Question 1

What is Foreign Tax Credit (FTC)?

Accepted Answer

Foreign Tax Credit allows you to reduce Indian tax liability by the tax already paid in a foreign country on the same income. FTC is calculated as the lower of: foreign tax paid or Indian tax attributable to that foreign income. This prevents double taxation.

Question 2

How do I claim Foreign Tax Credit in India?

Accepted Answer

File Form 67 on the income tax e-filing portal BEFORE filing your ITR. Attach proof of foreign tax paid (tax certificates, withholding statements). The FTC amount will appear in your ITR and reduce your tax liability.

Question 3

What is the DTAA benefit for YouTube income?

Accepted Answer

Under the India-USA DTAA, withholding tax on royalty income (like YouTube AdSense) is reduced from 30% to 15%. Submit Form W-8BEN to Google to claim this lower rate. You can then claim FTC in India for the 15% tax paid.

Question 4

Is income from UAE taxable in India?

Accepted Answer

Yes, Indian residents are taxed on global income, including UAE earnings. Since UAE has no income tax, you pay full Indian tax on this income with no FTC available. Report UAE income in ITR and pay tax at applicable slab rates.

Question 5

Can I carry forward unused Foreign Tax Credit?

Accepted Answer

No, India does not allow carry forward of unused FTC. If your foreign tax paid exceeds the Indian tax on that income, the excess cannot be refunded or carried forward. This may happen when foreign tax rates are higher than Indian effective rates.

Foreign Tax Credit (FTC) Calculator with DTAA Benefits

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