Woman paid US tax but faced Rs 30 lakh tax demand in India; what ITAT said
The Income Tax Appellate Tribunal (ITAT) in Delhi ruled in favor of an Indian-origin US citizen who faced a tax demand due to a procedural error. The taxpayer had failed to file Form 67 to claim foreign tax credits, but the tribunal allowed the claim despite the late submission.
Why it matters
This ruling provides clarity for non-resident Indians regarding the importance of procedural compliance in claiming foreign tax credits under DTAA agreements.
You are an Indian-origin US citizen and you pay your taxes in America. But a tax demand for your income is raised in India because of an error on your part. What happens then?In one such case, a woman paid income tax in the US and sought to claim credit for the tax under the India-USA DTAA while filing her taxes in India.Under the applicable rules, taxpayers who have paid taxes in a foreign country with which India has a Double Taxation Avoidance Agreement (DTAA) are required to submit Form 67 along with their ITR to claim credit in India for the foreign taxes already paid.What the case is aboutThe woman failed to file Form 67, a mistake that resulted in the Income Tax Department refusing her foreign tax credit (FTC) claim.
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