Aarti's project work in the US triggered US tax (~$3,500 withheld at source). Back home in India, she became resident this year (>182 days). India now wants to tax her global income — including those US earnings. "Wait, I'm being taxed twice?"
Not if she files Form 67. Foreign Tax Credit prevents double tax — claim it before ITR.
- Form 67 = mandatory before ITR to claim Foreign Tax Credit (FTC) under DTAA.
- Available if you became resident in India and paid tax in a country India has DTAA with (90+ countries).
- Credit = least of: actual foreign tax paid OR Indian tax on that doubly-taxed income.
- File Form 67 by the ITR filing due date (incl. belated). Miss it = lose credit.
When you need Form 67
- You're resident in India for the FY (≥ 182 days)
- You earned income that was taxed in another country
- Same income is now being taxed in India (because residents pay tax on global income)
- India has a DTAA with that country (most majors covered)
How the credit works — Aarti's numbers
Aarti's US project income: ~₹15L equivalent. US tax withheld: ~₹3L (about 20% in her case). Indian tax on that ₹15L slab portion: ~₹3.5L.
Without Form 67: Aarti pays ₹3.5L in India + ₹3L already in US = ₹6.5L on the same income. With Form 67: ₹3L US + ₹50k India = ₹3.5L total. Form 67 saves her ₹3L.
The 6-step claim flow
From your foreign tax authority (e.g., IRS Form 8802 for US). Mentions you were tax resident there for the relevant period.
Foreign return (Form 1040, P60, etc.), withholding certificates (W-2, 1099), challan receipts.
Self-declaration on the IT e-filing portal. References DTAA article being invoked.
e-File → Income Tax Forms → Form 67. Country, foreign tax paid (in foreign currency + INR equivalent), DTAA article. Upload TRC + tax payment proof.
Acknowledgement issued. Save for ITR reference.
Schedule FSI + Schedule TR + Schedule FA. Reference Form 67 ARN.
Critical: timing
From AY 2022-23, Form 67 can be filed up to the end of AY (or belated ITR date) but must be filed before claiming credit in ITR. Earlier the deadline was strict — now relaxed but order matters. File Form 67 first, then ITR.
What FTC won't cover
👉 Penalties / surcharges in the foreign country — not eligible
👉 Wealth tax / property tax abroad — these aren't "income tax"; not eligible
👉 Disputed amounts still under appeal abroad — file again after resolution
👉 Tax on income not also taxed in India — you can't get credit for tax on income India isn't taxing
👉 Indirect taxes like VAT / sales tax — not income tax
Country examples
USA
Article 25
DTAA effective from 1989. FTC fully claimable. Need IRS-issued TRC (Form 6166) + W-2 / 1099 / Form 1040 copies.
UK
Article 24
FTC claimable. HMRC issues TRC. P60 + P45 + SA returns as proof.
UAE
No income tax!
No income tax in UAE → no FTC needed. But TRC from UAE still useful for treaty residence purposes.
RNOR — the transition shelter
If you've been NRI for 9+ of the last 10 years and become resident — you get RNOR (Resident but Not Ordinarily Resident) status for up to 3 years. Foreign income remains exempt from Indian tax during RNOR (unless from Indian business control).
RNOR window is the best time to:
👉 Repatriate foreign savings tax-free
👉 Sell US / UK assets without Indian capital gains tax
👉 Receive ESOP exercise proceeds from foreign employer
If you're moving back from abroad, plan RNOR transitions carefully. The 2-3 year window can save lakhs in foreign-income tax — but the math gets complex.
Quick answers
Yes — Section 91 of the Income Tax Act provides unilateral relief even without a treaty. Lower of foreign tax rate vs Indian rate is the credit. Less generous than DTAA but available.
You match income to the Indian FY it falls in. For US calendar-year tax, you typically split across two Indian FYs. Form 67 supports this — declare per income head.
Provisional FTC allowed if withholding is final. For under-appeal taxes, defer claim until resolved. File revised ITR / ITR-U later.
Yes. Schedule FA covers all foreign assets (bank accounts, equity, property, signing authority) — not just income. Penalty for missing = ₹10L per asset.
NRIs aren't taxed on foreign income — so no FTC question for NRIs. FTC is for residents and RNORs with foreign income.
When you might want help
Single-country FTC is DIY-able with patience. Where help pays off: multi-country claims (US + UK + India), RNOR-status planning during return-to-India, ESOP from foreign parent + Form 67 + Schedule FA combinations, and disputed foreign-tax resolutions.
FTC + RNOR planning
30-minute call. We map your residency, identify treaty positions, and file Form 67 + ITR + Schedule FA / TR / FSI together.