The Income Tax Act is the primary legislation governing the taxation of income in India. Within the Act, there are various provisions that provide relief to taxpayers from double taxation, which occurs when the same income is taxed in two different countries. One such provision is Section 90, 90A, and 91 of the Income Tax Act.
What is Section 90 of the Income Tax Act?
Section 90 of the Income Tax Act deals with the agreement between India and foreign countries or specified territories for the avoidance of double taxation. This section empowers the Central Government to enter into an agreement with the government of any foreign country or specified territory outside India to provide relief from double taxation.
The provisions of this section apply to any person who is a resident of India or a resident of the foreign country or specified territory with which India has entered into an agreement. Under this section, if an individual’s income is taxed in both India and the foreign country or specified territory, they may be eligible to claim relief from double taxation in one of these countries.
What is Section 90A of the Income Tax Act?
Section 90A of the Income Tax Act deals with the agreement between the Central Government and any specified association for the avoidance of double taxation. The specified association can be any international organization or association in which India is a member.
This section enables the Central Government to enter into an agreement with any specified association for the relief of double taxation. The provisions of this section apply to any person who is a resident of India or a resident of any other country or specified territory that is a member of the specified association.
What is Section 91 of the Income Tax Act?
Section 91 of the Income Tax Act deals with the relief from double taxation in the absence of an agreement between India and the foreign country or specified territory. If India has not entered into an agreement with a foreign country or specified territory for the avoidance of double taxation, this section provides relief to taxpayers.
Under this section, if an individual’s income is taxed in both India and a foreign country or specified territory, they may be eligible to claim relief from double taxation in India. The relief available under this section is limited to the lower of the tax liability in India or the foreign country or specified territory.
Conclusion
Sections 90, 90A, and 91 of the Income Tax Act provide relief to taxpayers from double taxation in situations where the same income is taxed in two different countries. These provisions empower the Central Government to enter into agreements with foreign countries, specified territories, and specified associations to provide relief from double taxation. If an agreement is not in place, relief from double taxation may still be available under Section 91. Understanding these provisions is crucial for taxpayers who have income from foreign sources and want to avoid double taxation.
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Frequently Asked Questions (FAQs)
Q: What is the purpose of Sections 90, 90A, and 91 of the Income Tax Act?
A: The purpose of these sections is to provide relief to taxpayers from double taxation when the same income is taxed in two different countries or specified territories.
Q: Who is eligible to claim relief under these sections?
A: Any person who is a resident of India or a resident of a foreign country or specified territory with which India has entered into an agreement or a specified association with which India has entered into an agreement may be eligible to claim relief under these sections.
Q: What is a foreign country or specified territory?
A: A foreign country or specified territory is any country or territory other than India with which India has entered into an agreement for the avoidance of double taxation.
Q: What is a specified association?
A: A specified association is any international organization or association in which India is a member with which India has entered into an agreement for the avoidance of double taxation.
Q: What is the relief available under these sections?
A: The relief available under these sections is the avoidance of double taxation. If an individual’s income is taxed in both India and a foreign country or specified territory, they may be eligible to claim relief from double taxation in one of these countries.
Q: How does relief from double taxation work under these sections?
A: Relief from double taxation works by allowing taxpayers to claim a tax credit in one of the countries for the taxes paid in the other country on the same income. This ensures that the same income is not taxed twice.
Q: What happens if India has not entered into an agreement with a foreign country or specified territory for the avoidance of double taxation?
A: If an agreement is not in place, relief from double taxation may still be available under Section 91 of the Income Tax Act. The relief available under this section is limited to the lower of the tax liability in India or the foreign country or specified territory.
Q: Is it necessary to claim relief under these sections?
A: It is not mandatory to claim relief under these sections, but it is advisable to do so to avoid double taxation and reduce the overall tax liability.
Q: What documents are required to claim relief under these sections?
A: To claim relief under these sections, taxpayers must provide the relevant tax authorities with the necessary documents such as the tax residency certificate, proof of tax paid in the other country, and a declaration of income earned in the other country.
Q: Can relief from double taxation be claimed for all types of income?
A: Relief from double taxation can be claimed for all types of income, including salary, business income, capital gains, and dividends, among others.
