Tax on profit earned from foreign company

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hitesh chaudhari (Querist)
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01 March 2015 Dear sir, Mr. A resident and ordinary resident of india. he is doing partnership business with Mr. X at foreign (USA). Mr.X is foreigner. profit sharing ration are equal. At the end of year Mr.A earned net income ( after deducted all foreign taxes) INR 1000000/-. my question is how many taxes pay no this income in India? How much & show the calculation. Please give reply. .. thanks & regard

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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01 March 2015 Since Mr. A is resident and ordinary resident of India his global income is taxable in India and any tax paid in USA on his portion can be reduced from the tax payable in India.

A person earning any income has to pay tax in the country in which the income is earned (as Source Country) as well as in the country in which the person is resident. As such, the said income is liable to tax in both the countries. To avoid this hardship of double taxation, Government of India has entered into Double Taxation Avoidance Agreements (DTAAs) with various countries. DTAAs provide for the following reduced rates of tax on dividend, interest, royalties, technical service fees, etc., received by residents of one country from those in the other.
Where total exemption is not granted in the DTAAs and the income is taxed in both countries, the country in which the person is resident and is paying taxed, the credit for the tax paid by that person in the other country is allowed.

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