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Form 67 : Claiming Foreign Tax Credit

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Divya Singhvi

Form 67
Income Tax
Income Tax for NRI

The taxpayer resident in one country may have a source of income situated in another country. This gives rise to double taxation. The Income Tax act itself offers certain provisions to give relief to an individual whose income is likely to be taxed twice. This relief measure lies in a Double Taxation Avoidance Agreement (DTAA) i.e a tax treaty that India signs with another country. In order to claim the relief, the taxpayer shall file Form 67.

What is Foreign Tax Credit?

If you have paid taxes in one country, you can claim the same as tax credits in the country of your residence when both the countries have DTAA. There are two rules to it which are as follows:

  1. Source Rule: This rule holds that income is to be taxed in the country in which it arises irrespective of whether the income arises to a resident or non-resident.
  2. Residence Rule: This rule holds that the power to tax should rest with the country of residence.

If the both rules apply simultaneously to an assessee there will be double taxation. Double taxation means taxing the same income twice in the hands of assessee.

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CA Assisted Income Tax Return filing for Non-Resident Indian Individuals having taxable income in India.
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Concept of Foreign Tax Credit in India

Sections 90 and 91 of the Income-tax Act deals with the concept of Foreign Tax Credit. These sections allow Indian residents to claim a credit of foreign taxes paid by a taxpayer against their total tax liability in India.

Under these sections, if the taxpayer is a resident of India, and he has paid taxes outside India, he can claim a credit of such foreign taxes paid against his tax payable in India. Rule 128 was introduced to define certain rules and regulations regarding foreign tax credit to remove any ambiguities in this regard. Some of them are as follows:

Documents To Be Furnished For Claiming FTC

An assessee can claim Foreign Tax Credit in accordance with Rule 128, by furnishing the following documents on or before due date of filing of return:

  1. A statement of :
    • foreign income offered to tax
    • foreign tax deducted or paid on such income in Form No. 67
  2. Certificate or statement specifying the nature of income and the tax amount either paid by the taxpayer or deducted from their income :
    • From the tax authority of the foreign country
    • From the person responsible for the deduction of such tax
    • Signed by the taxpayer
  3. Proof of tax payment outside India.

What is Form 67?

An individual taxpayer shall furnish Form 67 in order to claim Foreign Tax Credit. It is also essential to file Form 67 on or before the due date of filing the income tax return u/s 139(1) i.e. the original return of income.

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CA Assisted Income Tax Return filing plan for resident individuals having foreign income.
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ITR for Residents with Foreign Income
CA Assisted Income Tax Return filing plan for resident individuals having foreign income.
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Procedure to File Form 67

The Central Board of Direct Taxes (CBDT), vide notification no. 9/2017 dated 19 September 2017 provides the below mentioned procedure for filing Form 67:

Filling and submission of Form 67

Form 67 shall be available to all the taxpayers’ logins.

  1. Visit Income Tax Portal

    Login using valid credentials on Income Tax Portal.

  2. Navigate to E-file

    Select Income Tax Forms to prepare and submit online forms

  3. Select Form 67 and the AY from the drop down.

    Instruction to fill the form is enclosed along with FormFile form 67

  4. Fill in all the required details

    Enter details of taxes paid outside India.Form 67_Part A

  5. You can submit the completed form 67 by clicking on the ‘submit’ button.

    You can also save the form filled as a draft so that you can make some changes later and then submit it.Form 67_Part B

FAQ

Where can I get Form 67?

Simply visit the official website of income tax department and select the Income Tax Form from E-File section. Search for the respective form in the search engine and then you will be able to download it.

What is a residence and source state?

Residence state is the home country of the taxpayer, while source state is a foreign country where the taxpayer is employed or receives income from.

Can anyone claim Foreign Tax Credit?

Only resident Indians can claim for the tax credits, as long as they have paid taxes in another country.

Is TRC mandatory?

Tax Residency Certificate helps establish which country you are a tax resident of in order to apply the relevant DTAA. And you can avail the benefits stated therein. India has made it mandatory to obtain TRC for a person who wants to avail any DTAA benefits of a treaty that India has entered into with another country.

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