Section 195

DTAA means Double Taxation Avoidance Agreement...

A DTAA is a tax treaty signed between two or more countries. Its key objective is that tax-payers in these countries can avoid being taxed twice for the same income. A DTAA applies in cases where a tax-payer resides in one country and earns income in another.

For example you are a Resident Individual in India. Your income is 10,00,000/- in india. TDS deducted @ 10% 1,00,000/-..

As well as you have income from foreign country Rs. 5,00,000/- and you have paid tax in foreign country Rs. 50,000/-

As you are a Resident of India that's why your full 10,00,000+5,00,000=15,00,000/- is taxable in India.

See, here Rs. 5,00,000/- is going to taxable again whether you have already paid tax on that same Income(5,00,000/-) in foreign country.

As per the provision there is no double taxation in income tax....

So that is the reason why two contries needs to sign bilateral agreement...

For more details you may read the provision of section 90, 90A and 91 of Income Tax Act.....

Regards,

Prabir Paul.....