CBDT gives relaxation for filing of Form 67 of rule 128 by bringing Notification No 100_2022 dated 18th August, 2022. The notification is giving major relief to taxpayers by giving extended timeline to claim foreign tax credit (FTC). The statement of claiming foreign tax credit can now be filed on or before the end of relevant assessment year.
The amendment will have a retrospective effect and is applicable from 1st April, 2022. It further means the amendment is applicable to all FTC Claims for F.Y. 2022-23.
CBDT has issued the said notification in exercise of its power given in Section 295(4)(2)(ha) of the Income Tax Act,1961.
The notification states “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.”
A explanatory statement has been added in notice that states “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”.
What is Rule 128, Income Tax Rules?
- Resident Taxpayer of India can claim credit of Foreign Tax paid by him or on whose income deduction has been made in foreign country. Foreign Tax Credit(FTC) can be claimed against assessed tax in India.
- Foreign Tax meaning will be defined in double taxation avoidance agreement signed with various countries and if no such agreement signed then Foreign tax will mean tax payable under the law in force in that country or specified territory in the nature of income-tax as per section 91.
- FTC will be available against the amount of tax, surcharge and cess payable under the Act but not in respect of any sum payable by way of interest, fee or penalty.
- No FTC in case of disputed Foreign Tax by assessee in any manner.
- Credits of FTC can be claimed only after furnishing
- Form No.67 and verified as specified
- A certificate or statement specifying nature of income and tax deduction from
- tax authority of foreign country
- from person who has deducted tax
- signed by taxpayer along with Foreign tax payment proof or Foreign tax deduction proof
- The credit of foreign tax shall be the aggregate of the amounts of credit computed separately for each source of income arising from a particular country or specified territory outside India and shall be given effect to in the following manner:—
| (i) | FTC lower of the tax payable under the Act on such income and the foreign tax paid on such income, however where the foreign tax paid exceeds the amount of tax payable in accordance with the provisions of the agreement for relief or avoidance of double taxation, such excess shall be ignored for the purposes of this clause. |
| (ii) | the credit shall be determined by conversion of the currency of payment of foreign tax at the telegraphic transfer buying rate on the last day of the month immediately preceding the month in which such tax has been paid or deducted. |
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