Under Section 90 of the tax law allows for a credit or deduction for tax paid in a foreign nation on income taxable in India. This provision is intended to prevent double taxation of the same income by allowing individuals or businesses to offset the tax paid in a foreign country against their tax liability in India.
The provision applies to both residents and non-residents of India. It allows for a credit or deduction for tax paid in any foreign country with which India has a tax treaty.
Section 90 of Income Tax Act
Section 90 of the Income Tax Act allows for the relief of double taxation in cases where the same income has been taxed in both India and another country with which India has a Double Taxation Avoidance Agreement (DTAA).
Under this provision, a resident taxpayer who has paid taxes on their foreign income in another country can claim relief in India by providing proof of the taxes paid abroad. The relief will be granted in the form of a tax credit, which can be used to offset the tax liability on foreign income in India.
To claim relief under Section 90, the taxpayer must file a claim for relief with the Indian tax authorities and provide evidence of the taxes paid abroad. The tax authorities will then determine the amount of relief that can be granted based on the DTAA between India and other countries.
It’s important to note that Section 90 applies only to cases of double taxation and does not provide relief from other taxes, such as capital gains or wealth tax. Additionally, the provision is subject to certain conditions and exclusions, which you can find more information about in the Income Tax Act.
Section 90 of Income Tax Act: Double taxation relief
Double taxation relief is a tax provision that aims to prevent the same income or asset from being taxed twice. It can occur when the same income is taxed in two different countries or when an individual is taxed on the same income by the federal and state governments.
There are several ways to obtain double taxation relief, including exemptions, credits, and deductions. Exemptions allow certain types of income or assets to be excluded from taxation. Credits allow taxpayers to offset the amount of tax they owe by the amount they have already paid to another jurisdiction. Deductions reduce the amount of income that is subject to taxation.
Double taxation relief can be obtained through countries’ tax treaties or domestic tax laws. Some countries also have unilateral relief provisions, allowing their citizens to claim relief from double taxation even if the other country does not have a tax treaty.
Section 90 of Income Tax Act: Eligibility
A person may apply for relief under section 90 if they are a resident of India and they earned income in a country with which India has a tax treaty. The individual must also have paid tax on the income in the country where it was earned.
FAQs
What does a resident of India mean as per Section 90?
A resident of India is a person who meets any of the following two conditions: The person was in India for 182 days or more in the relevant tax year. The individual spends at least 60 days or more in the relevant tax year and 365 days or more in India during the four years preceding the relevant tax year.
What is income earned or received outside India under Section 90?
Income earned or received outside India is any income that a resident of India earns or receives from sources outside India. It could include salary, rent, dividends, capital gains, etc., earned or received from a foreign company or government.
Is there any requirement to report foreign income in India?
Yes, a resident of India is required to report their foreign income in their Indian tax return. It includes income earned or received from any source outside India, whether or not it has been taxed in the foreign country.
Can I claim a tax exemption or tax credit for taxes paid on foreign income in India?
Yes, a resident of India may be entitled to claim a tax exemption or tax credit for taxes paid on foreign income under the conditions of a tax agreement between India and the foreign country. The resident should provide the necessary evidence of tax paid in the foreign country, such as a tax assessment certificate or tax return, to claim the tax exemption or credit.
Is there a time limit for claiming relief under section 90?
There is no specific time limit for claiming relief under Section 90. You can claim the credit in the tax year in which the income is earned or in any subsequent tax year. However, it is generally advisable to claim the credit as soon as possible to avoid delays in getting the credit.
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