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Section 90 and Section 91 of the Income
Tax Act,1961 defines Foreign Tax Credit. Section 90 of the Income Tax Act, 1961
includes a tax credit for countries in which India has entered into a Double
Tax Avoidance Agreement and Section 91 deals with a tax credit for countries
where DTAA is not applicable or not in force.
Country A (Residence State) –A Tax
Resident of Country A – Recipient of Income
Country B (Source State) – which holds
the portion of taxes deducted from the person who has received income in the
Further Residence state will deduct taxes on the income received by the taxpayer. In such a case tax resident’s income will be taxable twice in the residence state and source state. So, this address this issue Foreign Tax Credit was introduced.
Foreign Tax Credit was introduced to claim deduction or credit of taxes paid in Source State against liability in Residence State.
Read our article:All Types of Income Tax Return Filing In India
Table of Contents
As per the tax laws of India Section 90 and 91 were introduced. As explained above Section 90 of the Income Tax Act, 1961 includes a tax credit for countries in which India has entered into a Double Tax Avoidance Agreement and Section 91 deals with a tax credit for countries where DTAA is not applicable or not in force.
Further Rules for claiming Foreign Tax
Credit (FTC) has been notified under Rule 128 w.e.f. 01/04/2017 which will help
to clear out the ambiguity in case of claiming FTC:
As per Rule 128, the following documents are required for filing FTC on or before the due date of filing the return:
A Statement of Foreign income offered to
tax or foreign tax deducted or paid on such income in Form No. 67
2. Proof of taxes paid outside India.
Form 67 as mentioned above is a document
to be furnished for claiming FTC by a taxpayer. It is very essential to be
furnished on or before the due date of filing return under Section 139(1).
CBDT vide its notification no 9/2017
dated 19th September 2017 which has prescribed the procedure to file
As a taxpayer, you are required to log in to your account at E Filing Portal of the Income Tax Department using login credentials. In the Income-tax for you have to select Form 67. Select the assessment year from the drop-down list provided. On the page, you have to fill in the basic details. You can change or modify things that are required.
After filling the basic information, you
can move to the next tab which required details of income from a country or
specified country and FTC claimed. Lets us explain the points which you have to
After explaining the whole process of Filing Form 67 it is not easy to fill in the details correctly and claim the FTC and file the Form properly. For more information, you can talk to our Tax expert at Enterslice.
Read our article:Double Taxation Avoidance Agreement for NRI
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