Enabling the Board to notify rules for giving
foreign tax credit
Sub-section (1) of section 91 of the Income-tax Act provides for relief
in respect of income-tax on the income which is taxed in India as well as in
the country with which there is no Double Taxation Avoidance Agreement (DTAA).
It provides that an Indian resident is entitled to a deduction from the Indian
income-tax of a sum calculated on such doubly taxed income, at the Indian rate
of tax or the rate of tax of said country, whichever is lower. In cases of
countries with which India has entered into an agreement for the purposes of
avoidance of double taxation under section 90 or section 90A, a relief in
respect of income-tax on doubly taxed income is available as per the respective
DTAAs.
The Income-tax Act does not provide the manner for granting credit of
taxes paid in any country outside India. Accordingly, it is proposed to amend
section sub-section (2) of section 295 of the Income-tax Act so as to provide
that CBDT may make rules to provide the procedure for granting relief or
deduction, as the case may be, of any income-tax paid in any country or
specified territory outside India, under section 90, or under section 90A, or
under section 91, against the income-tax payable under the Act.
This amendment will take effect from 1st day of June, 2015.
Note On Relevant Clauses of Finance Bill
2015
Clause 78 of the Bill seeks to amend section 295 of the Income-tax Act relating
to power to make rules.
The existing provisions contained in sub-section (1) of the aforesaid
section provide that the Board may make rules for the whole or any part of
India for carrying out the purposes of this Act. Sub-section (2) of the said
section specifies the matters in respect of which such rules may be provided.
It is proposed to amend the said sub-section (2) so as to provide that
the Board may, by rules, provide the procedures for the granting of relief or
deduction, as the case may be, of any income-tax paid in any country or
specified territory outside India, under section 90 or section 90A or section
91, against the income-tax payable under this Act.
This amendment will take effect from 1st June, 2015.
Extract of Relevant Clauses from Finance Bill
2015 proposing amendment to Income tax Act, 1961
78. Amendment of section 295.
In section 295 of the Income-tax Act, in sub-section (2), after clause
(h), the following clause shall be inserted with effect from the 1st day of
June, 2015, namely:—
40 “(ha) the procedure for the granting of relief or deduction, as the
case may be, of any income-tax paid in any country or specified territory
outside India, under section 90 or section 90A or section 91, against the
income-tax payable under this Act;”.
( Compiled by CA Ankit Banka & Taxguru Team)
