Foreign Tax Credit Form 67: ITAT Kolkata Grants Relief for Delayed Filing

Foreign Tax Credit Form 67 has become an important compliance issue for Indian resident taxpayers earning foreign income. Many taxpayers pay tax outside India on foreign salary, dividends, ESOPs, RSUs, consultancy income or other overseas receipts. When the same income is also taxable in India, foreign tax credit helps avoid double taxation.

A recent ITAT Kolkata ruling in Neeta Makkar v. DCIT has provided important relief to taxpayers. The Tribunal held that foreign tax credit cannot be denied merely because Form No. 67 was filed after the due date, where the FTC claim is genuine and verifiable.

In this case, the assessee had filed her return declaring total income of ₹83,88,210. The returned income was accepted. However, the Assessing Officer denied foreign tax credit of ₹8,81,398 claimed under Section 90 of the Income-tax Act only because Form 67 was filed late. The Commissioner (Appeals) upheld the denial, but the ITAT Kolkata allowed the assessee’s appeal.

What is Form 67?

Form 67 is the prescribed form for claiming foreign tax credit in India. It is relevant where a resident taxpayer has paid or suffered tax in a foreign country on income that is also offered to tax in India.

Form 67 generally contains details of:

• foreign income;
• foreign tax paid or deducted;
• country in which tax was paid;
• DTAA relief, if applicable;
• foreign tax credit claimed in India.

It is commonly required in cases involving foreign salary, foreign dividends, ESOPs, RSUs, foreign pension, foreign consultancy income, overseas rental income or foreign capital gains.

Current Filing Requirement of Form 67

For current compliance, Form 67 is filed electronically on the income tax e-filing portal. Where the return is filed under Section 139(1) or Section 139(4), Form 67 should be filed on or before the end of the relevant assessment year. In case of an updated return under Section 139(8A), Form 67 should be filed on or before the date of filing the updated return.

Although judicial relief may be available in genuine cases of delayed filing, taxpayers should file Form 67 within the prescribed timeline to avoid denial, demand, refund blockage or litigation.

ITAT Kolkata’s Key Observation

The ITAT Kolkata treated delayed filing of Form 67 as a procedural lapse. The Tribunal accepted that if foreign income has been offered to tax in India and foreign tax has actually been paid, the substantive benefit of foreign tax credit should not be denied merely because the prescribed form was filed late.

This is an important taxpayer-friendly ruling because foreign tax credit is intended to prevent double taxation. A genuine FTC claim should not fail only on a technical ground.

Practical Importance of the Ruling

The ruling is especially useful for:

• resident taxpayers earning foreign income;
• NRIs returning to India;
• employees receiving overseas ESOPs or RSUs;
• consultants receiving foreign professional income;
• taxpayers whose FTC was denied in intimation or assessment;
• taxpayers who filed Form 67 late but have proper supporting documents.

However, taxpayers should not treat this decision as a reason to ignore compliance. Timely filing of Form 67 remains the safest approach.

Compliance Checklist for Taxpayers

Before claiming foreign tax credit, taxpayers should ensure that:

• residential status is correctly determined;
• foreign income is properly offered to tax in India;
• foreign tax paid or deducted is supported by documents;
• Form 67 is filed electronically;
• Schedule FSI and Schedule TR are correctly filled in the ITR;
• foreign asset reporting is completed where applicable;
• the FTC claim matches the supporting documents.

Key Takeaway

The decision in Neeta Makkar v. DCIT confirms that Foreign Tax Credit Form 67 is an important procedural requirement, but delayed filing should not automatically defeat a genuine FTC claim. Taxpayers with foreign income should maintain proper documentation, file Form 67 on time and seek professional advice where FTC has been denied due to delay.

For detailed guidance, read the full article here:
https://caalokkumar.com/my-writing/foreign-tax-credit-form-67/