Earned income abroad and had tax withheld there? You can credit it against your Indian tax — but only if you file Form 67 on time. Here's how the Foreign Tax Credit and DTAA relief actually work.
CA Rahul Dang
Founder & Practice Lead
If you earned income abroad — salary, RSUs, freelance fees, dividends — and tax was deducted there, you should not have to pay full tax on it again in India. The mechanism that prevents this is the Foreign Tax Credit (FTC), and claiming it correctly hinges on one small form most people miss: Form 67.
When the same income is taxed in two countries, India lets you reduce your Indian tax by the tax you already paid abroad. The relief comes through Section 90 (where India has a DTAA with that country) or Section 91 (where it does not). In effect, you pay the higherof the two countries’ rates — not both rates stacked.
The credit is the lower of the foreign tax paid and the Indian tax payable on that same income.
To claim FTC you must file Form 67 online, under Rule 128. It asks for the foreign income, the country, and the tax paid, with proof. Skip it and the assessing officer can deny your credit — turning relief into double tax.
The deadline is not your return due date. Rule 128(9) requires the statement in Form 67 and the supporting certificate to be furnished on or before the end of the assessment year relevant to the previous year in which the income was offered to tax in India — provided the return for that assessment year was furnished within the time specified under section 139(1) or 139(4). Where the return is an updated return under section 139(8A), Form 67 is due on or before the date that return is furnished.
That is a materially later date than the return due date, and it is the position after Rule 128(9) was substituted in 2022. Filing late is not automatically fatal, but filing outside the rule removes your strongest ground if the credit is questioned.
Which years this covers.Form 67 and Rule 128 belong to the Income-tax Act, 1961, which section 536 of the Income-tax Act, 2025 preserves for tax years beginning before 1 April 2026 — so this is the framework for FY 2025-26 and earlier. For tax years from 1 April 2026 the foreign tax credit sits in rule 76of the Income-tax Rules, 2026 and the statement is Form No. 44, on a different deadline and with an accountant’s verification in some cases — see our guide to the foreign tax credit under rule 76 and Form No. 44.
Agent Mehra, a Pune software consultant, earns ₹20 lakh from a US client who withholds ₹3 lakhin US tax. In India the tax on that same ₹20 lakh works out to ₹4 lakh. He claims FTC of ₹3 lakh (the lower figure) and pays only the ₹1 lakhbalance in India — provided he files Form 67 in time. Forget the form, and he risks paying the full ₹4 lakh on top of the US ₹3 lakh.
Part of the NRI Taxation knowledge hub.
More on NRI & Foreign Income
Indian tax residence is not a binary. Not ordinarily resident sits between the two, keeps foreign income outside the Indian net, and usually lasts two or three years after a return to India. Either of two tests gets you there — and most people only know about one of them.
From the Income-tax Rules, 2026 the foreign tax credit sits in rule 76 and the statement is Form No. 44 — not Form 67. The deadline becomes twelve months from the end of the tax year, and a chartered accountant must verify the form where the assessee is a company or the foreign tax reaches ₹1,00,000.