Tax Relief under DTAA

How can one claim tax relief when there is No DTAA?

Hi @Dixita

In case there is No DTAA, then Tax Relief can be claimed u/s 91. You can follow the below-mentioned steps to compute relief:

  1. Compute tax payable in India
  2. Compute lower of Indian rate of tax and rate of tax in Foreign country
  3. Multiply the rate obtained in Step 3 by the doubly taxed income.
  4. Relief will be the amount as computed in Step 3

Hope this help :slightly_smiling_face:

A resident has invested money in US parent company. They distributed business profits. Issued K1 form also. Resident filed US ITR Form 1040NR wherein deduction for Self Employment Tax and Qualified business income deductions were allowed. He paid US taxes on income (X-above two deductions). Now in Indian ITR these two deduction will be available or he has to declare total income `X’ in his Indian ITR

Hey @rkarora1967,
Since he is a resident, the person is required to pay tax on his global income. Further, he will get the benefit of India – US DTAA wherein he can get the benefit of income tax paid in the USA, whether directly or by deduction. However, such deduction will be restricted to income tax on that income in India.

So, the business profits earned will be taxable in India. He has to declare total income and then claim credit of the taxes paid in the US under DTAA. So, eventually, his income from the US parent company after deductions will be taxed in India.

Dear Ms. Desai

IF non resident having Interest and Dividend income in india and NO tax leviable in his current country as per DTAA rule, then can he/she claim relied under section 90?
For example Tax on dividend for NOn resident is 20% and as per DTAA its 10%, can he/she claim 10%while filing ITR?

Hello @AKSHAY1990 ,

DTAA can be claimed when same income is taxed in two countries. Since, no tax is levied in his current country, he will pay tax on Interest and Dividend income received in India.

Hope it helps.