Indian residents claim CREDIT for tax paid in foreign country via DTAA. Lower of foreign tax or Indian tax on foreign income. Multi-currency conversion + documentation.
Form 67 = STATEMENT of FOREIGN TAX CREDIT (FTC) claim. Used by Indian residents to claim CREDIT for tax paid in FOREIGN country against Indian tax liability via DTAA. KEY: (1) Filed alongside ITR. (2) Requires supporting documents (foreign tax certificates). (3) DTAA Article 23/24 (depending on country). (4) PREVENT DOUBLE TAXATION. (5) FOR INDIAN RESIDENTS with foreign income (NRIs with India residency, returning NRIs, expats).
FTC ELIGIBILITY: (1) INDIAN RESIDENT for tax purposes (not NRI). (2) Foreign income reported in Indian ITR. (3) Foreign tax actually paid (not just deducted). (4) Foreign country has DTAA with India (most do). (5) Foreign tax must be similar to income tax. NOT ELIGIBLE: (1) NRI status (foreign income not taxable in India typically). (2) Foreign taxes not paid. (3) Non-DTAA countries (rare). (4) Foreign penalty/fines (not eligible).
FTC LIMIT: Lower of: (1) ACTUAL foreign tax paid. (2) INDIAN tax attributable to foreign income. EXAMPLE: USA salary ₹50L, USA tax ₹10L, Indian total tax ₹15L on ₹50L (calculation). (a) Actual foreign tax: ₹10L. (b) Indian tax on foreign income: 30% × ₹50L = ₹15L (assuming top slab). (c) FTC = ₹10L (lower of two). (d) Net Indian tax: ₹15L - ₹10L = ₹5L. SAVED ₹10L via DTAA + FTC. COMPLEX: per-country computation, currency conversion, attribution. ENGAGE CA.
FTC DOCUMENTATION: (1) FORM 67 itself — online filing. (2) FOREIGN TAX RETURN (translated if needed). (3) FOREIGN TAX CERTIFICATE/RECEIPT showing tax paid. (4) BANK STATEMENTS showing foreign tax deductions. (5) FOREIGN INCOME breakdown (salary, capital gains, dividend, interest separately). (6) DTAA certification (TRC from foreign country sometimes). (7) Indian PAN. (8) Currency conversion rates. PROCESS: Login to e-filing portal → File Form 67 → Upload documents → Submit before ITR. AUTHENTIC TRANSLATIONS required for non-English documents.
COMMON FTC SCENARIOS: (1) RETURNING NRI: USA tech worker returning to India. Last year had USA salary + tax. Returns in March. Indian ITR claims FTC. (2) EXPAT WORKING IN INDIA: foreign country sends Indian to foreign branch. Both countries tax. FTC claim. (3) INDIAN-DOMICILED HNW: foreign mutual fund dividends + capital gains. Indian + foreign tax. FTC. (4) GLOBAL EMPLOYEE: Multi-country compensation. FTC per country. CONSULT CA for complex multi-country FTC computations. Mistakes cost thousands.