Double taxation relief


What is double taxation and how can one get the double taxation relief?


Double taxation refers to the phenomenon of taxing the same income twice. Double taxation of the same income occurs when the same income related to an individual is treated as being accrued, arising or received in more than one country.

This can occur in one of two ways - economic or juridical. Economic double taxation occurs if an income or a part of it is taxed twice in the same country, in the hands of two individuals. Alternatively, juridical double taxation occurs if income earned outside India is taxed two times in the hands of the same individual, once abroad and once in their home country.

Relief from double taxation can be provided under two ways namely exemption method and tax credit method. Under the exemption method, specific income is taxed in one of the two countries and exempted in another country. Under the tax credit method, the income is taxed jointly with the countries mentioned in the income tax treaty, in addition to the country of residence. This will authorize the tax credit or deduction for the tax charged in the country of residence.

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