Income Tax - Draft Rules for Grant of Foreign Tax Credit
SECTION 295 of the Income-tax Act provides that the Central Board of Direct Taxes (CBDT) may prescribe rules specifying the procedure for the granting of relief or deduction, as the case may be, of any income-tax paid in any country or specified territory outside India, under section 90 or section 90A or section 91, against the income-tax payable under the Act.
A Committee was set up by CBDT to suggest the methodology for grant of Foreign Tax Credit (FTC) after examining the various issues related to it. Taking into account, the report of the Committee and the provisions of the Act, CBDT has framed draft rules and published them for public comments and suggestions.
• An assessee being a resident shall be allowed a credit for the amount of any foreign tax paid by him in a country or specified territory outside India, by way of deduction or otherwise, in the year in which the income corresponding to such tax has been offered to tax or assessed to tax in India, in the manner and to the extent as specified in the rules.
• The credit for foreign tax shall be available against the amount of tax, surcharge and cess payable under the Act but not in respect of any sum payable by way of interest, fee or penalty.
• No credit shall be available in respect of any amount of foreign tax which is disputed in any manner by the assessee.
Comments and suggestions may be submitted by 2nd May, 2016 at the email address dirtpl4@nic.in.
CBDT F.No. 142/24/2015-TPL., Dated April 18, 2016