

Net payable: ₹0. Slab tax = ₹2,00,000. No 87A rebate (income > ₹12L). Cess 4% = ₹8,000. Gross Indian tax = ₹2,08,000. Foreign tax ₹3,00,000 > Indian tax ₹2,08,000 — FTC is capped at ₹2,08,000. Excess ₹92,000 is forfeited (cannot be carried forward or refunded). Net = ₹0.

What This Calculator Gives You

Exact Indian interest income tax liability under the New Regime FY 2025–26 slabs

Section 87A rebate automatically applied — foreign bank interest qualifies as normal income (not capital gains)

Correct Section 90 / Section 91 Foreign Tax Credit calculation (lower of foreign tax vs. Indian tax on that income)

Full impact of surcharge (max 25% under New Regime, triggered only above ₹50L) and 4% cess

Clear distinction between Resident (progressive tax + 87A rebate) and NRI (₹0 tax) treatment

Your net amount payable to India after all credits and rebates

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Frequently Asked Questions

Do NRIs pay Indian tax on foreign bank interest?

No. Under Section 5(2) of the Income Tax Act, NRIs pay 0% Indian tax on overseas bank interest. Only Indian-source income is taxable for NRIs. Foreign interest earned abroad is completely outside the scope of Indian taxation for non-residents. This calculator returns ₹0 for all NRI cases.

What is the difference between Resident and NRI taxation on foreign interest?

Residents (ROR) are taxed on global income under Section 5(1). Foreign interest income is part of their taxable Indian income and is taxed progressively under New Regime slabs (0%–30%), with Section 87A rebate applicable if total income is ₹12L or less, plus surcharge (up to 25% if income exceeds ₹50L) and 4% cess. NRIs are taxed at 0% on foreign-source income under Section 5(2) — no Indian tax liability at all.

How is the Foreign Tax Credit (FTC) calculated?

FTC = the LOWER of: (a) foreign tax paid on the interest income, OR (b) Indian tax due on that income (after Section 87A rebate, surcharge, and cess). Example: Your gross Indian tax after all calculations is ₹2,08,000 and you paid ₹50,000 in foreign tax. FTC = ₹50,000. Conversely, if your gross Indian tax is ₹2,08,000 but you paid ₹3,00,000 in foreign tax, FTC = ₹2,08,000 (capped). The excess ₹92,000 is forfeited — it cannot be refunded or carried forward.

Which exchange rate should I use to convert foreign interest to INR?

Under Rule 115 of the Income Tax Rules, 1962, use the SBI Telegraphic Transfer Buying Rate (TTBR) on the last day of the month immediately preceding the month in which the interest was credited. For example, interest received in July — use the June 30 TTBR. Keep documentation of the rate and date from SBI's published rate tables for your records.

What are the FY 2025–26 tax slabs for foreign interest income for residents?

New Regime slabs: ₹0–₹4L (0%), ₹4L–₹8L (5%), ₹8L–₹12L (10%), ₹12L–₹16L (15%), ₹16L–₹20L (20%), ₹20L–₹24L (25%), above ₹24L (30%). Section 87A rebate up to ₹60,000 for total income up to ₹12L (fully applies to foreign bank interest as normal income). Surcharge: 10% (income above ₹50L–₹1Cr), 15% (₹1Cr–₹2Cr), 25% (above ₹2Cr) under New Regime. 4% Health & Education Cess on all tax + surcharge.

Does the Section 87A rebate apply to foreign bank interest income?

Yes. Foreign bank interest is classified as Income from Other Sources — a normal slab-rate income. Under Finance Act 2025, the Section 87A rebate (up to ₹60,000 for income up to ₹12L) fully applies to foreign bank interest. This is different from capital gains (Section 111A, 112, 112A) which are excluded from the 87A rebate as confirmed by CBDT. So if your total income including foreign interest is ₹12L or less, your net Indian tax payable can be ₹0.

Do I need to report foreign interest in my ITR even if I paid tax abroad?

Yes, absolutely. All worldwide income must be declared in your Indian ITR, including foreign interest. You report the gross amount in Schedule FSI, the FTC in Schedule TR, and file Form 67 before ITR due date on the Income Tax e-filing portal. Omitting foreign income triggers scrutiny notices and penalties, even if tax was fully paid in the foreign country.

What is the difference between TDS and total foreign tax paid?

TDS is the amount withheld at source by your foreign bank when interest is credited. Total foreign tax paid is your complete settlement with that country's tax authorities for the year — which may include TDS plus any additional taxes assessed, minus refunds. When claiming FTC in Form 67, you use the TOTAL tax paid to the foreign authority, not just the TDS amount.

When does surcharge apply on foreign interest income?

Surcharge under the New Regime applies only when your total income EXCEEDS ₹50,00,000. The rates are: 10% for income above ₹50L up to ₹1Cr, 15% for income above ₹1Cr up to ₹2Cr, and 25% for income above ₹2Cr (maximum under New Regime). Income of exactly ₹50,00,000 does NOT attract surcharge — the threshold is strictly 'exceeds ₹50L'.

Accuracy, Expert Review & Official Sources

Built on official standards and verified by certified professionals

Last Updated: 6 April 2026

Developed By

Toolisky Team

Specialized in financial tools, calculation precision, and policy compliance.

Expert Reviewed

Content Accuracy & Standards Reviewer

Calculations verified against official guidelines and industry regulations.

Official References

This Foreign Interest Tax Calculator India FY 2025-26 — Free is built on official guidelines and verifiable sources:

Official Source Reference↗

Primary source used for validating logic and accuracy standards.

Accuracy Disclaimer & Professional Consultation

This tool is for informational and educational purposes only.All calculations on this platform are for informational and educational purposes only. While we strive for 100% accuracy based on official regulations, users should consult with certified professionals for legal or financial decisions.

Key Limitations:

• Does not constitute professional or legal advice
• Individual situations are unique and may require specific adjustments
• Changes in official policies may affect accuracy of results
• Additional factors not captured here may apply to your specific case

Always consult a qualified professional before making critical decisions based on these results.

Privacy & Data Security

All calculations are performed locally in your browser. No data is sent to servers or stored. Your information remains completely private.

Meet the Toolisky Team

Specialists dedicated to making tools and calculators accessible for everyone

Keshav Wadwale

Founder & Developer

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Anita Patil

Tax Planner & Calculation Advisor

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Viraj Mathpati

Legal Advisor & Senior Content Writer

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Madhav Wadwale

Content Writer

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Toolisky is an independent platform created to help users with complex calculations and insights. For official filing or legal decisions, users should always consult a certified professional in the relevant field.

Free foreign interest income tax calculator India FY 2025-26. Calculate tax on overseas bank interest, bonds & deposits. Covers Sec 5(1) & FTC under Sec 91.

Section 5(1), Section 90, Section 91, Rule 115, Rule 128, Finance Act 2025

What Is This Calculator?

Why Is This So Confusing?

How the Interest Income Tax Calculation Works

Step-by-Step Guide to Using This Calculator

Step 1: Select Residency Status
Choose Resident (ROR) or Non-Resident Indian (NRI). This one choice determines your entire interest income tax treatment. If you are unsure of your status, consult your Chartered Accountant — residency is determined each year based on physical presence rules under Section 6 of the Income Tax Act.
Step 2: Enter Foreign Interest Income in INR
Convert your foreign interest to INR using Rule 115. Use the SBI Telegraphic Transfer Buying Rate (TTBR) as of the last day of the month before the month in which the interest was credited. Do NOT use today's exchange rate, the RBI's reference rate, or your bank's conversion rate — only the SBI TTBR qualifies under Indian tax rules.
Step 3: Enter Foreign Tax Already Paid
Enter the total foreign tax paid on this interest in the foreign country. This is the total tax liability settled in that country for the year — it may include TDS withheld by your bank plus any additional taxes assessed, minus any refunds received. It is NOT limited to just the amount withheld at source.
Step 4: Apply the Tax Calculation
The calculator applies the New Regime slab rates on your total income (including foreign interest), applies Section 87A rebate if your income is ₹12L or less, calculates surcharge if applicable, adds 4% cess, and then calculates your Foreign Tax Credit (FTC) — all in one go.
Step 5: Review Your Results (Residents)
You will see: base Indian slab tax, Section 87A rebate (if applicable), tax after rebate, surcharge (if any), 4% cess, gross Indian tax, FTC relief (capped at the lower of foreign tax paid vs. Indian tax on that income), and net payable to India.
Step 6: File Form 67 Before Your ITR
To actually claim FTC in your ITR, you must file Form 67 on the Income Tax e-filing portal BEFORE you file your ITR. Form 67 details the foreign income and foreign tax paid. Missing this step means your FTC claim can be rejected even if the calculation is correct.

New Regime Tax Slabs FY 2025–26 (AY 2026–27)

Income Range	Tax Rate
₹0 - ₹4,00,000	0% (Nil)
₹4,00,001 - ₹8,00,000	5%
₹8,00,001 - ₹12,00,000	10%
₹12,00,001 - ₹16,00,000	15%
₹16,00,001 - ₹20,00,000	20%
₹20,00,001 - ₹24,00,000	25%
Above ₹24,00,001	30%

Surcharge & Health & Education Cess (New Regime)

Surcharge Slabs (New Regime)

Up to ₹50,00,000: Nil (no surcharge) | ₹50,00,001 – ₹1,00,00,000: 10% on tax | ₹1,00,00,001 – ₹2,00,00,000: 15% on tax | Above ₹2,00,00,000: 25% on tax (maximum under New Regime)

Health & Education Cess

4% on (Income Tax + Surcharge) for ALL taxpayers at ALL income levels. There is no threshold for cess — it applies from the first rupee of tax liability.

Section 90 vs Section 91 — Which Relief Applies to You?

Section 90 — Bilateral Relief (DTAA Countries)

Section 91 — Unilateral Relief (No DTAA)

NRI — Any Country

Not applicable. Under Section 5(2), NRIs owe ₹0 Indian tax on foreign interest regardless of the country, the amount, or any foreign taxes paid.

How to Convert Foreign Interest to INR — Rule 115

Real-Life Situations

1. Retired Resident in the UK with a Savings Account

2. Software Engineer with a US Bank Account

3. Multi-Country Interest Portfolio (UK, Singapore, Australia)

4. Senior Citizen (60+) with International Investments

5. Business Owner with Foreign Subsidiary Accounts

Common Mistakes to Avoid

Legal Basis & Official Statutory References

Section 5(1) — Income Tax Act, 1961

Section 5(2) — Income Tax Act, 1961

Section 87A — Tax Rebate (Finance Act 2025)

Section 90 — Bilateral Relief (DTAA Countries)

Section 91 — Unilateral Relief (No DTAA)

Rule 115 — Income Tax Rules, 1962 (Currency Conversion)

Rule 128 — Income Tax Rules, 1962 (Foreign Tax Credit Procedure)

Finance Act, 2025 — New Regime Tax Slabs & Key Changes

Section 115BAC — New Tax Regime

Section 115A — NOT Applicable to Foreign Bank Interest

Verified Accuracy — 14 Test Cases Passed

14/14

Test Cases Passed

Jan 2026

Last Verified

100%

Accuracy Rate

Test Case Coverage — Verified Against Finance Act 2025

All 14 test cases verified against CBDT guidelines and Finance Act 2025 provisions. Last verification: January 2026.

TC1 — Resident, ₹50,000 interest, ₹10,000 foreign tax

Net payable: ₹0. Reason: Income ₹50,000 is below the ₹4,00,000 basic exemption slab — slab tax = ₹0. FTC does not apply (there is no Indian tax to offset).

TC2 — Resident, ₹5,00,000 interest, ₹50,000 foreign tax

Net payable: ₹0. Reason: Slab tax = ₹5,000. Section 87A rebate = ₹5,000 (income ₹5L ≤ ₹12L). Tax after rebate = ₹0. FTC is irrelevant — there is no Indian tax liability.

TC3 — Resident, ₹25,00,000 interest, ₹2,50,000 foreign tax

TC4 — Resident, ₹1,00,000 interest, no foreign tax

Net payable: ₹0. Income ₹1,00,000 is below the ₹4,00,000 basic exemption slab — slab tax = ₹0.

TC5 — Resident, ₹10,00,000 interest, ₹50,000 foreign tax

Net payable: ₹0. Slab tax = ₹40,000. Section 87A rebate = ₹40,000 (income ₹10L ≤ ₹12L). Tax after rebate = ₹0. FTC is irrelevant — Indian tax is nil after rebate.

TC6 — Resident, ₹50,00,000 interest, ₹2,50,000 foreign tax

TC7 — Resident, ₹1,50,00,000 interest, ₹5,00,000 foreign tax

Net payable: ₹43,79,680. Slab tax = ₹40,80,000. 15% surcharge = ₹6,12,000 (income > ₹1Cr). Cess 4% = ₹1,87,680. Gross Indian tax = ₹48,79,680. FTC = ₹5,00,000. Net = ₹43,79,680.

TC8 — NRI, ₹50,000 foreign bank interest, any foreign tax

Indian tax: ₹0. NRI foreign bank interest is not taxable in India under Section 5(2). The source is foreign — it neither accrues nor arises in India.

TC9 — NRI, ₹10,00,000 foreign bank interest, ₹50,000 foreign tax

Indian tax: ₹0. NRI foreign bank interest is not taxable in India under Section 5(2). No Indian tax liability regardless of amount or foreign taxes paid.

TC10 — NRI, ₹1,00,00,000 foreign bank interest, ₹10,00,000 foreign tax

Indian tax: ₹0. NRI foreign bank interest is not taxable in India under Section 5(2). No Indian tax liability regardless of amount or foreign taxes paid.

TC11 — Resident, ₹4,00,000 interest (slab boundary), no foreign tax

Net payable: ₹0. Income = ₹4,00,000 = exactly the top of the 0% slab. Slab tax = ₹0.

TC12 — Resident, ₹4,00,001 interest (₹4L + ₹1), no foreign tax

Net payable: ₹0. Slab tax = ₹0.05 (₹1 × 5%). Section 87A rebate applies (income ₹4,00,001 ≤ ₹12L) — rebate = ₹0.05. Tax after rebate = ₹0.

TC13 — Resident, ₹12,00,000 interest, no foreign tax

TC14 — Resident, ₹20,00,000 interest, ₹3,00,000 foreign tax (FTC cap test)

What This Calculator Gives You

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Frequently Asked Questions

Do NRIs pay Indian tax on foreign bank interest?

What is the difference between Resident and NRI taxation on foreign interest?

How is the Foreign Tax Credit (FTC) calculated?

Which exchange rate should I use to convert foreign interest to INR?

What are the FY 2025–26 tax slabs for foreign interest income for residents?

Does the Section 87A rebate apply to foreign bank interest income?

Do I need to report foreign interest in my ITR even if I paid tax abroad?

What is the difference between TDS and total foreign tax paid?

When does surcharge apply on foreign interest income?

Accuracy, Expert Review & Official Sources

Built on official standards and verified by certified professionals

Last Updated: 6 April 2026

Developed By

Toolisky Team

Specialized in financial tools, calculation precision, and policy compliance.

Expert Reviewed

Content Accuracy & Standards Reviewer

Calculations verified against official guidelines and industry regulations.

Official References

This Foreign Interest Tax Calculator India FY 2025-26 — Free is built on official guidelines and verifiable sources:

Official Source Reference↗

Primary source used for validating logic and accuracy standards.

Accuracy Disclaimer & Professional Consultation

Key Limitations:

• Does not constitute professional or legal advice
• Individual situations are unique and may require specific adjustments
• Changes in official policies may affect accuracy of results
• Additional factors not captured here may apply to your specific case

Always consult a qualified professional before making critical decisions based on these results.

Privacy & Data Security

All calculations are performed locally in your browser. No data is sent to servers or stored. Your information remains completely private.

Meet the Toolisky Team

Specialists dedicated to making tools and calculators accessible for everyone

Keshav Wadwale

Founder & Developer

View Profile

Anita Patil

Tax Planner & Calculation Advisor

View Profile

Viraj Mathpati

Legal Advisor & Senior Content Writer

View Profile

Madhav Wadwale

Content Writer

View Profile

Foreign Interest Tax Calculator India FY 2025-26 — Free

Foreign Interest Tax Calculator India FY 2025-26 — Free

Free foreign interest income tax calculator India FY 2025-26. Calculate tax on overseas bank interest, bonds & deposits. Covers Sec 5(1) & FTC under Sec 91.

What Is This Calculator?

Why Is This So Confusing?

How the Interest Income Tax Calculation Works

Step-by-Step Guide to Using This Calculator

New Regime Tax Slabs FY 2025–26 (AY 2026–27)

Surcharge &amp; Health &amp; Education Cess (New Regime)

Surcharge Slabs (New Regime)

Health &amp; Education Cess

Section 90 vs Section 91 — Which Relief Applies to You?

Section 90 — Bilateral Relief (DTAA Countries)

Section 91 — Unilateral Relief (No DTAA)

NRI — Any Country

How to Convert Foreign Interest to INR — Rule 115

Real-Life Situations

1. Retired Resident in the UK with a Savings Account

2. Software Engineer with a US Bank Account

3. Multi-Country Interest Portfolio (UK, Singapore, Australia)

4. Senior Citizen (60+) with International Investments

5. Business Owner with Foreign Subsidiary Accounts

Common Mistakes to Avoid

Legal Basis &amp; Official Statutory References

Section 5(1) — Income Tax Act, 1961

Section 5(2) — Income Tax Act, 1961

Section 87A — Tax Rebate (Finance Act 2025)

Section 90 — Bilateral Relief (DTAA Countries)

Section 91 — Unilateral Relief (No DTAA)

Rule 115 — Income Tax Rules, 1962 (Currency Conversion)

Rule 128 — Income Tax Rules, 1962 (Foreign Tax Credit Procedure)

Finance Act, 2025 — New Regime Tax Slabs &amp; Key Changes

Section 115BAC — New Tax Regime

Section 115A — NOT Applicable to Foreign Bank Interest

Verified Accuracy — 14 Test Cases Passed

Test Case Coverage — Verified Against Finance Act 2025

TC1 — Resident, ₹50,000 interest, ₹10,000 foreign tax

TC2 — Resident, ₹5,00,000 interest, ₹50,000 foreign tax

TC3 — Resident, ₹25,00,000 interest, ₹2,50,000 foreign tax

TC4 — Resident, ₹1,00,000 interest, no foreign tax

TC5 — Resident, ₹10,00,000 interest, ₹50,000 foreign tax

TC6 — Resident, ₹50,00,000 interest, ₹2,50,000 foreign tax

TC7 — Resident, ₹1,50,00,000 interest, ₹5,00,000 foreign tax

TC8 — NRI, ₹50,000 foreign bank interest, any foreign tax

TC9 — NRI, ₹10,00,000 foreign bank interest, ₹50,000 foreign tax

TC10 — NRI, ₹1,00,00,000 foreign bank interest, ₹10,00,000 foreign tax

TC11 — Resident, ₹4,00,000 interest (slab boundary), no foreign tax

TC12 — Resident, ₹4,00,001 interest (₹4L + ₹1), no foreign tax

TC13 — Resident, ₹12,00,000 interest, no foreign tax

TC14 — Resident, ₹20,00,000 interest, ₹3,00,000 foreign tax (FTC cap test)

What This Calculator Gives You

Related Tools &amp; Resources

Interest Income Tax Calculator (India)

Foreign Dividend Tax Calculator

Payments from Abroad Tax Calculator

Old vs New Tax Regime Calculator

Capital Gains Tax Calculator India

Section 87A Marginal Relief Calculator

Frequently Asked Questions

Accuracy, Expert Review & Official Sources

Developed By

Expert Reviewed

Official References

Accuracy Disclaimer & Professional Consultation

Privacy & Data Security

Meet the Toolisky Team

Keshav Wadwale

Anita Patil

Viraj Mathpati

Madhav Wadwale

Free foreign interest income tax calculator India FY 2025-26. Calculate tax on overseas bank interest, bonds & deposits. Covers Sec 5(1) & FTC under Sec 91.

What Is This Calculator?

Why Is This So Confusing?

How the Interest Income Tax Calculation Works

Step-by-Step Guide to Using This Calculator

New Regime Tax Slabs FY 2025–26 (AY 2026–27)

Surcharge &amp; Health &amp; Education Cess (New Regime)

Surcharge Slabs (New Regime)

Health &amp; Education Cess

Section 90 vs Section 91 — Which Relief Applies to You?

Surcharge & Health & Education Cess (New Regime)

Health & Education Cess

Legal Basis & Official Statutory References

Finance Act, 2025 — New Regime Tax Slabs & Key Changes

Related Tools & Resources

Surcharge & Health & Education Cess (New Regime)

Health & Education Cess

Legal Basis & Official Statutory References

Finance Act, 2025 — New Regime Tax Slabs & Key Changes

Related Tools & Resources