Report foreign mutual fund holdings in ITR

CLAIM FOREIGN TAX CREDIT IF TAX WAS PAID ABROAD

- SAIKAT NEOGI

AS THE FOREIGN income of taxpayers categorized as resident and ordinarily resident (ROR) is taxable in India, it must be reported in the income tax returns (ITR). This has to be reported under specific heads such as salary, house property, and capital gains.

This foreign income needs to be converted into rupee using the telegraphic transfer buying rate on the last day of the financial year.

Taxpayers can claim foreign tax credit (FTC) via Form 67 if tax was paid abroad (relief under Section 90/91 of the Income-Tax Act).

Who is an ROR? According to the Indian income-tax provisions, an individual is taxed based on his residential status. While an ROR is taxed on global income, a non-resident (NR) or not ordinarily resident (NOR) is taxed only on India-sourced income.

An individual is considered a ROR for income tax purposes if they satisfy two conditions. First, they must qualify as a resident in the current financial year, which means they were present in India for 182 days or more during the year, or 60 days or more during the year and 365 days or more in the preceding four years.