A Resident taxpayer (Individual, Companies, Partnership firms, etc.) who have already paid tax in another country on amounts of foreign income and gains, may claim Foreign Tax Credit Relief in India to avoid being taxed twice on the same income.
Foreign Tax Credit Relief is not always available or may not be available on the full amount of foreign tax paid. Such relief is subject to the provisions of the Income-tax Act, 1961 read with Rule 128 of the Income-tax Rules, 1962 and the provisions of the relevant Tax Treaty, if any. The amount of Foreign Tax Credit Relief shall not exceed the Indian tax on the same item of income or gains
For the purpose of claiming Foreign Tax Credit Relief, Form no. 67 was notified on 27 June 2016. This Form is required to be furnished on or before the due date specified for furnishing the return of income by the taxpayer. The taxpayer will be required to attach supporting documents such as certificate specifying the nature of foreign income and the amount of foreign tax deducted therefrom or paid by the taxpayer.
Recently, the Central Board of Direct Taxes (‘CBDT’) vide its notification no. 9/2017, dated 19 September 2017 has prescribed the procedure for filing Form No. 67.
In this newsflash, we have delineated the above notification and also included a flowchart illustrating an overview of the foreign tax credit rules.
We trust you will find this newsflash useful.