Credit method (continued)
Tax sparing credit method –
Under this, taxpayer will get credit of the amount of tax which would have been paid in the source country had there been no exemption from tax under the domestic laws of the source country.
That means here that benefit is provided by the residence state even though actual taxes has not been paid in the source state.
Types of tax credit –
Example of tax sparing clause in India-Canada DTAA –
The views in all sections are personal views of the author.