What Is DTAA Relief Calculator?

The DTAA Relief Calculator works out how much double-taxation relief you can claim in India when the same income has already been taxed abroad. It's built for resident Indians with foreign income — salaried employees with overseas postings, freelancers billing foreign clients, and investors holding foreign stocks or dividends — since Rule 128 restricts this foreign tax credit method to residents. NRIs are usually taxed only on India-source income, so this average-rate calculation doesn't apply to them. Enter your Indian income, foreign income, and the tax you paid abroad — the tool tells you exactly how much relief you can set off against your Indian tax bill, using the same DTAA relief calculator formula the department applies.

DTAA Relief Calculator Formula (as per Section 90/91, Income-tax Act, 1961)

Relief from double taxation in India follows the tax-credit (average rate) method, whether it's claimed under Section 90 or Section 91 of the Income-tax Act, 1961:

Global Income = Indian Income + Foreign Income
Tax on Global Income = Tax computed at applicable slab rates + surcharge (if any) + 4% cess
Average Rate of Tax = (Tax on Global Income ÷ Global Income) × 100
Indian Tax on Foreign Income = Foreign Income × Average Rate

DTAA Relief = LOWER OF (Indian Tax on Foreign Income, Foreign Tax Paid)

If a Double Taxation Avoidance Agreement exists with the country where you earned the income, this relief falls under Section 90 (or Section 90A for specified associations), computed as per Rule 128 of the Income-tax Rules, 1962, and claimed by filing Form 67. If there's no DTAA with that country, the same calculation applies under Section 91 as unilateral relief — you don't need a treaty to avoid being taxed twice. Rule 128 also limits your foreign tax credit to tax, surcharge, and cess actually paid abroad — interest, penalties, and disputed foreign tax don't count.

How This Calculator Works

1. Enter your Indian income — everything you earned or accrued in India.
2. Enter your foreign income — the portion that was also taxed abroad.
3. Enter the foreign tax you actually paid or had deducted on that income.
4. Select whether India has a DTAA with the country concerned — this only changes which section your relief falls under, not the math.
5. The calculator adds both incomes together and works out your average Indian tax rate on that combined figure. This average rate already includes the Section 87A rebate, marginal relief near ₹12 lakh, and surcharge above ₹50 lakh.
6. It then applies that rate to your foreign income to find your notional Indian tax on it, then picks the lower of that figure and your actual foreign tax paid — that's your relief.

Step-by-Step Example Calculation

Rohit, a resident Indian consultant, earned ₹18,00,000 in India and ₹6,00,000 from a US client in FY 2025-26. The US withheld ₹90,000 in tax on that income. India has a DTAA with the US.

Step 1 — Global Income: ₹18,00,000 + ₹6,00,000 = ₹24,00,000

Step 2 — Tax on Global Income (new regime slabs, FY 2025-26):

• ₹0–4L: Nil
• ₹4L–8L @ 5% = ₹20,000
• ₹8L–12L @ 10% = ₹40,000
• ₹12L–16L @ 15% = ₹60,000
• ₹16L–20L @ 20% = ₹80,000
• ₹20L–24L @ 25% = ₹1,00,000
• Total tax before cess = ₹3,00,000 (no surcharge — applies only above ₹50L)
• Add 4% cess = ₹12,000
• Tax on Global Income = ₹3,12,000

Step 3 — Average Rate of Tax: ₹3,12,000 ÷ ₹24,00,000 × 100 = 13%

Step 4 — Indian Tax on Foreign Income: ₹6,00,000 × 13% = ₹78,000

Step 5 — Relief: Lower of ₹78,000 (Indian tax on foreign income) and ₹90,000 (foreign tax paid) = ₹78,000

Rohit can claim ₹78,000 as DTAA relief under Section 90, filed via Form 67. The remaining ₹12,000 of US tax isn't refunded by India — that's a cost of the foreign tax rate exceeding India's.

Who Should Use DTAA Relief Calculator

• Resident Indians with foreign income — salaried employees on overseas postings, RSU holders, or anyone whose global income includes foreign-taxed earnings. If you've recently returned from abroad, check your RNOR status first — FTC under Rule 128 only applies once you're a resident.
• Resident freelancers and consultants billing international clients — see also the professional income tax calculator for the rest of your tax picture.
• Salaried employees with a foreign posting, RSUs, or overseas allowances taxed abroad.
• Traders and investors holding foreign stocks, ETFs, or dividend-paying international shares — the foreign dividend tax calculator complements this for dividend-specific cases.
• CAs and tax professionals preparing Schedule FSI and Schedule TR entries for clients with foreign income.

Latest Rules You Should Know (2026)

For FY 2025-26 (AY 2026-27), DTAA relief is still governed by Sections 90, 90A, and 91 of the old Income-tax Act, 1961 — not the new Act. The Income Tax Act, 2025 renumbers this relief to Section 159, but that only applies to income earned from FY 2026-27 (1 April 2026) onward. [VERIFY]

Form 67 remains mandatory to claim relief under Section 90/90A — file it before the due date under Section 139(1), before you file your return. Miss it, and courts have upheld that the credit gets disallowed for that year. Practitioner sources report Form 67 will be renumbered Form 44 once the new Act's forms take effect. [VERIFY] Check Toolisky's Form 67 DTAA guide for the current filing steps and TTBR conversion rules.

New tax regime slab rates used in this calculator (FY 2025-26): Nil up to ₹4L, 5% up to ₹8L, 10% up to ₹12L, 15% up to ₹16L, 20% up to ₹20L, 25% up to ₹24L, 30% beyond, plus 4% cess. Section 87A rebate applies if your total taxable income is ₹12L or below, with marginal relief for income just above that. Surcharge of 10%/15%/25% applies above ₹50L/₹1Cr/₹2Cr respectively.

Common Mistakes People Make

• Assuming DTAA relief means you don't owe any Indian tax on foreign income — it only caps the tax at the lower of the two countries' rates, not zero.
• Forgetting to file Form 67 before the ITR due date — the credit gets disallowed even if the foreign tax was genuinely paid.
• Using the foreign country's exchange rate instead of the SBI TT Buying Rate prescribed for conversion.
• Claiming relief on disputed foreign tax that hasn't been finally settled — Rule 128 excludes this.
• Mixing up Section 90 (treaty-based) with Section 91 (no treaty) — the math is the same, but the section you cite in your return must match whether a DTAA actually exists.
• Applying the average rate to your entire income instead of only the foreign portion — relief is calculated on foreign income alone.
• Assuming the surcharge on high incomes (above ₹50 lakh) gets the same marginal-relief smoothing as the ₹12 lakh rebate — this calculator doesn't model surcharge marginal relief. If your income is near ₹50L, ₹1Cr, or ₹2Cr, get a CA to check the exact surcharge liability.

FAQs

Does DTAA relief mean I pay zero tax on foreign income? 

No. It only prevents you from paying tax twice on the same income at both countries' full rates. You still pay tax at whichever rate — Indian or foreign — is lower, and the excess above that isn't refunded by either country.

Can I claim DTAA relief without a Double Taxation Avoidance Agreement? 

Yes, under Section 91. This is called unilateral relief and uses the same average-rate calculation, just without needing a signed treaty with that country.

Is Form 67 mandatory to claim this relief? 

Yes. The Supreme Court has upheld that filing Form 67 before your return's due date is a hard requirement for claiming foreign tax credit under Section 90 or 90A.

Which ITR form should I use to claim DTAA relief? 

ITR-2 for salary, capital gains, or investment income with no business income; ITR-3 if the foreign income is from freelance or professional work. ITR-1 doesn't support Schedule FSI or Schedule TR.

Will the Income Tax Act 2025 change how DTAA relief is calculated? 

The formula stays the same. Only the section number changes — from Sections 90/91 to Section 159 — and only for income earned from FY 2026-27 onward. 

What exchange rate should I use for foreign tax paid? 

Generally the SBI TT Buying Rate on the last day of the month before the tax was deducted or paid, except for RSU/ESOP perquisites, which use the rate on the vesting date.

Related Tools on Toolisky

• Form 67 for DTAA Foreign Tax Credit — full filing guide
• Foreign Dividend Tax Calculator
• Dividend Tax Calculator India
• RNOR Status for NRIs Returning to India from the US
• Professional Income Tax Calculator
• Income Tax Act 2025 for NRIs in the USA