15 July 2009
Dear Friends N Respected Seniors., A resident assessee, earned foreign exchange of Rs.78,800. The foreign income was also subjected to tax deduction of Rs.8,800 at source in the foreign country with which india had no agreement for avoidance of double taxation. The assesse claimed relief under Section 91 of the income Tax Act in respect of the whole foreign income. Pls advice me anyone regarding this.
16 July 2009
If any person who is resident in India in any previous year proves that, in respect of his income which accrued or arose during that previous year outside India (and which is not deemed to accrue or arise in India), he has paid in any country with which there is no agreement under section 90 for the relief or avoidance of double taxation, income-tax, by deduction or otherwise, under the law in force in that country, he shall be entitled to the deduction from the Indian income-tax payable by him of a sum calculated on such doubly taxed income at the Indian rate of tax or the rate of tax of the said country, whichever is the lower, or at the Indian rate of tax if both the rates are equal.
So in this case we have to compute the tax on his foreign income on the basis of status of the assessee i.e. (company or individual or HUF etc.)
Then we have to compare the amount of tax computed as above and that deducted at source. The assessee will get the benefit of the lower of the two.
In no case the assessee will get the relief on the entire income.
CAclubindia
