DTAA—Tax Credit Tax Credit of State Income Taxes Paid Abroad Under Section 91

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The Tax Publishers DTAA--Tax Credit Tax Credit of State Income Taxes Paid Abroad Under Section 91 Srivatsan Ranganathan The author has discussed a fine print issue on the interplay of Section 90 and 91 on the matter of granting tax credits in this article. 1. Primer In case of doubly taxed income, relief from taxation is available via tax credit of the tax paid in the source jurisdiction. Tax credits would be available in the other state (state of residence) on the doubly taxed income as per section 90 or 91. Section 90 covers countries where there is a DTAA signed with India and section 91 will be pressed into service for non-DTAA countries (from the Sectional heading at least). In case of non-DTAA countries the foreign tax or the Indian tax which ever is lower is available as tax credit vide section 91. 2. DTAA scope and the debate Under DTAA provisions the taxes which are covered are only federal taxes or taxes levied at a country level and not State or Cantonal taxes. The issue what arises is whether the State taxes levied are available as a tax credit in India? SUBSCRIBE FOR FULL CONTENT

The Tax Publishers

DTAA--Tax Credit

Tax Credit of State Income Taxes Paid Abroad Under Section 91

Srivatsan Ranganathan

The author has discussed a fine print issue on the interplay of Section 90 and 91 on the matter of granting tax credits in this article.

1. Primer

In case of doubly taxed income, relief from taxation is available via tax credit of the tax paid in the source jurisdiction. Tax credits would be available in the other state (state of residence) on the doubly taxed income as per section 90 or 91. Section 90 covers countries where there is a DTAA signed with India and section 91 will be pressed into service for non-DTAA countries (from the Sectional heading at least). In case of non-DTAA countries the foreign tax or the Indian tax which ever is lower is available as tax credit vide section 91.

2. DTAA scope and the debate

Under DTAA provisions the taxes which are covered are only federal taxes or taxes levied at a country level and not State or Cantonal taxes. The issue what arises is whether the State taxes levied are available as a tax credit in India?