DOUBLE TAXATION RELIEF

In the current time of cross-line exchanges across the globe, the impact of taxation is one of the significant contemplations for any exchange and venture choice in different nations. Perhaps the most huge aftereffects of globalization is the apparent effect of one country’s domestic assessment arrangements on the economy of another country. This has prompted the requirement for persistently evaluating the duty systems of different nations and achieving fundamental changes. Where a citizen is inhabitant in one nation yet has a kind of revenue arranged in another country it brings about conceivable double taxation. This emerges from the two fundamental standards that empowers the country of home just as the country where the kind of revenue exists to force charge to be specific, (I) the source rule and (ii) the home standard. The source decide holds that pay is to be burdened in the country in which it starts regardless of whether the pay builds to an occupant or a non-inhabitant while the home standard specifies that the ability to duty should rest with the country in which the citizen dwells. In the event that the two standards apply all the while to a business element and it were to endure charge at the two finishes, the expense of working on a worldwide scale would get restrictive and would hinder the cycle of globalization. It is starting here of view that Double Taxation Avoidance Agreements

(DTAA) become huge. DTAAs set out the portion rules for taxation of the pay by the source country and the home country. Such principles are laid for different classes of pay, for instance, interest, profit, sovereignties, capital additions, business pay and so forth Each such class is managed by discrete article in the DTAA.

TYPES OF RELIEF:
⦁ Bilateral Relief: Under this method, the Governments of two countries can enter into an agreement to provide relief against double taxation by mutually working out the basis onwhich the relief is to be granted. India has entered into agreements for relief against or avoidance of double taxation with more than 100 countries which include Sri Lanka,Switzerland, Sweden, Denmark, Japan, Federal Republic of Germany, Greece, etc.
⦁ Unilateral Relief: This method provides for double taxation relief unilaterally by a country to its resident for the taxes paid in the other country, even where no DTAA has been entered into with that country. India grants unilateral relief through credit method under section 91 to its residents for taxes paid in the country, with which India has not signed DTAA.