Article 25 of dtaa between usa and india
This query is : Resolved
16 April 2015
Dear Sir,
I have filled Return of Income (ROI) for FY 2010-11 declaring total income of Rs. 955310 which include foreign salary income of Rs. 8,58,946 remaining Rs. 96,364 was Indian Salary Income.
My status was resident in FY 2010-11. I have already received assessment letter from Income tax. But recently I received a order U/s 154 of the Income Tax Act, 1961. Details are provided below:
1. India has entered DTAA with USA vide Notification No. GSR 900(E) dated 20/12/1990. As per Article 25 (i.e. Elimination of double taxation) of the India USA DTAA, in the case of india, double taxation shall be avoided as follows:
a) “where a resident of India derives income may be taxed in United States, India shall allow as a deduction from the tax on the income of that resident an amount equal to the income-tax paid in United States, whether directly or by deduction. Such amount shall not, however, exceed that part of the tax (as computed before the deduction is given) which is attributable to the income which may be taxed in the united states”
Reliance is placed on the last sentence of the both DTAA agreement, which is basically same in both agreement, which states that relief cannot exceed the amount of tax at Indian rate on the foreign income earned. That means relief is attributable to the income that is earned in the foreign country and not on income which is earned in India. Hence, the last sentence of DTAA quoted above simply states that tax relief must not exceed the amount of tax on foreign income if levied at an Indian tax rate.
In this particular case relief u/s 90 is computed keeping in view of DTAA with India and USA.
A Total income assessed in the order u/s 143(3) dated 21/03/14 955310
B Total Tax payable on above 144811
C Average Rate of Tax 15.16%
D Foreign Income Included in Total Income 858946
E Tax on foreign income on Indian rate i.e. average rate of 15.16% 130204
F Actual Tax Paid on Foreign Income 182293
G Relief allowable lower of E and F 130204
H Relief allowed during assessment 144823
I Excess Relief allowed 14619
Since the mistake is apparent from record, same is rectified u/s 154 of the I.T. act 1961. Hence in this case, there was excess relief of Rs. 14619 allowed at the time of assessment which resulted in a short levy of tax to the tune of Rs. 14619 and a levy of interest u/s 234B and 234C of Rs. 5110 and Rs. 542 respectively. Total Tax effect is Rs. 20260.
Order u/s 145 Ended…………..
Request you to please guide me whether the above calculation is ok or not and if Ok then how can I deposit this amount.
Thanks in Advance!!
I have filled Return of Income (ROI) for FY 2010-11 declaring total income of Rs. 955310 which include foreign salary income of Rs. 8,58,946 remaining Rs. 96,364 was Indian Salary Income.
My status was resident in FY 2010-11. I have already received assessment letter from Income tax. But recently I received a order U/s 154 of the Income Tax Act, 1961. Details are provided below:
1. India has entered DTAA with USA vide Notification No. GSR 900(E) dated 20/12/1990. As per Article 25 (i.e. Elimination of double taxation) of the India USA DTAA, in the case of india, double taxation shall be avoided as follows:
a) “where a resident of India derives income may be taxed in United States, India shall allow as a deduction from the tax on the income of that resident an amount equal to the income-tax paid in United States, whether directly or by deduction. Such amount shall not, however, exceed that part of the tax (as computed before the deduction is given) which is attributable to the income which may be taxed in the united states”
Reliance is placed on the last sentence of the both DTAA agreement, which is basically same in both agreement, which states that relief cannot exceed the amount of tax at Indian rate on the foreign income earned. That means relief is attributable to the income that is earned in the foreign country and not on income which is earned in India. Hence, the last sentence of DTAA quoted above simply states that tax relief must not exceed the amount of tax on foreign income if levied at an Indian tax rate.
In this particular case relief u/s 90 is computed keeping in view of DTAA with India and USA.
A Total income assessed in the order u/s 143(3) dated 21/03/14 955310
B Total Tax payable on above 144811
C Average Rate of Tax 15.16%
D Foreign Income Included in Total Income 858946
E Tax on foreign income on Indian rate i.e. average rate of 15.16% 130204
F Actual Tax Paid on Foreign Income 182293
G Relief allowable lower of E and F 130204
H Relief allowed during assessment 144823
I Excess Relief allowed 14619
Since the mistake is apparent from record, same is rectified u/s 154 of the I.T. act 1961. Hence in this case, there was excess relief of Rs. 14619 allowed at the time of assessment which resulted in a short levy of tax to the tune of Rs. 14619 and a levy of interest u/s 234B and 234C of Rs. 5110 and Rs. 542 respectively. Total Tax effect is Rs. 20260.
Order u/s 145 Ended…………..
Request you to please guide me whether the above calculation is ok or not and if Ok then how can I deposit this amount.
Thanks in Advance!!
16 April 2015
The calculation seems to be OK. Pay the amount through net banking.
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17 April 2015
Thanks for your quick reply. Need some quick advice as well:
1. How to pay amount through Net Banking.
2. As I have received a order u/s 154 from ITO, do I need to send some reply to him or not after tax deposit.
FYI: I have received order u/s 154 on 27-Feb-15, but no demand letter received till date. Further can you help me with the total amount of tax which I should pay now as 234A/B/C tax will surely increase.
1. How to pay amount through Net Banking.
2. As I have received a order u/s 154 from ITO, do I need to send some reply to him or not after tax deposit.
FYI: I have received order u/s 154 on 27-Feb-15, but no demand letter received till date. Further can you help me with the total amount of tax which I should pay now as 234A/B/C tax will surely increase.
17 April 2015
1. If you have net banking account you can pay it by choosing direct tax payment option. If not having net banking account deposit the amount through challan to bank.
2. Deposit the tax and then send reply.
3. Deposit the tax demanded any shortfall can be paid later.
2. Deposit the tax and then send reply.
3. Deposit the tax demanded any shortfall can be paid later.
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