Foreign Tax Credit - Income-tax (18th Amendment) Rules, 2016 - 54/2016 - Income Tax

Foreign Tax Credit: residents may offset foreign income taxes against Indian tax subject to documentation, limits, and conversion rules.

Residents may claim credit for foreign tax paid in the year the corresponding income is taxed in India, subject to prorated allocation where income is taxed over multiple years. Credit is limited to the lesser of Indian tax on that income and actual foreign tax paid (treaty-excess ignored), converted at the telegraphic transfer buying rate. Disputed foreign tax is excluded until final settlement with proof; specific documentary requirements including Form No.67 and supporting certificates must be furnished by the return due date.