Form 67 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Form 67 is the statement a resident files under Rule 128 to claim credit for tax paid abroad against Indian tax on the same income. It captures the foreign income, the foreign tax, and the credit claimed, and should be filed on or before furnishing the income-tax return.
Overview
When a resident's foreign income is taxed both abroad and in India, Rule 128 of the Income-tax Rules lets him claim foreign tax credit (FTC). The procedural gateway is Form 67 — without it, the credit computed under Sections 90/90A (treaty) or 91 (unilateral) of the Income-tax Act 2025 cannot be effectively claimed in the return.
What Form 67 Captures
| Detail | Purpose |
|---|---|
| Country and source of income | Identify the foreign income stream |
| Amount of foreign income | Base for computing Indian tax on it |
| Foreign tax paid / deducted | Amount available for credit |
| Rate and article of relief | Treaty (Section 90) or unilateral (Section 91) |
| Credit claimed | Lower of foreign tax and Indian tax on that income |
How the Credit Is Computed
Under Rule 128 the FTC is worked out separately for each source and each country. For each stream the credit is the lower of (a) the foreign tax actually paid or deducted and (b) the Indian tax payable on that foreign income. Credit is not allowed for foreign interest, penalty or disputed tax. The credit is converted to rupees using the telegraphic transfer buying rate on the last day of the month preceding the month the tax was paid or deducted.
Filing Timeline
Rule 128 was relaxed so that Form 67 may now be furnished on or before the end of the relevant assessment year, aligning with the belated-return window. Best practice is to file Form 67 before or together with the return; filing it late has historically triggered disputes even though courts have treated the requirement as directory.
Worked Example
A resident individual earns ₹8,00,000 dividend from the US and suffers 25% US tax (₹2,00,000). Indian tax on the dividend at his slab is ₹2,40,000 (30%). The FTC is the lower of ₹2,00,000 and ₹2,40,000 — so ₹2,00,000 is credited and only ₹40,000 net Indian tax remains. He files Form 67 with proof of US tax before submitting his ITR.
Common Pitfalls
Claiming credit without filing Form 67, using the wrong exchange rate, or claiming credit for foreign surcharge/penalties leads to disallowance. Compute source-by-source and keep the foreign tax certificate on record.