Rule 128 - Foreign Tax Credit

Foreign tax credit allows residents to offset foreign tax against Indian tax where the same income is taxed in India.

A resident assessee may claim a foreign tax credit in the year the corresponding income is offered or assessed to tax in India, computed source-wise by country as the lower of Indian tax attributable to that income and foreign tax paid (converted at the telegraphic transfer buying rate), available against tax, surcharge and cess but not interest; disputed foreign tax is excluded until final settlement with evidence of payment and non-claim of refund, and specified documentation including Form No.67 and tax certificates must be furnished within the assessment-year return timelines.