No benefit of lower tax rate under DTAA for taxpayers with foreign income if Form 67 is not filed by this date
If you're an Indian taxpayer with foreign income, such as dividends from foreign stocks or earnings from the sale of shares/ESOPs of foreign companies, you can benefit from a lower tax rate under section 90 or 91 of the Income Tax Act, 1961. This tax relief is provided through the Double Taxation Avoidance Agreement (DTAA) provisions. If you are eligible for tax relief, section 90 applies under the DTAA provisions. However, if your country of residence has not signed a DTAA with India, then you can seek relief under section 91 of the Indian Income tax law.#sr_widget.onDemand p, #stock_pro.onDemand p{font-size: 14px;line-height: 1.28;} .onDemand .live_stock{left:17px;padding:1px 3px 1px 5px;font-size:12px;font-weight:600;line-height:18px;top:9px} #sr_widget.onDemand .sr_desc{margin:0 auto 0;} #sr_widget.onDemand .sr_desc{color: #024d99;margin-top:10px;} #sr_widget.onDemand .crypto .live_stock .lb-icon{8px 6px 5px 3px !important} #sr_widget.crypto.onDemand a.text{border-bottom:1px solid #ccc;padding-bottom:5px;display:block;width:100%} #sr_widget.onDemand .sr_desc .text p, #stock_pro.onDemand .sr_desc .text p{font-size:12px;font-weight:400;}
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"To claim either bilateral relief under a DTAA (section 90) or unilateral relief under Section 91, taxpayers must file an Indian income tax return and provide a tax payment or deduction certificate from the relevant foreign tax authority," says CA Abhishek Soni, co-founder, Tax2Win.
When do you need to claim tax relief under section 90?
According to CA (Dr.) Suresh Surana, Section 90- 'Bilateral relief' applies when a DTAA agreement exists between India and the other country. "This section applies when a DTAA exists. The taxpayer can claim relief based on the provisions of the DTAA, which may include lower tax rates or exemptions," he says."If relief is being claimed u/s 90 of the Act, then both the return form and form no.67 must mention section 90. Similarly for relief being claimed under section 91, the country code for the country where taxes were paid must be identical in both return form and form no.67. If taxes were paid in multiple countries, then the taxpayer must report country and income wise information in separate line items consistently in both form no. 67 and return form," said the income tax department.
Form 67 is needed to be filed if you are claiming tax relief under section 90 (DTAA)
Surana says that taxpayers who want to claim relief under the DTAA provisions would be required to file Form 67 online on or before the filing of the ITR. "Form 67 (Statement of income from a country or specified territory outside India and Foreign Tax Credit i.e. FTC) is a specific form used by taxpayers in India to claim a tax credit for foreign taxes paid outside India," he says.
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Deadline to file Form 67
Surana says that you need to file Form 67 on or before March 31, 2025, for FY 2023-24 (AY 2024-25) if you want to claim DTAA benefits under section 90."In accordance with Rule 128 of the Income Tax Rules, 1962, Form 67 is to be furnished on or before the end of the assessment year relevant to the financial year in which the relevant income has been offered /assessed to tax in India as well as the return for such assessment year has been furnished within the time specified for original return u/s 139(1) and belated return u/s 139(4) of the IT Act. For instance, any person claiming FTC for FY 2023-24 (AY 2024-25) would be required to furnish Form 67 on or before 31st March 2025," he says.
When can you claim tax relief under section 91
Section 91 is also known as 'Unilateral relief' and you have to use this type of relief when the country of your residence has not signed DTAA with India. "In this case, the taxpayer can claim relief for taxes paid in the foreign country, limited to the Indian tax payable on the same income. In case no DTAA exists between India and the source country and taxpayers claiming relief under Section 91 then the taxpayer would be required to file Form 67 online on or before filing of the ITR," says Surana.Filing ITR is required to claim section 91 tax relief. "To claim either bilateral relief under a DTAA or unilateral relief under Section 91, taxpayers must file an Indian income tax return and provide a tax payment or deduction certificate from the relevant foreign tax authority," says Soni.
What did the tax department say about Form 67?
As per the Income Tax Department: "A taxpayer who is a tax resident in India may claim credit for taxes paid in a foreign country in respect of such income being offered in the Indian income tax return. To provide details of taxes paid in the foreign country. The taxpayer is required to submit form no.67 and disclose relevant details in the said form. Further, consistent details are required to be reported in the Schedule TR of the ITR form. Form no.67 may be filed along with the return of income. For AY 2024-25, the last date to file form no.67 is 31st March 2025. The taxpayer must ensure that there is not inconsistency in particular provided in form 67 vis-a-vis particulars reported in form ITR-2. For instance:If relief is being claimed u/s 90 of the Act, then both the return form and form no. 67 must mention section 90. Similarly for relief being claimed under section 91, the country code for country where taxes were paid must be identical in both return form and form no. 67.If taxes were paid in multiple countries, then the taxpayer must report country and income wise information in separate line items consistently in both form no. 67 and return form." #sr_widget.onDemand p, #stock_pro.onDemand p{font-size: 14px;line-height: 1.28;} .onDemand .live_stock{left:17px;padding:1px 3px 1px 5px;font-size:12px;font-weight:600;line-height:18px;top:9px} #sr_widget.onDemand .sr_desc{margin:0 auto 0;} #sr_widget.onDemand .sr_desc{color: #024d99;margin-top:10px;} #sr_widget.onDemand .crypto .live_stock .lb-icon{8px 6px 5px 3px !important} #sr_widget.crypto.onDemand a.text{border-bottom:1px solid #ccc;padding-bottom:5px;display:block;width:100%} #sr_widget.onDemand .sr_desc .text p, #stock_pro.onDemand .sr_desc .text p{font-size:12px;font-weight:400;}
This story originally appeared on: India Times - Author:Faqs of Insurances
