Enabling the Board to notify rules for giving foreign tax credit

Sub-section (1) of section 91 of the Income-tax Act provides for relief in respect of income-tax on the income which is taxed in India as well as in the country with which there is no Double Taxation Avoidance Agreement (DTAA). It provides that an Indian resident is entitled to a deduction from the Indian income-tax of a sum calculated on such doubly taxed income, at the Indian rate of tax or the rate of tax of said country, whichever is lower. In cases of countries with which India has entered into an agreement for the purposes of avoidance of double taxation under section 90 or section 90A, a relief in respect of income-tax on doubly taxed income is available as per the respective DTAAs.

The Income-tax Act does not provide the manner for granting credit of taxes paid in any country outside India. Accordingly, it is proposed to amend section sub-section (2) of section 295 of the Income-tax Act so as to provide that CBDT may make rules to provide the procedure for granting relief or deduction, as the case may be, of any income-tax paid in any country or specified territory outside India, under section 90, or under section 90A, or under section 91, against the income-tax payable under the Act.

This amendment will take effect from 1st day of June, 2015.

Note On Relevant Clauses of Finance Bill 2015

Clause 78 of the Bill seeks to amend section 295 of the Income-tax Act relating to power to make rules.

The existing provisions contained in sub-section (1) of the aforesaid section provide that the Board may make rules for the whole or any part of India for carrying out the purposes of this Act. Sub-section (2) of the said section specifies the matters in respect of which such rules may be provided.

It is proposed to amend the said sub-section (2) so as to provide that the Board may, by rules, provide the procedures for the granting of relief or deduction, as the case may be, of any income-tax paid in any country or specified territory outside India, under section 90 or section 90A or section 91, against the income-tax payable under this Act.

This amendment will take effect from 1st June, 2015.

Extract of Relevant Clauses from Finance Bill 2015 proposing amendment to Income tax Act, 1961

78. Amendment of section 295.

In section 295 of the Income-tax Act, in sub-section (2), after clause (h), the following clause shall be inserted with effect from the 1st day of June, 2015, namely:—

40 “(ha) the procedure for the granting of relief or deduction, as the case may be, of any income-tax paid in any country or specified territory outside India, under section 90 or section 90A or section 91, against the income-tax payable under this Act;”.

( Compiled by CA Ankit Banka & Taxguru Team)

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Category : Income Tax (24904)
Type : Articles (13898)
Tags : Budget (1473) Budget 2015-16 (272) DTAA (292) section 90 (21)

0 responses to “CBDT can notify rules for giving foreign tax credit”

  1. Ashish says:

    In AY2014-15, I have claimed tax relief under sec90A for an amount of INR 200000 as that was the income tax deducted by foreign country.

    In Feb 2015, the foreign country refunded me INR 100000 (INR equivalent of amount refunded in foreign currency) as they have deducted in excess.

    Now, I have to transfer the refunded tax amount to Indian Income tax dept.

    Could you advise what challan form should I fill to pay this foreign tax credit ?? should I pay it as self assessment tax ?

  2. srinivas.g says:

    Dear sir,

    I have not received daily updates and mails from your side from 6th of march 15

    Thanking you
    regards
    shrinivasg

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