Foreign Tax Credit — Form 67 Filing (Rule 128)

Section 90 — Income-tax Act, 1961 (DTAA countries)
Where India has a Double Taxation Avoidance Agreement with a foreign country, residents can claim relief under Section 90 by crediting the foreign tax paid (at the rate specified in the DTAA, or actual, whichever is lower) against their Indian income tax.

Section 91 — Income-tax Act, 1961 (non-DTAA countries)
Where no DTAA exists, Section 91 provides unilateral relief: the credit is the lower of (a) the Indian rate of tax on the doubly-taxed income or (b) the foreign rate of tax. This applies to income on which tax has been paid in the foreign country.

Rule 128 — Income-tax Rules, 1962 (FTC Rules)
Rule 128, inserted by Income-tax (18th Amendment) Rules, 2016, prescribes the mechanism for claiming FTC:

• Rule 128(1): Credit allowed for foreign tax of the year in which the income is offered to tax in India


• Rule 128(7): FTC cannot exceed Indian income tax attributable to the doubly-taxed income


• Rule 128(9): Form 67 must be filed on or before the due date of the return of income under Section 139(1) — this is a strict condition; missing it forfeits the credit


• Rule 128(10): Disputed foreign tax provisionally credited must be reversed and interest paid on the refund when the dispute is settled in the assessee's favour

Form 67: Prescribed under Rule 128(1), filed electronically on the income tax e-filing portal (www.incometax.gov.in). Requires: country of source, nature of income, gross income, foreign tax paid, rate, foreign tax credit claimed, and details of the foreign tax payment certificate (TRC / withholding statement).

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ITA 2025 Concordance (in force 1 April 2026)
Section 90 [ITA 1961] → Section 159 [ITA 2025] (agreement with foreign countries / specified territories for relief from double taxation)
Section 91 [ITA 1961] → Section 160 [ITA 2025] (Countries with which no agreement exists — unilateral relief from double taxation)
Rule 128 [IT Rules 1962] → IT Rules 2026 (notified 20 March 2026): equivalent rule number to be confirmed
Transition note: AY 2026-27 runs under ITA 1961 per Section 536(2). DTAA claims from tax year 2026-27 onward cite ITA 2025 Section 159.

If you are a resident Indian who has earned income abroad and paid tax on it in a foreign country, you can claim that tax as a credit against your Indian income tax liability under Section 90 or 91 of the Income-tax Act, 1961. Without claiming this credit, you pay tax twice on the same income — once abroad and once in India.

The catch: Form 67 is time-barred. Under Rule 128(9), the Foreign Tax Credit (FTC) claim must be made by filing Form 67 on or before the due date of the return of income for that assessment year. If you miss the ITR due date without having filed Form 67, you lose the foreign tax credit for that year permanently — it cannot be claimed via a revised return or updated return (ITR-U).

Who needs this service:

• NRIs who became residents (RNOR or Resident) and have foreign income from a year where they paid tax abroad


• Residents with overseas employment income (consultant fees, salary, board fees) taxed in the foreign country


• Residents with foreign dividend or interest income on which withholding tax was deducted at source


• Partners or directors of foreign entities who receive profit distributions taxed at source overseas


• Residents who redeemed foreign mutual funds or sold foreign assets and paid capital gains tax abroad

What the FTC computation involves:

• Identifying the eligible foreign tax (creditable taxes under the DTAA or Section 91)


• Computing the FTC limit — the credit cannot exceed the Indian tax attributable to the foreign income (computed as a fraction of total Indian tax)


• Preparing the country-wise FTC schedule (Form 67 requires country, income type, foreign tax paid, foreign tax rate, eligible FTC)


• Reconciling the foreign tax certificate (TRC or withholding statement) with the ITR income schedule

Key limits:

• The FTC in any year is capped at the Indian tax on that income (you cannot create a refund using FTC)


• Disputed foreign taxes (where you have appealed in the foreign country) must be provisionally claimed and then adjusted in the year of resolution


• FTC applies to income tax, war profits tax, and excess profits tax paid in foreign countries covered by DTAA or Section 91 — it does not cover VAT, social security contributions, or wealth tax