How to claim credit for taxes paid abroad?

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How to claim credit for taxes paid abroad?

World is turning out to be a global village. Everyone is moving here and there. Earning in one country may be subject to double taxation. However, there is a provision for credit of taxes in other country if taxes is already paid in the source country. Many such taxation provisions are regulated by Double Taxation Avoidance Agreement (DTAA).

Let us know more about the way of availing the credit towards taxes paid in other countries :

A. Procedural requirements for taking credit of taxes paid abroad is given in Rule 128 of the Income Tax Rules.

B. The credit of foreign taxes shall be available by filing Form 67 and filing the Income Tax return. Form 67 for claiming foreign taxes shall be filed on or before the due date of filing the return of income under section 139(1).

C. Credit of foreign taxes may not be available if form 67 is not filed within the due date of ITR.

D. Form 67 is available for filing in the online mode on the IT Portal.

E. Some documents to be attached with Form 67 for claiming FTC are:

Certificate or statement specifying the nature of income and the amount of tax deducted therefrom or paid by the assessee:

a) The statement specifying nature of income and tax paid in foreign country can be the return of income filed in the foreign country or certificate issued by the foreign tax authority.

(b) This can also be a certificate of tax deduction from the person responsible for deducting such tax in the foreign country just like Form 16/16A/16C furnished in India i.e TDS/TCS certificates or some other certificate specifying income and taxes.

c) In absence of the above-mentioned documents, the person claiming the credit of foreign taxes can also furnish self-attested/self-signed statement specifying the income offered and taxes paid abroad, but the said statement shall be valid only if it is accompanied by:

(i) an acknowledgement of online payment or bank counter foil or challan for payment of tax where the payment has been made by the assessee;

(ii) proof of deduction where tax has been deducted.

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