Foreign tax credit-form 67

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This discussion clarifies how to determine the exchange rate for foreign tax credits on Form 67, using the Telegraphic Transfer Buying Rate on the last day of the month before payment. It also explains that the tax credit is applied during the processing of your tax return. Additionally, it addresses the applicability of Section 44ADA for freelancing income and the subsequent tax audit requirements.

Kowsalya

Kowsalya (Querist)

28 August 2021 what is the exchange rate to be considered while filing form 67 and when do we get credit after filing it?

Thanks in advance

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

29 August 2021 FTC shall be determined by conversion of the currency of payment of the foreign tax at the Telegraphic Transfer Buying Rate on the last day of the month immediately preceding the month in which such tax has been paid or deducted.
You will get tax credit while return is processed. File form 67 before filing ITR.

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Kowsalya

Kowsalya (Querist)

30 August 2021 Sir
What to do if the resident assessee earns Rs.35L as freelancing income from abroad credited in bank account in India from April 2020 to October 2020. and from Nov to March he signed full time employement and earned RS.27L in foreign bank account.Now my query is can we apply section 44ADA to the entire income? If yes, as the limit of Rs.50L exceeded, is tax audit applicable?

Thanks in Advance

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

30 August 2021 Section 44ADA applicable only on freelance income.

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