CBDT exempts NRIs from Online filing form 10F Upto 31 March 2023
CBDT exempts NRIs from Online filing form 10F Upto 31 March 2023, Online filing form 10F, NRIs filing form 10F, form 10F, exempts non-resident Indians (NRIs) from ...
Read MoreThe Double Tax Avoidance Agreement (DTAA) is necessarily a bilateral agreement entered into between two countries. The basic motive is to promote and foster economic trade and investment between two Countries by avoidance of double taxation.
International double taxation has adverse impacts on the trade and services and on movement of capital and people. Taxation of the same income by two or more countries would constitute a prohibitive burden on the payer of tax. The domestic laws of most countries, including India, reduce this difficulty by affording unilateral relief in respect of such doubly taxed income (Section 91 of the Income Tax Act). But as this is not a satisfactory solution in view of the divergence in the rules for determining sources of income in different countries, the tax treaties try to remove tax obstacles that inhibit trade and services and movement of capital and persons between the countries concerned. It helps in improvement of the general investment climate.
The need for Agreement for Double Tax Avoidance arises because of conflicting rules in two different countries about chargeability of income on basis of receipt and accrual, residential status etc. As there is no clear definition of income and taxability thereof, which is approved internationally, an income may become liable to tax in two countries. Double taxation occurs when an individual is forced to pay two or more taxes for the same income, asset, or financial transaction in different countries. Double taxation occurs mainly due to overlapping tax laws and regulations of the countries where an individual operates his business.
The need for Agreement for Double Tax Avoidance arises because of conflicting rules in two different countries about chargeability of income on basis of receipt and accrual, residential status etc. As there is no clear definition of income and taxability thereof, which is approved internationally, an income may become liable to tax in two countries. Double taxation occurs when an individual is forced to pay two or more taxes for the same income, asset, or financial transaction in different countries. Double taxation occurs mainly due to overlapping tax laws and regulations of the countries where an individual operates his business.
In India, Under Section 90 and 91 of the Income Tax Act, relief against double taxation is granted in two ways:
UNILATERAL RELIEF
Under Section 91, an individual can be relieved from double taxation by Indian Government irrespective of whether there is a DTAA between India and the other country concerned. Unilateral relief to a tax payer may be provided if:
BILATERAL RELIEF
Under Section 90, the Indian government provides protection against double taxation by entering into a DTAA with another country, based on mutually acceptable terms.
SUCH RELIEF MAY BE OFFERED UNDER FOLLOWING TWO METHODS:
EXEMPTION METHOD: This assures complete avoidance of tax overlapping.
TAX CREDIT METHOD: This provides relief by giving the tax payer a deduction from the tax payable in India. DTAA CAN BE OF TWO TYPES.
A. COMPREHENSIVE DTAA: Comprehensive DTAAs are those which cover almost all types of incomes covered by any model convention. Many a time a treaty covers wealth tax, gift tax, surtax etc. too. DTAA Comprehensive Agreements with respect to taxes on income with following countries :
B. LIMITED DTAA: Limited DTAAs are those which are limited to certain types of incomes only, e.g. DTAA between India and Pakistan is limited to shipping and aircraft profits only. DTAA Limited agreements – With respect to income of airlines/merchant shipping with following countries:
When an Indian person makes a profit or some other type of taxable gain or receives any income in another country, he may be in a situation where he will be needed to pay a tax on that income in India, as well as in the country in which the income was made. To protect Indian tax payers from this unfair practice, DTAA assures that India's trade and services with other countries, & also the movement of capital are not adversely affected. Acting under the authority of law,
We at Rajput Jain & Associates offer advisory services to Indian Clients, Multinational Clients having interest in India and NRI for better tax management keeping in view the laws of India as well as overseas countries and Double Taxation Avoidance Agreements (DTAA) if any executed.
For any further queries, please mail us to singh.swatantra@gmail.com
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