Double tax with Chaina

Here are specific instructions and also decided rulings/judgements¹ which make clear that in respect of matters which are governed both by the Income-tax Act and the Double Taxation Avoidance Agreements (DTAA), provisions of DTAA would prevail.

Whether there is no provision in the agreement for avoidance of double taxation on the subject matter, falling within the purview of Income-tax Act, the relevant provisions of IT Act would apply. In another ruling², AAR has clarified and laid down that the specific provisions of DTAA will override the general provisions of IT Act.

The relief of DTAA can be sought only when a person has paid the tax in one of the countries and the same income is liable to be taxes in another country. But if the person is exempt from taxation in one country then he cannot claim the benefit of DTAA to get scot free from paying any tax.³

India has DTAA with China.

^regards,

^ratan

Hello,

since the employee is in china for more than 183 days, employee have to pay taxin china for the income received in china by him. Also his income which is received in china whill be clubbed in Indian income and will be taxed. But credit will be given for the tax which is paid by the employee in china. That has to be calculated as per the DTAA with China.