If you are an NRI who has returned to India and is now a resident, or if you are an RNOR earning income both in India and abroad, you may be paying tax in two countries on the same income. The solution is the Foreign Tax Credit (FTC) — a mechanism under India’s Double Tax Avoidance Agreements (DTAA) that allows you to offset taxes paid abroad against your Indian tax liability. Under the Income Tax Act 2025, this is claimed via Form 44 (previously Form 67).
Who Can Claim Foreign Tax Credit?
Foreign Tax Credit under Sections 90/91 of the Income Tax Act 2025 is available to:
- Resident Indians (ROR) who earn foreign income — salary, business income, capital gains, interest — that is also taxable in India
- RNOR (Resident but Not Ordinarily Resident) individuals in their transition years after returning from abroad
- Individuals from countries with which India has a DTAA — USA, UK, UAE, Canada, Australia, Singapore, Germany, and 90+ other countries
- Individuals from countries without DTAA who have paid tax there — FTC is available under Section 91 of the IT Act 2025 as unilateral relief
What Changed: Form 67 Is Now Form 44
Under the Income Tax Act 2025 (effective 1 April 2026), Form 67 has been renumbered as Form 44. The underlying process and purpose remain identical — you file a statement of foreign income and foreign taxes paid, and claim the credit against your Indian tax payable. If you search for “Form 67” online, it is the same as Form 44 under the new Act.
At NRI Tax CA, we handle Form 44 / Form 67 filing as an add-on to ITR filing at ₹1,499 (ITR filing starts at ₹3,499).
The Critical Deadline You Must Not Miss
This is the most common and costly mistake: Form 44 must be filed on or before the due date of your ITR. If you file your ITR first and then try to file Form 44 later, your FTC claim will be rejected. The Income Tax Department has been strict about this sequencing, and courts have consistently held that late Form 44 filings do not qualify for the credit.
For most individuals, the ITR due date is 31 July of the assessment year. For those with audit requirements, it is 31 October. File Form 44 before or on the same day as your ITR — not after.
What Information You Need to File Form 44
To file Form 44, you need the following documents from your foreign country of employment or residence:
- Foreign tax return or assessment order showing the income declared and tax assessed
- Proof of tax payment — tax paid certificate, withholding tax certificate, or bank statement showing tax deducted
- Nature of income — salary, capital gains, business income, interest, etc.
- DTAA Article under which the credit is being claimed
- Exchange rate on the date of tax payment for conversion to INR
You do not need to provide foreign documents to us directly — we will tell you exactly what to gather based on your specific country and income type.
How the Credit Is Calculated
The FTC you can claim is the lower of: (a) the foreign tax actually paid, or (b) the Indian tax payable on that same income. This prevents a situation where you claim more credit than your Indian tax liability on that income. The calculation is done income-category by income-category — foreign salary credit, foreign capital gains credit, etc. are computed separately.
For example: If you earned ₹10 lakhs in salary from your US employer and paid ₹2.5 lakhs in US federal tax on it, and your Indian tax on the same ₹10 lakhs is ₹1.8 lakhs — your FTC is limited to ₹1.8 lakhs (the lower amount). The excess US tax paid (₹70,000) is not refundable but may be carried forward under US tax rules.
Countries Where This Is Most Commonly Used
Foreign Tax Credit claims are most common for NRIs returning from the United States, United Kingdom, Canada, Australia, Germany, and Singapore. The US in particular has a global taxation system — meaning US citizens and green card holders pay US tax on worldwide income regardless of where they live. When such individuals also become Indian tax residents, Form 44 / Form 67 is essential to avoid double taxation.
NRI Status and RNOR — The Transition Window
When you return to India after being an NRI, you typically get a 2–3 year window as an RNOR (Resident but Not Ordinarily Resident). During RNOR status, your foreign income is not taxable in India — only Indian-sourced income is. This makes RNOR status extremely valuable, and careful planning of your return date can determine whether you get this benefit for 2 years or just 1.
Once RNOR status ends and you become a full Resident (ROR), your global income is taxable in India and FTC via Form 44 becomes essential if you still have foreign income. At NRI Tax CA, our NRI Status & Residential Advisory service (₹4,999) analyses your exact situation and advises on optimal transition timing.
Get Your Form 44 Filed Correctly
Foreign Tax Credit calculations involve DTAA interpretation, income-category matching, and precise timing requirements. An error here means either overpaying Indian tax (by not claiming enough credit) or a notice from the Income Tax Department (by claiming incorrectly). At NRI Tax CA, we handle Form 44 as part of your NRI ITR filing — ensuring the credit is maximised legally and filed on time.
Compute your foreign tax credit and net India tax liability with our free NRI tax calculator. For Form 67 filing and DTAA claim in ITR, consult our NRI tax experts.
Start your case here — fixed quote within 2 hours, ITR + Form 44 starting at ₹4,998.
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