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Double Taxation Avoidance

Taxpayers who are in the India is domiciled or habitually resident here, are obliged to pay tax on income from sources in the India as well as income from abroad. Income from foreign sources means income arising from foreign sources and is subject to taxation in foreign countries in accordance with an international agreement, net of related expenses set out in the Law on Income Tax. Items that decreasing the taxes and deductions according to foreign law is not possible to determine the tax base. Expenditure incurred on revenue set aside by international treaty for the avoidance of double taxation cannot be tax deductible. Therefore, to avoid double taxation, is contained in the Law on Income Tax provisions on the exclusion of taxation.

Income from operations in the State with which the India entered into an agreement for the double taxation avoidance arising residents in the India and from an employer who is a resident of the State where such activity is carried out, or by an employer who is resident in the territory of India, and income from employment for such employer while going borne by a permanent establishment located in a State with which the India has concluded a treaty for avoidance of double taxation, in which case such income in the Indian taxation system exempt from tax, provided that the proceeds were taxed in the source country. In the event that it is advantageous for taxpayers, the provision under which you may use only one method that is mentioned in the agreement on avoidance of double taxation with a particular country. The methods are as follows:

  • Method full credit
  • Credit the
  • Method of exemption with progression
  • The method of exemption from the tax base (tax loss)
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