Form 67 auto-calculated tax relief amount

This query is : Open

Atul (Querist)
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05 July 2018 Example:

Foreign income: Rs.66000
Foreign tax paid: Rs.1320
tax as per India tax rules: Rs.800
tax as DTAA: Rs.1500

It seems the tax relief amount auto calculated in Form 67 is Rs.1500. My understanding was that the relief amount should be Rs. 1320 (the smaller of foreign tax paid and tax payable as per DTAA in India).

Would appreciate some explanation.

Thanks.

CA Mayur Todmal

CA Mayur Todmal (Expert)
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05 July 2018 foreign tax credit shall be the lower of:
- Tax payable under the Act on such income; or
- Foreign tax paid on such income
Where the foreign tax paid exceeds the amount of tax payable under the
provisions of tax treaty, such excess amount shall not be considered

Atul

Atul (Querist)
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05 July 2018 In my example, the foreign tax (Rs.1320) does not exceed the amount of tax as per DTAA. (Rs. 1500). So, as per your explanation, the foreign tax credit should be Minimum(Tax payable as per India IT rules, Foreign tax paid) which is
Minimum (800, 1320) = Rs.800.
But the Form 67 autocalculated Foreign tax credit amount is Rs.1500, when I tried with the above numbers. That is the confusion.

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