Form 67: Meaning, Due Date & How To File For Foreign Tax Credit

In case you receive your income from anywhere outside India, either through foreign employment or investment, there is a chance you might have to pay taxes in a foreign country as well as in India.

It seems unfair, right? This is where the relevance of the term Foreign Tax Credit (FTC). FTC enables you to claim your taxes paid overseas from the taxes payable in India. FTC knowledge is essential since FTC can be claimed only through Form 67.

What Is Foreign Tax Credit (FTC)?

The Foreign Tax Credit (FTC) enables a taxpayer to claim a credit for any foreign taxes they have already paid overseas on income, which is taxed again in India. This ensures that the taxpayer is not subject to double taxation when the same income is taxed in two countries.

For claiming the credit in India, FTC can normally be availed if India has a DTAA with the foreign country by filing a claim under Section 90 of the Income Tax Act. However, if there is no DTAA between India and the foreign nation, then it will be under Section 91 of the Income Tax Act. To file this claim, the taxpayer must furnish information regarding foreign income, foreign tax, and the foreign country.

Documents Required For Form 67

To claim a foreign tax credit, you can do so by filing Form 67. You should provide information about your foreign income, accompanied by relevant evidence. This is done to verify the payment of foreign tax and its correct computation.

Below are the required documents for the form.

• Statement regarding the foreign income earned in the financial year

• Proof of the foreign tax deduction and payment in the foreign jurisdiction

• Tax certificate or withholding tax certificate from the foreign tax administration/employer

• Nature and source of foreign income earned

• The country where the foreign income was earned

What Is Form 67 Of Income Tax?

Form 67 is a document which must be submitted by taxpayers who wish to avail themselves of the Foreign Tax Credit (FTC). This document records information such as the country in which income was earned, the kind of income, and the foreign tax payable. By filing Form 67, you can reduce your liability in India without paying double taxation.

This form is required if income earned from a foreign country is taxable in India. Filing Form 67 with the income tax authorities helps them verify the foreign tax credit claimed. The form is governed by Rule 128 of the Income Tax Rules, 1962.

How To File Form 67 (Step-by-Step)

Form 67 needs to be filed online on the income tax e-filing website. Details of foreign income and taxes paid should be filled out, and then the form can be submitted.

Here are the steps to fill this form:

Step 1: Log in to the income tax e-filing website using your PAN number and password.

Step 2: Go to e-File and click on Income Tax Forms.

Step 3: Click on 'File Income Tax Forms' and look for Form 67.

Step 4: Select the appropriate assessment year.

Step 5: Fill in the details of foreign income and taxes paid outside India.

Step 6: Fill in country-specific details along with tax credit details.

Step 7: Upload any required documents.

Step 8: Finally, submit the form after checking all the details.

Step 9: Submit the form after verifying it using OTP, EVC, or DSC issued to you.

The details provided in Form 67 are useful while claiming the Foreign Tax Credit on your income tax return.

Form 67 Due Date

Form 67 must be filed before or on the due date of filing the income tax return in the concerned assessment year. The filing of Form 67 before this deadline helps ensure that the Foreign Tax Credit is also taken into account while computing the income tax return.

If Form 67 is not filed within the stipulated deadline, it becomes difficult for the foreign tax credit to be availed during tax computations. Hence, if you earn from foreign sources, you need to file Form 67 before filing your income tax return.

The deadline for income tax returns may differ depending on your category and extension deadlines, provided by the Income Tax Department. Therefore, it is necessary to file Form 67 considering the same.

Who Needs To File Form 67?

Filing of Form 67 is mandatory for taxpayers who earn money from another nation, along with paying tax thereon in that foreign country. Individuals who are willing to use their credit for foreign tax can use Form 67 to ensure that tax paid to another country is not deducted again in India.

This form is generally needed when an individual works or earns money through other means from another nation, that is, a salary from another country. This also includes income from a foreign company or banks, foreign freelancing, or business outside India.

When To File Form 67 (Before ITR?)

The submission of Form 67 must be done before filing the income tax return, where the Foreign Tax Credit will be claimed. This is to ensure that the information about foreign tax paid is ready for computations when calculating the final tax payable.

Because every transfer of foreign tax data is validated by Form 67, submitting this form after filing the income tax return can result in its non-inclusion during processing. Due to this, it is recommended that you do the validation process of Form 67 before filing your income tax return. Filing it before ITR will prevent any further delays and mismatch problems, as well as guarantee the inclusion of the Foreign Tax Credit.

Conclusion

The significance of Form 67 lies in the fact that it plays a crucial role when an Indian taxpayer earns his income through foreign sources. Through this form, you can claim the tax deducted in a foreign country and the Foreign Tax Credit while filing your income tax returns in India.

Submitting a correctly filled and documented Form 67 is very important for having an effective tax claim filing process. Considering that the deadline to submit this form is limited, you have to file the form either before or at the same time as the tax return is filed.

Sources

Income Tax Department

India Filings