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Corporate Tax Planning




                    Notes          10.   Double taxation means taxation of same income of a person in less than one country.

                                   11.   Under Section 90, Indian government can relieve an individual from burden of double
                                       taxation.
                                   12.   Tax credit method provides relief by giving the tax payer a deduction from the tax payable
                                       in India.

                                   12.4 Double Taxation Relief Provisions in India

                                   Sections 90 and 91 of the Income tax Act, 1961 provide for double taxation relief in India. In India,
                                   a relief for avoidance of double taxation is provided in both ways that is Unilateral and Bilateral
                                   Relief. Provisions relating thereto are enumerated here in below:


                                   Agreement with Foreign Countries or Specified Territories - Bilateral Relief
                                   [Section 90]
                                   1.   Section 90(1) provides that the Central Government may enter into an agreement with the
                                       Government of any country outside India or specified territory outside India,—

                                       (a)   for the granting of relief in respect of—
                                            (i)   income on which income-tax has been paid both in India and in that country or

                                                 specified territory; or
                                            (ii)   income-tax chargeable under this Act and under the corresponding law in force
                                                 in that country or specified territory to promote mutual economic relations,

                                                 trade and investment; or
                                       (b)   for the avoidance of double taxation of income under this Act and under the

                                            corresponding law in force in that country or specified territory; or

                                            Accordingly, the Central Government has notified that where such an agreement
                                            provides that any income of a resident of India may be taxed in the other country
                                            then, such income shall be included in his total income chargeable to tax in India
                                            in accordance with the provisions of the Income-tax Act, 1961, and relief shall be
                                            granted in accordance with the method for elimination or avoidance of double

                                            taxation provided in such agreement [Notification No. 91/2008, dated 28.8.2008].
                                       (c)   for exchange of information for the prevention of evasion or avoidance of income-tax
                                            chargeable under this Act or under the corresponding law in force in that country or
                                            specified territory or investigation of cases of such evasion or avoidance; or

                                       (d)   for recovery of income-tax under this Act and under the corresponding law in force
                                            in that country or specified territory. The Central Government may by notifi cation in


                                            the Official Gazette, make such provisions as may be necessary for implementing the
                                            agreement.
                                   2.   Where the Central Government has entered into such an agreement with the Government
                                       of any country outside India or specified territory outside India for granting relief of tax, or

                                       for avoidance of double taxation, then, in relation to the assessee to whom such agreement

                                       applies, the provisions of this Act shall apply to the extent they are more beneficial to that
                                       assessee.
                                   3.   Any term used but not defined in this Act or in the agreement referred to above shall have


                                       the same meaning as assigned to it in the notification issued by the Central Government in

                                       the Official Gazette in this behalf, unless the context otherwise requires, provided the same
                                       is not inconsistent with the provisions of this Act or the agreement. The meaning assigned
                                       would be deemed to have come to effect from the date on which the said agreement came
                                       into force and not from the date of the said notifi cation.




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