CBDT has issued Notification No. 100/2022 dated 18.08.2022 in G.S.R. 636(E) through Income-tax (27th Amendment) Rules, 2022 to amend Rule 128 of the Income-tax Rules, 1962 (‘Rules’) to extend the time limit for furnishing of Form No. 67 to claim credit of taxes paid in a foreign country, popularly known as Foreign Tax Credit (FTC).
Form No. 67 can now be furnished electronically on or before the end of the assessment year relevant to the previous year in which the income has been offered to tax or assessed to tax in India and the return of income is furnished under section 139 of the Income-tax Act, 1961 (‘Act’).
Further, FTC can be claimed for filing belated returns under section 139(4) as well as updated returns under section 139(8A) of the Act.
Prior to the amendment, Form No. 67 was required to be furnished on or before the due date specified for furnishing the return of income under sub-section (1) of section 139 of the Act.
Rule 128 prescribes the manner of claiming and allowing credit for taxes paid in a foreign country. The credit for foreign tax is available against the amount of tax, surcharge and cess payable under the Income-tax Act in India.
The foreign tax credit shall be allowed on furnishing a statement of income from a foreign country and foreign taxes paid in Form No. 67 and a certificate or statement specifying the nature of income and the amount of tax paid by the assessee. As per Rule 128(9), the statement in Form No. 67 and the certificate or the statement shall be furnished on or before the end of the assessment year relevant to the previous year in which the foreign income has been offered to tax or assessed to tax in India and the return for such assessment year has been furnished within the time specified under sub-section (1) or sub-section (4) of section 139.
Further, where the return has been furnished under sub-section (8A) of section 139, the statement in Form No. 67 and the certificate or the statement to the extent it relates to the income included in the updated return, shall be furnished on or before the date on which such return is furnished.
Foreign Tax Credit
Where an assessee has paid any income tax in any foreign country or specified territory outside India, he can claim a credit for the same against the tax liability that arises on total income in India.
The credit for such foreign tax is allowed in India in the year in which such income is offered to tax in India. The credit for the foreign tax shall be restricted to the amount of foreign tax paid in case tax payable on such income under the Income-tax Act is lower. If the amount of foreign tax exceeds the amount of tax payable as per the provisions of the DTAA, such excess shall be ignored while calculating the foreign tax credit.
Year of allowability of Foreign Tax Credit
The foreign tax credit is allowed in India in the year in which such foreign income, on which tax is paid in the foreign country is claimed, is offered to tax in India. In order to claim such foreign tax credit, the resident asseessee is required to furnish Form No. 67 electronically online.
Time limit for furnishing Form No. 67 to claim Foreign Tax Credit
In case of normal returns:
The statement in Form No. 67 is required to be furnished on or before the end of the assessment year relevant to the previous year in which the foreign income is offered to tax or assessed to tax in India where the return of income for such assessment year has been furnished within the time specified under Section 139(1) or Section 139(4). Hence, Form No. 67 can be filed even after filing of return of income u/s 139(1) or 139(4).
In case of Updated Return:
In the case where foreign income is offered to tax in India by furnishing an updated return in accordance with the provisions of section 139(8A), Form No. 67 shall be required to be furnished on or before the date on which such an updated return is furnished. Hence, in the case of an updated return, Form No. 67 cannot be furnished after filing of updated return.
Applicability Date of Amended Rule 128
This amendment in Rule 128 is effective from 01-04-2022 and shall apply to all the claims of foreign tax credit (FTC) in Form No. 67 furnished during the financial year 2022-2023.
Read the full text of CBDT Notification No. 100/2022 dated 18.08.2022 on Extension of Time-limit for Furnishing of Form No. 67 for Foreign Tax Credit (FTC)
MINISTRY OF FINANCE
(Department of Revenue)
[CENTRAL BOARD OF DIRECT TAXES]
NOTIFICATION
New Delhi, the 18th August, 2022
INCOME-TAX
G.S.R. 636(E).—In exercise of the powers conferred by clause (ha) of sub-section (2) and subsection (4) of section 295 of the Income-tax Act, 1961 (43 of 1961), the Central Board of Direct Taxes hereby makes the following rules further to amend the Income-tax Rules, 1962, namely:-
1. Short title and commencement.— (1) These rules may be called the Income-tax (27thAmendment) Rules, 2022.
(2) They shall be deemed to have come into force from 1at day of April, 2022.
2. In the Income-tax Rules, 1962, in rule 128, for sub-rule (9) the following sub-rule shall be substituted, namely:-
“(9) The statement in Form No. 67 referred to in clause (i) of sub-rule (8) and the certificate or the statement referred to in clause (ii) of sub-rule (8) shall be furnished on or before the end of the assessment year relevant to the previous year in which the income referred to in sub-rule (1) has been offered to tax or assessed to tax in India and the return for such assessment year has been furnished within the time specified under sub-section (1) or sub-section (4) of section 139:
Provided that where the return has been furnished under sub-section (8A) of section 139, the statement in Form No. 67 referred to in clause (i) of sub-rule (8) and the certificate or the statement referred to in clause (ii) of sub-rule (8) to the extent it relates to the income included in the updated return, shall be furnished on or before the date on which such return is furnished.”.
[Notification No. 100/2022/F. No. 370142/35/2022-TPL]
NEHA SAHAY, Under Secy.
Explanatory Memorandum: This amendment is effective from the 1st day of April, 2022 so that it applies to all the claims of foreign tax credit furnished during the financial year 2022-2023. It is hereby certified that no person is being adversely affected by giving retrospective effect to this rule.
Note : The principal rules were published in the Gazette of India, Extraordinary, Part-II, Section-3, Subsection (ii) vide number S.O. 969 (E) dated the 26th March, 1962 and last amended vide notification number G.S.R 634 (E) dated 17 th August, 2022
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