For companies and other business entities having cross-border transactions, wherein they are eligible to claim credit of foreign tax against their taxable income in India, there did not exist a mechanism for availment of such credit. Towards this, the Finance Act 2015 made an amendment wherein the CBDT was empowered to notify rules pertaining to Foreign Tax Credit (FTC).
The CBDT thereafter constituted a committee, which submitted its report to the CBDT on the methodology for granting foreign tax credit. Taking into account, the report of the Committee and the provisions of the Income Tax Act, the draft rules for grant of FTC are released by the CBDT for comments.
In this newsflash, we have provided an overview of the draft Foreign Tax Credit rules for your ready reference.