If you filed Form 67 late and CPC wiped out your foreign tax credit, you may still get it back. On 17 August 2026, ITAT Bangalore ruled in Shashank Shekhar v. ITO that a late Form 67 cannot, by itself, defeat a foreign tax credit (FTC) claim under section 90 of the Income-tax Act, 1961 and Article 25 of the India-USA DTAA.

We see this every filing season. Someone works a stint in the US, pays American tax on their salary, comes back to India as a resident and reports the income honestly. Then the CPC intimation lands with the credit removed, just because Form 67 wasn't uploaded before the return.

This guide walks through what the Tribunal decided, why, and what to do if your Foreign Tax Credit in India was denied.

Key takeaways

• A late Form 67 is a procedural slip, not a reason to deny foreign tax credit (ITAT Bangalore, Shashank Shekhar v. ITO, ITA 2613/Bang/2025, 17 August 2026).
• Rule 128(9) sets a timeline but no penalty, so tribunals treat it as directory, not mandatory.
• Form 67 filed before the return is processed or the assessment is completed is generally treated as enough.
• The Madras High Court (2025) and ITAT Mumbai (2022) agree.
• From AY 2022-23, Form 67 can be filed up to the end of the assessment year.
• For income from 1 April 2026, Form 67 is replaced by Form 44 under Rule 76 of the Income-tax Rules, 2026.
• CPC still denies FTC automatically if Form 67 is missing, so file it before your return.

What did ITAT Bangalore decide in Shashank Shekhar v. ITO?

ITAT Bangalore held that a mere delay in filing Form 67 under Rule 128(9) does not take away a resident taxpayer's right to foreign tax credit. It told the Assessing Officer (AO) to accept Form 67 and decide the claim on merits.

Here's how the case played out. The order came from Bench C, with Vice President Prashant Maharishi and Judicial Member Sandeep Singh Karhail, for assessment year 2017-18. The taxpayer, a resident individual, paid ₹1,79,971 in US tax on US income of ₹8,98,392 and claimed FTC of ₹1,64,427 in India. The appeal was allowed for statistical purposes, so the AO now verifies the numbers, with the procedural objection gone.

Case at a glance

What is Form 67 and why does it matter for foreign tax credit?

Form 67 is the statement of foreign income and foreign tax credit that a resident files on the Indian income tax portal to claim credit for tax paid abroad under Rule 128 of the Income-tax Rules, 1962.

Why does it exist? An Indian resident is taxed on worldwide income. If another country has already taxed that income, sections 90 and 91 give you a credit so you aren't taxed twice. Form 67 is how you claim it. It lists the foreign income, the country, the tax paid and the relief claimed. You back it up with a certificate or statement of foreign tax, such as a US Form W-2 or Form 1040.

The catch is that CPC's software only checks whether Form 67 exists when it processes the return. If it doesn't, the credit is removed in the section 143(1) intimation, even if the tax was genuinely paid. That's the usual story behind Foreign Tax Credit denied by CPC.

How did the foreign tax credit dispute unfold?

CPC denied the FTC twice, the first appeal was dismissed for delay, and the Tribunal ruled seven years after the original denial.

The taxpayer didn't even appear before the Tribunal. He won on the strength of the paper book, which had Form 67 and Form W-2, plus a steady line of earlier rulings.

Why did the Tribunal hold that a late Form 67 is not fatal?

Rule 128(9) sets a deadline but no consequence for missing it, the Act itself sets no deadline, and a procedural rule can't override a right given by section 90 and the treaty. Let's take the reasons one at a time.

1. Rule 128(9) is directory, not mandatory

For AY 2017-18, Rule 128(9) asked for Form 67 by the section 139(1) due date. It said nothing about losing the credit if you were late. When a procedural rule attaches no penalty to non-compliance, courts treat it as directory. Rule 128(4) lists the cases where FTC is truly not allowed, and late Form 67 isn't one of them.

2. Sections 90 and 91 set no deadline

Your right to relief comes from the Act and the DTAA. Neither section 90 nor section 91 says the declaration must be filed by the return due date.

3. The 2022 amendment relaxed the timeline

The Income-tax (Twenty-seventh Amendment) Rules, 2022 replaced Rule 128(9) from 1 April 2022 and allowed Form 67 up to the end of the assessment year. Following ITAT Mumbai in Sonakshi Sinha v. CIT [2022] 142 taxmann.com 414, the Tribunal read this as a sign that the older deadline shouldn't be fatal.

4. Wipro is distinguishable

Revenue often leans on the Supreme Court's Wipro Ltd. ruling, which treated a time-bound declaration as mandatory. The Tribunal agreed with Sonakshi Sinha that Wipro dealt with a condition in the Act itself. The Form 67 deadline sits only in a rule, with no stated consequence. The Supreme Court's approach in CIT v. G.M. Knitting Industries (P) Ltd., where a form filed during assessment counted as sufficient compliance, also backs the taxpayer.

What does "allowed for statistical purposes" mean?

It means the Tribunal accepted the taxpayer's legal argument but didn't work out the relief itself. The denial was set aside, and the AO must accept Form 67 and the supporting papers, hear the taxpayer and decide the FTC on merits. The procedural objection is gone, but the amount still needs checking.

Which rulings support foreign tax credit despite a late Form 67?

At least one High Court and several ITAT benches have held that FTC can't be denied just because Form 67 was filed late. Here are the main ones.

How is foreign tax credit calculated in India?

Foreign tax credit is the lower of the foreign tax you paid and the Indian tax payable on that same foreign income, worked out separately for each income source and each country.

That's why Shashank Shekhar claimed ₹1,64,427 even though he paid ₹1,79,971 in the US. The extra foreign tax is simply lost. India doesn't refund it or let you carry it forward. Here's an example with round numbers:

Two more rules to remember. Foreign tax is converted at the SBI telegraphic transfer buying rate on the last day of the month before the month the tax was paid or deducted. And foreign interest, fees or penalties never qualify for credit.

What should you do if CPC denied your foreign tax credit?

If CPC removed your FTC because Form 67 was missing, follow these steps. They're the same ones we use with clients.

1. Check the intimation. Confirm the section 143(1) intimation denied FTC for want of Form 67, and note its date for limitation.
2. File Form 67 on the e-filing portal. Upload it for the right assessment year with the foreign tax certificate or statement (Form W-2, Form 1040, P60 or similar) and proof of payment.
3. Apply for rectification under section 154. Raise an online request and quote the Form 67 acknowledgement number and filing date.
4. Appeal if rectification fails. File Form 35 before the CIT(A) within 30 days of the order. If you're late, attach a condonation application explaining why.
5. Cite the precedents. Use Shashank Shekhar v. ITO (ITAT Bangalore, 2026), Sonakshi Sinha v. CIT (ITAT Mumbai, 2022) and Venkatanarayanan Somayaji Lakshminarasimha v. PCIT (Madras HC, 2025).
6. Get your numbers ready. Keep an FTC computation showing foreign income, foreign tax, rupee conversion and the Indian tax cap. The AO will check it.

What Form 67 mistakes lead to FTC denial?

Most denials come from a few avoidable slips. Watch out for these:

• Filing the return before Form 67. The portal expects Form 67 first. Filing it afterwards invites an automatic denial.
• Not reporting the foreign income. No credit is available unless that income is offered to tax in India.
• Mismatched amounts. Foreign tax in Form 67 must match Schedule FSI and Schedule TR of your ITR.
• Wrong exchange rate. Rule 128 uses the SBI TT buying rate, not an average annual rate.
• Claiming refundable or disputed tax. Disputed foreign tax is creditable only once the dispute is settled.
• Missing the appeal deadline. In Shashank Shekhar, the first appeal was dismissed purely for delay.

Form 67 vs Form 44: what changes for FY 2026-27?

For income earned from 1 April 2026, Form 67 is replaced by Form 44 under Rule 76 of the Income-tax Rules, 2026, framed under the Income-tax Act, 2025. Form 67 still applies to income up to FY 2025-26.

Here's the side-by-side view for Form 67 vs Form 44 FY 2026-27.

Will the Shashank Shekhar reasoning apply to Form 44?

Nobody knows yet. The Tribunal built its reasoning on the wording of the old Rule 128(9). Until a tribunal or court interprets Rule 76, treat the Form 44 deadline as binding and file it before your return.

Need help recovering a denied foreign tax credit?

Dinesh Aarjav & Associates prepares Form 67 and Form 44, computes FTC under the relevant DTAA, aligns your Indian ITR with your US Form 1040 and Form 1116, and handles rectifications and appeals where CPC has denied credit. If you have an FTC stuck in an old intimation, it's often still recoverable.

Talk to our cross-border tax team: explore our DTAA Advisory, US Tax Returns for NRIs and Returning to India services, or book a consultation at dineshaarjav.com.

*Disclaimer: This article is for general information and reflects the ITAT order pronounced on 17 August 2026. It is not legal or tax advice. Please consult a qualified professional before acting on it.*