Clause 206 - Foreign tax credit - Direct Taxes Code Bill, 2009

E. - Foreign tax credit Foreign tax credit 206. (1) An assessee shall be allowed a credit in respect of income-tax paid by deduction, or otherwise, in any other country under the law in force in that country, in accordance with the provisions of this section. (2) An assessee shall be allowed a credit against the Indian income-tax payable by him in respect of his income which has accrued during the financial year outside India, of the amount determined in accordance with the Agreement entered into with such other country under section 258. (3) However, in a case where there is no agreement under section 258 with the other country, the amount referred to in sub-section (2) shall be determined - (a) at the Indian rate of tax or the rate of tax of the other country, whichever is lower;or (b) at the Indian rate of tax, if both the rates are equal. (4) An assessee shall, regadless of anything contained in sub-section (3), not be entitled to credit against the Indian income tax payable by him in respect of any income referred to therein, if - (i) the income is also deemed to accrue in India; and (ii) no Agreement under section 258 has been entered into with the other country in which the income has accrued. (5) The Central Government may prescribe the method for computing the amount of credit, the manner of claiming credit and such other particulars as are necessary for the relief or avoidance of double taxation.