Home > Income Tax > NRI Tax Help Center > Foreign Tax Credit Last Updated: Dec 07th 2023
Getting Foreign Tax Credit & How to submit Form 67 Online?
Form 67 is mandatory to file before claiming Foreign Tax Credit (FTC) while filing as a resident Indian (ROR) or under RNOR period. As there are high stakes in this area, it's important every taxpayer who wish to claim FTC should know the process and caveats.
This document covers Background, Double Taxation, Foreign Tax Credit, Form 67, Note on ITAT ruling, Preparation and submission of Form 67
This document covers
1. Background
The effect of taxation is one of the important considerations for any trade and investment decision in other countries. One of the most significant results of globalization is the visible impact of one country’s domestic tax policies in the economy of another country. This has led to the need for continuously assessing the tax regimes of various countries and bringing about necessary reforms.
2. Double Taxation
The tax payer resident in one country may have source of income situated in another country. It gives rise to double taxation. This arises from the two basic rules that enables the country of residence as well as the country where the source of income exists. The two rules are as follows
- 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 resident to non-resident
- Residence Rule: This rule holds that the power to tax should rest with the country of residence.
There will be double taxation if the both rules apply simultaneously to an assessee. Double taxation means taxing the same income twice in the hands of assessee. To take care of these situations, the Income Tax Act, 1961 has provided for double taxation relief.
3. Foreign Tax Credit
The resident assessee shall be allowed a credit for 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.
4. Form 67
Form 67 is a statement or form required to be submitted by the tax payer to claim foreign tax credit. All assessee’s who wants to take the credit of foreign tax paid in other country are required to prepare and submit form 67 online along with income tax return.
Form 67 must be submitted before e-filing your ITR with the Foreign Tax Credit (FTC).
While there are tribunal rulings (such as Brinda RamaKrishna v. ITO [TS-1059-ITAT-2021 (Bangalore)]), stating that the delay in filing Form 67 should not be the reason to deny / disallow FTC. Filing Form 67 is mainly a directive.
It's important to note that it's just a ruling, not everyone can afford to go thru ITAT and / or convincing a ITO using tribunal rulings. Hence EZTax advise taxpayers to file Form 67 before eFiling the ITR.
5. Preparation and submission of Form 67
Form 67 shall be available to all the assessee’s login. The assessee is required to login to the income tax e filing portal using their valid credentials. The tax payers need to login to the portal and go to e file > Income Tax Forms. The tax payers need to enter the required details and submit the form with EVC or Digital Signature. Submission of form 67shall precede filing Income Tax Return.