Government seeks suggestions on foreign tax credit rules revision

The government is seeking to revise the foreign tax credit (FTC) rules with the finance ministry on Monday seeking public opinion on its proposed draft.

"The draft rules for grant of foreign tax credit are uploaded on the website of the Income Tax Department at www.incometaxindia.gov.in for comments from stakeholders and general public," said a finance ministry statement.

A non-refundable tax credit for income taxes paid to a foreign government, the FTC is applicable to anyone who has either worked abroad or has investment income from a foreign source.

According to the proposed draft, the credit for foreign tax shall be available against the amount of tax, surcharge and cess payable under the Income Tax Act but not in respect of any sum payable by way of interest, fee or penalty, while no credit shall be available in respect of any amount of foreign tax which is disputed in any manner by the assessee.

A committee was set up by Central Board of Direct Taxes (CBDT) to suggest the methodology for grant of foreign tax credit after examining the various issues related to it. The draft rules take into account its report and provisions of the Income Tax Act.