Tax credit mechanism prevents double taxation by allowing deduction of foreign tax paid from domestic tax liability.

Avoidance of Double Taxation is effected by preserving domestic taxation rules except where the Convention provides otherwise and by prescribing mechanisms for relief where income or capital may be taxed in the other Contracting State. India must allow a deduction from Indian tax for tax paid in Denmark attributable to income or capital taxable there, and Denmark must allow corresponding deductions for Indian tax paid, subject to attribution limits; certain Indian exemptions are treated as tax paid for credit purposes.

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