Foreign tax credit: Indian tax paid on Indian-source income is creditable against Australian tax, subject to specified limits.

The Agreement provides that Indian tax paid on income derived by Australian residents from India is allowed as a credit against Australian tax, including attributable Indian tax on profits distributed as dividends where an Australian company holds at least ten percent of voting power. Certain Indian exemptions or reductions may be treated as tax foregone and included in the credit calculation under specified Income-tax Act provisions or equivalent subsequent provisions agreed by letter, with special rules for interest and a temporal limitation to the first ten years unless extended by mutual letter.

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