Section 91 of the Income Tax Act: Meaning, Relief, Calculation, and Eligibility

In summary

Section 91 of the Income Tax Act, 1961 provides relief when a person resident in India has foreign income that is also taxable in India and has paid tax on that income in a country with which India has no agreement under Section 90 for relief or avoidance of double taxation. The relief is calculated on the doubly taxed income at the lower applicable tax rate.

• Section 91 applies where the relevant foreign country has no applicable DTAA with India.
• The provision offers unilateral relief rather than treaty-based relief.
• Relief is generally based on the lower of the Indian and foreign tax rates.
• Only income that is taxed in both jurisdictions is relevant for the relief.
• Foreign tax paid must be supported with appropriate documentation.
• Form 67 is used to claim Foreign Tax Credit, subject to applicable rules.

For FY 2026-27, taxpayers should also use the applicable income tax slabs when determining their Indian tax liability.

Section 91 provides relief from double taxation for an Indian resident who earns income in a foreign country that does not have an applicable DTAA with India.

Where the same income is taxable in both countries and the taxpayer has paid tax in the foreign country, Section 91 allows relief against the Indian tax liability, subject to its conditions. The provision is therefore a form of unilateral relief because the relief is provided under Indian domestic law rather than through a negotiated tax treaty.

Section 91 should not be treated as an automatic credit for every foreign tax payment. The nature of the income, tax paid abroad, residential status, and applicable provisions must be considered.

Section 91 can apply when the statutory conditions are satisfied. Broadly, the taxpayer should consider:

• Residential status: The taxpayer should qualify as resident in India for the relevant previous year.
• Foreign income: The income should have accrued or arisen outside India and meet the conditions specified under Section 91.
• Foreign tax: Income Tax should have been paid in the foreign country on the relevant income.
• No applicable DTAA: The relevant foreign country should not have an applicable agreement with India for relief or avoidance of double taxation under Section 90.
• Double taxation: The relevant income should be subject to tax in both jurisdictions.

The precise application can differ according to the type of income and the circumstances of the taxpayer.

Section 91 relief is generally calculated using the lower of the Indian tax rate or the foreign tax rate applicable to the doubly taxed income.

A simplified formula is:

Section 91 relief = Doubly taxed income × lower applicable tax rate

The calculation can be more involved in practice because the applicable Indian rate may depend on the taxpayer's total income and the relevant tax provisions.

For example, the Income Tax Department's rules may require an average Indian tax rate to be considered when calculating Foreign Tax Credit in certain circumstances. Therefore, the simple formula is useful for understanding the concept but should not automatically be used as the final tax computation.

Suppose Ramesh is resident in India and earns Rs. 10 lakh from consultancy services provided to a company in Country X. India does not have an applicable DTAA with Country X.

Country X taxes the income at 20%, resulting in foreign tax of Rs. 2 lakh. Assume the relevant Indian tax rate for the doubly taxed income is 30%.

The lower rate is 20%.

Section 91 relief = Rs. 10 lakh × 20% = Rs. 2 lakh

If the Indian tax liability attributable to this income is Rs. 3 lakh, the relief could reduce the liability to Rs. 1 lakh, subject to the applicable calculation and conditions.

This is an illustration. Actual relief can differ because Indian tax calculations can involve total income, applicable rates, surcharge, cess, and other provisions.

Section 91 and a Double Taxation Avoidance Agreement address double taxation through different mechanisms.

Last updated: October 2026

A DTAA can contain provisions dealing with taxing rights, withholding rates, exemptions, and tax credits. Section 91 instead provides relief under Indian domestic law when its statutory conditions are met.

Foreign Tax Credit (FTC) relates to eligible foreign tax paid on income that is also taxable in India.

A simplified process is:

• Identify: Determine the foreign income that is taxable in both countries.
• Calculate: Work out the relevant Indian tax liability and foreign tax paid.
• Compare: Determine the applicable Indian and foreign tax rates.
• Apply: Calculate relief based on the applicable lower rate and the doubly taxed income.
• Report: Include the relevant foreign income in the Indian Income Tax Return.
• Claim: Furnish the prescribed details, including Form 67 where applicable.

The calculation should not be confused with simply subtracting every rupee of foreign tax from the Indian tax payable. The credit is subject to the applicable rules and limits.

Foreign capital gains can involve additional considerations because capital gains may be taxed differently from ordinary income under Indian tax law.

For example, taxpayers dealing with investments should understand the applicable Long Term Capital Gain Tax and Short Term Capital Gains Tax rules before calculating any foreign tax credit.

The foreign country's classification of a gain may also differ from India's treatment. Therefore, the relevant income should be matched carefully across both tax jurisdictions before determining the amount eligible for relief.

Form 67 is used to provide prescribed information relating to Foreign Tax Credit.

A practical process involves:

• Report the income: Include the foreign income in the applicable Income Tax Return.
• Record foreign tax: Maintain evidence showing the amount of tax paid or deducted overseas.
• Prepare Form 67: Provide the prescribed details relating to the foreign income and tax.
• Submit electronically: Furnish Form 67 through the Income Tax e-Filing portal within the applicable timeline.
• Retain records: Keep tax certificates, payment evidence, statements, and other supporting documents.

The exact filing requirements and deadlines should be checked for the relevant assessment year.

Supporting documentation helps establish both the foreign income and the tax paid on it.

Keep relevant records such as:

• Foreign tax certificates: Documents issued by the foreign tax authority where applicable.
• Income records: Contracts, salary statements, dividend statements, interest statements, or other evidence.
• Payment records: Evidence of foreign tax paid or deducted.
• Exchange-rate information: Records supporting the conversion of foreign amounts into Indian currency where required.
• Indian tax records: Details showing how the same income was reported in India.
• Form 67 records: Copies of the information submitted for the Foreign Tax Credit claim.

Before claiming relief, check:

• Residency: Confirm your residential status for the relevant tax year.
• Country: Check whether India has an applicable DTAA with the country concerned.
• Income: Identify the specific foreign income that is taxable in both jurisdictions.
• Foreign tax: Confirm the amount and nature of tax actually paid overseas.
• Indian tax: Determine the applicable Indian tax treatment.
• Documentation: Retain evidence supporting both income and foreign tax.
• Form 67: Check the current filing requirements and deadline.
• Tax year: Use the provisions applicable to the relevant assessment year.

Where income comes from multiple countries or involves complex investments, professional tax advice can help determine the appropriate relief mechanism.

Section 91 provides unilateral relief to eligible Indian residents who are taxed on the same foreign income in India and a country without an applicable DTAA. The relief is generally linked to the lower applicable Indian or foreign tax rate and the amount of doubly taxed income.

A proper claim requires careful attention to residential status, the foreign country's treaty position, income classification, foreign tax paid, Indian tax treatment, documentation, and Form 67 requirements. These factors should be checked for the relevant assessment year before claiming relief.

Last reviewed: October 2026

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