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:
- Assessee is resident in India in previous year in which income is taxable
- Income arises or accrues to him outside India.
- Assessee has paid tax on income in the foreign country.
- 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.
