Form 67 and Foreign Tax Credit: How to Claim US Dividend Tax Back in India
Blog by Aliceblue News Desk
22 October 2026
11 minutes
You receive a dividend from a US stock, open your account, and find that a quarter of it is missing. India taxes the same dividend again when you file your return. Form 67 lets you claim a foreign tax credit in India for that US dividend tax, so you don’t pay tax twice on the same income.
Quick Answer
Form 67 is an online statement a resident Indian files to claim a foreign tax credit under Rule 128. If you received US dividends, the US usually withholds 25% tax when you have submitted Form W-8BEN. You report the gross dividend in your ITR and claim credit for the lower of the US tax withheld and the Indian tax due on that income. File Form 67 before filing your ITR.
Table of Contents
- What Is Form 67 and Foreign Tax Credit?
- Why Does the US Deduct Tax on Dividends?
- How Does Claiming US Dividend Tax Back Work?
- What Documents Do You Need?
- How to File Form 67 Online
- What to Enter in Form 67
- Practical Example With Numbers
- Why Was 30% Tax Deducted Instead of 25%?
- What Is the Last Date to File Form 67?
- Advantages
- Risks and Limitations
- Tips for Beginners
- Form 67 vs Form W-8BEN
- Common Mistakes to Avoid
- Who Should File Form 67?
- Conclusion
- FAQs
What Is Form 67 and Foreign Tax Credit?
Form 67 is a statement you file online to claim credit for tax already deducted in another country. It is filed under Rule 128 of the Income Tax Rules, 1962.
A foreign tax credit, or FTC, means you subtract foreign tax already paid from your Indian tax on the same income. Without this credit, you’d pay tax on the same dividend in both countries.
India taxes residents on income earned anywhere in the world. So if you hold shares in a US company, the dividend is taxable in India. The US also deducts tax before sending you the money. The India-US tax treaty, called the DTAA, reduces this double tax burden. Form 67 is the form that lets you use it.
Why Does the US Deduct Tax on Dividends?
The US taxes income paid to non-US residents at source. This means the tax is deducted before the dividend reaches your account.
For Indian investors, the treaty rate is 25% if you have submitted Form W-8BEN to your broker. Without it, the default rate is 30%.
Form W-8BEN is a US form that tells your broker you are an Indian tax resident. Once submitted, it usually stays valid for about three calendar years. Renew it before it expires.
How Does Claiming US Dividend Tax Back Work?
The process has a clear order. Follow it in this sequence.
- Submit Form W-8BEN to your broker. Do this when you open the account. It tells the US payer you are an Indian resident and helps them apply the 25% treaty rate.
- Receive the dividend after tax is deducted. Your broker deducts the US tax before crediting the money. The statement shows the gross dividend, the tax withheld, and the amount credited to you.
- Convert the amounts to rupees. Use the SBI telegraphic transfer buying rate, or TTBR, as on the date of each dividend payment, not the date the cash hit your account. This follows Rule 115.
- File Form 67 on the income tax portal. Enter the country, the income, the foreign tax paid, and the treaty details. Attach your broker statement or Form 1042-S. E-verify the form.
- File your ITR with the foreign income details. Report the gross dividend, not the net amount you received. Fill out Schedule FSI for foreign source income and Schedule TR for tax relief. The same gross dividend figure also goes into Schedule OS and Schedule FA, so keep one clean ledger.
- Get the credit. The credit equals the lower of the US tax paid and the Indian tax due on that income.
What Documents Do You Need?
Keep these ready before you start. Missing proof is the most common reason a claim gets stuck.
- Form 1042-S. This is the US tax document from your broker. It shows the income paid and the federal tax withheld. Box 7a shows the withheld amount.
- Broker dividend statement. This lists each dividend date, the gross amount, the tax withheld, and the net amount credited.
- Exchange rate reference. Keep a record of the SBI TTBR you used and the date it applies to.
- Form W-8BEN copy. Useful if the broker applied the treaty rate.
- Your ITR details. You will need the same figures for Schedules FSI, TR, OS, and FA.
One thing to watch. Form 1042-S covers January to December, while Form 67 runs on the Indian April-to-March year. One financial year straddles two 1042-S forms. Pair the 1042-S with an April-to-March dividend statement from your broker to get the full picture.
How to File Form 67 Online
Form 67 is filed only online on the income tax e-filing portal.
- Log in to the portal with your PAN.
- Go to e-File, then Income Tax Forms, then File Income Tax Forms.
- Select Form 67 under the relevant assessment year.
- Choose the relevant return and enter the foreign country, income type, gross income, and tax paid or deducted.
- Upload the supporting documents.
- Submit and e-verify the form.
The form is separate from your ITR, but the numbers must match. If your Form 67 says one figure and your ITR says another, the credit can be questioned.
What to Enter in Form 67
The form has three main parts. Here is what goes where.
Part | What to enter | Where it comes from |
Part A | Country, tax resident status, and treaty details | Your PAN and the India-US DTAA |
Part B | Gross foreign income and foreign tax paid or deducted | Form 1042-S, Box 7a for the withheld amount; broker statement for the gross dividend |
Part C | Details of each foreign tax payment or deduction | Broker statement, matched to the TTBR date |
Vested maps the 1042 S boxes directly to the form fields, which saves a lot of guesswork. Keep the broker statement open in one tab and the portal in another so the numbers line up.
Practical Example With Numbers
Suppose you own US stocks through an international investing account. In the year, you receive a gross dividend of ₹2,00,000. The US withholds 25% at source.
Item | Amount |
Gross dividend | ₹2,00,000 |
US tax withheld at 25% | ₹50,000 |
Amount credited to your account | ₹1,50,000 |
Now assume you are in the highest slab. The rate is 30% plus 4% cess, which works out to 31.2% effective.
Item | With Form 67 | Without Form 67 |
Indian tax on ₹2,00,000 | ₹62,400 | ₹62,400 |
Credit for US tax | ₹50,000 | ₹0 |
Extra tax to pay in India | ₹12,400 | ₹62,400 |
Total tax (US + India) | ₹62,400 | ₹1,12,400 |
The credit saves you ₹50,000. Your total tax equals your Indian rate. When the Indian rate is higher than 25%, the full US withholding is credited, and the difference is paid in India.
If your income is low and you fall in the 10% slab, the effective rate is 10.4% after cess. Indian tax on the dividend is ₹2,00,000 × 10.4% = ₹20,800. The credit is the lower of ₹50,000 and ₹20,800, so you get ₹20,800. The remaining ₹29,200 of US tax cannot be refunded by India. The credit never exceeds the Indian tax due on that income.
Why Was 30% Tax Deducted Instead of 25%?
This happens when the broker does not have a valid Form W-8BEN on file. The default US rate is 30% for nonresident aliens.
The extra 5% is generally recovered from the US side, not from India. India credits only up to the treaty rate of 25%. If 30% was withheld, contact your broker to correct the W-8BEN and ask about a refund of the extra 5%.
What Is the Last Date to File Form 67?
File Form 67 before your ITR. If the form is not on record when the return is processed, the credit is denied, no matter how perfect your FSI and TR schedules are.
Rule 128 does give some room. It says Form 67 can be filed on or before the end of the relevant assessment year if the return was filed under section 139(1) or as a belated return under section 139(4). For an updated return under section 139(8A), it is due by the date of that return.incometaxindia+1
Do not lean on that window. Tax professionals note that return processing checks for the form mechanically and denies the credit if it is missing at the time of processing.
A change is also coming. From FY 2026 27, the new Act’s framework is expected to replace Form 67 with Form 44. Check the portal for the form that applies to the year you are filing.
Advantages
Form 67 stops you from paying tax twice on the same rupee. For investors in the 30% slab, the full US withholding is credited, so the total tax equals the Indian rate and nothing more.
It also keeps your records in order. Claiming credit through the proper form leaves a trail that matches the foreign income in your return. This helps if the tax department asks questions later.
For investors building a US dividend portfolio over years, the savings add up. Dividends reinvested in the first year compound, so a missed credit in year one also reduces what you reinvest.
Risks and Limitations
- Deadline risk. If Form 67 is not on record when the return is processed, the credit is denied.
- Excess US tax is not refunded by India. If your Indian tax on the dividend is lower than the US tax, the difference is not paid back.
- Wrong rate withheld. Without a valid W-8BEN, the broker applies 30% instead of 25%.
- Currency conversion errors. Using the wrong exchange rate gives wrong figures in the form and the ITR.
- Rule changes. The shift from Form 67 to Form 44 means you should check the current form each year.
- Behavioural risk. Many investors treat the net dividend as their income. Reporting only the amount received can mismatch the broker’s tax data.
Tips for Beginners
- File Form W-8BEN as soon as you open a US investing account.
- Download your annual tax statement or Form 1042-S early.
- Keep a simple sheet listing each dividend date, gross amount, tax withheld, and rupee rate used.
- File Form 67 first, then your ITR. This avoids deadline problems.
- Use ITR-2 or the form that fits your income type. Salary-only forms do not carry foreign income schedules.
- Report all foreign assets in Schedule FA of your return, even if the dividend is small.
- Ask a chartered accountant if you hold multiple foreign accounts or have unusual income.
Form 67 vs Form W-8BEN
People often mix up the two forms. They do different jobs at different ends of the process.
Parameter | Form W-8BEN | Form 67 |
Filed with | Your US broker | Indian income tax portal |
Purpose | Get the lower 25% treaty withholding | Claim credit for the tax withheld |
When | Before dividends are paid | Within the Rule 128 time limit |
Country | US tax system | Indian tax system |
If skipped | 30% default withholding | Withheld tax is not credited |
Common Mistakes to Avoid
- Filing Form 67 late. The credit is denied if the form is not on record when the return is processed. File before the ITR.
- Reporting the net dividend. Report the gross dividend and show the tax separately.
- Skipping W-8BEN. You pay 30% instead of 25%. Submit it at account opening.
- Expecting a refund of excess tax. India credits only up to the Indian tax on that income.
- Ignoring small dividends. Even small amounts need the form.
- Using any random exchange rate. Follow the Rule 115 rate, using the dividend payment date.
- Missing the proof. Keep broker statements and Form 1042-S ready for years in case of a query.
Who Should File Form 67?
It suits any Indian tax resident who earns dividends from US stocks, US ETFs, or foreign funds and has had tax withheld abroad. It matters most for investors in the 20% to 30% slabs, because they get the full credit. It also applies to people with other foreign income such as RSUs or foreign interest.
It is less useful if your Indian tax on the foreign income is close to zero, because the credit is capped at that amount. It is also not needed if you hold only Indian shares and receive no foreign income.
Conclusion
US dividends are taxed twice unless you claim the credit. The US withholds 25% when you have a valid W-8BEN, and India taxes the gross dividend at your slab rate. Form 67 lets you offset the first against the second, up to the Indian tax due. Keep your broker statements, convert at the right rate, file Form 67 before your ITR, and report gross income. Check each year whether the form or deadline has changed.
Frequently Asked Questions
Blog by Aliceblue News Desk
