Section 90A of ITA, 1961 : Section 90A: Adoption By Central Government Of Agreement Between Specified Associations For Double Taxation Relief

Explanation using Example

Imagine a software company in India, "TechSolutions Pvt. Ltd.", has a subsidiary in Singapore, "TechSolutions SG". The company earns income from both countries and is subject to tax in India as well as Singapore. To avoid double taxation, the Indian government has an agreement with Singapore under Section 90A of the Income-tax Act, 1961.

As per the agreement, TechSolutions Pvt. Ltd. can claim a tax credit for the taxes paid in Singapore against their Indian tax liability. This agreement is notified by the Central Government, and it provides relief from double taxation, thereby promoting cross-border trade and investment.

When filing its tax return in India, TechSolutions Pvt. Ltd. can apply the provisions of the agreement because they are more beneficial, thus reducing their overall tax burden. However, they must ensure compliance with the documentation requirements, including obtaining a certificate of residency from Singapore's government.