Foreign Income subject to DTAA – The scheme of treatment of such income announced

Central Government has issued two notifications under section 90 and 90A of the Income Tax Act, 1961 to specify the manner in which the income which is subject to DTAA and subject to tax in the foreign country shall be dealt in India.

Notification No. 90/2008-All dated -28-08-2008

Notification No. 91/2008-All dated -28-08-2008

Section 90 empowers the Central Government to enter into an agreement with the foreign countries to avoid double taxation.

Section 90A empowers the Central Government to notify the provision to implement the agreement entered into by the specified association in India with the specified association outside India.

There was no uniform procedure on treatment of income which was not taxable in India by virtue of DTAA.

Now, central government has notified that such income which is eligible for benefit of an agreement to avoid double taxation, the assessee is required to include such income first in his taxable income and thereafter he is entitled to claim the relief as per the provision.

Consequently, no foreign income subject shall remain unreported.