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1、DoubleTaxationAvoidanceAgreements(DTAA)避免双重征税协议TheDoubleTaxAvoidanceAgreements(DTAA)isessentiallybilateralagreementsenteredintobetweentwocountries,inourcase,betweenIndiaandanotherforeignstate.Thebasicobjectiveistoavoid,taxationofincomeinboththecountries(i.e.Doubletaxationofs
2、ameincome)andtopromoteandfostereconomictradeandinvestmentbetweenthetwocountries.TheadvantagesofDTAAareasunder.TheadvantageofDTAAareasunder,a.LowerWithholdingTaxes(TaxDeductionatSource)b.CompleteExemptionofIncomefromTaxesc.UnderlyingTaxCreditsd.TaxSparingCreditsTheProvisionso
3、fDTAAoverridethegeneralprovisionsoftaxingstatueofaparticularcountry.ItisnowwellsettledthatinIndiatheprovisionsoftheDTAAoverridetheprovisionsofthedomesticstatute.Moreover,withtheinsertionofSec.90(2)intheIndianIncomeTaxAct,itisclearthatassesseshasanoptionofchoosingtobegoverned
4、eitherbytheprovisionsofparticularDTAAortheprovisionsoftheIncomeTaxAct,whicheveraremorebeneficial.TheNonResidentcancertainlytakethebenefitoftheprovisionsofDTAAenteredintobetweenIndiaandthecountry,inwhichheresides,moreparticularlyinrespectofInterestIncomefromNROaccount,Governm
5、entsecurities,Loans,FixedDepositswithCompaniesanddividendsetc.Thisisexplainedbelow:-FortheAssessmentYear2008-2009,WithholdingTaxRate(TDS)undertheIndianIncomeTaxforInterestIncome-33.99%whereas,RateofTaxprescribedintheDTAAwiththecountrywhereNonResidentresidese.g.Singapore-15%T
6、herefore,chargeableratewillbe15%(LoweroftheTwo)EveryNonResidentshouldchooselowerofthetaxrateprescribedinDTAAwiththecountrywhereheresidesandthetaxrateprescribedundertheIndiantaxlaws.Doubletaxationisthesystematicimpositionoftwoormoretaxesonthesameincome(inthecaseofincometaxes)
7、,asset(inthecaseofcapitaltaxes),orfinancialtransaction(inthecaseofsalestaxes).Itreferstotaxationbytwoormorecountriesofthesameincome,assetortransaction,forexampleincomepaidbyanentityofonecountrytoaresidentofadifferentcountry.Thedoubleliabilityisoftenmitigatedbytaxtreatiesbetw
8、eencountries.Theterm'doubletaxation'isadditionallyused,particularlyintheUSA
