Uncategorized

What is Form 44 and How to Claim a Foreign Tax Credit?

by TaxAcumen Team

In today’s modern society, many Indians depend on foreign sources for their income. This foreign revenue is typically taxed by the country where it is earned. However, under the Income Tax Act of 2025, residents are also required to pay taxes on their global income, including incomes from foreign countries.

To avoid paying taxes on the same income twice, taxpayers in India can apply for a relief known as the ‘Foreign Tax Credit’ (FTC). To qualify for the FTC, taxpayers must file Form 44 with the Income Tax Department.

What is Form 44?

To claim a foreign tax credit on paid foreign income tax, a resident taxpayer must submit Form 44. According to Rule 152 of the Income Tax Rules, 2026, filing this form is required. It includes information like the following and serves as a declaration and proof of taxes paid overseas:

  • determining foreign revenue.
  • amount of foreign tax deducted or paid.
  • income kind and country of origin.
  • documentation or certificates certifying the payment of foreign taxes.

Form 44 must be submitted by the end of the applicable tax year, at the earliest. The taxpayer faces the risk of losing their foreign tax credit claim for that year if it is not filed within the time limit.

Contents of Form 44

Form 44 is divided into four sections:

  1. Basic information: taxpayer details (name, PAN, and address); the relevant tax year; and details of foreign income and tax paid.
  2. Refund details: Information related to any refund of foreign taxes due to loss carrybacks or dispute resolution.
  3. Verification: Taxpayer’s declaration and verification with a digital signature or electronic verification code (EVC).
  4. Attachments: Supporting documents such as foreign tax payment certificates and proof of payment must be uploaded in digital format.

Key Documents Required for FTC Claim

To support the claim in form 44, taxpayers must submit the following:

  • A certificate or statement from the foreign tax authority or withholding agent indicating the tax deducted or paid.
  • Proof of foreign tax payment, like bank statements or tax receipts.
  • A statement of income from that foreign country.
  • Corresponding details entered in the Income Tax Return (ITR) under the specified foreign income schedules.

Procedure and Due Date for Filing Form 44

Form 44 must be filed electronically on the Income Tax Department’s e-filing portal. It should ideally be filed on or before the due date for filing the ITR under Section 156 of the 2025 Act. While the 2025 Act is more flexible, failure to file Form 44 before the final assessment can lead to the disallowance of the FTC claim. Taxpayers must ensure that the figures in Form 44 match the entries in Form 168 (Unified AIS) for consistency.

Claiming an FTC – Important Points

  • FTC is allowed only for taxes on income, surcharges, and cess, but not for penalties, interest, or fees.
  • If foreign taxes are disputed in the source country, FTC is disallowed until the dispute is resolved and proof of final settlement is submitted.
  • Currency conversion of foreign tax paid must be done using the Telegraphic Transfer Buying Rate (TTBR) as published by the Reserve Bank of India on the last day of the month preceding the tax payment month.
  • The foreign tax credit applies separately for each country; the total credit is aggregated accordingly.
  • If income is assessed under alternate tax regimes (like MAT for companies), FTC is still available on the tax paid for foreign income.

Conclusion

In order to file relief claims under the Income Tax Act of 2025, Form 44 is an essential compliance form. Taxpayers must file the Foreign Tax Credit appropriately and within the allotted timeframes in order to avoid paying taxes on the same income twice. Processing is kept straightforward and litigation-free with accurate documentation and matching data across digital tax forms.