Section 90 of ITA, 1961 : Section 90: Agreement With Foreign Countries Or Specified Territories

Explanation using Example

Imagine a software consultant, Priya, who is a resident of India but has been working on a project in Germany for a year. During this period, Priya earns income from the services she provides in Germany. Both India and Germany tax Priya's income, leading to double taxation.

Under Section 90 of the Income-tax Act, 1961, the Indian government has an agreement with Germany to avoid such double taxation. Priya can claim relief when she files her Indian income tax return, ensuring that she doesn't pay tax twice on the same income. She must provide a certificate of residency from the German government and any other prescribed documents to avail this benefit.

This agreement between India and Germany allows Priya to be taxed in a manner that is more beneficial to her, as per the provisions of the Income-tax Act that apply in light of the agreement.