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Form 67: How Indian residents claim foreign tax credit
Indian residents who paid tax abroad can claim Foreign Tax Credit via Form 67. Step-by-step guide to avoid double taxation on foreign income.
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If you are an Indian resident who has already paid tax on income earned outside India, you may not have to pay tax on the same income twice.
The Income Tax Department allows eligible resident taxpayers to claim a Foreign Tax Credit (FTC) by filing Form 67 along with the supporting documents.
A foreign tax credit lets Indian residents reduce their tax liability in India by claiming credit for taxes already paid in another country on the same income. The provision is governed by Rule 128 of the Income Tax Rules, 1962.
Suppose Mahesh, an Indian resident, earns ₹2 lakh as freelance income from a client in the US. The US deducts ₹20,000 as tax before making the payment.
Since Mahesh must also report this income in his Indian income tax return, and his tax liability in India on the same income is ₹30,000, he can claim a foreign tax credit of ₹20,000 by filing Form 67.
As a result, he will only need to pay the remaining ₹10,000 in India, avoiding double taxation on the same income.
Step 1: Sign in to the e-filing portal using your login credentials.
Step 2: From the dashboard, navigate to e-file, then select 'File Income Tax Forms.'
Step 3: Select or type Form 67 in the search bar and open the form.
Step 4: Select the applicable Assessment Year.