Form 67 of the Income Tax Act Explained

What is Form 67 of the Income Tax Act?

Form 67 of the income tax act is a form that every assessee who wishes to claim foreign tax credit needs to furnish while filing the ITR under section 139(1). A foreign tax credit can be availed of by any assessee who earns money outside India and is liable to pay tax in both countries. Form 67 is an important document that needs to be filed to claim a deduction of foreign tax paid in the home country.

What is Form 67 Due Date for FY 2024-25?

As per the Income Tax Rules 128(9), Form 67 should be furnished by the end of the assessment year before filing the original return u/s 139(1) or belated tax return u/s139(4) for AY 2024-25. If you want to claim the tax credit, it is crucial to file Form 67 before the 31st of December 2024 to claim the tax credit.

If you file an updated return u/s 139(8A), then Form 67 should be filed on or before the due date of filing the updated return. However, it is important to note that if you file Form 67 after the end of the assessment year, you will not be eligible for the Foreign Tax Credit. In order to claim relief u/s 90, Form 67 must be submitted before the end of the assessment year.

What is the Concept of FTC in India?

As per the Indian Income Tax law, sections 90 and 91 of the Income Tax Act consist of provisions related to foreign tax credits.

Section 90 deals with claiming FTC in the case where India has a DTAA (Double Taxation Avoidance Agreement) with another country. Section 91 deals with claiming of FTC in cases where India does not have a DTAA with another country from where the income arises for a taxpayer.

These sections allow a taxpayer who is a resident of India and has paid taxes outside of India to claim a credit of such taxes paid against the tax payable in India.

The rules for claiming Foreign Tax Credit (FTC) were introduced under Rule 128, effective from April 1, 2017, to clarify the process. Key points are summarized below:

• FTC can be claimed in the year when the related income is taxed or assessed in India.
• It can be applied against tax, surcharge, and cess owed under Indian tax laws, but not against interest, fees, or penalties.
• FTC is not available for disputed foreign taxes.
• FTC is allowed even for tax payable under Section 115JB (Minimum Alternate Tax).
• FTC is calculated separately for each income source from a specific country and then combined.
• FTC is limited to the lower amount between the Indian tax liability on that income and the foreign tax paid.
• The currency conversion for FTC will use the Telegraphic Transfer Buying Rate from the last day of the month before the foreign tax payment or deduction.

Foreign Tax Credit and Form 67

As mentioned above, Form 67 is an essential document for every resident taxpayer who is eligible to claim a foreign tax credit or FTC on any income received outside the country.

The foreign tax credit is a facility provided by the Indian government that allows you to claim relief or credit of the tax paid on the income earned outside India.

Suppose you are an Indian resident having foreign assets or any other foreign source of income, either in the form of salaries, interests, dividends, etc. In that case, you can claim a refund of the tax paid in the source country by filling Form 67 of the Income Tax Act.

Documents required to be furnished for claiming FTC

In accordance with Rule 128, in order to claim FTC, the taxpayer is required to file the following documents on or before the due date of filing of return:

1. 1. A statement of :
   • foreign income offered to tax
   • foreign tax deducted or paid on such income in Form No. 67
2. 2. Certificate or statement specifying the nature of income and the amount of tax deducted therefrom or paid by the taxpayer :
   • From the tax authority of the foreign country
   • from the person responsible for the deduction of such tax
   • signed by the taxpayer
3. 3. Proof of payment of taxes outside India.

Components of Form 67

Now that you know what form 67 is, let us understand its components in detail -

• Part A - Part A of Form 67 of the Income Tax Act consists of the basic details of the assessee, such as Name, PAN or Aadhaar number, address of the assessee, assessment year, and the details of the type of income received and the foreign tax credit claimed. You can fill in all these basic details and move on to the next part of the form, i.e., Part B.
• Part B - In part B, you have to furnish the details of any refund of foreign tax claimed in the previous year due to carry backward of losses. It also requires the assessee to furnish the details of any foreign tax credit claimed on the disputed tax amount.
• Verification - This section consists of a self-declaration form in conformity with the Rule 128 of the Income Tax Act. It consists of the assessee's name, PAN, declaration, place, and date of filling out the form.
• Attachments - Once you have filled in the above parts, the last section requires you to attach the proof or the statement of the tax payment or any tax deducted. Before attaching the document, read the instructions carefully and make sure the document conforms with the rules.

How to File Form 67 of the Income Tax Act?

To file form 67 -

• The taxpayers who are required to file their ITR online must prepare Form 67 and submit it online.
• The taxpayer should submit Form 67 either before the due date or on the due date of the filing ITR.
• You can access Form 67 of the Income Tax Act on the dashboard of your e-filing portal.
• You also need to provide a Digital Signature Certificate or an Electronic Verification Code to submit Form 67.

Step-by-step Process of Filling Form 67

• Step 1. Use your Id and Password to log in to the e-filing portal.
• Step 2. Select e-file > Income Tax Forms > File Income Tax Forms
• Step 3. On the next page, select ‘persons not dependant on any source of income’, proceed to the next subpage. Now select Double Taxation Relief (Form 67) and click on ‘file now’ next to this option.
• Step 4. Select A.Y. and click ‘continue.’
• Step 5. Click ‘Let’s get started’ on the instructions page.
• Step 6. Once Form 67 is displayed, click ‘Preview.’
• Step 7. Verify the details and click e-verify.
• Step 8. Click ‘Yes’ and submit the form.
• Step 9. The e-verification page appears. A success message along with the acknowledgment number and transaction ID. Note the acknowledgment number for the future.

Worrying about paying taxes twice is a matter of the past. The introduction of Form 67 of the income tax act has made it easy to prevent double taxation and avail of the benefit of the Foreign Tax Credit. Filing Form 67 yourself can be a little tedious and time-consuming. Don't Worry! Hire a CA now and get a smooth and hassle-free ITR filing experience. If you need any tax-related assistance to manage your taxes, simply book a Tax Advisory Service for consultation.