NRIs with big foreign tax payment need to get CA certificate to claim tax credit in their ITRs in India under draft tax rules 2026; Know more
Feb 27, 2026
Synopsis
Indians working abroad can claim Foreign Tax Credit (FTC) by filing Form 67. Draft rules propose renumbering it to Form 44, requiring CA certificates for companies and individuals with foreign tax payments over Rs 1 lakh. These changes aim to enhance scrutiny and ensure bona fide claims, potentially increasing compliance costs.
Many Indians working overseas and earning their salaries abroad have to pay due taxes in that foreign country, be it Singapore, or the United States of America (USA). In cases, where a salaried employee has already paid taxes there, India offers a foreign tax credit (FTC). To take advantage of this, you need to submit Form 67 as per Rule 128 of the Income Tax Rules, 1962.
Although you must file Form 67 before the income tax return (ITR) filing deadline to receive the FTC, missing this deadline can lead to tax disputes. Some taxpayers have successfully contested these disputes in ITAT, but it's best to file Form 67 within the due date to secure the FTC credit in India and avoid double taxation.
However, under the draft Income Tax Rules, 2026, the rules have changed for Form 67 (re-numbered to Form 44 now). The draft income tax rules have not yet been approved by the Parliament.
What has changed with the form 67 under draft tax rules, 2026?
Sachin Vasudeva, Senior Partner, SCV & Co. LLP, told ET Wealth Online that now a CA certificate is required in cases of all companies claiming FTC and in case of individuals where foreign taxes paid outside India are equal to or more than Rs 1 lakh.
Vasudeva says: “Further, now the Form has separate reporting of FTC which is subject to dispute in the foreign country. A separate Form 45 needs to be filed where such dispute is settled with evidence for settlement of dispute and payment of taxes.”
Vasudeva further highlights that whereas Form 67 ( now Form 44 under new draft rules) requires a CA certificate based on the conditions mentioned , Form 45 would also require certification from CA.
What might be the reason for this rule change in Form 67 and how it may impact NRIs
According to Chartered Accountant Ashish Karundia, the proposal seems to arise from the tax authorities’ aim to add another layer of scrutiny to foreign tax credit (FTC) claims.
In contrast to taxes paid in India, which can be readily verified through the department’s internal reporting and information systems, taxes paid in foreign jurisdictions are not directly accessible for independent verification.
Karundia says: “By requiring certification from a Chartered Accountant in higher-value cases and mandating such certification uniformly for companies, the authorities appear intent on ensuring that only bona fide and adequately substantiated FTC claims are accepted.”
According to Karundia, while this measure is likely to strengthen the integrity of the claim process and curb the risk of erroneous or inflated credits, it will also result in increased compliance costs and extended procedural timelines, particularly for individuals and smaller firms with modest cross-border income.
Karundia says: “Taxpayers will need to maintain comprehensive supporting documentation, including evidence of foreign tax payments and exchange rate computations, to satisfy professional certification requirements and potential regulatory scrutiny.”
(16) Form No. 44 shall be verified by an accountant: –
(a) where the assessee is a company; or
(b) in all other cases where the amount of foreign tax paid outside India for a tax year equals or exceeds one lakh rupees.
Impact on NRIs
Charactered Accountant Suresh Surana says that the proposed changes relating to FTC under the Draft IT Rules, 2026 are expected to have significant practical implications for taxpayers earning income from foreign sources. The key aspects requiring attention are outlined below:
Revised timeline for filing the FTC form: Under the IT Rules, 1962, Form 67 and the supporting certificate need to be furnished on or before the end of the relevant assessment year, provided the ITR has been filed within the time specified under section 139(1) or section 139(4).
Under the Draft IT Rules, 2026, Form 44 and the certificate have to be furnished within 12 months from the end of the relevant tax year in which the income has been offered to tax or assessed in India, subject to the return being filed within the time specified under Section 263(1) or Ssection 263(4).
Auto-population of information: The notes to Form 44 indicate that certain information may be pre-filled or auto populated, to the extent possible, based on data available with the tax authorities. This is intended to reduce manual errors and improve ease of compliance.
What will the CA certify with respect to Form 67?
Surana says that the CA’s certification under the proposed rules would broadly cover the following -
• correctness of the foreign income reported,
• verification of foreign tax paid or withheld,
• confirmation that the FTC claim has been computed in accordance with the tax laws and applicable tax treaties.
What is the due date to file Form 67?
Chartered Accountant Gaurav Makhijani says that according to the Indian tax rules, Form 67 must be filed by the end of the relevant assessment year i.e., for income earned in FY 2024–25, Form 67 can be filed on or before March 31, 2026 in order to claim Foreign Tax Credit.
However, the income-tax return claiming FTC must still be filed within the prescribed time limits.
Makhijani explains using an example; for instance, if ITR is not yet filed for FY 2024-25, it must be furnished by December 31 as belated ITR under Section 139(4) in order to claim Foreign Tax Credit (FTC) along with Form 67 that may be furnished on or before March 31, 2026.
Makhijani says: “In practice, it is advisable to file Form 67 before filing the tax return, as this helps avoid automatic tax demands during return processing. The extended timeline mainly helps taxpayers in cases where documents such as proof of foreign tax payment are not immediately available.”
[The Economic Times]
