DOUBLE TAXATION AVOIDANCE AGREEMENT (DTAA) under Section 90 ITA 1961:
Adoes not exist (cf. Income Tax Act 1961, Section 90; Various DTAAs) (cf. Income Tax Act 1961, Section 90; Various DTAAs) (cf. Income Tax Act 1961, Section 90; Various DTAAs) (cf. Income Tax Act 1961, Section 90; Various DTAAs)
Bdoubles tax (cf. Income Tax Act 1961, Section 90; Various DTAAs) (cf. Income Tax Act 1961, Section 90; Various DTAAs) (cf. Income Tax Act 1961, Section 90; Various DTAAs) (cf. Income Tax Act 1961, Section 90; Various DTAAs)
Cpermits FOREIGN income to be taxed only in ONE COUNTRY (TIE-BREAKER provisions, FOREIGN TAX CREDIT methods); India has DTAA with 90+ countries; Section 90(2): treaty provisions override domestic law if beneficial to assessee
Dabolishes tax (cf. Income Tax Act 1961, Section 90; Various DTAAs) (cf. Income Tax Act 1961, Section 90; Various DTAAs) (cf. Income Tax Act 1961, Section 90; Various DTAAs) (cf. Income Tax Act 1961, Section 90; Various DTAAs)
Answer & Solution
Correct answer: C. permits FOREIGN income to be taxed only in ONE COUNTRY (TIE-BREAKER provisions, FOREIGN TAX CREDIT methods); India has DTAA with 90+ countries; Section 90(2): treaty provisions override domestic law if beneficial to assessee
1. Section 90 Income Tax Act 1961: empowers Central Government to enter into DOUBLE TAXATION AVOIDANCE AGREEMENTS (DTAAs) with foreign countries.
2. PURPOSE:
3. (i) Avoid double taxation of the same income;
4. (ii) Provide FOREIGN TAX CREDIT (CREDIT method) or EXEMPTION method;
5. (iii) Promote international trade and investment;
6. (iv) Prevent tax evasion through cooperation.
7. INDIA has DTAA with 90+ countries (USA, UK, Singapore, UAE, etc.).
8. Section 90(2): if the DTAA provides MORE BENEFICIAL provisions than the Act, the DTAA prevails.
9. SECTION 90A: agreements with specified associations of foreign states (e.g., OECD).
10. SECTION 91: UNILATERAL TAX RELIEF for countries with no DTAA — proportionate credit.
11. MLI (Multilateral Instrument 2017) modifies multiple DTAAs.
12. Hence option B is correct.
_Source: CS Executive Paper 4 Tax Laws (ICSI BoS) + Income Tax Act 1961 + CGST Act 2017 — Income Tax Act 1961, Section 90; Various DTAAs_
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