Home / News / India /  CBDT amends income tax rule for foreign tax credit claims

The income rule for providing relief to taxpayers claiming foreign tax credit (FTC) has been amended. The Central Board of Direct Taxes (CBDT) has made changes to rule 128 under Income Tax Rules 1962, for FTC. The pre-amended rule required taxpayers to file their FTC claims by the due date for furnishing income tax returns (ITR).

Income Tax department through its Twitter account, notified CBDT's amendment in the rule for FTC. The department said, "The pre-amended Rule required the FTC claim to be filed by the due date of furnishing the Income Tax Return. The amendment operates retrospectively so that this benefit is available to all FTC claims filed during the current Financial Year."

Also, it added, "The Statement in Form No. 67 can now be furnished on or before the end of the relevant Asstt Year."

As per the CBDT notification, "the statement in Form No 67.... shall be furnished on or before the end of the assessment year relevant to the previous year in which the income referred in the sub-rule (1) has been furnished within the time specified under sub-section (1) or sub-section (4) of section 139."

Further, CBDT notified saying, "provided that where the return has been furnished under sub-section (8A) of section 139, the statement in form 67... 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."

The amendment has come into effect on April 1, 2022.

The notification said, "The 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."

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.

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