Foreign Tax Credit in India: How to Claim It and File Form 67

Indian residents are taxed on their worldwide income. If some of that income has already been taxed abroad, foreign tax credit prevents it being fully taxed twice. But the credit has limits, and it needs a specific form. This guide explains how to claim it.

Note: this describes the rules under the Income-tax Act, 1961 and Rule 128. Successor provisions apply under the Income-tax Act, 2025.

Who Can Claim

A resident taxpayer who has paid tax in another country on income that's also taxed in India — for example, salary for work abroad, foreign dividends, or fees from foreign clients with tax withheld.

How Much Credit

The credit is the lower of:

• The foreign tax paid on the income.
• The Indian tax payable on that same income.

It's computed separately for each country and each source of income.

Treaty or Unilateral Relief

Where India has a treaty with the country, credit is given under the treaty. Where there's no treaty, Indian law provides unilateral relief.

Form 67

To claim credit, you file Form 67 on the income-tax portal, giving details of the foreign income and tax, supported by evidence. It's generally filed around the time of filing the return, within the time allowed by the rules.

Evidence

• A certificate or statement from the foreign tax authority, or
• A certificate of tax deducted from the person who deducted it, or
• Proof of payment of tax, or the foreign tax return, with a self-declaration.

Special Cases

• Disputed foreign tax: credit is generally allowed only once the dispute is settled, within the time allowed.
• Different tax years: credit is allowed in the Indian year in which the income is taxed, proportionately where the foreign year spans two Indian years.
• No credit is given for interest, fees or penalties paid abroad.

Getting Help

Think Filing computes foreign tax credit, files Form 67 and reports foreign income correctly.