Foreign tax paid abroad? NRIs can claim credit by March 31; here’s how to fill Form 67

This credit allows NRIs to offset taxes paid abroad against their Indian tax liability. The last date to claim the FTC is March 31.

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When an Indian resident earns income from another country, that country may deduct tax on that income. Since the person is also liable to pay tax in India, there could be a double tax situation. So, to avoid paying tax twice, the resident can claim a credit for the tax already paid abroad.

Form 67 must be filed before you submit your Income Tax Return (ITR) for the year. The rules for claiming FTC in India are under Rule 128, which clarifies how NRIs or Indian residents can claim credit for taxes paid abroad.

For example, you own Apple shares listed in the US. You get a dividend of $2,000. But the US government takes 25% tax upfront, so only $1,500 lands in your account. Now, since you live in India, the tax law says your worldwide income is taxable here.

That’s when the Double Taxation Avoidance Agreement (DTAA) comes in handy. India lets you claim credit for the tax you already paid in the US, so you don’t end up paying tax twice on the same money.

According to Section 90 of the Income Tax Act, India has a tax treaty with another country called DTAA. So, if you pay tax in a foreign country, you can claim credit for it in India.

In addition to this, Section 91 of the IT Act applies even if India does not have a tax agreement with that country, you can claim credit for taxes you paid abroad.

You can claim FTC in the same year when that income is declared or assessed in India. FTC can be claimed on tax, surcharge, and cess paid abroad but it cannot be claimed on interest, penalties, or fees.

A person is considered a resident in India for a financial year if he/she has stayed for 182 days or more in India in that year or stayed 60 days or more in that year and 365 days or more in the previous four years.

How to fill Form 67

Go to the Income Tax e-filing portal.

Login using your user ID and password.

Click ‘e-File’ on dashboard and select ‘File Income Tax Forms’.

On the next page, select ‘Persons not dependent on any Source of income’.

Proceed to the next subpage, and click on ‘File Now’ next to ‘Double Taxation Relief (Form 67)’.

Click on the ‘Assessment Year’, the instruction page will appear.

Form 67 will appear. Fill the required details and click Preview.

Upload all the documents and proof of tax.

After that, click on e-verify page.

Once successful, a message will displayed along with a transaction ID and acknowledgment number.