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3 Types of Relief from Double Taxation - Unilateral an Bilateral Relief - +91-9667714335 - YouTube
Channel: International Taxation - Sorting Tax Advisory
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so what are the kind of relief which are聽
available from double taxation when you talk聽聽
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about the relief from double taxation it can take聽
place in two ways okay one is called a unilateral聽聽
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relief right the other one is called a bilateral聽
relief and we'll come to that in a bit but what聽聽
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is unilateral relief like the word uni indicate聽
it is a one-sided relief which is given right in聽聽
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the Indian context if India does not have a DTAA a tax treaty with a country okay where聽聽
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the taxes are paid so let's say an Indian resident聽
is carrying out business in country X
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In Country X he pays $50 as taxes but India does not have聽
any treaty with country X right since they do not聽聽
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have a treaty there is no way article 23 can be聽
applied in such a case in order to promote trade聽聽
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India may decide that even though a treaty is not聽
available we are going to provide a relief to this聽聽
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person and therefore whatever taxes he is paid聽
on the income in country X we are going to give聽聽
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a credit of that against the Indian taxes in case聽
of bilateral relief the relief is available under聽聽
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article 23 or corresponding article of the DTAA with a country where the taxes are paid
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now as we talk about unilateral relief bilateral聽
relief the entire chapter is actually around聽聽
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bilateral relief but let's spend some time to聽
understand what is a unilateral relief and when聽聽
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is it available and this is dealt with in section聽
91 of the Income Tax Act 1961 so what should we do聽聽
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right it should be income which has accrued聽
outside India and which is not deemed to聽聽
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accrue or arise in India the reason for that is聽
if an income is accruing in India or is deemed to聽聽
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accrue or arise in India then India has a right聽
to tax such Income right which means that the cash聽聽
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for such taxes should be paid in India itself聽
and therefore the question of giving a relief聽聽
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does not arise who are covered a person who is聽
a resident in India which country should income聽聽
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arise with whom India does not have an agreement聽
under Section 90 if there is an agreement under聽聽
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Section 90 which is the DTAA then the聽
credit can be available under the DTAA聽聽
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and a bilateral relief methods but not under聽
the unilateral relief section the manner of聽聽
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payment of taxes it could be deduction which is聽
something like a TDS that we have in India聽聽
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tax deduction at source withholding taxes have聽
been applied or otherwise the taxpayer may have聽聽
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paid the taxes on his own accord because there聽
were no deduction which were there but since he聽聽
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was liable to pay taxes he would have paid the聽
taxes himself how much is the relief which is聽聽
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available it is tax deducted or Indian rate of聽
tax whichever is lower or Indian rate of tax if聽聽
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both are equal so if your TDS is 15% the rate of聽
tax in India is 30% then the relief which will be聽聽
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available will be 15% if instead of 30 the income聽
is taxable in India at 10% then the relief which聽聽
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will be available will be 10% whichever is lower聽
but if both of them are equal then it has to be聽聽
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the Indian rate of tax but what is the rate at聽
which this relief is available if it is Indian聽聽
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tax rate what does this mean this actually means聽
the Indian income tax okay once you calculate聽聽
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whatever the reliefs and deduction etc are聽
available divided by the total income right
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