Answer

1. F

   Facts

   Tax paid abroad can be credited against Indian tax under Sec 90 or 91 (now Sec 159 or 160), but only if Form 67 (now Form 44) is filed with proof of foreign tax, by the end of the assessment year.

2. P

   Provisions and law

   • Sec 90, Income-tax Act 1961 (now Sec 159, Income-tax Act 2025)Relief under a tax treaty for tax paid in another country
   • Sec 91, Income-tax Act 1961 (now Sec 160, Income-tax Act 2025)Unilateral relief where there is no tax treaty
   • Rule 128, Income-tax Rules 1962 (now Rule 76, Income-tax Rules 2026), with Form 67 (now Form 44)Foreign tax credit needs Form 67 filed by the end of the assessment year with proof of foreign tax
3. A

   Analysis

   The credit is limited to the Indian tax on that income. Example: a client in a treaty country withheld ₹50,000 on ₹5 lakh of fees; under Sec 44ADA the Indian tax on that income is the 50% deemed income taxed at your average rate. If it is lower than ₹50,000, the excess is not refunded. Often it is better to give the client a treaty form so they do not withhold at all.

4. C

   Conclusion

   1. 1Get proof of tax withheld from the client
   2. 2File Form 67 (now Form 44) before filing or by the end of the assessment year
   3. 3Claim foreign tax credit in the return
   4. 4Ask clients for treaty-based reduced withholding next time

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