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Duke (Article Assistant) (39 Points)

12 January 2010

Which is the only instance in Indian Income Tax Act where citizenship based taxation takes place?

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5 Replies

Amir (Learner) (4016 Points)
Replied 12 January 2010

Dear Duke,

Can u plz elaborate, what exactly citizen based taxation means...

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Duke (Article Assistant) (39 Points)
Replied 12 January 2010

Citizen based taxation means that a person is taxed for only being a citizen of that country. eg: An indian taxed because he is an indian citizen and not depending upon his residential status.

CA Radhika Arde (Chartered Accountant) (67 Points)
Replied 12 January 2010

I dont think so........Taxability is on residential status only and not on citizenship........If any case is there would like to know..........

Amir (Learner) (4016 Points)
Replied 12 January 2010

Dear Duke,

I hope this is rite,

Article 1(3) of DTAA with US reads as follows:-

3. Notwithstanding any provision of the Convention except paragraph 4, a Contracting State may tax its residents [as determined under Article 4 (Residence)], and by reason of citizenship may tax its citizens, as if the Convention had not come into effect. For this purpose, the term “citizen” shall include a former citizen whose loss of citizenship had as one of its principal purposes the avoidance of tax, but only for a period of 10 years following such loss.

Duke (Article Assistant) (39 Points)
Replied 15 January 2010

Originally posted by : Duke
	Which is the only instance in Indian Income Tax Act where citizenship based taxation takes place?

Well it seems none of you got the answer. In section 9(1) we would find that it has been mentioned that payment made by indian govt to an indian residind outside india for a service rendered outside india shall be taxed under income chargeable to tax under the head salaries.