Taxpayer is eligible for foreign tax credit in India on taxes paid in various foreign countries

 The Bangalore Bench of the Income-tax Appellate Tribunal (the Tribunal) in the case of ITTIAM Systems Pvt Ltd (the taxpayer) dealt with the issue of eligibility of Foreign Tax Credit (FTC) on the taxes paid in various foreign countries. The Tribunal held that the taxpayer is eligible for full credit of FTC, amounting to taxes paid in USA, Japan and Germany under respective tax treaties. However, in the case of Korea, FTC is limited to taxes paid in Korea or India, whichever is less.

With Taiwan, India does not have a tax treaty. Therefore, FTC is to be computed based on rate of tax applicable in India or Taiwan, whichever is less, on such doubly taxable income