How to Claim Foreign Tax Credit Using Form 67
- The mandatory filing deadline for Form 67 under amended Rule 128.
- How to calculate Foreign Tax Credit limits across different Double Tax Avoidance Agreements (DTAA).
- Essential foreign tax documentation required by the Income Tax Department.
When you invoice US or European clients for weekend engineering consulting, foreign platforms often withhold local taxes (such as 30% US withholding under Chapter 3 of the IRC without a Form W-8BEN, or standard treaty-reduced rates of 15%). You do not have to absorb this double taxation as a business loss. Under Section 90 and Section 91 of the Income-tax Act, 1961, you can offset these foreign deductions against your Indian tax liability using Foreign Tax Credit (FTC).
Foreign Tax Relief Snapshot
| Component | Requirement | Key Rule / Provision |
|---|---|---|
| Statutory Form | Form 67 (Filed online) | Rule 128(8) |
| Filing Cutoff | End of relevant Assessment Year | CBDT Notification No. 100/2022 |
| Credit Cap | Lower of Indian tax or foreign tax paid | Rule 128(3) |
The Rule 128 Filing Mechanism
To claim relief, you must furnish Form 67 electronically on the Income Tax e-filing portal before filing your return. The credit is calculated country-by-country and cannot exceed the Indian rate of tax on that specific foreign income stream.
Following procedural relaxations under Rule 128, Form 67 can be submitted on or before the end of the assessment year, provided your return of income for that year is filed within the time specified under Section 139(1) or Section 139(4).
Critical Supporting Documentation
Your Form 67 submission must be accompanied by explicit proof of foreign tax payment. Self-declarations alone are insufficient if your case is selected for scrutiny.
If you earn side consulting revenue subject to 15% foreign withholding but fall into the 30% domestic tax slab on your salaried income, Form 67 ensures you only pay the 15% delta in India rather than doubling your overall tax burden.
This post is general information only and does not constitute tax, financial, or investment advice. Consult a qualified professional for your specific situation.
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