Due date for filing Form 67 to get Foreign tax credit in India revised from AY 2023-24

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Person’s who are earning income from 2 different countries might be required to pay some tax in both countries and in such situation the resident country allows credit of tax paid in foreign country as per it’s rules.

India also provides such facility and section 90 read with rule 128 governs the provision to claim foreign tax credit in India.

For claiming foreign tax credit, as per Income Tax rules assessee is required to file Form 67 on e-filing portal before filing Income tax return.

Relevant extract of sub-rule 9 of rule 128 in relation to filing of Form 67 is as under:

“(9) The statement in Form No.67 referred to in clause (i) of sub-rule (8) and the certificate or the statement referred to in clause (ii) of sub-rule (8) shall be furnished on or before the due date specified for furnishing the return of income under sub-section (1) of section 139, in the manner specified for furnishing such return of income.”

Thus, as per the rule Assessee is required to file Form 67 before the due date of filing Income tax return u/s 139(1) i.e. original return to claim foreign tax credit.

However, Income tax department has vide notification no. 100 of 2022 dt. 18.08.2022 amended the rules to claim foreign tax credit and filing of Form 67 and relevant extract of notification amending sub-rule 9 of rule 128 is as under:

“(9) The statement in Form No. 67 referred to in clause (i) of sub-rule (8) and the certificate or the statement referred to in clause (ii) of sub-rule (8) shall be furnished on or before the end of the assessment year relevant to the previous year in which the income referred to in sub-rule (1) has been offered to tax or assessed to tax in India and the return for such assessment year has been furnished within the time specified under sub-section (1) or sub-section (4) of section 139:

Provided that where the return has been furnished under sub-section (8A) of section 139, the statement in Form No. 67 referred to in clause (i) of sub-rule (8) and the certificate or the statement referred to in clause (ii) of sub-rule (8) to the extent it relates to the income included in the updated return, shall be furnished on or before the date on which such return is furnished.”

In the above rule the time limit has been provided for 2 types of return, Original return and Updated return. Hence, let’s discuss the amendment for both type of return:

Due date for Form 67 in relation to Original return or belated return:

As per the amended rule assessee is required to furnish Form 67 before the end of relevant assessment year provided the Income tax return is furnished within the time limit prescribed u/s 139(1) and 139(4) i.e. original return and belated return.

Thus, now the requirement to file Form 67 before the due date of filing original return u/s 139(1) has been done away with and Form 67 can now be filed before the end of relevant assessment year.

Due date for Form 67 in relation to Update Return:

In relation to updated return it has been mentioned to claim foreign tax credit in Form 67 in relation to additional income offered in updated return, Form 67 can be filed before filing the Updated return.

Key takeaways:

As per the above amendment now Form 67 can be filed till end of relevant assessment year and now belated return can be filed latest by December month of relevant assessment year and thus it can be said that such returns will be taken up for processing after March only if the Form 67 is filed in March month i.e. end of relevant assessment year.

In case of updated return now the assessee would be able to again file Form 67 to claim foreign tax credit along with updated return but this could be filed only in relation to additional income offered in updated income tax return.

It will be interesting to see as to how 2 Form 67 will be allowed to be filed.

It is important to note that still the due date to file Form 67 has been provided in rule 128 and not Income tax act and there have been various instances wherein it has been held that due date for filing Income tax return cannot be prescribed in rules and due dates are only applicable if the same is mentioned in the Act and sections.

This amendment is effective from the 1st day of April, 2022 so that it applies to all the claims of foreign tax credit furnished during the financial year 2022-2023. It is hereby certified that no person is being adversely affected by giving retrospective effect to this rule.

Some of the case laws which support the above contention are as under:

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