Introduction:

Section 295(2) (ha) of the Income Tax Act, 1961 provides that the CBDT (Board) may make Rules for the procedure for granting of relief or deduction, as the case may be, of any income tax paid in any country or specified territory outside India, under Section 90 or Section 90A or Section 91, against Income – tax payable under the said Act.

Foreign Tax:

In respect of a country or specified territory outside India with which India has entered into an agreement for the relief or avoidance of double taxation of income under Section 90 &  Section 90A.

In respect of any other country or specified territory outside India, the tax payable under the law force in that country in the nature of Income-tax as provided in Explanation to Section 91.

Relevant Rule: 

Rule 128 of the Income Tax (18th Amendment) Rules, 2016:

An assessee, being a resident shall be allowed a credit for the amount of any foreign tax paid by him in a country or specified territory outside India, by way of deduction or otherwise, in the year in which the income corresponding to such tax has been offered to tax in India.

Availability of Credit:

The credit shall be available against the amount of tax, surcharge and cess payable under the Income Tax Act but not in respect of any sum payable by way of interest, fees or penalty.

Disputed Income:

No credit shall be available in respect of any amount of foreign tax which is under dispute in any manner. However, the credit will be allowed within six months from the end of the month in which dispute are finally settled.

Computation:

The credit of foreign tax shall be the aggregate of the amount credit computed separately for each source of income arising from a particular county or specified territory outside India.

Further,

  1. The Credit shall be the lower of the tax payable under the Income Tax Act 1961 &
  2. Same will be determined by conversion of the currency of payment of foreign tax at the telegraphic transfer buying rate on the last day of month immediately preceding month in which such tax has been paid.

Requisite Documents:

  1. A statement of Income from the country or specified territory outside India in Form 67,;
  2. Certificate or statement specifying the nature of income and the amount of tax deducted or paid by the assessee – from the concerned tax authority of the country or specified territory or from the  person responsible for deduction

The Statement in Form 67 and the certificate shall be furnished on or before the due date specified for furnishing the return of income.

Latest Development

Online submission of Form 67

All assessee’s who are required to file return of income electronically under Section 139(1) r.w.r Rule 12(3) of the Income Tax Rules, 1962, are required to prepare and submit Form 67 online along with the Return of Income if the Credit for the amount of any foreign tax credit paid by the assessee in a country or specified territory outside India.

Form 67 shall be available to all the assessee’s login. The assessees required to login into the e-filing portal using their valid credentials.

Further, Form 67 shall be submitted before filing of Return of Income.

Title Notification No. Date
Procedure for filing Statement of income from a country or specified territory outside India and Foreign Tax Credit Notification No. 9 19/09/2017

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One response to “Foreign Tax Credit: Online submission of Form 67 and other changes”

  1. B Vijaya says:

    Very good information, thank you Sir

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