Foreign Tax Credit prevents double taxation by allowing credit for tax paid abroad against domestic tax liability.
Relief from double taxation is provided under bilateral Double Taxation Avoidance Agreements or domestic provisions by the Exemption, Credit or Deduction methods; the Credit Method-available as Full Credit or Ordinary Credit-reduces domestic tax by allowing credit for foreign tax subject to procedural and substantive conditions. Creditable foreign tax is limited to tax, surcharge and cess, excludes disputed taxes, must be converted at specified exchange rates, and is claimable only upon filing the prescribed electronic form and furnishing documentary proof of payment or deduction. (AI Summary)