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).
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
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.
CAclubindia
