Double Taxation Relief

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Double Taxation Relief

Double taxation means:

Double taxation means the same income is taxed twice in the hands of assessee.

Double taxation situation arises:

Where taxpayer is resident in one country and has source of income from other country also then there arises a situation of double taxation.

Why double taxation avoidance agreement is entered between countries?

To provide relief to assessee to pay tax on the same income twice double taxation avoidance agreement is entered between countries.

What if there is contradiction between Income Tax Act 1961 and Double Taxation Avoidance Agreement?

If there is contradiction between Income Tax Act 1961 and Double Taxation Avoidance Agreement than Double Taxation Avoidance Agreement prevails.

Countries with whom India have Double Taxation Avoidance Agreement

Armenia Kazakstan Serbia
Australia Kenya Singapore
Austria Kuwait Slovenia
Bangladesh Kyrgyz Republic South Africa
Belarus Luxembourg South Korea
Belgium Malaysia Spain
Botswana Malta Sri Lanka
Brazil Mexico Sudan
Bulgaria Mongolia Sweden
Canada Montenegro Switzerland
China Morocco Syria
Cyprus Myanmar Tajikistan
Czech Republic Namibia Tanzania
Denmark Nepal Thailand
Finland Netherlands Trinidad and Tobago
France New Zealand Turkey
Germany Norway Turkmenistan
Hungary Oman UAE
Iceland Philippines Uganda
Indonesia Poland Ukraine
Ireland Portugal United Kingdom
Israel Qatar USA
Italy Romania Uzbekistan
Japan Russian Federation Vietnam
Jordan Saudi Arabia Zambia

 

Where there is no double taxation avoidance agreement between countries what is the relief available?

In India under section 91 of Income Tax Act 1961 relief is available to resident in India subject to fulfillment of following conditions:

  1. Assessee is resident in India in previous year in which income is taxable
  2. Income arises or accrues to him outside India.
  3. Assessee has paid tax on income in the foreign country.
  4. There is no double taxation avoidance agreement between the countries i.e. India and foreign country.

Relief under section 91 of Income Tax Act 1961 is available subject to lower of Indian rate of tax or foreign rate of tax on that doubly taxed income. This relief is in the form of deduction from the income tax payable in India.

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