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  • Sybcaf - Taxation - Sem 4 Dtaa Double Taxation Avoidance Agreement

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    Hanisha Katariya
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    DTAA stands for Double Taxation Avoidance Agreement. It is an international treaty between two countries to avoid double taxation of income and facilitate transparency to prevent tax evasion. The key purposes of a DTAA are to 1) avoid double taxation of the same income in both countries, 2) allow for recovery of taxes in both countries, and 3) rationally allocate taxing rights over a taxpayer's income between the two states. DTAAs use methods like exemption and tax relief to determine which country has primary taxing rights and how taxpayers can receive relief from double taxation.

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    DTAA stands for Double Taxation Avoidance Agreement. It is an international treaty between two countries to avoid double taxation of income and facilitate transparency to prevent tax evasion. The key purposes of a DTAA are to 1) avoid double taxation of the same income in both countries, 2) allow for recovery of taxes in both countries, and 3) rationally allocate taxing rights over a taxpayer's income between the two states. DTAAs use methods like exemption and tax relief to determine which country has primary taxing rights and how taxpayers can receive relief from double taxation.

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    5 views3 pages

    Sybcaf - Taxation - Sem 4 Dtaa Double Taxation Avoidance Agreement

    Uploaded by

    Hanisha Katariya
    DTAA stands for Double Taxation Avoidance Agreement. It is an international treaty between two countries to avoid double taxation of income and facilitate transparency to prevent tax evasion. The key purposes of a DTAA are to 1) avoid double taxation of the same income in both countries, 2) allow for recovery of taxes in both countries, and 3) rationally allocate taxing rights over a taxpayer's income between the two states. DTAAs use methods like exemption and tax relief to determine which country has primary taxing rights and how taxpayers can receive relief from double taxation.

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    SYBCAF – TAXATION – SEM 4

    DTAA

    Double taxation avoidance agreement

     DTAA: An international Taxation Agreement concluded between two countries in written form
    and governed by international law (treaty law, international criminal law, the laws of war) . A
    treaty is not a tax law, although it is an agreement about how taxes are to be imposed. It is an act
    between two sovereign states and terms and conditions mentioned therein have to be strictly
    followed. India is having DTAA with almost 80 countries.

    Indian income 100000.

    Foreign income 200000.

    For tax – 10%. In foreign country.

    Indian govt – 10%

    200000-40000

    Taxable for this income in india

    INCOME ACCRUED, INCOME RECD IN INDIA,

    INCOME FROM INDIA – INC FROM US.

    US – TAX , ROR – INDIA - TAX

    Purpose of DTAA

    DTAA is an Agreement between two or more countries for resolving the issues of taxability of
    income and increased transparency to avoid tax evasion.

     Avoidance of Double Taxation of Income.

     For recovery of Income Tax in both the countries.


     Allocate rationally, Equitable and fairly the taxing rights over a Taxpayer’s Income
    between two states.

     Encourage free flow of international Trade & Investment and Technology.

     Increased transparency.

    Methods: Double taxation relief:

     Unilateral relief-
    o no mutual agreement with the country - OBJ
    o relief (deduction) is provided by home country.
     Bilateral:

    There is a agreement between the countries.

    o Exemption method- income will be exempt in one country and taxable only in one
    country.
    From country A rs20000, home country 50000.
    Agreement that there will be no tax if you are earning from country A
    o Tax relief method – the income will be taxable in both the
    countries. But some kind of deduction will be provided in home
    country.(ror)
    Tax relief method:

    Steps
    1 Calculate taxable income (Indian income + foreign income)
    2 Calculate tax on total income
    3 Calculate average rate of tax in india
    Amount of tax *100
    Taxable income
    4 Calculate rate of tax in foreign country
    Tax in foreign country *100 / income in foreign country
    5 Rate= lower of step 3 or 4
    6 Relief = amount of foreign income * rate in step 5
    7 Tax payable = total tax – relief (step 2 – 6)

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