Form 67 is a mandatory document for claiming FTC. It is a statement that provides the details of income earned in a foreign country. It also furnishes details of the tax either paid by the taxpayer or deducted from their income. Section 139 (1) of the Income Tax Act states that Form 67 should be provided before or on the due date of filing the income tax return.
The Central Board of Direct Taxes (CBDT) provides a procedure for filing Form 67 for FTC in India. It is given in the following:
*Taxpayers who are required to file their income tax returns online must prepare and submit Form 67 online
*Form 67 must be prepared and submitted either before or on the date of filing the tax return
*The form is available on the income tax departments’ e-filing portal in the taxpayers’ account
*To submit the form, an electronic verification code (EVC) or digital signature certificate (DSC) is compulsory
To prepare and submit Form 67, the taxpayer should login to their account in the e-filing portal of the income tax department. Next, they must select the option of Form 67 as well as the assessment year from the dropdown menu.
Note that the first four points of the form will include the taxpayer’s basic information. They should be prefilled. It will include the taxpayers’ name, PAN, and address details.
The address details given there may be amended, if required.
Afterwards, the taxpayer should enter the relevant details regarding their income earned from a foreign country or any specified territory outside India. Here the FTC details will also be mentioned.
Given below is a rundown of all the components that the taxpayer has to fill in Form 67:
*Name of the country/ specified territory: Here the taxpayer has to select the name of the specified territory or country where they earned their income
*Source of income: The taxpayer may have multiple sources of income. In such cases, they must declare each source of income separately in this column
*Income from outside India: The taxpayer should mention the amount they have earned in the foreign country or specified territory outside India
*Tax paid outside India: Here the taxpayer must mention details of the tax that they paid on their income (salary, property income, etc.) received outside India
o Amount: Here the taxpayer must furnish details of the amount of the tax they paid o Rate: Here they must furnish details of the rate of the tax they paid
*Tax payable on such income under normal provisions in India: The taxpayer must provide details of the tax that they paid in India on their foreign income
Tax payable on such income under Section 115JB /JC: Suppose the taxpayer is covered under alternate minimum tax (AMT). In this case, they must mention the minimum tax amount payable under the AMT provision
Credit claimed under Section 90/90A: This section is applicable to people who work in countries with which India has inked the DTAA
o Article No. of DTAA: Here the taxpayer has to mention the relevant treaty article under which the income is taxable o Rate of tax as per DTAA: The taxpayer has to mention the rate at which their income is taxable under the DTAA o Amount: The taxpayer has to mention the total tax amount as per the rate at which it is taxed under the DTAA
*Credit claimed under Section 91: This section is applicable for people who work in countries with which India has not inked the DTAA
Total FTC claimed: Once all the details are entered, this field will be auto-updated with the lowest credit amount.
Once the taxpayer has entered all the fields, they can save it as a draft to review it later. After a thorough review of the submitted details, they may submit Form 67 by clicking on the ‘Submit’ button.
Under the Income Tax Act, 1961, the income earned by any citizen of the country is taxable. Your tax returns have to be filed on time along with all the required documents if you wish to enjoy the reliefs and refunds promised under the Act.
As per the rules laid down by the Income Tax Department, any income, such as a salary, is taxed when it is received and not altogether at the end of the financial year. But, there are certain situations in which salary benefits are not provided in the same financial year, but the following year instead, forcing you to adjust your salary arrears in the subsequent years.
Taking note of this, the Income Tax department laid out a few provisions under the Income Tax Act, 1961 to provide some relief. Section 89(1) outlines laws that allow citizens to enjoy tax relief on salary arrears. Based on what is outlined here, your taxes are adjusted under the assumption that arrears were received in the year in which they were due.
1.If you have accrued your salary in a financial year but received it in a different year, then Section 89(1) allows you to adjust the salary amount.
2.Filling of Form 10E is mandatory in order to claim relief in this case.
3.The purpose behind providing this relief is to ensure that a taxpayer does not fall in the higher tax bracket simply because he or she received his salary arrears in a different year.
4.In simple words, you need not pay tax on your income if it was earned in a different year.
5.Arrears or advance salary amounts can add up to increase the tax amount for taxpayers and this could deter them from paying taxes. As a result, this could lead to a slump in the economy of the country.
In order to claim relief under Section 89(1) concerning arrears of salary, an individual is required to fill up and submit Form 10E. If you’ve never done this before, don’t worry. Here is look at our handy guide to fill form 10E online:
1.Visit the official website for the filing of Form 10E - www.incometaxindiaefiling.gov.in.
2.Log in to your account using your User ID and password along with your date of birth.
3.After successfully logging in, click on the tab called ‘e-file’.
4.Now, select the option of Income Tax Forms.
5.A drop-down list will appear on the screen. Select Form 10E from it.
6.You need to enter the assessment year (the year in which the arrears on salary or pension were received).
7.Once you fill up your name, PAN and other details, the instructions to fill Form 10E will be displayed on the screen.
8.After going through the guidelines carefully, you can begin to fill the form which is divided into four Annexures.
*Annexure-I: Fill this annexure if you’re claiming relief with respect to pension or salary received in arrears or premature withdrawal from your Provident Fund.
*Annexure-II: If you’ve received a gratuity amount for rendering your service as an employee for a time period between 5- 15 years, then fill up the details in this annexure.
*Annexure-IIA: This annexure is to claim relief in the gratuity amount received for rendering services for more than 15 years.
*Annexure-III: You can claim relief in respect to the compensation received on termination of employment by filling up Annexure III.
*Annexure-IV: This has to be filled when relief is claimed with respect to commutation of pension.
9.Once you’ve filled up the form, you can preview it before you finally submit it.
10.If you are unable to complete the form at one go, you can save it. The ‘Save Draft’ button at the bottom of the screen will allow you to save the information you’ve entered so that you can complete the form later.
11.To recall the saved draft, you will have to follow the same steps as provided above.
12.Since Form 10E is submitted online, it is not necessary to attach its copy with your income tax return. But, for your own future reference, you can keep a hard copy with your financial papers.
It is mandatory to fill Form 10E online if you would like to claim relief as allowed under Section 89(1). While filing your income tax return, if you claim relief without filling the form, then the Income Tax Department will send you a circular regarding the same. The notice would state that you are not allowed to receive relief due to the missing Form 10E.
In a situation where you have received your pension or salary in arrears or advance, then Rule 21A guides you on how to calculate your tax relief. We can help you understand the calculation better with the help of the following steps:
Step 1: Calculate the tax on your total income for the current financial year (this will include the amount received through arrears or advance salary). Let’s call this Amount 1.
Step 2: Now, compute the tax payable on your income without adding the arrears or advance. This is Amount 2.
Step 3: Find out the difference between the two amounts (Amount 1 – Amount 2).
Step 4: Calculate the tax on your income for the year when the arrears arose (do not include the arrears). We can call this Amount 3.
Step 5: For the same year, calculate the tax payable by adding the arrears or advance amount to your income. This is Amount 4.
Step 6: Subtract the two Amounts (Amount 4 – Amount 3).
Step 7: Only if the amount in Step 3 is more than that in Step 6, a taxpayer can claim relief under Section 89(1).
Since Form 10E under Section 89(1) provides tax relief for employees, it’s important to fill up and submit the form before a claim for relief is made. Remember, by keeping your tax paperwork in order and filing on time, you can avoid paying an exorbitant fine for delayed taxes.