Central Government has issued two notifications under section 90 and 90A of the Income Tax Act, 1961 to specify the manner in which the income which is subject to DTAA and subject to tax in the foreign country shall be dealt in India.

Notification No. 90/2008-Alldated -28-08-2008

Notification No. 91/2008-Alldated -28-08-2008

 

Section 90 empowers the Central Government to enter into an agreement with the foreign countries to avoid double taxation.

Section 90A empowers the Central Government to notify the provision to implement the agreement entered into by the specified association in India with the specified association outside India.

There was no uniform procedure on treatment of income which was not taxable in India by virtue of DTAA.

Now, central government has notified that such income which is eligible for benefit of an agreement to avoid double taxation, the assessee is required to include such income first in his taxable income and thereafter he is entitled to claim the relief as per the provision.

 

Consequently, no foreign income subject shall remain unreported.

Double taxation relief procedure: require taxpayers to include foreign income then claim relief, ensuring full reporting. Taxpayers with foreign income eligible for a Double Taxation Avoidance Agreement must include that income in their Indian taxable income first and thereafter claim relief under the applicable agreement or its implementing notification; the Central Government's notifications standardise this inclusion then relief procedure, applying equally where implementation is through specified associations, to ensure such foreign income is reported before relief is claimed.