Article 4 Double Taxation Avoidance Agreement India

Mr. X, a man based in India, works in the United States. In return, Mr. X receives some compensation for the work done in the United States. Today, the U.S. government imposes federal income tax on income collected in the United States. However, it is possible that the Indian government may also levy income tax on the same amount, i.e. the remuneration paid abroad, with Mr. X based in India. In order to protect innocent taxpayers like Mr. X from the harmful effects of double taxation, governments in two or more countries can enter into an agreement known as the Double Taxation Prevention Convention (DBAA). 5. The Tribunal also stated that a distinction had been made between a commercial relationship and a stable establishment.

The latter is intended for the taxation of a non-resident`s income under a double taxation agreement, while the first applies to the application of the Income Tax Act. With regard to offshore services, the Tribunal found that a sufficient territorial link between the transfer of services and India`s territorial borders was necessary to make income taxable. The entire contract would not be due to activities in India. The residence examination, also applied in international law, is that of the taxpayer and not that of the beneficiary of these services. The UN model gives more weight to the source principle than to the principle of residence in the OECD model. In conjunction with the principle of withholding tax, the article of the convention model assumes that: (a) the taxation of foreign capital income would take into account expenditures attributable to income income, so that these incomes would be taxed netly, (b) that the tax would not be high enough to discourage investment and (c) that it is the adequacy of revenue sharing with the country. which provides the capital. In addition, the UN Model Convention contains the idea that it would be appropriate for the country of residence to extend a double taxation exemption measure through tax credits or foreign tax exemptions, as in the OECD model convention.

The Double Tax Evasion Agreement (DBAA) is essentially a bilateral agreement between two countries. The main objective was to promote and promote economic exchanges and investment between two countries by avoiding double taxation. The agreement on double tax evasion is a treaty signed by two countries. The agreement is signed to make a country an attractive tourist destination and allow NGOs to decide whether to pay several taxes. DTAA does not mean that NRA can totally avoid taxes, but it does mean that NRA can avoid paying higher taxes in both countries. The DTAA allows an NRI to reduce its tax impact on revenues collected in India. The DTAA also reduces cases of tax evasion. C orntries around the world enter into different tax treaties.

These contracts are beneficial to residents (commercial and individual units) of the countries parties to the agreement. They can provide for tax exemptions, tax credits and a general reduction in tax rates. Singapore has concluded with many DBA countries. These agreements contribute to the efficiency of Singapore`s tax system. This article highlights the important provisions of the India-Singapore DBA, tax applicability, tax rates, the scope of the agreement and the benefits of the DBA.