Need Tally
for Clients?

Contact Us! Here

  Tally Auditor

License (Renewal)
  Tally Gold

License Renewal

  Tally Silver

License Renewal
  Tally Silver

New Licence
  Tally Gold

New Licence
 
Open DEMAT Account with in 24 Hrs and start investing now!
« Top Headlines »
Open DEMAT Account in 24 hrs
 Delhi HC Rules GST Registration Cannot Be Cancelled Retrospectively Without a Clear Show Cause Notice (SCN)
 Belated income tax return AY 2026-27: How to file, late filing charges and what you may lose
 Major Financial Changes from August 1, 2026: ITR Deadline, RBI MPC Meeting, Tatkal Ticket Rules & More
 Government proposes to ease tax relief conditions for offshore funds
 TallyPrime Connected Banking: Automating Banking and Accounting
 ITR Filing Deadline 2026: Is July 31 the Last Date to File Your Income Tax Return? Latest Official Update
 ITR filing deadline nears: How to file income tax return online on e-filing portal - quick 15-step guide
 Will the ITR Filing Deadline Be Extended Beyond July 31 for FY 2025-26? Here's the Latest Update for Taxpayers
 Income Tax Refund Delayed for AY 2026-27? 5 Common Reasons Your Refund May Be Stuck and How to Fix It
 ITR Filing 2026: FM Nirmala Sitharaman Asks Tax Officials to Let Honest Taxpayers Correct Genuine Mistakes
 Will Your FCNR Deposit Stay Tax-Free After Returning to India? Tax Rules Explained for NRIs

Interpretation of double tax avoidance agreements
November, 06th 2007

The Central Government has signed with several countries, including the U.S. Agreements for the Avoidance of Double Taxation. By this, I am given to understand that in the case of an Indian who is a perm anent resident in the U.S. (green card holder) but who may have taxable income in India, as also in the U.S., double taxation is sought to be avoided as per the following. If his tax liability is A in the U.S. and B in India, calculated independently on the respective incomes, if B is less than A in rupee equivalent, no tax is payable in India. On the other hand, if B is more than A, the difference between B and A, that is, (B-A) alone is payable in India. Kindly clarify whether the above position remains the same, or whether it has undergone any change.

The reader is incorrectly advised as to the method of relief under the Double Tax Avoidance Agreement.

Each country taxes the income arising within its borders. Entitlement of relief under Double Tax Avoidance Agreement is only in the country in which the taxpayer is permanently resident as decided under the terms of the Agreement and not merely with reference to passport, green card and stay. Relief is contemplated only, where the same income is assessed in both countries.

For interest, dividend, royalty and technical fees, there is a stipulated lower rate in the country of origin of such income, subject to credit of tax paid in the country, where such income is included in the assessment.

Some items like capital gains on sale of immovable property is taxable under the Agreement only where the property is situated, so that the question of double tax relief does not arise at all.

Salary is taxed where employment is exercised, but the country where the employee is permanent resident will give credit for such tax paid in the place of service, if the same income is taxable.

If it is business income, it may be taxable in both countries, where business is located and where such business has permanent establishment, through which income is earned.

The country where business is located would give credit for tax paid on the doubly taxed income at the lesser of the two rates.

This is a broad pattern of Double Tax Avoidance Agreement with minor differences possible in some agreements.

S. RAJARATNAM

Home | About Us | Terms and Conditions | Contact Us
Copyright 2026 CAinINDIA All Right Reserved.
Designed and Developed by Ritz Consulting