A practical, interactive guide for Indians working abroad, expats on assignment, and global mobility professionals navigating the new Form 44 under the Income-tax Act, 2025.
Foreign nationals working in India, returning Indian employees, and NRIs with continuing India tax exposure may, depending on residential status, become taxable in India on their global income.
Where income has already been taxed overseas, the same income can end up taxed in two jurisdictions. India addresses this through its Double Taxation Avoidance Agreements (DTAAs) and a domestic Foreign Tax Credit mechanism, which lets eligible taxpayers claim credit in India for taxes paid abroad, subject to prescribed conditions, documentation, and computation rules.
With the introduction of the Income-tax Act, 2025 and the Income-tax Rules, 2026, the process has been updated, including the move from Form 67 to Form 44 and new requirements such as Chartered Accountant verification in specified cases.
Form 45 has also been introduced, and is used for furnishing evidence of settlement of a foreign tax dispute, including proof of tax paid.
FTC lets taxpayers take credit of taxes paid in the source country against the tax liability payable in the country of residence, avoiding tax on the same income twice.
The source state may tax income for services physically performed there, and withholds tax at source.
As the residence state, India may tax the taxpayer's global income, including that same overseas income.
FTC bridges the two: eligible foreign taxes paid are credited against the Indian tax liability on the same income.
Click through each scenario to follow the taxpayer's journey and see exactly where FTC applies.
Rohan works for the Indian subsidiary of a U.S.-based company and is seconded to the U.S. headquarters, earning employment income there for part of the year. His income is subject to tax in both countries.
The U.S.-source income may be taxed in both countries. FTC lets Rohan credit the eligible U.S. tax paid against his Indian tax liability on that same income.
Individuals returning to India after a long overseas stay may qualify as ordinarily resident, requiring them to disclose both Indian and foreign income for that tax year.
His total earnings, including U.S. employment income plus interest and dividends, are taxable in India. As tax was already deducted in the U.S., he uses FTC to offset his Indian liability and avoid paying twice.
Foreign nationals on long-term assignments in India can become tax residents depending on their duration of stay, making worldwide income taxable and creating potential dual taxation.
As an ordinarily resident taxpayer, Paul's worldwide income may be taxable in India, including German salary earned after his return. Since tax was withheld in Germany, Paul may claim FTC in India to reduce double taxation.
A taxpayer can claim FTC in India when both conditions below are satisfied.
Submit an online statement of foreign income and taxes (Form 44, previously Form 67) with all supporting documents.
A proof detailing the nature and quantum of income and tax paid in the foreign country must be submitted. This can take the form of:
Form 44 can only be submitted online on the Income-tax India e-Filing portal:
It can be e-verified using an Electronic Verification Code (EVC) or a Digital Signature Certificate (DSC).
Taxpayers must furnish Form 44 on or before the end of the following tax year.
Taxpayers filing an original return (by 31 July), a belated return (by 31 December) or a revised return (by 31 December) may submit Form 44 on or before the end of the following tax year, i.e. by 31 March of the year after the financial year.
On revised returns: guidelines don't explicitly specify a Form 44 due date, but since a revised return replaces the original, the Form 44 due date is generally taken to remain the same, i.e. by 31 March following the relevant financial year.
Updated returns: taxpayers filing an updated return must file Form 44 before submitting it. An updated return can be filed within 36 months of the relevant financial year, subject to additional tax of 25% if within 12 months, or 50% thereafter.
Where possible, file Form 44 and the tax return together. Late filing delays processing and refunds.
Even if filed separately, the return and Form 44 data must always correspond.
Submit proper documentation justifying the FTC claim with Form 44.
FTC is claimable only for the year the income is offered to tax in India.
FTC is not available for disputed foreign taxes, or for late fees / penalties paid abroad.
Repatriating expats should keep bank account, phone & DSC active for post-repatriation e-verification.
Avoid submitting on the last day. A technical glitch could deny FTC, so review carefully, as there is currently no provision to revise Form 44.
Form 44 must be verified by a Chartered Accountant when:
Rejection of the FTC claim by the tax authorities
Tax demand notice with interest
Potential disputes and litigation
Need to file an updated return with additional tax
Even where income and taxes are reported in the return, failing to submit Form 44 can lead to FTC denial and a tax demand.
Stay mindful of timelines and documentation. If Form 44 was not filed by the due date, it is advisable to:
Several judicial rulings have favoured taxpayers in cases of delayed Form 67 (now Form 44) submissions, emphasising that the right to claim FTC takes precedence over procedural lapses, provided substantive compliance is demonstrated.
Facts
Tribunal ruling
The Tribunal directed the Assessing Officer to allow the FTC, holding that procedural delays should not negate substantive rights when all other conditions are met.
Similar rulings, Sukhdev Sen vs. ACIT (ITA 78/Kol/2014), Vikash Daga vs. ACIT (ITA 2536/Del/2022) and Ashish Agrawal vs. ITO (ITA 337/Hyd/2023), confirm that late filing doesn't automatically invalidate FTC claims. Still, timely filing is recommended to minimise disputes and delays.
Our experts can help you structure compliant cross-border assignments, file Form 44 correctly, and minimise double-tax exposure. Get in touch today for a consultation.
