The income regulation for granting relief to taxpayers seeking foreign tax credit (FTC) has been changed. The Central Board of Direct Taxes (CBDT) has made changes to Rule 128 under Income Tax Rules 1962, for FTC. The pre-amended rule requires taxpayers to file their FTC claims by the due date for supplying income tax returns (ITR). The new rule works retrospectively so that this benefit is applicable to all FTC claims made during the current Financial Year.
The Statement in Form No. 67 can now be provided on or before the ending of the Assessment Year.
The rule is applicable from the 1st day of April 2022 so that it applies to all the claims of foreign tax credit supplied during the financial year 2022-2023. It is thus certified that no individual is being negatively impacted by granting retrospective effect to this regulation.
Under the income tax rule of 128, an assessee, being a resident shall be allowed a credit for the amount of any foreign tax paid by him in a country or specified territory outside India, by way of deduction or otherwise, in the year in which the income corresponding to such tax has been offered to tax or assessed to tax in India.