The recently proposed Draft Rule 76 introduces significant changes regarding the Foreign Tax Credit (FTC) that taxpayers need to be aware of. Under the new regulations, all FTC claims submitted via Form 44 will now require verification by a certified accountant.
Key Requirements for FTC Verification
- Who Needs Verification?
- If the assessee is a company, verification by an accountant is mandatory.
- Verification is also required if the foreign tax paid outside India is equal to or greater than ₹1 lakh.
Accountant’s Certification Must Include:
- Income & Related Documentation:
The accountant should verify all relevant income and associated books/documents. - Evidence of Foreign Tax Payment:
Appropriate proof of the foreign tax payment must be provided. - FTC Claim Compliance:
The FTC claim should be in accordance with the Double Taxation Avoidance Agreement (DTAA) and the Income-tax Act, 2025.
For taxpayers, understanding these new rules is crucial to ensure compliance and to maximize their Foreign Tax Credit claims.
