Us India Double Taxation Avoidance Agreement
April 13, 2021

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. 6. Periodic payments for the assistance of a minor child, made on the basis of a written separation agreement or divorce decision, a separate maintenance allowance or a compulsory allowance paid by a resident of a contracting state to a resident of the other contracting state, are taxable only in the first state. The Treaty must be read carefully to understand its provisions from their correct perspective. The best way to understand the DBAA is to compare it to a partnership agreement between two.

In partnership, the words “part of the first part” are used and in the DBAA the words are “the other contracting state.” The words “contracting states” can also be replaced by the names of the countries concerned and the DBAA can be re-read to better understand. If an Indian resident deducts income and is taxed in the United States, India authorizes the amount of income tax paid in the United States in the form of a deduction. However, this deduction cannot exceed the Indian tax paid on foreign income collected. Under the agreement, income is considered to be as follows: 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. 5. Provisions to avoid tax evasion: they include Articles 9 (associated companies) and 26 (exchange of information).

The agreement between India and the Hong Kong Special Administrative Region (HKSAR) of the People`s Republic of China to avoid double taxation is operational There may be scenarios in which a person was previously established in the United States but earned income in India or something like that, a person is established in India and generates his income from the United States. In both scenarios, taxes must be paid in the United States and India because of residence and taxation legislation. The Double Tax Evasion Agreement (DBAA) is essentially a bilateral agreement between two countries.

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