E.—Foreign tax credit
207. (1) An assessee, being a resident in India in any financial year, shall be allowed a credit in respect of income-tax paid by deduction or otherwise, in any country or other specified territory under the law in force in that country or territory, in accordance with the provisions of this section.
(2) An assessee, referred to in sub-section (1), shall be allowed a credit against the Indian income-tax payable by him in respect of his income of the financial year,—
(a) which has been taxed in any country or other specifried territory with which India has an agreement under section 291, in accordance with the agreement entered into with such country or specified territory; or
(b) which has accrued outside India (but not deemed to be received in India) and taxed in a country with which India does not have an agreement under section 291, of the amount determined in the following manner, namely:—
(i) at the Indian rate of tax or the rate of tax of the other country, whichever is lower;
(ii) at the Indian rate of tax, if both the rates are equal.
(3) Notwithstanding anything in sub-section (2), the amount of credit of foreign tax referred to therein shall not, in any case, exceed—
(a) the Indian income-tax payable in respect of income which is taxed outside India; and
(b) the Indian income-tax payable on total income of the assessee.
(4) The Central Government may, for the relief or avoidance of double taxation, pre-scribe-
(a) the method for computing the amount of credit;
(b) the manner of claiming credit; and
(c) such other particulars as may be considered necessary.
