ITR Filing 2024: What is Form 67 and how can it help you avoid double taxation, claim foreign tax credit

ITR filing: Form 67 is a crucial document in the realm of tax compliance. This official IT form must be accurately completed and submitted to the tax department within the stipulated timeline to avail of a tax credit. It is imperative that Form 67 is filed on or before the due date for tax return submissions in India to ensure the appropriate credit is applied. Failure to submit Form 67 in a timely manner will result in the non-processing of the tax credit for the individual. 

When a resident taxpayer earns income from a foreign country, the tax will be withheld by the foreign state. The taxpayer is still responsible for taxes in their resident country. In these situations, residents can seek a tax credit for the amount withheld by the foreign country by submitting Form 67 to the income tax department.

According to Income Tax rules 128(9), it is imperative to submit Form 67 by the conclusion of the assessment year prior to filing the Original Return under section 139(1) or the Belated Return under section 139(4) for Assessment Year 2024-25. Therefore, to avail of the tax credit, Form 67 must be filed by December 31, 2024.

Sections 90, 90A and 91 

Sections 90, 90A and 91 of Income-Tax (I-T) Act, 1961, deal with FTC. Income taxpayers in India can claim relief under Sections 90, 90A, and 91 of the Income Tax Act of 1961 as per the Double Taxation Avoidance Agreement (DTAA) provisions. 

Section 90 of the Income Tax Act is a provision that comes into effect in the presence of the Double Taxation Avoidance Agreement (DTAA). It serves the purpose of ensuring that no individual faces the burden of paying income tax twice when employed by a foreign entity. This provision is particularly relevant when an individual is engaged in work activities in a foreign nation or when an expatriate is rendering services within the borders of India. The DTAA serves as a safeguard to prevent both the respective governments from imposing taxes concurrently.

Furthermore, Section 90A of the Income Tax Act is applicable in cases where a DTAA has been agreed upon between specific associations of two nations. In scenarios where an organization in India has entered into a DTAA with a foreign entity, tax relief can be sought according to the guidelines set under Section 90A. This provision is designed for organizations that have mutually signed a DTAA, enabling tax relief in the form of a tax credit for the taxes paid in the foreign jurisdiction that exceed the minimum tax liability in India.

Moreover, Section 91 of the Income Tax Act addresses situations where an individual is entitled to claim tax relief in the absence of a DTAA between India and another country. India, being proactive in international tax matters, has established DTAA agreements with numerous countries worldwide, ensuring that taxpayers can benefit from provisions that mitigate the impact of double taxation.

How to fill Form 67

1. Form 67 can only be submitted through online mode. This service enables the registered users to file Form 67 online through the e-Filing portal.

2. You need:
> Registered user on the e-Filing portal with valid user ID and password.
> PAN and Aadhaar of the taxpayer are linked. (Recommended)
> Status of PAN of Taxpayer should be "Active"
> Statement of foreign income: Comprehensive details of any income that has been taxed abroad, including information on the foreign tax deducted or paid on such income.
> Certificate from foreign authority: Certificate or statement from the foreign tax authority should specify the nature and amount of income earned, as well as the tax deducted or paid.
> Proof of payment: Taxpayers are required to provide documentation validating the tax payments made outside India.

3. After you have logged into your account, navigate to the ‘e-File’ section and click on ‘Income Tax Forms’. From there, select the option ‘File Income Tax Forms’. On the subsequent page, locate and click on ‘Persons not dependent on any source of income’. Proceed by selecting Form 67 from the available choices and indicate the assessment year applicable to your filing.

4. File details: In the Form, provide comprehensive details concerning your foreign income and the corresponding taxes paid. Information to be included consists of the income amount, type of income received, country where taxes were paid, and the precise sum of taxes remitted.

5. Submit proof: Ensure that you have adequate evidence of tax payment to the foreign tax authority. This proof can be in the form of a tax payment receipt, a certificate of tax deduction issued by your foreign employer, or any official documentation validating the tax payment.

6. Verify and submit: Upon completing the form and assembling the requisite documents, proceed to submit the form electronically via the portal. To verify and finalize the submission process, you can employ an Electronic Verification Code (EVC) or a Digital Signature Certificate (DSC) for authentication purposes