Dear Members,
Just wanted to know one thing. If there is certain clause like "Taxing Gifts" is present in IT Act 1961, but there is nothing mentioned regarding taxing gifts in the treaty (DTAA) , what should be done? do we need to tax it or ignore it?
Answers/Comments, with reference to case laws are most welcomed and appreciated.
Thanks!
Dear , don't think it as gift , think it income . gift is taxed as income form other sources in india ,
for resident ,it does not matter whether you have received gift in india or outside india , it will be taxable in india as long as it is not exempted u/s 56(2)(vii).
now think of a gift which might also be taxable ouside india ( for example : gift of immovable property located ouside india form NRI) . HENCE COMES THE DOUBLE TAXATION
and again it will be taxed as INCOME and not as gift.
DTAA provide the relief for this double taxed INCOME:
" Subject to the provisions of the law of India regarding the allowance as a credit against Indian tax of tax paid in a territory outside India (which shall not affect the general principle hereof), the amount of the United Kingdom tax paid, under the laws of the United Kingdom and in accordance with the provisions of this Convention, whether directly or by deduction, by a resident of India, in respect of income from sources within the United Kingdom which has been subjected to tax both in India and the United Kingdom shall be allowed as a credit against the Indian tax payable in respect of such income but in an amount not exceeding that proportion of Indian tax which such income bears to the entire income chargeable to Indian tax. "
CAclubindia
