/ DTAA

Form No.67 not compulsory but directory requirement for FTC

How to claim Foreign Tax Credit Claim.

What is the meaning of a foreign tax credit?

  • A foreign tax credit is a relief mechanism that allows Indian resident taxpayers to claim credit for income taxes paid in a foreign country on income that is also taxable in India, thereby preventing double taxation.
  • A foreign tax credit can be claimed under Section 90 of the Income Tax Act where India has a Double Taxation Avoidance Agreement with the foreign country. and Section 91 where no DTAA exists, providing unilateral tax relief.
  • To claim the Foreign Tax Credit, taxpayers must pay foreign income tax on income that is also taxable in India; file Form 67; and disclose the income in Schedule FSI and the tax relief in Schedule TR of the Income Tax Return and maintain supporting documents such as foreign tax certificates, withholding statements, invoices, bank statements, and proof of tax payment.
  • The amount of foreign tax credit is restricted to the lower of foreign tax paid or Indian tax payable on the same income. Only foreign income taxes qualify for a foreign tax credit. Taxes such as VAT, GST, sales tax, penalties, interest, social security contributions, and platform fees are not eligible. Proper documentation, timely filing of Form 67, and accurate reporting in the income tax return help taxpayers lawfully claim a foreign tax credit and avoid double taxation on foreign-source income.

Form 67 for Claiming Foreign Tax Credit 

  • Form 67 is a prescribed form under Rule 128 of the Income Tax Rules, 1962, which enables a resident taxpayer to claim a foreign tax credit for taxes paid outside India on income that is also taxable in India. The form must be filed electronically through the Income Tax e-Filing portal.
  • A resident taxpayer earning foreign income and paying tax abroad can claim foreign tax credit by furnishing Form 67 along with supporting documents such as proof of foreign tax payment or deduction. The form contains details of foreign income, taxes paid overseas, disputed foreign taxes, and any foreign tax refunds arising due to loss carry-back provisions.
  • To file Form 67, the taxpayer must be registered on the Income Tax e-Filing portal, have an active PAN, and preferably have PAN linked with Aadhaar. The form consists of Part A (taxpayer and foreign income details), Part B (foreign tax refund and disputed tax details), verification, and attachments.
  • Form 67 can be filed only online by selecting the relevant assessment year, entering the required information, uploading supporting documents, and completing e-verification. Upon successful submission, the taxpayer receives an acknowledgement number and transaction ID for future reference.

Important point to be consider while considering Foreign Tax Credit 

  • If foreign tax is deducted on your overseas income, you can avoid double taxation by claiming a foreign tax credit via filling Form 67, along with Schedule FSI and Schedule TR in your income tax return.
  • Form 67 is required only when claiming a foreign tax credit for foreign taxes paid. If no foreign tax was deducted, simply report the foreign income in your income tax return and pay tax in India.
  • Income tax Form 67 should be filed before or along with the income tax return, including belated returns, to properly claim foreign tax credit.
  • Even if India does not have a DTAA with the foreign country, relief may still be available under Section 91 of the Income-tax Act.
  • Foreign taxes should generally be converted into INR using the prescribed TT Buying Rate as per applicable tax rules.
  • Platform charges, PayPal fees, Upwork fees, and similar deductions are business expenses, not foreign taxes, and therefore do not qualify for a foreign tax credit.

Form 67 User Manual 

  • If Form 67 is missed when filing the original return, taxpayers should file it promptly and submit a revised return, subject to applicable deadlines.
  • Valid documentation is essential for foreign tax credit claims, including foreign tax withholding certificates (such as Form 1042-S), invoices, contracts, bank statements, e-FIRAs, proof of foreign tax payment, Form 67 acknowledgement, and Income tax schedules.
  • Taxpayers using presumptive taxation schemes (Sections 44AD/44ADA) may still claim a foreign tax credit although the calculation and allocation of tax relief can be more complex.
  • To reduce future foreign withholding taxes, taxpayers can utilize treaty benefits where available by furnishing documents such as Form W-8BEN, Tax Residency Certificate (TRC), and Form 10F.
  • Foreign accounts and assets may need to be reported in Schedule FA, depending on the nature of the account and whether foreign balances are maintained.
  • Proper records should be preserved for several years to support a foreign tax credit claims and respond to any future tax scrutiny.

Form No.67 is not compulsory but a directory requirement.

Form No. 67 is not compulsory but a directory requirement. Disallowance of foreign tax credit due to delay in filing the same is not valid: ITAT

  • Income tax Form No. 67 is not Compulsory However, as a directory requirement, the Income Tax Appellate Tribunal Bangalore Bench has held that income tax disallowance of foreign tax credit due to delay in filling of form 67 is not valid. Shri Y. Sridhar, Chartered Accountants, appeared for the income tax assessee & K. Sankar Ganesh appeared for the revenue.
  • The income tax assessee filed the income tax return on 24-07-2017 admitting an income of INR 69.22,004/- which included income from other sources of Rs.6,96,084. The income from other sources included dividend income of INR 4,77,500/-  received from a Danish company. On this dividend received from Denmark, TDS of INR 1,28.925/- was deducted @ 27%.
  • Appellant, at a later stage filed income tax Form No. 67 on 08-02-2020 & made a rectification application on 29-05-2020 before the Income Tax Dept. Centralized Processing Centre, Bangalore, for giving credit to the Taxes deducted outside India. The Income Tax Dept Centralized Processing Centre rejected the claim through order stating that fresh claims of relief were being sought in the rectification application & which is not a mistake apparent from the records.
  • On appeal, the National Faceless Assessment Centre denied Foreign Tax Credit  available to the Assessee merely because there was a delay in filling Income tax  Form 67 as it was filed after the deadline date for submission original return of income specified U/s 139(1) of the Act.
  • it was observed that income atx Rule 128(9) of the Rules does not provide for Foreign Tax Credit disallowance of in case of delay in submissions income tax Form No. 67, and filing of income tax Form No. 67 is not compulsory however a directory requirement.

Foreign-Tax-Credit

The Income Tax Appellate Tribunal Bangalore Bench decided that following an appeal

A foreign tax credit is not disallowed under Rule 128(9) of the ITR if Form No. 67 is filed late;

  • In addition, the Double Taxation Avoidance Agreement (DTAA) supersedes the Income Tax Act (ITA) to the degree that it is in the taxpayer’s best interest, and Form No. 67 submission is merely a directory requirement rather than a requirement in itself. Considering that the DTAA has no clause allowing the a foreign tax credit to be denied due to a procedural rule’s non-compliance.
  • For simply being late in compliance with a procedural obligation, the same cannot be denied. Consequently, despite the delayed furnishing of Form No. 67, the Tribunal accepted the a foreign tax credit claim.
  • Income Tax Appellate Tribunal bench that non-submission of Income tax Form No.67 before due date under section 139(1) of the Income Tax Act is not fatal to the claim for Foreign Tax Credit.
  • By following the case of Sanjay Patil Vs Assessing Officer Order dated, the Income Tax Appellate Tribunal held that the assessee is entitled to a foreign tax credit & the assessing officer is directed to allow the claim.

Latest Update on Form 67 / Form 44 for Foreign Tax Credit

Under the Income-tax Act, 2025, Form 67 has been redesignated as Form 44 for claiming Foreign Tax Credit (FTC). Despite the change in form number, its core purpose remains the same—reporting foreign income and foreign taxes paid to claim relief from double taxation in India.

For AY 2026-27 (FY 2025-26), taxpayers should continue using Form 67. The transition to Form 44 will apply under the new tax framework for subsequent years as prescribed under the revised law. Foreign Tax Credit can be claimed: Under Section 90, where India has a Double Taxation Avoidance Agreement with the foreign country. and U/s 91, where no DTAA exists, allowing unilateral tax relief.

Taxpayers are generally permitted to file the prescribed FTC form up to the end of the relevant assessment year, subject to the applicable provisions governing return filing and foreign tax credit claims. To avail FTC, taxpayers must disclose:

  • File Foreign income in Schedule FSI (Foreign Source Income),
  • You can claim Foreign tax relief in Schedule TR (Tax Relief).
  • Along with filing the prescribed FTC form and supporting documentation.

In Summary of this blog 

  • Foreign Tax Credit enables Indian resident taxpayers to claim relief for taxes paid on foreign income by adjusting such taxes against their Indian tax liability on the same income through Form 67.
  • To claim Foreign Tax Credit, taxpayers should submit Form 67 before or at the time of filing their Income Tax Return and ensure that the details are correctly reported in Schedule FSI (Foreign Source Income) and Schedule TR (Tax Relief).
  • Foreign Tax Credit is available only for foreign income taxes paid or withheld. It cannot be claimed for indirect taxes, penalties, interest, social security contributions, platform charges, VAT, or GST.
  • The amount of credit admissible is restricted to the lower of the foreign tax paid and the Indian tax payable on the corresponding income. The assessee is entitled to a foreign tax credit & the assessing officer is directed to allow the claim.
  • Taxpayers should preserve supporting records such as invoices, e-FIRA, foreign tax withholding certificates (e.g., Form 1042-S), bank statements, and foreign exchange conversion records for a minimum period of six years to substantiate the claim.
  • Although Form 67 is being replaced by Form 44 under the new income tax framework, its purpose continues to remain the same—to allow resident taxpayers to claim credit for taxes paid in foreign countries and avoid double taxation on the same income. Proper disclosure of foreign-source income, taxes paid overseas, and timely submission of the prescribed form are crucial for availing Foreign Tax Credit.

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