CBDT notifies procedure for foreign tax credit

Procedure for foreign tax credit

Background

A resident taxpayer is allowed credit for foreign taxes in the year in which the corresponding foreign income is offered to tax or assessed to tax in India.  Rule 128 of the Income-tax Rules, 1962 (IT Rules) prescribes the mechanism for foreign tax credit. This rule mandates furnishing of Form 67 – statement of income from foreign country/territory and foreign tax deducted/paid on such income, alongwith various other documents specified. Further, the IT Rules provide that Form 67 is to be furnished on or before the due date of filing tax return.

Procedure

The Central Board of Direct Taxes, vide Notification No 9 dated 19 September 2017, has provided the procedure for filing Form 67. These are summarized as below –

• Form 67 is to be submitted before filing of tax return.
• Such Form is to be prepared and submitted online by taxpayers, who are required to file tax return electronically.
• The Form is available in taxpayers account on e-filing portal of Income-tax Department.
• Digital Signature Certificate or Electronic Verification Code is mandatory to submit the Form.

BDO Comment

Though Rule 128 is effective from 1 April 2017, the e-filing portal did not provide utility for filing of Form 67. Post notification of procedure, clarity is required whether Form 67 needs to be filed now by taxpayers who have already furnished their tax returns.