Foreign Tax Credit (FTC) — Draft IT Rules 2026 Introduce CA Verification

 

The Draft Income-tax Rules, 2026 propose an important compliance update for taxpayers claiming Foreign Tax Credit (FTC) — aimed at improving accuracy and documentation standards.

📌 What is Foreign Tax Credit (FTC)?

FTC allows Indian residents earning income abroad to avoid double taxation by claiming credit in India for taxes paid in a foreign country.

⚖ What’s the Proposed Change? — Draft Rule 76

Taxpayers claiming FTC through Form 44 must now obtain verification from a Chartered Accountant.

This verification becomes mandatory when:

✔ The assessee is a company, OR

✔ Foreign tax paid is ₹1 lakh or more

🧾 What the CA Certification Must Confirm

• Income details and supporting records

• FTC eligibility as per DTAA & Income-tax Act provisions

• Proof of foreign tax payment

🎯 Why This Matters

✅ Improves credibility of FTC claims

✅ Reduces disputes and documentation gaps

✅ Encourages structured compliance

✅ Aligns FTC claims with treaty provisions

📢 Practical Impact

Businesses and high-value FTC claimants should plan early for documentation and CA verification to avoid delays in tax filings.

💡 Bottom Line

FTC continues to protect taxpayers from double taxation — but Draft Rule 76 introduces a stronger verification framework for transparency and compliance.