Double Taxation Avoidance Agreement
Double taxation is the process when a tax is deducted from the same income in the two countries. It comes under the mistake that need to rectify with the help of double taxation avoidance agreement. It is the bilateral agreement between the two countries that need to follow while taxing the income. The main objective behind launching this agreement is to protect the respective income from being getting double taxation. At present; India has Tax Treaty or DTAA with 84 other countries.
To understand in detail let�s have an example that if in case NRI resides in India and maintaining the account in Bank of India. The interest on this account is treated as income to the NRI which is subjected for the income deduction. The rate of deduction is decided as per the double taxation avoidance agreement; the rate which is described in the DTTA has been followed for the income tax deduction. In this way NRI community who are in India can take the benefits of provisions of DTAA that is being entered between the two countries. Loans, NRO account, fixed deposits with companies, government securities and dividend are some of the segments where NRI can reap the benefits of agreement.
How to Reap The Benefits From DTAA
For reaping the complete benefits of double taxation avoidance agreement one need to submit the documents to the deductors :
- TRC tax residency certificate
- PAN Card self attested copy
- Passport and Visa self attested copy
- PIO Proof copy
- Self-declaration cum indemnity format
- Candidate name
- Nationality and Status (individual, firm, society, trust, company)
- Tax Identification Number
- Residential status
- Certificate applicable period