A foreign tax credit lets a taxpayer take away tax that has already been paid in another country from the tax on the same money. This way the same money does not get taxed twice. In India a foreign tax credit is claimed by filing Form 67 on the income tax portal. Form 67 is for residents. Non‑resident Indians (NRIs) do not use Form 67 because they are taxed in India on money earned in India.
The NRI foreign tax credit and Form 67 become important in two cases. First when an NRI comes back to India. Becomes a resident while still earning money abroad that was already taxed in the other country. Second, when an NRI earns money in India that is taxed in India and also in the country where the NRI lives. In that case the NRI can claim a foreign tax credit for the Indian tax under the rules of that other country and the treaty. Knowing which country owns the foreign tax credit stops a wasted filing or a lost claim.
Who can claim a foreign tax credit in India
| Status | Taxed in India on | Form 67 in India |
|---|---|---|
| Non‑resident Indian (NRI) | Income received, accrued or arising in India | Not applicable because there is usually no foreign money in the Indian return. The foreign tax credit for tax is claimed in the country where the person lives. |
| Not ordinarily resident (RNOR) | Indian income and certain foreign income, such as income from a business controlled from India | Applicable when foreign money is taxed in India and when tax has been paid in the other country. |
| Ordinarily resident | Indian income and foreign income | Applicable for any foreign money that is taxed in both countries. |
When an NRI comes back to India the person is usually taxed on all money earned worldwide after the resident status changes. Money such as salary, interest, dividends or rent that was taxed abroad can then be eligible for the foreign tax credit.
How the credit works
The foreign tax credit is available when there is a tax treaty with the country, which is called a double taxation avoidance agreement or DTAA. If there is no treaty the foreign tax credit comes from the domestic relief provision. The foreign tax credit is limited to the amount between the foreign tax paid and the Indian tax on that same money. This means the foreign tax credit can lower the tax but it cannot give a refund for any foreign tax that was already paid.
Steps to claim the credit with Form 67
| Step | What happens |
|---|---|
| 1. Identify the taxed income | The income must be taxable in India and must have borne tax abroad such as foreign salary, interest or capital gains. |
| 2. Check the treaty | The DTAA with the country decides the relief available and the article that applies to each income type. |
| 3. Collect proof | A certificate or statement from the foreign tax authority or employer proof of payment of the tax and the foreign tax return where one was filed. |
| 4. Convert the tax into rupees | The telegraphic transfer buying rate of the State Bank of India on the last day of the month before the month of payment or deduction is used. |
| 5. File Form 67 online | The form is filed on the income tax portal with an electronic verification code or a digital signature and the documents are attached. |
| 6. Claim the credit in the return | The foreign income and the tax relief are reported in the schedules of the income tax return (ITR). |
Timing and common mistakes
| Point | What to know |
|---|---|
| Deadline | The safest course is to file Form 67 on or before the date of the original return. Some tribunal rulings have allowed claims with late‑filed forms though relying on them carries a dispute risk. |
| Updated return | For an updated return Form 67 is filed on or before the date of filing that return. |
| Wrong form or year | The Income‑tax Act, 2025 and its rules have sections and forms from April 2026 so the form name and rule reference for the relevant year are worth confirming on the portal. |
| Currency conversion | Using a rate than the prescribed one can lead to a mismatch with the Indian tax computation. |
| Missing proof | A claim without the foreign tax certificate or payment proof can be rejected. |
What NRIs should take from this
Form 67 is a tool for residents. For an NRI the foreign tax credit for tax stays, in the country where the person lives. When an NRI becomes a resident again the foreign money and the foreign tax paid on it must be entered in the return. The claim then needs the documents and the filing before the return date.
Kuvera offers mutual funds and the statements of holdings and gains that Kuvera gives help put together the Indian income part of a return.
Frequently Asked Questions
1. What is Form 67?
Form 67 is the statement that you file on the income tax portal when you want to claim a credit in India for tax that you have already paid in another country on the income.
2. Can an NRI file Form 67 in India?
Generally no. An NRI is taxed in India on income earned in India and does not claim credit for foreign tax in the Indian return. If the NRI returns to India and becomes a resident then that individual can use Form 67.
3. What documents are needed to claim the credit?
A statement from the foreign tax authority or from the employer proof of payment of the foreign tax and where available the foreign tax return.
4. What is the deadline for Form 67?
The safest time to file Form 67 is on or before the date of the original income tax return. If you need to file an updated return Form 67 must be submitted by the filing date of that return.
5. Is the foreign tax credit more than the tax on that income?
No. The foreign tax credit is limited to the amount between the foreign tax paid and the Indian tax payable on that income.
