Double Taxation Avoidance Agreement (DTAA)

Hello Friends,

My this blog is related to tell you about DTAA (Double Taxation Avoidance Agreement).

"DTAA (Double Taxation Avoidance Agreement) is an agreement signed between two or more countries to help taxpayers avoid paying double taxes on the same income. "

When a person who is not a resident of a country earns income in that country he is still liable to tax there, but he has to declare this income in the country of his residence as well as pay tax on the income again. This is known by the term 'Double Taxation'.

It is important for the taxpayer to know whether he is resident or a non resident in a country in which he earns income. The number of days stay in the country is usually the deciding factor for residential status. 

Example: If a person resident in the US in a particular financial year earns income in the India and pays tax in India on such income, he can set it off against his tax liability in his tax return in US. 

To help taxpayers from being taxed for the same income twice, many countries have DTAA's between themselves, whereby the tax paid in the alien country can be deducted from the tax payable in the country of the residence. While this is legal and does not amount to tax avoidance, some taxpayers try to misuse the facility by wrong statement of incomes and avoid paying the right tax.

Factors to be consider for DTAA:

• Residential Status of a Taxpayer

• Number of days stay in a particular country

• Total Income earned in a particular country

• Signed Agreement between these countries 

I hope it will be helpful to you.

Thanks and Regards

Kulvinder Kaur

B.Com(H), MBA (Finance)

9871580806,8826566751

rightsteptoinvest@gmail.com