DTAA Consultants In India

DTAA- The Double Taxation Avoidance Agreement is certainly a Tax-Agreement directed between two nations. The objective is to ensure the taxpayer gaining income from a foreign country avoids paying taxes twice on the same income. 

DTAA is beneficial to taxpayers to stimulate and promote economic proceedings amongst countries, without engaging into the jurisdiction of dual taxation.

The Double Taxation Avoidance Agreement can either be considered as a comprehensive agreement, covering every sort of income source, or target specific and limited areas. Which includes the collection of tax income from shipping, inheritance, air transport and other sections. 

Some common categories falling under DTAAs are also considerable such as- services, revenue, property, capital gains, savings or fixed & deposit accounts, etc.

Presently, India has DTAA with more than 80+ countries, and there’s a prospect to sign such tax treaties with more foreign countries in future. Some of the country’s names are enrolled under the comprehensive agreements include Australia, Canada, the United Arab Emirates, Germany, Mauritius, Singapore, the United Kingdom and the United States of America.

• Avoidance of Dual Taxation on the same income.
• For redemption of Income Tax in both respective countries.
• Rationalisation, equitable and reasonable taxing rights over an individual Taxpayer’s Income or gain between countries.
• Stimulate free flow of international business transactions, Trade & Investment and Technological developments.
• Increased transparency between countries.

• Self-declaration under indemnity bond
• Copy of Self-attested PAN card
• Copy of Self-attested visa and passport
• PIO proof copy (if required)
• Tax Residency Certificate (TRC)
• As per the Finance Act 2013, an individual will not be relieved of any claim benefit under the Double Taxation Avoidance Agreement unless a Tax Residency Certificate TRC is not provided to the deductor

Comprehensive DTAA 

Limited DTAA

Deduction Method

Exemption Method

Credit Method

• Ordinary Credit: As per the norms of the ordinary credit, the taxpayers of the respective country pays either full or partial credit taxes for the income. The taxes will be determined on the same source of income but charges a lower amount with the extent of the credit facility.

• Underlying Credit:  Credit available for corporate tax when a dividend is paid by an individual or resident of one state to another area. This is mainly an additional tax paid on dividend.

• The objective is to upgrade the possibilities of trade flow & investment by prohibiting differentiation between taxpayers. Addition of fiscal certainties to the cross-border functionings. 
• Prevention from the threats of international evasions & taxation avoidance. 
• Provide facilitates to collect international taxation. Procurement of finances for International development & steer clear of double taxation by applying the rights of taxation between the revenue source and the country of residence.

• Promote harmony amongst the nations to operate the proper functioning of international taxation & to reduce the burden of taxation.

• Tax treaties assist the taxpayers in standing against the double taxations issues and providing a transparent and free flow of foreign exchange affairs, thus boost up the scope of foreign investments in the country. 

• Additionally, these treaties have provisions to accommodate a mutual exchange of information and alleviate litigation by supplying mutual assistance policy.

• The agreements offer a legal bonding, jurisdiction amongst the source & residence country. This agreement has a considerable value under the international taxation law.

• These treaties provide the taxation right considering the income in lieu of interest, royalty, dividends and fees for providing technical services to the residence country. However, for the source country, the taxation has been regulated to the specific rates mentioned in the treaty.

• The authority to tax Directors fees, the salary of individuals in the Government service, income of entertainers, payments gained by students and apprentices, & athletes, payments of social security, pensions and several incomes comes under this agreement.