Dividend and withholding tax - DTAA- RSU

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Dear All,

One person has received RSU from US company and also received dividend in USD for which tax withholded at 30%.  As per DTAA the tax should have been deducted at 25%. but in this case 30% tax deducted. So while filing form 67, can we claim this 30% under DTAA and take credit of full 30% or credit will be limited to 25% as per DTAA agreement? THis person falls under 30% slab with surcharge 25% under income tax act. so actually he can claim 30% of withholded tax. But is he eligible to claim 30% or only 25% is allowed? Pls clarifiy.

Note:- He is not able to find 1042S. but broker statement shows 30% tax deduction.

Replies (2)
Quick Summary
A taxpayer received US RSU dividends with 30% US tax withheld, though the India-US DTAA rate is 25%. The query is whether Form 67 can claim FTC for the full 30% or only 25%, especially without Form 1042-S and relying only on broker statements.

  • FTC is generally based on the foreign tax actually paid, not merely the DTAA rate.
  • The maximum FTC is limited by the Indian tax on the doubly taxed income (Rule 128).
  • Obtain Form 1042-S as evidence.
  • The excess 5% over the DTAA rate can be a contentious issue if it is recoverable from the US, so claiming a US refund may be the safer approach.

Thank you for the prompt reply.

He is not able to locate form 1042S. he has only the statements from broker. 

So will the department reject if we claim the full 30% which is already paid in United states?

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