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The rules pertaining to the foreign tax credit are constituted in the rule 128 of the Income Tax Rules, 1962. The 128 rule has been initiated as from 1st April, 2017. The current article, points and emphasizes on foreign tax credit, inclusion and exclusion and the quantity of foreign tax credit. Moreover, the article encircles a consolidated list of documents required for claiming the foreign tax credit and is intended form no. 67 making and submission.

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According to the rule 128(1), the person, a resident, will be provided with a credit for the subsequent amount of foreign tax paid with by the taxpayer in any country or a pre-recognised territory outside India. Such kind of credit should be available in the form of deduction or nonetheless in the year, when, the earning corresponding to the tax is made attainable to tax in India.

And according to the rule 128(2) of the Income Tax Rules, 1962, foreign tax is described as, and includes, the following:-

  1. Tax described under the agreement with foreign territories outside India or countries for the exemption of double taxation as of section 90 or section 90A.
  2. Tax which is payable with respect to the laws in force in the country or specific territories outside India in the type of income tax specified in clause (IV) of explanation to section 91


According to rule 128 of the Income Tax Act, the following mentioned are the inclusion and exclusion in foreign tax credit-

  1. Foreign tax credit constitutes the amount of tax, surplus charge and the cesses which are payable under the Act.
  2. The overall sum payable as interest is not included in the foreign tax credit.
  3. Any amount of foreign tax or any part of it which is concurrently disputed in any way by the taxpayer is not included in the foreign tax credit.


The foreign tax credit should be the net sum of credits calculated separately for each income source originating from any country or specific territory outside the country.


The foreign tax should be reduced in comparison of:-

  1. Tax payable under the Act.
  2. Foreign tax which is paid on this income.

But, if the foreign tax paid is found to be more than the tax payable with respect to the agreement, then such an extensive excess can be ignored.



  1. The form no. 67 which is related to the legal statement of income obtained from a country or a specific territory outside India and the foreign tax credit.
  2. An assigned statement or certificate from the tax authority of the abroad country or from the designated person responsible for the tax, in accordance to the type of case, directing the nature of income and the amount of tax deductible there from. Moreover, the statement signed by the assessee will only be validated if the same is attached with an acknowledgement from the bank counter or a statement of online payment.
  3. The evidence of deduction. It should be reminded and kept in mind that the form no. 67 mentioned herein accompanying the required documents needs to be polished on or before the due date of submission of the income tax return as formulated under the section 139(1) of the Income Tax Act, 1961.


Vide notification no. 9 marked and dated as 19th September, 2017, By the Central Board of Direct Taxes has provided us the detailed procedure for filing the form. Elaborative steps have been mentioned as:-

  1. The assessee has to make sure to login into the online e-filing portal with the help of apt user id and password.
  2. Locate the path e-file→ make and submit online forms (other than ITR) → Choose form no. 67
  3. Information to be submitted in the form no. 67 are:-
  • Name of the assessee
  • Permanent account number of the filer.
  • Address of the assessee.
  • The year of assessment for which the foreign tax credit is petitioned.
  • Elaborated details of income obtained from the foreign country and territories outside India.
  • Whether any form of reimbursement of the foreign tax has been proclaimed in any specific accounting year as a repercussion of carry backward losses? If affirmative, then following details have to be provided as an attachment:-
  1. The accounting year related to the loss.
  2. The accounting year wherein set off of carry backward of the loss was taken.
  3. The refund claim made for the specific accounting year.
  • Whether of credit has been acclaimed for any foreign tax under dispute? If affirmative, then the mentioned details have to be provided:-
  1. The type and amount of income in whose accordance the tax is disputed.
  2. The amount/balance of such disputed tax.
  3. The digital signature certificate or electronic verification code can be used to submit form no. 67.

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