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Double taxation is the imposition of two or more taxes on the same income (in the case of income taxes), asset (in the case of capital taxes), or financial transaction (in the case of sales taxes). It refers to two distinct situations: Taxation of divided income without relief or credit for taxes paid by the company paying the dividend on the income from which the dividend is paid.
India signed an Agreement with the Government of the Kingdom of Bahrain for the Exchange of Information with respect to taxes (TIEA), here yesterday. The Agreement was signed by Shri Namo Narain Meena, Minister of State for Finance (Expenditure and Financial Affairs) on behalf of Government of India and H.E. Kamal Ahmad, Minister for Transportation and Acting CEO of the Economic Development of Bahrain on behalf of Government of the Kingdom of Bahrain.
The Convention between the Kingdom of Netherlands and the Republic of India for the avoidance of double taxation and for the prevention of fiscal evasion with respect to taxes on income and on capital was signed on 30th July, 1988 (DTAC). Both India and Netherlands have concluded a Protocol to amend the Article 26 of the DTAC concerning Exchange of Information to bring it in line with the international standards.
India has entered into a tax treaty with Switzerland; Article 26 of the tax treaty which deals with exchange of information between the two countries was reworded by agreement between the two countries and simultaneously a new paragraph 10 was inserted in the Protocol to clarify the understanding of the operation of Article 26 (Notification No. 62/2011 dated 27 December 2011). India and Switzerland have now entered into a Mutual Agreement regarding the interpretation of paragraph 10(b) of the Protocol to the tax treaty to provide as under:-
The Amended Protocol between India and Switzerland amending the existing Double Taxation Avoidance Agreement (DTAA) between the two countries came into force on 7th October, 2011. In 219 cases, undisclosed income of Rs. 565 crore has been detected and tax of Rs.181 crore realized so far.
Section 115A; vs DTAA rate; Assessee can choose between treaty rate and 115A for different agreements before and after 1.6.2005. Assessee has not invoked or applied the provisions of the Treaty selectively. The assessee has computed the tax on royalty income arising from two different contracts falling under two different limbs of section 115A(1)(b) at two rates
In response to the 2011 update of the UN Model Convention which was launched on 15.3.2012, the CBDT has addressed a letter dated 12th March 2012 in which it has registered its objections to the provisions in the UN Model Convention. In particular, the CBDT has stated:
Income Tax Department receives information from various sources including from foreign governments under the Double Taxation Avoidance Agreement (DTAA). Whenever such information is received, it is investigated and any untaxed amount is assessed and brought to taxation. Prosecution proceedings for concealment are initiated in appropriate cases.
During the course of assessment proceedings, in the case of an assessee having income or assets outside India, information is being sought from the tax authorities situated outside India, while completing an assessment. Under the provisions of section 90 or section 90A of the Income-tax Act, information can be exchanged with the foreign tax authorities for prevention of evasion or avoidance of income tax chargeable under this Act or under the corresponding law in force in that country or specified territory, as the case may be.
Section 90 of the Income Tax Act empowers the Central Government to enter into an agreement with the Government of any foreign country or specified territory outside India for the purpose of –(i) granting relief in respect of avoidance of double taxation, (ii) exchange of information and (iii) recovery of taxes.
