Paying tax on the same income twice is every global professional’s worst fear. Priyobrato, a software engineer with overseas income, made sure to avoid this by accurately claiming Rs 46,647 in tax relief under India’s Double Taxation Avoidance Agreement (DTAA). Because he had already paid tax abroad on his foreign equity and dividends, his final tax liability in India was fully settled.
So when an official demand notice from the Income Tax Department arrived in his inbox, it came as a complete surprise.
Despite being legally entitled to every rupee of relief, the tax department’s automated system had rejected his entire DTAA claim and calculated unexpected tax dues.
Facing mounting interest penalties and a strict deadline to respond, Priyobrato turned to ClearTax for professional assistance.
ClearTax assigned tax expert CA Dhanush and associate Shreesha to analyze the notice and review his tax filings. During their audit, the team uncovered two critical reporting errors that had caused the automated system to reject his return:
1. The Missing Form 67: While Priyobrato qualified for DTAA relief, the tax portal’s system rejected the Rs 46,647 credit because Form 67 had not been submitted on the portal prior to filing his original return.
2. The Advance Tax Discrepancy: An “Unmatched Tax Payment” The system flagged error of an unmatched tax payment because tax withheld by a tenant on his house rent (Section 194I) was erroneously listed under the advance tax section instead of the proper TDS schedule.
To ensure a smooth resolution, Priyobrato worked closely with the tax team to review his updated computation. Together, they made three key corrections:
Reclassifying Rent TDS: They removed the mislisted house rent TDS from advance tax and moved it to the correct schedule, immediately clearing the unmatched payment flag.
Fixing Mutual Fund Gains: They adjusted capital gain figures on debt funds (HDFC Short Term Debt) and international feeder funds (Motilal Oswal Nasdaq 100) to align with official CAMS statements.
Exact Exchange Rate Conversions: They recalculated gains on US stocks using official SBI TT Buy exchange rates for the exact vest and sale dates.
Once the numbers were reconciled and a nominal Rs 113 balance was cleared, the tax expert executed a precise two-step submission on the government portal requiring live verification.
The moment Form 67 and the updated return were processed, the tax department granted the total Rs 46,647 credit and formally closed the notice. Priyobrato’s case brings out three practical lessons for anyone with foreign income:
1. Form 67 is non-negotiable for DTAA relief: You cannot claim foreign tax credits on your return without submitting Form 67 on or before the filing date.
2. Match TDS entries with Form 26AS/AIS categories: Putting tenant rent TDS or salary withholding under advance tax schedules causes automated rejection notices.
3. Use official SBI TT Buy rates for foreign stocks: Always convert US dollar transaction values using official SBI TT Buy exchange rates on the relevant dates.
Working with experienced tax experts ensures your foreign credits and capital gains are filed accurately, protecting your hard-earned tax relief.
(The author is the founder and CEO of ClearTax)
Disclaimer: The views expressed in this article are solely those of the author and do not reflect the official policy, editorial position or views of Financial Express. The article is intended for informational purposes only and should not be construed as tax, legal or financial advice.
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