What is Section 91 of the Income Tax Act?

One thing I would add is that Section 91 shouldn't be confused with a foreign tax deduction.

A tax credit reduces Indian tax payable to the extent allowed. It isn't the same as simply deducting the foreign tax from your income.

Also, don't assume that paying tax in the US automatically means you can claim the same amount as a credit in India.

The calculation generally looks at the doubly taxed income and compares the applicable Indian and foreign tax rates. There are also specific requirements for claiming foreign tax credit.

The Income Tax Department's guidance on foreign tax credit refers to Form 67 and the prescribed procedure for claiming the credit in the return.

If you're a US-based NRI, I'd also check whether you're actually in a situation where the India-US DTAA applies to the particular income. Different types of income can have different treaty provisions.

I had a CPA in my country and an Indian tax professional look at my first cross-border return because the interaction between domestic law, treaty provisions, and foreign tax credit was more complicated than I expected.

Requirements can change, so I'd verify the current Income Tax Department instructions for the relevant assessment year.

I'm an NRI in Australia and had a similar question.

My understanding is that Section 91 is called unilateral relief because India can provide relief from double taxation even where there isn't an applicable DTAA.

The calculation isn't necessarily a straight 1:1 refund of foreign tax.

For example, suppose the same income is taxable in India and you paid foreign tax on it. The credit is generally restricted to the lower of the Indian rate of tax or the foreign rate of tax on that doubly taxed income, subject to the detailed rules.

I would also be careful about the word "NRI." Section 91 itself isn't simply an NRI benefit. The person's residential status under Indian tax law matters, as does the type and source of income and whether a tax treaty applies.

In my Australian return, I had to make sure the income and foreign tax amounts were properly documented. For the Indian filing, I kept the foreign tax statement and tax-payment evidence because I didn't want to claim a credit based only on a bank statement.

So if you're dealing with the US, I'd first check the India-US DTAA and then determine whether Section 90 or another provision is relevant before going to Section 91.

I dealt with foreign tax credit while filing my Indian return after moving to the UK.

One thing that helped me was separating Section 90/90A treaty relief from Section 91 unilateral relief. I originally thought Section 91 was simply the normal foreign-tax-credit section for every NRI, but that's not quite how I understood it after going through the rules.

Section 91 is generally relevant where a resident has paid tax in a foreign country with which India does not have an agreement for avoidance of double taxation covering the relevant situation.

If a DTAA applies, you normally look at the treaty provisions first rather than automatically claiming Section 91.

The other important point is that the credit isn't simply "whatever foreign tax I paid." There are limitations under the law, including a comparison with the Indian tax attributable to the doubly taxed income.

I also had to deal with Form 67 for claiming foreign tax credit. I wouldn't leave that until the last minute because the filing requirements can be easy to overlook.

My case was relatively straightforward, though, and everyone's tax residency and foreign-income situation can be different.

How can i calculate tax relief under section 91 of the Income Tax Act?

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