How does a Double Taxation Avoidance Agreement help me avoid paying tax twice

Question

I earn income in India as well as in the country where I currently live, and I am worried about being taxed on the same income twice. I have been reading conflicting things online and I would like to understand what Indian law actually says about this, which Act and Section applies, what the realistic timelines and costs are, and what I should be doing right now to protect my position. If the matter can be resolved without litigation I would prefer that route, but I want to know what my rights are before I agree to anything or sign any document.

MyVakeel Legal Desk · Accepted Answer

How does a Double Taxation Avoidance Agreement help me avoid paying tax twice is governed in India primarily by Income-tax Act, 1961, Section 90, Income-tax Act, 1961, Section 91 and Income-tax Act, 2025. The short answer is set out below, followed by the practical steps most people in this situation need to take. Read it alongside the specific provisions named, because the exact relief available to you turns on the facts you can prove on paper.

Section 90 of the Income-tax Act, 1961 empowers the Indian government to enter into Double Taxation Avoidance Agreements with other countries, and where such an agreement exists, its provisions apply to the extent they are more beneficial to the taxpayer than the corresponding provisions of the domestic Income-tax Act, giving you the choice of whichever regime is more favourable for the relevant income.

Relief under a DTAA is typically provided either through the exemption method, where income is taxed only in one country, or more commonly through the tax credit method, where the income is taxed in both countries but the tax paid in the source country is allowed as a credit against the tax payable in the country of residence, subject to the specific article governing that category of income in the treaty.

Where no DTAA exists with a particular country, Section 91 provides unilateral relief by allowing a resident taxpayer a deduction for tax paid in the foreign country on income that is also taxed in India, computed as the lower of the Indian rate or the foreign rate applied to the doubly taxed income.

To claim DTAA benefits while filing your Indian return, you generally need a tax residency certificate from the tax authority of the other country and must furnish Form 10F along with other prescribed details, and the specific rate of tax applicable to items such as dividends, interest, royalty or fees for technical services should be checked in the relevant treaty article rather than assumed.

What to do next: 1) Identify whether a DTAA exists between India and the other country involved; 2) Obtain a tax residency certificate and file Form 10F; 3) Choose the more beneficial provision between the treaty and domestic law; 4) Claim foreign tax credit or exemption as applicable while filing the return.

If the other side has already issued a notice, filed a case or set a deadline, treat the matter as time-sensitive — most remedies under Income-tax Act, 1961, Section 90 carry limitation periods, and a delay you cannot explain weakens an otherwise strong case. You can post the details on the MyVakeel forum for a practising advocate to review, or book a paid consultation with a Bar Council verified lawyer in this practice area.