Section 80RR of ITA, 1961 : Section 80Rr: Deduction In Respect Of Professional Income From Foreign Sources In Certain Cases

Explanation using Example

Imagine a scenario where Ravi, an Indian resident and a professional cricket player, participates in a cricket tournament in Australia. He earns a significant amount of money from the Australian cricket board, which is a foreign entity. For the assessment year beginning on April 1, 2003, Ravi earns AUD 100,000 from his participation in the tournament. To avail the benefits under Section 80RR of the Income-tax Act, 1961, Ravi ensures that he brings the money, equivalent to AUD 100,000, into India in US dollars (a convertible foreign exchange) within six months of the end of the financial year.

According to the provisions of Section 80RR, for the assessment year 2003-2004, Ravi is eligible to claim a deduction of 30% on the income earned from abroad. This means he can claim a deduction of 30% on AUD 100,000, which would reduce his taxable income from this foreign source by AUD 30,000. However, Ravi must also furnish a certificate in the prescribed form along with his tax return to certify that he has correctly claimed the deduction in accordance with the provisions of Section 80RR. The Reserve Bank of India, being the competent authority, would oversee the regulation of these foreign exchange dealings.