Recently, Govt. of India did amendment in agreement with Govt. of Singapore for avoidance of double taxation. According to this amendment both Govt. of India and Govt. of Singapore will exchange the information of tax matter. This is done due to inquiry of tax on companies whether they are paying tax in Singapore or not. Read this official press release at here. So, student should know its importance and learn what is its meaning?
Meaning of Double Taxation
Double taxation means taking of tax by two countries on same income of any assessee. Suppose, I earned $ 50,000 from my USA business. If IRS USA takes income tax from me on this earning and same time, Indian Govt. takes income tax on my earning $ 50,000 => Rs. 22,50,000. It will be double taxation for me. As per good rule, assessee can not pay double tax on same income. That is the reason, all most all the govt. of all countries have contracted with each other. That agreement is called Double Taxation Avoidance Agreement.
How to Avoid Double Taxation
It is very easy. I will submit the application in IRS of USA that I am foreign businessman and I have no activity in USA. I am also the permanent resident of India. With this, I will get all my income from USA without paying tax in USA. In India, I will file normal income tax return and show net income after deducting acceptable expenses as per the law and I will pay income tax to Govt of India only.
Related : E-Return of Income Tax
Meaning of Double Taxation
Double taxation means taking of tax by two countries on same income of any assessee. Suppose, I earned $ 50,000 from my USA business. If IRS USA takes income tax from me on this earning and same time, Indian Govt. takes income tax on my earning $ 50,000 => Rs. 22,50,000. It will be double taxation for me. As per good rule, assessee can not pay double tax on same income. That is the reason, all most all the govt. of all countries have contracted with each other. That agreement is called Double Taxation Avoidance Agreement.
How to Avoid Double Taxation
It is very easy. I will submit the application in IRS of USA that I am foreign businessman and I have no activity in USA. I am also the permanent resident of India. With this, I will get all my income from USA without paying tax in USA. In India, I will file normal income tax return and show net income after deducting acceptable expenses as per the law and I will pay income tax to Govt of India only.
Related : E-Return of Income Tax
Comments