CS Professional · Advanced Direct Tax Laws and Practice · Double Taxation Avoidance Agreement (DTAA)
A resident Indian has doubly taxed foreign income of Rs 4,00,000 from Country Y, which has no agreement with India. The Indian rate of tax, as defined in section 160, works out to 30%. The rate of tax of Country Y, as defined, is 20%. What is the deduction from Indian income-tax?
The deduction is Rs 80,000. Section 160 allows relief at the lower of the Indian rate (30%) and the foreign country's rate (20%) on the doubly taxed income of Rs 4,00,000, giving 20% of Rs 4,00,000, which is Rs 80,000.
- ARs 1,20,000
- BRs 80,000Correct
- CRs 40,000
- DRs 1,00,000
Explanation
The lower of 30% and 20% is 20%. Deduction = 20% x Rs 4,00,000 = Rs 80,000. Rs 1,20,000 wrongly uses the higher Indian rate.
Did you get it right without looking?
One question tells you little. A timed set on Double Taxation Avoidance Agreement (DTAA) shows your real accuracy, how long you take and where you lose marks.
More Double Taxation Avoidance Agreement (DTAA) questions
- Mr. Arjun, resident in India, earned foreign income of Rs 4,00,000 in a country with which India has no agreement under Section 159. Indian …
- Under section 159 of the Income-tax Act, 2025, which description of a 'specified association' is correct?
- Under the Income-tax Act, 2025, a non-resident assessee wants to claim relief under a notified agreement. Which condition must he satisfy fo…
- Mr. Arvind is resident in India and earns Rs 2,00,000 of foreign-source income in a country with which India has no section 159 agreement. H…
- Mr. Kumar, an Indian resident, earned foreign income from Country X, which has no agreement with India under section 159. He paid tax of ₹60…
- A non-resident company, Alpha Inc., wishes to claim relief under a notified treaty on income arising in India. Which statement is correct un…