February 8, 2023

Particular person taxpayers, reminiscent of excessive web value people (HNIs), usually have their earnings portfolio unfold throughout a number of international locations.

If these people qualify as world residents of India, they’re liable to pay tax in India on their incomes earned exterior India as effectively. Nevertheless, by advantage of the double taxation avoidance settlement between India and the respective nation, they’ll declare credit score of overseas taxes paid on such overseas incomes, towards the India tax legal responsibility.

Whereas there are lots of points regarding overseas tax credit score (FTC) which might be value consideration, let’s give attention to Type 67.

Additionally learn: Your information to submitting earnings tax returns for the evaluation yr 2022-23

What’s Type 67?

It’s a assertion of overseas earnings and overseas taxes paid, which is filed and verified on-line through an e-filing account, together with the proof of tax cost. The due date to furnish this manner was on or earlier than the due date for furnishing the unique return.

Via a notification dated August 18, 2022, the federal government has prolonged the due date for furnishing FTC from April 1, 2022.

Here’s a fast abstract of the brand new due dates to furnish Type 67:

The due date to furnish Type 67 is now on or earlier than the top of the evaluation yr, related to the earlier yr wherein the abroad earnings has been taxed in India and the return for such evaluation yr has been furnished throughout the time specified underneath Part 139(1) — i.e., the time restrict for submitting the unique tax return, and Part 139 (4) — the time restrict for submitting the belated tax return.

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For returns filed underneath Part 139 (8A), which is the up to date return, the time restrict to file Type 67 is earlier than submitting the return.

The above extension supplies an enormous reduction to a number of taxpayers as they’ve been dealing with difficulties in gathering all data/ supporting paperwork relating to FTC claims earlier than the due date of submitting unique return.

Additionally learn: Issues it’s essential to verify after submitting your earnings tax returns

What about revised returns?

One fascinating reality to notice within the new provision for the Type 67 due date is that it doesn’t categorically point out or discuss with Part 139(5), a piece which supplies for submitting revised returns.

Does this imply there isn’t a time restrict for submitting Type 67 in case of revised returns and a person can file it as and when he/she has the data?

Or, ought to a person submit Type 67 earlier than he/she submits revised return to keep away from litigation? The latter appears to be the cheap strategy as there have been instances previously the place FTC claims had been rejected by the decrease stage of tax authorities on account of delayed submitting of Type 67.

Regardless that such claims had been later allowed by the Tribunal (on the idea that submitting of Type 67 is a procedural requirement and can’t consequence within the denial of the FTC the place such claims had been official), one needed to undergo the litigation course of to get FTC claims allowed.

Additionally pay attention: Has the time restrict for verifying I-T returns been revised? 

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What are the adjustments wanted?

Within the absence of readability for revised return, one could also be tempted to file a belated return to take the advantage of the prolonged timeline for submitting Type 67, even at the price of paying the penal payment of Rs 5,000 for delayed submitting and denial of carry ahead of any loss, if any (besides loss from home property).

Due to this fact, a clarification from the federal government on the Type 67 due date for revised return would actually assist taxpayers and can finish the chance of extended litigation.

At the moment, there’s a necessary requirement of e-verification for Type 67 by an energetic Indian cell quantity or listed financial institution for web banking or Aadhaar quantity or Digital Signature Certificates and so on.

This prolonged time restrict should still not assist these people who would not have entry to any of those prescribed methods of e-verification. Such people embrace overseas nationals who left India after finishing their India task.

It could actually assist if both guide verification (the way in which return acknowledgement Type ITR V is signed and despatched to CPC) or e-verification by abroad cell quantity or the registered electronic mail ID of the taxpayer is allowed.

(Views expressed are private)

The creator is Associate, Vialto Companions India. Tanu Gupta (Supervisor, Vialto Companions) additionally contributed to the column.