India has signed double taxation treaties (DBAAs) with 88 countries. Foreign companies established in countries with which India has a DBAA can benefit from more advantageous provisions and tariffs between the Information Technology Act and the DBAA. Recently, the Government of the Republic of India and the Government of the People`s Republic of China signed the Double Taxation Convention (DBAA) on 26.11.2018. This convention was signed in order to reduce double taxation and prevent tax evasion in the context of income tax. Sections 90 and 91 of the Income Tax Act 1961 provide special facilities for taxable persons to avoid double taxation. Section 90 deals with the provisions relating to taxable persons who have paid taxes to another country with which India has a DBAA. Section 91 applies to countries with which India does not have a DBAA. In fact, India offers relief to both types of taxpayers. Under Section 90 of the Income Tax Act 1961, India may enter into an agreement with a foreign country or territory to avoid double taxation of income, exchange information to prevent tax evasion. It is called the tax treaty, a bilateral economic convention between two nations to avoid or eliminate double taxation of the same income in two countries. The DBAA or Double Taxation Avoidance Agreement is a tax agreement signed between India and another country (or two or more countries) in order to avoid double taxes for taxpayers on their income from the country of origin and the country of residence. Double taxation is a problem related to the taxation of income that exceeds the limits.
DBA can either cover all types of income or can target a certain type of income, depending on the types of businesses/holdings of citizens of one country in another. The following categories are covered by double taxation treaties (DBAAs): applicants should have a clear approach to the various agreements or contracts signed between India and another country, as they are an important part of the UPSC program. Applicants can also download the PDF notes at the end of this article….