Unilateral tax credit –
Section 91 of Income Tax Act, 1961 (‘Act’) enables its residents to avail unilateral tax credit for foreign taxes paid outside India in a country with which India has not signed any tax treaty. Following conditions are required to be satisfied by the for availing unilateral tax credit –
- Person claiming credit must be resident in India for the said previous year
- Income is from a source outside India. In other words, income shall not be deemed to accrue or arise in India
- Tax has been paid in the foreign country << The taxpayer should be able to prove that he/ she has paid income tax on such income in the foreign country>>
- Absence of agreement under section 90 for the relief or avoidance of double taxation.