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Query on double taxation relief

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A company incorporated in Mauritius has a branch in India. Indian branch paid tax @ 30% as per Indian law.

DTAA between India and Mauritius says that taxation on a PE shall not be less favourably levied as compared to other establishments in India carrying on same activities.

What is meant by the last line? Does it mean that PE will be taxed at normal rates in India applicable to similar establishments?

Replies (2)
As per section 90, the provisions of Income tax act or DTAA whichever are more beneficial to assessee shall apply. The above para means that PE of a foreign co.will be taxed treating them as domestic company.
However, explanation 1 to section 90 says that"for the removal of doubts, it is hereby declared that the charge of tax in respect of a foreign co.at a higher rate than the rate at which a domestic company is chargeable, shall not be treated as less favourably charged in respect of such foreign company.
Conclusion:- Domestic co.is to be taxed at the rates specified in finance act applicable to them and foreign companies will be taxed at the rates specified for them in finance act which is more than the rates applicable to domestic co.
Thanks..

Got it. Thanks a lot :)


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