Hello Experts.
I am a resident for the year FY2014-2015 and have global Income. I am confused with respect to Double Taxation that i have earned in the foreign Country(Germany)
Please consider the following points here
- There is a DTAA agreement between India and germany, Tax shall be determined in the case of a resident of the Republic of India as follows :
Where a resident of the Republic of India derives income or owns capital which, in accordance with the provisions of this Agreement, may be taxed in the Federal Republic of Germany, the Republic of India shall allow as a deduction from the tax on such income of that resident an amount equal to the income-tax paid in the Federal Republic of Germany, whether directly or by deduction, and as a deduction from the tax on such capital of that resident an amount equal to the capital tax paid in the Federal Republic of Germany. Such deduction in either case shall not, however, exceed that part of the income-tax or capital tax (as computed before the deduction is given) which is attributable, as the case may be, to the income or the capital which may be taxed in the Federal Republic of Germany
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The above can be concluded that the benefit shall be of Income tax paid in India or in Germany whichever is lower.
Step 1: So, i shall calculate tax on my Taxable income twice, once considering the foreign income and second time not considering it.
The diffrence of the two shall be the Tax to be paid in india on the foreign Income.
Step : 2 Now I shall compare the value of Tax paid in foreign Country with the the amount of tax payable on such Foreign Income in India and the lower of the same shall be subtracted from the Total Tax payable by me (Calcualted on Total Income including Foreign Income) and the balance shall be payable by me.
Please let me know if the steps mentioned by me are correct or the same need to be modified.
Thanks for your help.
Regards
Ketan
CAclubindia
