Double taxation relief

This query is : Resolved

Dhruv Gaglani (Querist)
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26 October 2012 Dear All,
I am a resident in India and am a salaried person. However I shall also be earning Salary income from Muscat, Oman. Now India has a DTAA with Oman. In Muscat, the tax rate is NIL. Will I get any benefit under DTAA for the salary income earned in Muscat or will the whole income be taxable as the tax rate in Muscat is NIL.
As the income tax rate is NIL, will I be able to claim Relief for the proportionate income earned in Muscat?

CA Pooja Agarwal

CA Pooja Agarwal (Expert)
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26 October 2012 If you are an Indian resident working overseas or having income outside India, then your global income will be taxable in India. Income earned outside India shall also be taxed in India even though your foreign income is also taxable in that foreign country. To avoid the double taxation of such foreign income, the act provides the relief to the assessee. The central government enter into an agreement i.e. Double Taxation Avoidance Agreement (DTAA) with the government of other country or territory outside India to grant relief in respect of double taxability.

In case DTAA with foreign country exists

If DTAA agreement exists between India and that foreign country from which the assessee earned such foreign income, and then the total income of the assessee shall be taxed at the DTAA rate or the Income tax rate, whichever is beneficial to the assessee.

Thus in your case.Since the tax rate is nil in muscat,it would be fully taxable in India as there is no double taxation..

this is my opinion..comments from other experts are invited

Dhruv Gaglani

Dhruv Gaglani (Querist)
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26 October 2012 Thank you Madam for your reply.

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Dhruv Gaglani

Dhruv Gaglani (Querist)
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26 October 2012 However I read in one of the books, that if India has a DTAA with a foreign country, then the tax liability in India shall only be proportionate to my Indian income.
For eg.
Indian income = Rs. 8,86,000/-
Foreign income= Rs. 1,92,000/-
Total income= Rs. 10,78,000/-
Tax= Rs. 1,80,660/-
Average Rate of Tax = 16.76% (1,80,660/10,78,000*100)
Indian Tax liability = Rs. 1,48,480/- (8,86,000*16.76%).

Is the above computation correct?

Rathin Roy

Rathin Roy (Expert)
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27 October 2012 No that is not correct the tax rate applicable to you would be the normal rate (as per slabs) In India.