How Do You Claim Foreign Tax Credit in India Using Form 67 or Form 44?
- Author:
- Manoj Sharma
- Verified by:
- Editorial team
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Short answer
Foreign tax credit lets an Indian resident reduce Indian income tax by the tax already paid abroad on the same income. For income up to FY 2025-26, you claim it with Form 67 under Rule 128. From tax year 2026-27, you file Form No. 44 under Rule 76 of the Income-tax Rules, 2026.
| Applies to | Governed by | Deadline | Penalty | Last verified |
|---|---|---|---|---|
| Residents of India whose foreign income is taxed in India and who paid tax on that income in another country, usually through withholding by a foreign client | Income-tax Act, 2025 sections 159 and 160 with Rule 76 and Form No. 44 of the Income-tax Rules, 2026 (tax year 2026-27 onwards); Income-tax Act, 1961 sections 90, 90A and 91 with Rule 128 and Form 67 of the Income-tax Rules, 1962 (FY 2025-26 and earlier) | Form 67 for FY 2025-26: by the end of assessment year 2026-27 (31 March 2027), with a return filed on time or as a belated return. Form No. 44 for tax year 2026-27: within twelve months from the end of the tax year | No separate penalty for the form itself; without it the credit is not allowed, so the foreign tax is not set off and Indian tax, with any interest, stays payable | 9 Oct 2026 |
What is foreign tax credit for Indian residents earning foreign income?
Foreign tax credit is a reduction in your Indian income tax for tax you already paid in another country on the same income. A resident pays Indian tax on worldwide income, so a fee taxed abroad would otherwise be taxed twice. Rule 76(1) allows a resident credit for foreign tax paid by deduction or otherwise, in the tax year in which the matching income is taxed in India.
- Treaty countries: Where India has a tax treaty with the country, the foreign tax counted is the tax covered by that treaty. The treaty power sits in section 159 of the Income-tax Act, 2025, which replaced section 90 of the 1961 Act. See DTAA for Indian exporters.
- Other countries: Where there is no treaty, section 160 gives a resident a deduction calculated at the Indian rate of tax or the foreign rate, whichever is lower. This replaced section 91 of the 1961 Act.
- Cap: Under Rule 76(7)(a), the credit is the lower of the Indian tax payable on that income and the foreign tax paid on it, worked out separately for each source of income in each country.
- Scope: Credit is set against tax, surcharge and cess. Rule 76(4) says it is not available against interest, fee or penalty.
- Form: The claim needs a statement of foreign income and foreign tax. This is Form 67 under Rule 128(8) of the Income-tax Rules, 1962 and Form No. 44 under Rule 76(10) of the Income-tax Rules, 2026.
The Income-tax Act, 1961 was repealed on 1 April 2026, and the Income Tax Department FAQ says its provisions still govern tax years that began before that date. So Form 67 is still the form for FY 2025-26 income, and Form No. 44 applies from tax year 2026-27.
Who can claim foreign tax credit in India on income taxed abroad?
A resident of India can claim foreign tax credit when the same income is taxed in India and tax on it was paid or withheld abroad. Rule 76(1) and Rule 128(1) both limit the credit to residents. The income must be offered to tax or assessed to tax in India in that year.
| Taxpayer | Can claim credit under the rule | Why | Best for |
|---|---|---|---|
| Resident individual freelancer or consultant | Yes | Resident, and foreign fees are taxed in India | Freelancers whose foreign client withheld tax |
| Resident company or LLP exporting services | Yes | Resident; Form No. 44 must also be verified by an accountant for a company | Agencies and IT service firms with treaty withholding |
| Resident earning foreign dividends or interest | Yes | Same rule applies to any income taxed abroad and in India | Individuals holding foreign shares or deposits |
| Non-resident Indian | No, not under Rule 76 or Rule 128 | Both rules cover residents only; non-residents rely on treaty relief with a tax residency certificate | NRIs with income from India |
| Resident whose foreign income is exempt in India | No | No Indian tax arises on that income, so there is nothing to credit against | Checking before filing a form you do not need |
How do you claim foreign tax credit in your Indian income tax return?
You claim foreign tax credit by reporting the foreign income in your return, filing the foreign tax credit statement on the e-filing portal, and keeping proof of the foreign tax. The form depends on the year: Form 67 for FY 2025-26 and earlier, and Form No. 44 from tax year 2026-27.
- Collect proof of the foreign tax: a certificate from the foreign tax authority or from the client that deducted the tax, or your own signed statement backed by proof of payment or deduction, as listed in Rule 76(10) and (11).
- Convert the foreign tax into rupees at the telegraphic transfer buying rate on the last day of the month before the month in which the tax was paid or deducted, as required by Rule 76(7)(b).
- Work out the credit for each source of income from each country: the lower of the Indian tax on that income and the foreign tax paid, ignoring any foreign tax above the treaty rate.
- Log in to the e-filing portal, select the form, prepare and submit it. The Form 67 FAQ says the form can only be filed online.
- E-verify the form with Aadhaar OTP, EVC or DSC, as the Form 67 FAQ describes.
- Report the foreign income and claim the relief in your return. Relief claimed for tax paid outside India is one of the amounts section 266(2)(d) lets you take into account before paying the balance tax.
- Keep the certificates, challans and exchange rate workings in case the Assessing Officer asks for them.
Is a chartered accountant needed to file Form 67 or Form No. 44?
For Form 67, the Form 67 FAQ says a CA certificate is not mandatory. For Form No. 44, Rule 76(16) requires verification by an accountant in two cases.
- The person claiming credit is a company.
- In any other case, the foreign tax paid outside India for the tax year is Rs 1,00,000 or more.
How does foreign tax credit work when the foreign tax is disputed?
No credit is allowed for foreign tax you are disputing. Under Rule 76(5) and (6), credit is allowed for the original year once the dispute is settled, if you act within six months from the end of the month of settlement.
- File Form No. 45 with evidence of settlement and proof that the tax was paid, as required by Rule 76(15).
- Give an undertaking that no refund of that tax has been or will be claimed.
- For years under the 1961 Act, Rule 128(4) has the same six-month condition.
How is foreign tax credit split when the income is taxed in India over more than one year?
The credit follows the income. Rule 76(2) says that where income is offered to tax in more than one tax year, credit is spread across those years in the same proportion as the income.
Can foreign tax credit be claimed with an updated return?
Yes, for the income included in the updated return. Rule 76(13) requires Form No. 44 and the supporting certificate on or before the date the updated return under section 263(6)(a) is filed. Rule 128(9) has the same condition for an updated return under section 139(8A).
What are the deadlines and documents for Form 67 and Form No. 44?
The deadline for Form 67 for FY 2025-26 income is the end of assessment year 2026-27, which is 31 March 2027, provided the return was filed under section 139(1) or 139(4). For tax year 2026-27, Form No. 44 is due within twelve months from the end of the tax year, with a return under section 263(1) or (4), per Rule 76(12).
| Item | Income up to FY 2025-26 (1961 Act) | Tax year 2026-27 onwards (2025 Act) | Best for |
|---|---|---|---|
| Rule | Rule 128, Income-tax Rules, 1962 | Rule 76, Income-tax Rules, 2026 | Finding the legal text |
| Form | Form 67 | Form No. 44 | Choosing the correct form on the portal |
| Filing deadline | On or before the end of the assessment year, with a return under section 139(1) or 139(4) | Within twelve months from the end of the tax year, with a return under section 263(1) or 263(4) | Planning when to file |
| Updated return | On or before the date the updated return under section 139(8A) is filed | On or before the date the updated return under section 263(6)(a) is filed | Correcting a missed claim |
| Foreign tax proof | Certificate from the foreign tax authority or deductor, or your signed statement with proof of payment or deduction | Same three options, with proof of payment or deduction for a self-signed statement | Freelancers paid by foreign clients |
| Accountant verification | Not mandatory, per the portal FAQ | Required for companies, and for others where foreign tax is Rs 1,00,000 or more | Larger claims and companies |
| Disputed tax form | Evidence and undertaking under Rule 128(4) | Form No. 45 with evidence of settlement | Taxpayers in a dispute abroad |
What happens if you do not file Form 67 or Form No. 44 on time?
If you do not file the form within the time allowed, the condition in Rule 76(10) or Rule 128(8) is not met and the credit can be refused. You then pay full Indian tax on income that was already taxed abroad.
- Credit refused: The rules allow credit only on furnishing the statement and proof, so a missing form usually leads to the credit being disallowed when the return is processed.
- Tax demand: If the credit is cut, the tax you set off becomes payable, and interest under the Act can apply to the shortfall.
- No expense deduction: You cannot fall back on treating the foreign tax as a business expense. Section 35(a)(iii) disallows tax paid in another country for which relief is available under section 159 or 160.
- Refund cases: If foreign tax that you claimed as credit is later refunded, for example after a loss is carried back abroad, Rule 76(14) requires you to file Form No. 44 again.
If the return was filed in time but the form was not, file it before the deadline in Rule 76(12) or Rule 128(9). If that has passed, an updated return with the form filed on or before the same date is one route for the income it covers. Check your case with a tax professional.
How is foreign tax credit calculated for an Indian freelancer?
Say a resident freelancer has total income of Rs 20,00,000, including Rs 5,00,000 of fees from a client abroad that withheld Rs 50,000 as tax. Indian tax on total income is Rs 2,00,000, an average rate of 10%. Indian tax on the foreign fees is then Rs 50,000. Credit is the lower of Rs 50,000 and Rs 50,000, so Rs 50,000. If the client withheld Rs 75,000 instead, credit stays capped at Rs 50,000 under Rule 76(7)(a). All numbers are hypothetical.
| Situation | Credit allowed | Where the rule is | Best for |
|---|---|---|---|
| Foreign tax lower than Indian tax on that income | Full foreign tax | Rule 76(7)(a) | Clients in low-withholding countries |
| Foreign tax higher than Indian tax on that income | Capped at the Indian tax on that income | Rule 76(7)(a) | High-withholding countries |
| Foreign tax withheld above the treaty rate | Excess over the treaty rate is ignored | Rule 76(7)(a) | Clients who withheld without treaty forms |
| No treaty with the country | Indian rate or foreign rate, whichever is lower | Section 160(1) | Clients in non-treaty countries |
| Foreign tax under dispute | None until the dispute is settled | Rule 76(5) and (6) | Contested withholding |
| Interest, fee or penalty in India | Credit cannot be used against these | Rule 76(4) | Late filers with interest due |
What mistakes do freelancers make when claiming foreign tax credit in India?
- Wrong form: Filing Form 67 for tax year 2026-27 income, or Form No. 44 for FY 2025-26 income. The year of the income decides the form.
- Wrong rate: Converting foreign tax at the rate on the payment date instead of the telegraphic transfer buying rate on the last day of the previous month.
- Above treaty rate: Claiming credit for tax a client withheld above the treaty rate. That excess is ignored; ask the client for a refund under their local rules. See foreign client deducted withholding tax.
- Missing proof: Relying on an invoice note that tax was withheld. Keep a certificate from the client or tax authority, or proof of deduction with your own statement.
- Wrong year: Claiming credit in the year the tax was withheld when the income is taxed in India in a different year. The credit follows the year the income is taxed in India.
- Pooling countries: Adding all foreign tax together. Credit is worked out separately for each source of income in each country.
- Income not reported: Claiming credit without showing the foreign income in the return. Credit only exists for income offered to tax in India. See income tax on foreign income.
How did we verify this?
Every rule, deadline and form on this page is linked to its official source, checked on the dates below.
- Income-tax Rules, 2026 (Notification No. 22/2026, G.S.R. 198(E), 20 March 2026), Rule 1(2) (in force 1 April 2026); Rule 76(1) to (18) Foreign tax credit; Form No. 44 Statement of income from a country or region outside India and Foreign Tax Credit; Form No. 45 (checked 9 Oct 2026)
- Income-tax Rules, 1962 (Income Tax Department), Rule 128(1) to (10) Foreign Tax Credit; sub-rule (9) substituted by IT (Twenty-seventh Amdt.) Rules, 2022 w.r.e.f. 1-4-2022; Form No. 67 (checked 9 Oct 2026)
- Income-tax Act, 2025, Sections 35(a)(iii), 159, 160, 263(1), (4), (6), 266(2)(d), 396(b) (checked 9 Oct 2026)
- Form 67 FAQ, Income Tax Department e-filing portal, FAQs 1 to 6 (checked 9 Oct 2026)
- Objective and scope of the New Act FAQs, Income Tax Department, FAQs 2, 9 and 21 (checked 9 Oct 2026)
- Returns and forms applicable for individuals, Income Tax Department, Form 67 entry in returns and forms list (checked 9 Oct 2026)
Frequently asked questions
Is Form 67 still used after the Income-tax Act, 2025 came into force?
Yes, for earlier years. The Income Tax Department FAQ says returns for assessment year 2026-27 are filed using forms under the old Act. So Form 67 under Rule 128 is used for FY 2025-26 income. For tax year 2026-27 onwards, Form No. 44 under Rule 76 replaces it.
Can foreign tax credit be claimed if a US client deducted tax without a W-8BEN?
Credit is limited to the tax covered by the treaty. Where the client withheld more than the treaty rate, the excess is ignored when the credit is worked out. You may need to seek a refund of the excess from the foreign tax authority. See W-8BEN for Indian freelancers for how treaty rates are claimed.
Does the Form 67 FAQ deadline match Rule 128 for FY 2025-26?
Not exactly. The portal Form 67 FAQ says to file before the section 139(1) due date. Rule 128(9), as substituted in 2022, allows filing by the end of the assessment year if the return is filed under section 139(1) or 139(4). Filing with the return avoids the question.
Can a tax residency certificate help when claiming foreign tax credit in India?
A tax residency certificate from India can help you get the lower treaty rate abroad, which reduces how much a foreign client withholds. That lowers the excess you cannot claim as credit in India. See tax residency certificate for how to apply for one before invoicing.
Is foreign tax counted as income when claiming credit under Rule 76?
Yes. Under section 396(b) of the Income-tax Act, 2025, income-tax paid outside India by deduction, for which credit is allowed, is deemed income received. So you report the gross foreign income before withholding, and then claim the withheld tax as credit.
Can an authorised representative file Form 67 for a freelancer?
Yes. The Form 67 FAQ says you can add an authorised representative to file Form 67 on your behalf. The form can only be filed online on the e-filing portal and is e-verified using Aadhaar OTP, EVC or DSC. Keep a copy of the filed form with your records.
Which ITR lists Form 67 as a document for claiming foreign tax credit?
The Income Tax Department's return guidance for individuals lists Form 67 as the statement of foreign income and foreign tax credit that the taxpayer submits. It is filed separately from the return itself. See which ITR form to file for choosing the return.