NRI Taxation » Double Tax Treaties
DOUBLE TAXATION AVOIDANCE AGREEMENT (DTAA)
Since Non-residents are likely to be covered by the tax laws of at least two countries, the Government has entered into DTAAs for granting relief to them in respect of double- taxation.
Double Taxation is defined as levying of taxes for the same tax payer in two countries for the same income earned in the same period of time.
The very nature of Non residents is that they are covered by laws of two nations. so, they are the most affected when they have to pay tax for the income earned in same period of time in both nations.
If the rate of tax is more than 50% in the both countries then they are left with negative income.
To avoid hardship to individuals and also with view to see that national economic growth does not suffer,Double Taxation Avoidance Agreements (D.T.A.A) are entered into with other countries.
Tax treaties serve the purpose of providing full protection to tax payers against double taxation and thus preven the discouragement in free flow of international trade and international investment. Above all such treaties generally contain provisions for mutual exchange of information and for reducing litigation. We may say the DTAA are the first step in the direction of building International Society.
Salient Features
- DTA Agreement between India and other country covers only residents of India and the Other Contracting country which has entered into the agreement with India.
- Such agreement provides that the laws of the two contracting states will govern the taxation of income in respective states except when express provision to the contrary is made in the agreement.
- It is intedend to put tax payers in a beneficial position, it is provided in Sec. 90 that a beneficial provisions under the Indian Income Tax Act will not be denied to residents of contracting state merely because the corresponding provision in tax treaty is less beneficial.
- Some agreements provide that income by way of interest, royalty or fee for technical services is charged to tax on net basis which may result in tax deducted at source from sums paid to Non-residents which may be more than the final tax liability.Therefore, Assessing Officer has been empowered u/s 195 to determine the appropriate proportion of the amount from which tax is to be deducted at source.
- Instances where as per the Income-tax Act, tax is required to be deducted at a rate prescribed in tax treaty which may require foreign companies to apply for refund. To prevent such difficulties Sec. 2(37A) provides that tax may be deducted at source at the rate applicable in a particular case as per section 195 on the sums payable to non-residents or in accordance with the rates specified in D.T.A Agreements
Generated Keywords for the page : income tax return , income tax , tax return , double taxation , tax relief , tax , offshore , irs , , double tax , income tax , double tax treaties , income tax act , tax treaties , double taxation , what is income tax , calculation of income tax , salary tax calculation , income tax calculation , income tax software , offshore company , offshore investments , tax lawyer , capital gains tax , double taxation relief , exemption income tax , file income tax return , file income tax returns , file it return , file return , file tax return , filing of income tax return , filing tax return , german tax , holding company , how to file income tax return , how to file income tax returns , how to save tax , income tax calculator , income tax exemptions , income tax filing , income tax form no 16 , income tax guide , income tax information , income tax payment , income tax rate india , income tax rates , income tax rates india , income tax return filing , income tax return form , income tax rules india , income tax saving , income tax sections , income tax treaty , india service tax , inheritance tax , it return filing , nanny tax , offshore tax , tax agreement , tax calculator , tax online , tax payment , tax rate india , tax rates , tax rates india , tax saving , tax saving scheme , tax slabs india , value added tax ,
Stumble it!