Rate Of Tax As Per Double Taxation Avoidance Agreements


INIs can avoid the payment of double taxation under the Double Tax Avoidance Agreement (DBAA). Normally, non-resident Indians (NRIs) live abroad, but earn income in India. In such cases, it is possible that the income received in India may be taxed both in India and in the country of residence of the NRA. This means that they would have to pay two taxes on the same income. To avoid this, the Double Taxation Convention (DBA) has been amended. The Protocol amending the India-Mauritius Agreement, signed on 10 May 2016, provides for source-based taxation on capital gains resulting from the sale of shares acquired from 1 April 2017 in a company established in India. At the same time, investments made before April 1, 2017 were made by grandfathers and are not subject to capital gains tax in India. If such capital gains arise during the transitional period between 1 April 2017 and 31 March 2019, the tax rate is limited to 50% of India`s national rate. However, the 50% reduction in the tax rate during the transitional period is subject to the article on the limitation of benefits. Tax in India at the full national rate will be applied from the 2019-2020 fiscal year.

(2) Fees and charges for technical services would be taxable in the country of origin at the rates imposed for different categories of fees and charges for technical services. These tariffs are subject to different conditions and the nature of the services/fees for which payment is made. Please refer to the detailed conditions of the relevant double taxation agreement. A DBA (Double Taxation Convention) may require that the tax be levied by the country of residence and that it be exempt in the country where it is created. In other cases, the resident may pay a withholding tax to the country where the income was born and the taxpayer benefits from a compensatory foreign tax credit in the country of residence to reflect the fact that the tax has already been paid. In the first case, the taxpayer (abroad) would declare himself a non-resident. In both cases, the DBA may provide for the two tax authorities to exchange information on these returns. Through this communication between countries, they also have a better view of individuals and companies trying to avoid or evade taxes. [4] In the European Union, Member States have concluded a multilateral agreement on the exchange of information.

[7] This means that they declare to each (their colleagues in the other jurisdiction) a list of persons who have applied for exemption from local taxation because they do not reside in the state where the income is received. These people should have reported this foreign income in their own country of residence, so any difference indicates tax evasion. . . .

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