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.