CHAPTER IX
DOUBLE TAXATION RELIEF
[Agreement with foreign
countries.
90. [(1)] The Central Government may enter into an agreement with the
Government of any country outside
[(a) for
the granting of relief in respect of—
(I) Income on which have been paid both income-tax
under this Act and income-tax in that country; or
(ii) income-tax chargeable under this Act and under
the corresponding law in force in that country 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
(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 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,
and may, by
notification in the Official Gazette, make such provisions as may be necessary
for implementing the agreement.]
[(2) Where the Central Government has entered
into an agreement with the Government of any country outside India under
sub-section (1) for granting relief of tax, or as the case may be, 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 in sub-section (1) shall, unless the context
otherwise requires, and is not inconsistent with the provisions of this Act or
the agreement, have the same meaning as assigned to it in the notification
issued by the Central Government in the Official Gazette in this behalf.]
[Explanation.—For the removal of
doubts, it is hereby declared that the charge of tax in respect of a foreign
company at a rate higher than the rate at which a domestic company is
chargeable, shall not be regarded as less favorable charge or levy of tax in
respect of such foreign company [***].]
[Adoption by Central Government of
agreements between specified associations for double taxation relief.
90A.(1) Any specified association in
(a) for
the granting of relief in respect of—
(i) income
on which have been paid both income-tax under this Act and income-tax in any
specified territory outside
(ii) income-tax chargeable
under this Act and under the corresponding law in force in that specified
territory outside India 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 specified territory outside
(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 specified
territory outside India, 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 specified territory outside
(2) Where a specified association in India has
entered into an agreement with a specified association of any specified
territory outside India under sub-section (1) and such agreement has been
notified under that sub-section, for granting relief of tax, or as the case may
be, 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 in sub-section (1) shall, unless the context otherwise
requires, and is not inconsistent with the provisions of this Act or the
agreement, have the same meaning as assigned to it in the notification issued
by the Central Government in the Official Gazette in this behalf.
Explanation 1.—For the removal of
doubts, it is hereby declared that the charge of tax in respect of a company
incorporated in the specified territory outside India at a rate higher than the
rate at which a domestic company is chargeable, shall not be regarded as less favourable charge or levy of tax in respect of such
company.
Explanation 2.—For
the purposes of this section, the expressions—
(a) “specified
association” means any institution, association or body, whether incorporated
or not, functioning under any law for the time being in force in India or the
laws of the specified territory outside India and which may be notified as such
by the Central Government for the purposes of this section;
(b) “specified
territory” means any area outside
Countries with
which no agreement exists.
91.(1) If any person who is resident in India in any previous year proves
that, in respect of his income which accrued or arose during that previous year
outside India (and which is not deemed to accrue or arise in India), he has
paid in any country with which there is no agreement under section 90 for the
relief or avoidance of double taxation, income-tax, by deduction or otherwise,
under the law in force in that country, he shall be entitled to the deduction
from the Indian income-tax payable by him of a sum calculated on such doubly
taxed income at the Indian rate of tax or the rate of tax of the said country,
whichever is the lower, or at the Indian rate of tax if both the rates are
equal.
(2) If any
person who is resident in India in any previous year proves that in respect of
his income which accrued or arose to him during that previous year in Pakistan
he has paid in that country, by deduction or otherwise, tax payable to the
Government under any law for the time being in force in that country relating
to taxation of agricultural income, he shall be entitled to a deduction from
the Indian income-tax payable by him—
(a) of the amount of the tax paid in
(b) of a sum calculated on that income at the Indian rate of tax;whichever is less.
(3) If any non-resident person is
assessed on his share in the income of a registered firm assessed as resident
in India in any previous year and such share includes any income accruing or
arising outside India during that previous year (and which is not deemed to
accrue or arise in India) in a country with which there is no agreement under
section 90 for the relief or avoidance of double taxation and he proves that he
has paid income-tax by deduction or otherwise under the law in force in that
country in respect of the income so included he shall be entitled to a
deduction from the Indian income-tax payable by him of a sum calculated on such
doubly taxed income so included at the Indian rate of tax or the rate of tax of
the said country, whichever is the lower, or at the Indian rate of tax if both
the rates are equal.
Explanation.—In this section,—
(i) the expression
“Indian income-tax” means income-tax [***] charged in accordance with the
provisions of this Act;
(ii) the
expression “Indian rate of tax” means the rate determined by dividing the
amount of Indian income-tax after deduction of any relief due under the
provisions of this Act but before deduction of any relief due under this [Chapter],
by the total income;
(iii) the
expression “rate of tax of the said country” means income-tax and super-tax
actually paid in the said country in accordance with the corresponding laws in force
in the said country after deduction of all relief due, but before deduction of
any relief due in the said country in respect of double taxation, divided by
the whole amount of the income as assessed in the said country;
(iv) the expression “income-tax” in relation to any country includes any excess profits tax or business profits tax charged on the profits by the Government of any part of that country or a local authority in that country