Claiming Foreign Tax Credit:
A Practical Guide to Form 67
Mittal & Company · Chartered Accountants
If you’re a resident Indian taxpayer earning income abroad — consulting fees, dividends, royalties, salary, or capital gains — you may already be paying tax on that income twice: once in the source country, and again in India when you file your return. The good news is that this double taxation is entirely avoidable. Form 67 is the mechanism that lets you claim credit in India for the tax you’ve already paid overseas, and once you understand the process, it’s a straightforward compliance step rather than a complicated one.
Here’s everything you need to know to claim your Foreign Tax Credit (FTC) correctly and on time.
What Form 67 Does
When you earn foreign income, the source country typically withholds or collects tax on it. India, however, taxes its residents on their global income — so without relief, the same income gets taxed twice. Form 67 is the online statement you file with the Income Tax Department to claim credit for that foreign tax, under Section 90 (where India has a Double Taxation Avoidance Agreement, or DTAA, with the country) or Section 91 (where no treaty exists).
Rule 128 of the Income-tax Rules, 1962 governs the credit itself — how much you
can claim and under what conditions. Form 67 is simply how you report it.
Who Should File It
Form 67 applies to resident taxpayers — individuals, companies, or any assessee who is a resident of India for the relevant year and has paid or had
tax deducted on income earned outside the country. If you’re a non-resident, this form isn’t for you; FTC relief under Form 67 is specifically for residents being taxed on global income.
You’ll also need to file Form 67 in the reverse scenario: if a loss carried back in a foreign jurisdiction results in a refund of tax you’d previously claimed credit for, that adjustment gets reported here too.
How the Credit Is Calculated
The FTC you’re entitled to is the lower of:
- The Indian tax payable on that same foreign income, or
- The actual foreign tax paid or deducted, converted to rupees using the SBI Telegraphic Transfer Buying Rate (TTBR).
A couple of practical points worth keeping in mind:A couple of practical points worth keeping in mind:
- Any foreign tax paid in excess of what the applicable DTAA allows is simply ignored for credit purposes.
- Credit generally cannot be claimed against interest, fees, or penalties under the Income-tax Act — only against the tax itself.
- Foreign tax that is currently under dispute abroad usually cannot be claimed as credit until the dispute is resolved.
Documents to Keep Ready
Before you sit down to file, gather:
- PAN and Aadhaar (linked, since this is a prerequisite for e-filing)
- Details of the foreign income earned and the country it arose in
- Proof of tax paid or deducted abroad — a foreign tax certificate, TDS certificate, or payment challan
- Computation showing how the credit has been worked out
- Return of income filed (or to be filed) in the foreign country, if available
Filing Process, Step by Step
- Log in to the Income Tax e-filing portal with your registered credentials.
- Navigate to the statutory forms section and select Form 67 for the relevant assessment year.
- Complete Part A — your basic details (name, PAN, address, assessment year) along with particulars of the foreign income and tax paid.
- Complete Part B, if applicable — details relating to any refund of foreign tax linked to a credit claimed in an earlier year.
- Upload your supporting documents — the foreign tax certificate or proof of deduction.
- E-verify the form using your preferred method (Aadhaar OTP, net banking, DSC, etc.).
- Make sure the figures in Form 67 match Schedule FSI and Schedule TR in your income tax return — mismatches here are one of the most common reasons credits get questioned during processing.
The Deadline Is the Part That Trips People Up
This is worth repeating because it’s where most taxpayers lose the credit — not through a calculation error, but through timing. Form 67 must be filed on or before the end of the relevant assessment year, and before you file your original return under Section 139(1) or a belated return under Section 139(4). For AY 2026-27, that means Form 67 needs to be filed by 31st December 2026.
Filing your ITR and simply reporting the foreign income in Schedule FSI is not enough on its own — the return and Form 67 work together, and skipping Form 67 (or filing it late) is the single most avoidable reason credits get denied. If you’ve missed the deadline before, note that several appellate tribunals have taken a taxpayer-friendly view and treated the filing requirement as directory rather than mandatory — but it’s far simpler to just file on time than to rely on that relief.
A Change on the Horizon: Form 44
Worth flagging early so it doesn’t catch you off guard: under the Income-tax Act, 2025 (effective 1 April 2026), Form 67 is being renumbered as Form 44. Rule 128 continues to govern eligibility and quantum — only the form number and portal label change. For income earned up to FY 2025-26 (AY 2026-27), you’ll continue to use Form 67 as usual. Form 44 is expected to apply to income earned from FY 2026-27 onwards.
One proposed change worth watching: a chartered accountant’s certificate may become mandatory for all companies claiming FTC, and for individuals where foreign tax paid is ₹1 lakh or more. This is still at the draft-notification stage as of now, so treat it as a likely direction rather than a confirmed rule, and check in with your CA closer to the transition.
The Takeaway
Claiming Foreign Tax Credit isn’t complicated once you know the sequence: calculate the credit correctly, gather your proof of foreign tax paid, file Form 67 well before the deadline, and make sure your ITR schedules line up with what you’ve reported. Get the timing right, and there’s no reason you should ever pay tax twice on the same income.
Disclaimer
This article is for general informational purposes only and does not constitute tax or legal advice. Rules under the Income-tax Act, 1961, the Income-tax Act, 2025, and related Rules are subject to change, and their application depends on each taxpayer’s specific facts and circumstances. Please consult a qualified tax professional before making any filing decisions.