Income tax of resident

The Harshit Aggarwal (B.Com(H) ,CS Final) (5278 Points)
Replied 05 October 2009

Yes, the Indian Income Tax Act has nothing to do with other's IT Acts !!

llllVICTORllll (Internal Auditor) (511 Points)
Replied 05 October 2009

but wouldnt it be double taxation of same income?

The Harshit Aggarwal (B.Com(H) ,CS Final) (5278 Points)
Replied 05 October 2009

yes it is but to the best of my knowledge rules of both the countries will be followed.

The Harshit Aggarwal (B.Com(H) ,CS Final) (5278 Points)
Replied 05 October 2009

i think there will be some relief.........but not upto 100%

(Guest)

The worldwide income of an ordinarily resident assessee will be taxed in India, whether it is brought in India or not. Though he pays tax in another country, he will be liable to pay tax in India also.

(Guest)

There is no relief in this case. It happens only when there is Double Tax Avoidance Agreement betweeen the 2 countries. If this be the case then the amt of tax paid in other country will be allowed as a deduction from the tax payable in India.....

1 Like

CA Anup Agarwal (JOB) (49 Points)
Replied 05 October 2009

Yes. it will be taxed..ya it is double taxation.

The Harshit Aggarwal (B.Com(H) ,CS Final) (5278 Points)
Replied 05 October 2009

Originally posted by :Poonam Thanvi
"	There is no relief in this case. It happens only when there is Double Tax Avoidance Agreement betweeen the 2 countries. If this be the case then the amt of tax paid in other country will be allowed as a deduction from the tax payable in India.....	"

Thanks 4 info. Poonam

Juzer Sadikot (CA - innovative solutions for Imports and Exports) (1309 Points)
Replied 05 October 2009

Originally posted by :Poonam Thanvi
"	There is no relief in this case. It happens only when there is Double Tax Avoidance Agreement betweeen the 2 countries. If this be the case then the amt of tax paid in other country will be allowed as a deduction from the tax payable in India.....	"

Dear All,

For Resident and Ordinary Resident world Income is taxable. However when the income earned in source country and tax is/has paid/deducted in the source country the assesse can claim benifit of relief undersection 90 when there is DTAA between the two countries or relief under section 91 in case there is no DTAA agreement.

For your Info;

CHAPTER IX

DOUBLE TAXATION RELIEF

^47-52[Agreement with foreign countries or specified territories.

⁵³90.(1) The Central Government may enter into an agreement with the Government of any country outside India or specified territory outside India,—

(a) for the granting of relief in respect of—

(i) income on which have been paid both income-tax under this Act and income-tax in that country or specified territory, as the case may be, or

(ii) income-tax chargeable under this Act and under the corresponding law in force in that country or specified territory, as the case may be, to promote mutual economic relations, trade and investment, or

(b) for the avoidance of double taxation of income under this Act and under the corresponding law in force in that country or specified territory, as the case may be, or

(c) for exchange of information for the prevention of evasion or avoidance of income-tax chargeable under this Act or under the corresponding law in force in that country or specified territory, as the case may be, or investigation of cases of such evasion or avoidance, or

(d) for recovery of income-tax under this Act and under the corresponding law in force in that country or specified territory, as the case may be,

and may, by notification in the Official Gazette, make such provisions as may be necessary for implementing the agreement.

(2) Where the Central Government has entered into an agreement with the Government of any country outside India or specified territory outside India, as the case may be, under sub-section (1) for granting relief of tax, or as the case may be, avoidance of double taxation, then, in relation to the assessee to whom such agreement applies, the provisions of this Act shall apply to the extent they are more beneficial to that assessee.

(3) Any term used but not defined in this Act or in the agreement referred to in sub-section (1) shall, unless the context otherwise requires, and is not inconsistent with the provisions of this Act or the agreement, have the same meaning as assigned to it in the notification issued by the Central Government in the Official Gazette in this behalf.

Explanation 1.—For the removal of doubts, it is hereby declared that the charge of tax in respect of a foreign company at a rate higher than the rate at which a domestic company is chargeable, shall not be regarded as less favourable charge or levy of tax in respect of such foreign company.

Explanation 2.—For the purposes of this section, “specified territory” means any area outside India which may be notified as such by the Central Government.]

Countries with which no agreement exists.

⁵⁶91. (1) 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 income⁵⁷ 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.

(2) If any person who is resident in India in any previous year proves that in respect of his income which accrued or arose to him during that previous year in Pakistan he has paid in that country, by deduction or otherwise, tax payable to the Government under any law for the time being in force in that country relating to taxation of agricultural income, he shall be entitled to a deduction from the Indian income-tax payable by him—

(a) of the amount of the tax paid in Pakistan under any law aforesaid on such income which is liable to tax under this Act also; or

(b) of a sum calculated on that income at the Indian rate of tax;

whichever is less.

(3) If any non-resident person is assessed on his share in the income of a registered firm assessed as resident in India in any previous year and such share includes any income accruing or arising outside India during that previous year (and which is not deemed to accrue or arise in India) in a country with which there is no agreement under section 90 for the relief or avoidance of double taxation and he proves that he has paid income-tax by deduction or otherwise under the law in force in that country in respect of the income so included he shall be entitled to a deduction from the Indian income-tax payable by him of a sum calculated on such doubly taxed income so included 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.

Explanation.—In this section,—

(i) the expression “Indian income-tax” means income-tax ⁵⁸[***] charged in accordance with the provisions of this Act;

(ii) the expression “Indian rate of tax” means the rate determined by dividing the amount of Indian income-tax after deduction of any relief due under the provisions of this Act but before deduction of any relief due under this ⁵⁹[Chapter], by the total income;

(iii) the expression “rate of tax of the said country” means income-tax and super-tax actually paid in the said country in accordance with the corresponding laws in force in the said country after deduction of all relief due, but before deduction of any relief due in the said country in respect of double taxation, divided by the whole amount of the income as assessed in the said country;

(iv) the expression “income-tax” in relation to any country includes any excess profits tax or business profits tax charged on the profits by the Government of any part of that country or a local authority in that country.

Thanks and regards

1 Like

INDERJEET (CWA STUDENT & SERVICE) (177 Points)
Replied 06 October 2009

Originally posted by :Poonam Thanvi
"	There is no relief in this case. It happens only when there is Double Tax Avoidance Agreement betweeen the 2 countries. If this be the case then the amt of tax paid in other country will be allowed as a deduction from the tax payable in India.....	"

GOOD POONAM ITS CORRECT

Rajeev (www.rkmco.com) (985 Points)
Replied 06 October 2009

But that is exactly what we do to foreign companies as well , when the non resident income accrues in india , aint provisions of 195 attracted ?

The world trade norms have to be amended for this , that only resident countries will have the power to tax the income.The residential status norms also have to be amended globally and should be uniform throughout the world. But that can never happen in our life time . so we have to face situations like these .

Thats why DTAA are in existence with many countries , but in countries where DTAA dont exist , Incomes are doubly taxed.

Juzer Sadikot (CA - innovative solutions for Imports and Exports) (1309 Points)
Replied 06 October 2009

Dear All

I think relief under section 91 of IT Act is available in case of taxation of Income in both Source and Resident Country.

Plz correct me if I m worng.

For your info I am again producing extract of section 91 of the Act.

Countries with which no agreement exists.

⁵⁶91. (1) 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 income⁵⁷ 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.

The Harshit Aggarwal (B.Com(H) ,CS Final) (5278 Points)
Replied 06 October 2009

yes u r correct Juzer,

relief under section 91 of IT Act is available

GURPREET (article) (27 Points)
Replied 06 October 2009

if there is an aggreement b/w two countries to avoid double taxation then there is no need to pay tax again in india ,u have to just show the proof of tax payment. k