How to claim 15% USA withholding tax credits in your ITR?

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If you're selling software online and paying 15% US withholding tax on sales to US customers, you can claim this as a credit against your Indian income tax. To do this, you'll need to file Form 67 along with your Income Tax Return (ITR). This process allows you to reduce your overall tax payable in India by the amount of US withholding tax you've already paid.

Satinder Singh

Satinder Singh (Querist)
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15 February 2020 I sell software online through a USA based firm envato.com and they deduct 15% withholding TAX on every sale from USA customer. And then they fill TAX each year from 1 Jan to 31 Dec sales under our name and pan-card using 1042-S form - https://www.irs.gov/forms-pubs/about-form-1042-s.

So how can I claim these tax credits in India while filling my final ITR under double taxation policy.

I need an expert advice on it because I have already asked 5-6 CAs regarding this and all are confused on this matter, hope anyone can help.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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15 February 2020 You can claim tax relief on USA witholding tax deducted while filling ITR in India. For claiming relief you have to file form 67 along with ITR.
USA witholding tax can be reduced in the income tax payable in India on that income.

Satinder Singh

Satinder Singh (Querist)
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15 February 2020 Thanks for an answer Sir, can you please confirm, am I right or wrong based on below statement?

For example:- if I'm going to pay Rs 80000 as income tax after final calculation and if I have paid Rs 50000 as USA withholding tax so do I only need to pay Rs 30000 as income tax after deducting may USA withholding tax credits?

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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16 February 2020 Yes you are right, if 80000 is payable on USA income you need to pay only 30000.

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