Which method of double tax relief is used by India? Is it exemption or credit method?

Answer 1

It appears you are talking about Double Taxation Relief.The tax is paid/withholding tax is deducted at the rate which is prescribed under DTAA between India and the other cointry.Click on link below for details
http://www.allindiantaxes.com/income-tax-dtaa.php

Answer 2

The method of state and central government tax on new industries both of which are temperorily not applied for the first ten or fifteen years as tax holidays to encourage them.It can be term as amethod of temperory exemption.

Answer 3

CONVENTION BETWEEN THE GOVERNMENT OF THE UNITED KINGDOM OF GREAT BRITAIN AND NORTHERN IRELAND AND THE GOVERNMENT OF THE REPUBLIC OF INDIA FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME AND CAPITAL GAINS

The Government of the United Kingdom of Great Britain and Northern Ireland and the Government of the Republic of India;

Desiring to conclude a new Convention for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and capital gains;

Have agreed as follows:


Article 1
Scope of the Convention
(1) This Convention shall apply to persons who are residents of one or both of the Contracting States.

(2) This Convention extends to the territory of each Contracting State, including its territorial sea, and to those areas of the exclusive economic zone or the continental shelf adjacent to the outer limit of the territorial sea of each State over which it has, in accordance with international law, sovereign rights for the purpose of exploration and exploitation of the natural resources of such areas, and references in this Convention to the Contracting State or to either of them shall be construed accordingly.


Article 2
Taxes covered
(1) The taxes which are the subject of this Convention are:

(a) in the United Kingdom:
(i) the income tax;
(ii) the corporation tax;
(iii) the capital gains tax; and
(iv) the petroleum revenue tax;(hereinafter referred to as "United Kingdom tax");

(b) in India:

the income-tax including any surcharge thereon;

(hereinafter referred to as "Indian tax").


(2) This Convention shall also apply to any identical or substantially similar taxes which are imposed by either Contracting State after the date of signature of this Convention in addition to, or in place of, the taxes of that Contracting State referred to in paragraph (1) of this Article. The competent authorities of the Contracting States shall notify each other of any substantial changes which are made in their respective taxation laws.


Article 3
General definitions
(1) In this Convention, unless the context otherwise requires:

(a) the term "United Kingdom" means Great Britain and Northern Ireland;

(b) the term "India" means the Republic of India;

(c) the term "tax" means United Kingdom tax or Indian tax, as the context requires but shall not include any amount which is payable in respect of any default or omission in relation to the taxes to which this Convention applies or which represents a penalty imposed relating to those taxes;

(d) the term "fiscal year" in relation to Indian tax means "previous year" as defined in the Income-tax Act, 1961 (43 of 1961) and in relation to United Kingdom tax means a year beginning with 6th April in one year and ending with 5th April in the following year;

(e) the terms "a Contracting State" and "the other Contracting State" mean India or the United Kingdom, as the context requires;

(f) the term "person" includes an individual, a company and any other entity which is treated as a taxable unit under the taxation laws in force in the respective Contracting States, but, subject to paragraph (2) of this Article, does not include a partnership;

(g) the term "company" means any body corporate or any entity which is treated as a company or body corporate for tax purposes;

(h) the terms "enterprise of a Contracting State" and "enterprise of the other Contracting State" mean respectively an enterprise carried on by a resident of a Contracting State and an enterprise carried on by a resident of the other Contracting State;

(i) the term "competent authority" means, in the case of the United Kingdom, the Commissioners of Inland Revenue or their authorised representative, and, in the case of India, the Central Government in the Ministry of Finance (Department of Revenue) or their authorised representative;

(j) the term "international traffic" means only transport by a ship or aircraft operated by an enterprise of a Contracting State except when the ship or aircraft is operated solely between places in the other Contracting State;

(k) the term "Government" means the Government of a Contracting State or a political subdivision or local authority thereof. In relation to the United Kingdom, the term "political subdivision" shall include Northern Ireland.


(2) A partnership which is treated as a taxable unit under the Income-tax Act, 1961 (43 of 1961) of India shall be treated as a person for the purposes of this Convention.

(3) As regards the application of this Convention by a Contracting State any term not otherwise defined shall, unless the context otherwise requires, have the meaning which it has under the laws of that Contracting State relating to the taxes which are the subject of this Convention.


Article 4
Fiscal domicile
(1) For the purposes of this Convention, the term "resident of a Contracting State" means any person who, under the law of that State, is liable to taxation therein by reason of his domicile, residence, place of management or any other criterion of a similar nature.

(2) Where by reason of the provisions of paragraph (1) of this Article an individual is a resident of both Contracting States, then his status shall be determined in accordance with the following rules:

(a) he shall be deemed to be a resident of the Contracting State in which he has a permanent home available to him. If he has a permanent home available to him in both Contracting States, he shall be deemed to be a resident of the Contracting State with which his personal and economic relations are closer (centre of vital interests);

(b) if the Contracting State in which he has his centre of vital interests cannot be determined, or if he has not a permanent home available to him in either Contracting State, he shall be deemed to be a resident of the Contracting State in which he has an habitual abode;

(c) if he has an habitual abode in both Contracting States or in neither of them, he shall be deemed to be a resident of the Contracting State of which he is a national;

(d) if he is a national of both Contracting States or of neither of them, the competent authorities of the Contracting States shall settle the question by mutual agreement.


(3) Where by reason of the provisions of paragraph (1) of this Article a person other than an individual is a resident of both Contracting States, then it shall be deemed to be a resident of the Contracting State in which its place of effective management is situated.


Article 5
Permanent establishment
(1) For the purposes of this Convention, the term "permanent establishment" means a fixed place of business through which the business of an enterprise is wholly or partly carried on.

(2) The term "permanent establishment" shall include especially:

(a) a place of management;

(b) a branch;

(c) an office;

(d) a factory;

(e) a workshop;

(f) premises used as a sales outlet or for receiving or soliciting orders;

(g) a warehouse in relation to a person providing storage facilities for others;

(h) a mine, an oil or gas well, quarry or other place of extraction of natural resources;

(i) an installation or structure used for the exploration or exploitation of natural resources;

(j) a building site or construction, installation or assembly project or supervisory activities in connection therewith, where such site, project or supervisory activity continues for a period of more than six months, or where such project or supervisory activity, being incidental to the sale of machinery or equipment, continues for a period not exceeding six months and the charges payable for the project or supervisory activity exceed 10 per cent of the sale price of the machinery and equipment;

(k) the furnishing of services including managerial services, other than those taxable under Article 13 (Royalties and fees for technical services), within a Contracting State by an enterprise through employees or other personnel, but only if:
(i) activities of that nature continue within that State for a period or periods aggregating more than 90 days within any twelve-month period; or
(ii) services are performed within that State for an enterprise within the meaning of paragraph (1) of Article 10 (Associated enterprises) and continue for a period or periods aggregating more than 30 days within any twelve-month period.

WHEREAS it is enacted by sections 826(1) and 828 of the Taxes Consolidation Act, 1997 (No. 39 of 1997), that if the Government by order declare that arrangements specified in the order have been made with the government of any territory outside the State in relation to affording relief from double taxation in respect of income tax, corporation tax or capital gains tax and any taxes of a similar character, imposed by the laws of the State or by the laws of that territory, and that it is expedient that those arrangements should have the force of law, the arrangements shall, notwithstanding anything in any enactment other than section 168 of the Taxes Consolidation Act, 1997, have the force of law:


AND WHEREAS it is further enacted by section 826(6) of the Taxes Consolidation Act, 1997, that where such an order is proposed to be made, a draft of the order shall be laid before Dáil Éireann and the order shall not be made until a resolution approving of the draft has been passed by Dáil Éireann:


AND WHEREAS a draft of the following Order has been laid before Dáil Éireann and a resolution approving of the draft has been passed by Dáil Éireann:


NOW, the Government, in exercise of the powers conferred on them by sections 826(1) and 828 of the Taxes Consolidation Act, 1997 (No. 39 of 1997), hereby order as follows:


1. This Order may be cited as the Double Taxation Relief (Taxes on Income and Capital Gains) (Republic of India) Order, 2001.


2. It is hereby declared -


(a) that the arrangements specified in the Convention the text of which is set out in the Schedule to this Order have been made with the Government of the Republic of India in relation to affording relief from double taxation in respect of income tax, corporation tax or capital gains tax and any taxes of a similar character, imposed by the laws of the State or by the laws of the Republic of India, and


(b) that it is expedient that those arrangements should have the force of law.


FOR THE AVOIDANCE OF DOUBLE TAXATION AND FOR THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME AND CAPITAL GAINS.


The Government of Ireland and the Government of the Republic of India,


desiring to conclude a Convention for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and capital gains and with a view to promoting economic co-operation between the two countries,


have agreed as follows:


Article 1 PERSONAL SCOPE


This Convention shall apply to persons who are residents of one or both of the Contracting States.


Article 2 TAXES COVERED


1. This Convention shall apply to taxes on income and capital gains imposed on behalf of a Contracting State or of its political subdivisions or local authorities irrespective of the manner in which they are levied.


2. There shall be regarded as taxes on income and capital gains all taxes imposed on total income, or on elements of income including taxes on gains from the alienation of movable or immovable property.


3. The existing taxes to which the Convention shall apply are in particular:


(a) In India :


the income tax, including any surcharge thereon,


(hereinafter referred to as "Indian tax"),


(b) In Ireland



(i) the income tax;



(ii) the corporation tax; and



(iii) the capital gains tax



(hereinafter referred to as "Irish tax")



4. The Convention shall apply also to any identical or substantially similar taxes which are imposed after the date of signature of the Convention in addition to, or in place of, the existing taxes referred to in paragraph 3. The competent authorities of the Contracting States shall notify each other of significant changes which have been made in their respective taxation laws.


Article 3 GENERAL DEFINITIONS


1. For the purposes of this Convention, unless the context otherwise requires :


(a) the term "India" means the territory of India and includes the territorial sea and airspace above it, as well as any other maritime zone in which India has sovereign rights, other rights and jurisdiction, according to the Indian law and in accordance with international law, including the U.N. Convention on the Law of the Sea;


(b) the term "Ireland" includes any area outside the territorial waters of Ireland which, in accordance with international law, has been or may hereafter be designated under the laws of Ireland concerning the Continental Shelf, as an area within which the rights of Ireland with respect to the sea and subsoil and their natural resources may be exercised;


(c) the term "person" includes an individual, a company, a trust, a partnership which is treated as a taxable unit under the Income Tax Act, 1961 (43 of 1961) of India, a body of persons and any other entity which is treated as a taxable unit under the taxation laws in force in the respective Contracting States;


(d) the term "company" means any body corporate or any entity which is treated as a body corporate for tax purposes;


(e) the term "enterprise of a Contracting State" and "enterprise of the other Contracting State" mean respectively an enterprise carried on by a resident of a Contracting State and an enterprise carried on by a resident of the other Contracting State;


(f) the term "international traffic" means any transport by a ship or aircraft operated by an enterprise of a Contracting State, except when the ship or aircraft is operated solely between places in the other Contracting State;


(g) the term "competent authority" means:


(i) in the case of India: the Central Government in the Ministry of Finance (Department of Revenue) or their authorised representative;


(ii) in the case of Ireland the Revenue Commissioners or their authorised representative;


(h) the term "national" means:


(i) in relation to Ireland, any citizen of Ireland and any legal person, association or other entity deriving its status as such from the laws in force in Ireland,


(ii) in relation to India,


(A) any individual possessing the nationality of India;


(B) any legal person, partnership or association deriving its status as such from the laws in force in India;


(i) the term "fiscal year" means :


(i) in the case of India, "previous year" as defined under section 3 of the Income Tax Act, 1961;


(ii) in the case of Ireland, a year beginning with the sixth day of April in one year and ending with the fifth day of April in the following year;


(j) the term "tax" means Indian tax or Irish tax, as the context requires, but shall not include any amount which is payable in respect of any default or omission in relation to the taxes to which this Convention applies or which represents a penalty or fine imposed relating to those taxes;


(k) the terms "a Contracting State", "one of the Contracting States" and "the other Contracting State" mean Ireland or the Republic of India, as the context requires, and the term "Contracting States" means Ireland and the Republic of India.


2. As regards the application of the Convention by a Contracting State any term not defined therein shall, unless the context otherwise requires, have the meaning which it has under the law of that State concerning the taxes to which the Convention applies
formore
http://www.irishstatutebook.ie/ZZSI521Y2001.html