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Relief from Double Taxation

Under Section 90 and 91 of the Income Tax Act, relief against double taxation is provided in two ways:

Unilateral Relief

Under Section 91, the Indian government can relieve an individual from double taxation irrespective of whether there is a DTAA between India and the other country concerned. Unilateral relief may be offered to a tax payer if:

  1. The person or company has been a resident of India in the previous year.
  2. The same income must be accrued to and received by the tax payer outside India in the previous year.
  3. The income should have been taxed in India and in another country with which there is no tax treaty.
  4. The person or company has paid tax under the laws of the foreign country in question.

Bilateral Relief

Under Section 90, the Indian government offers protection against double taxation by entering into a DTAA with another country, based on mutually acceptable terms. Such relief may be offered under two methods:

  1. Exemption method – This ensures complete avoidance of tax overlapping.
  2. Tax credit method – This provides relief by giving the tax payer a deduction from the tax payable in India.