India Foreign Tax Credit: Form 67, Form 44 and How to Claim Relief

The foreign tax credit in India lets a resident reduce Indian tax by the tax already paid abroad on the same income. It matters most to returning NRIs who regain resident status while still earning in the United States or Canada, and to Indian companies with foreign income. The credit is claimed in the Indian return with a statement of foreign income and tax: Form 67 for income up to FY 2025-26, and Form 44 under the Income-tax Rules, 2026 for tax year 2026-27 onwards.

How does the foreign tax credit in India work?

Section 159 of the Income-tax Act, 2025 gives effect to tax treaties, and it applies the Act's provisions where they are more beneficial than the treaty. Section 160 covers countries with which India has no agreement: the resident is entitled to a deduction from Indian tax on the doubly taxed income at the Indian rate or the foreign rate, whichever is lower. The mechanics of the credit sit in rule 76 of the Income-tax Rules, 2026:

• Year of credit: the foreign tax is credited in the tax year in which the corresponding income is offered to tax or assessed in India. If the income is spread over several tax years, the credit follows in the same proportion.
• What counts as foreign tax: for a treaty country, the tax covered by the treaty. For other countries, tax in the nature of income-tax.
• What the credit is set against: tax, surcharge and cess, but not interest, fee or penalty.
• Per source, per country: the credit is computed separately for each source of income from each country, and it is the lower of the Indian tax on that income and the foreign tax paid. Foreign tax above the treaty-allowed amount is ignored.
• Currency: convert the foreign tax at the telegraphic transfer buying rate on the last day of the month before the month of payment or deduction.
• Disputed foreign tax: no credit while the tax is disputed. If you furnish evidence of settlement, evidence that the tax was paid, and an undertaking that no refund has been or will be claimed, within six months from the end of the month in which the dispute is finally settled, the credit is allowed for the year the income was taxed in India.

Who can claim it?

The rule begins "an assessee, being a resident". Residency is tested every year; our residency rules guide explains resident, non-resident and RNOR status. Typical claimants are returning NRIs who are resident and ordinarily resident again, Indian residents earning U.S. or Canadian rent, dividends or salary, and Indian companies with foreign branch or dividend income.

How to claim the credit, step by step

1. Compute the Indian tax on the foreign income for the year, source by source and country by country.
2. Gather proof of foreign tax. A certificate or statement of the nature of income and tax deducted, from the foreign tax authority, the person who deducted tax, or signed by you, with proof of payment or deduction (for example a payment acknowledgement, bank counterfoil or challan).
3. File the statement online. For income up to FY 2025-26 use Form 67 under the 1962 Rules; for tax year 2026-27 onwards use Form 44. Both are filed on the e-Filing portal. The Department's 2026 forms list describes Form 44 as the statement of income from a country outside India and foreign tax credit, and the portal supports both Acts side by side.
4. File the return on time. Under rule 76(12), Form 44 and the certificate must be furnished within twelve months from the end of the tax year, and the return for that year must have been furnished within the original or belated due date. For Form 67 years, ask your Chartered Accountant (CA) to confirm the exact cut-off in the rule.
5. Report the claim in the return. The Indian return has schedules for foreign-source income, tax relief and foreign assets, so the credit must reconcile with them. See Schedule FA and the Black Money Act.
6. If a dispute later settles, file Form 45 (intimation of settlement of dispute regarding foreign tax) within the six-month window.

Documents and information you need

• Foreign tax returns, assessments or withholding statements (U.S. Forms 1099, 1042-S or the tax return; Canadian T-slips and notices of assessment)
• Proof of payment: bank statements, challans or payment acknowledgements
• A schedule of foreign income by country and source, with exchange-rate workings
• Treaty article references and any tax residency certificate for the claim
• The Indian computation showing tax before and after credit

A worked example

A Hyderabad-based returnee, who is resident and ordinarily resident for FY 2026-27, earns US rental income equal to Rs 10,00,000. The Indian tax on that income at her marginal rate is Rs 2,00,000, and the U.S. tax paid, converted at the telegraphic transfer buying rate, is Rs 1,20,000. The credit is Rs 1,20,000, so Indian tax payable on that income falls to Rs 80,000. If the U.S. tax had been Rs 2,40,000, the credit would stop at Rs 2,00,000, and the excess Rs 40,000 is not creditable in India. She files Form 44 with the certificate and her return in July 2027.

Mistakes to avoid

• Claiming credit as a non-resident or in a year of NRI status
• Using one blended credit across countries instead of source-by-source
• Forgetting to convert at the prescribed rate
• Claiming credit for tax that is still in dispute
• Filing the return late, which can cost the credit even when the proof is perfect

How we can help

From Aurora, Illinois, we prepare the U.S. foreign tax credit calculation, compare it with the Indian one, and flag where the same income is credited in both countries. Your Indian CA prepares and files Form 67 or Form 44 and the Indian return, and we coordinate so the numbers agree. See cross-border tax and individual returns for newcomers and NRIs. Browse the full India: Tax and Compliance section.

Frequently asked questions

General information only. It is not tax, legal, accounting or immigration advice for your situation, and rules change; confirm the current rules with the official source or a licensed professional in the relevant country.