When Section 90 or Section 91 relief may apply to foreign income
Rohan: Veda, I think I have to sell my Mumbai flat to pay this tax bill. They say I owe tax on my Dubai salary in India too, and I already paid tax there.
Veda: Put the listing down. You haven’t sold anything, and you probably don’t owe double tax.
Rohan is a software engineer living in Dubai. He files his Indian income tax return every year because he holds a permanent home in India. This year, his ITR notice flagged his foreign salary. He panicked.
Two doors, one problem: Section 90 vs Section 91
Veda: India has a rulebook for exactly this. Section 90 is for countries with a Double Taxation Avoidance Agreement. Section 91 is for countries without one.
Rohan: So it is like a VIP lane or a backup plan?
Veda: Exactly. Think of Section 90 as the VIP lane. If India has a deal with your country, you use the deal. If not, Section 91 is the standard lane that still gives you some relief.
| Feature | Section 90 | Section 91 |
|---|---|---|
| Basis | India has a DTAA with the country | No DTAA exists with the country |
| Relief method | Follows the treaty terms, usually the credit method | Unilateral relief, generally the lower of Indian or foreign tax |
| Key proof | Tax Residency Certificate (TRC) | Proof of tax paid abroad |
Rohan: And I can’t use both, right? That would be like getting a discount twice.
Veda: Correct. You claim relief under one route for the same income. You cannot stack them.
Who actually gets to walk through them?
Rohan: What if I am not a resident? Do I still pay tax on my Dubai salary?
Veda: If you are a non-resident, India generally taxes only income earned in India. So there is no double tax on your Dubai salary to begin with. But if you are a resident, global income is taxable, and that is when relief matters.
Rohan: So the first thing I need to check is my residency status?
Veda: Yes. Residency decides whether your foreign income is even in the Indian tax net. If it is not in the net, there is nothing to relieve.
The paper trail that makes or breaks your claim
Veda: Relief is not automatic. The tax officer needs proof. For Section 90, you typically need a Tax Residency Certificate from the foreign country. For claiming credit, you often need to file the relevant form, like Form 67, along with proof of tax paid.
Rohan: And for Section 91?
Veda: You still need evidence. Keep your foreign tax payment receipts, your foreign tax return, and the salary slips. If you cannot prove you paid tax there, you cannot claim the credit.
Rohan: Can I just check the DTAA status online?
Veda: You can start there. The Income Tax Department maintains the list of agreements. Always verify the current position at the official portal before filing.
Checklist before you hit submit
- Confirm your residential status for the relevant financial year.
- Check whether a DTAA exists with the country where the income was earned.
- Obtain a valid Tax Residency Certificate if you are claiming under Section 90.
- Calculate the tax payable in India and the tax paid abroad on the same income.
- Claim relief only on income that is taxed in both jurisdictions.
- Attach proof of foreign tax payment with your return.
- Verify current rules and forms on the Income Tax Department portal.
Three mistakes that cost money
- Claiming relief on exempt income. If the foreign country did not tax the income, India will tax it fully. There is no credit for tax you did not pay.
- Missing the TRC deadline. For DTAA benefits, the Tax Residency Certificate is usually required. Without it, you may be stuck with domestic rates.
- Double dipping. Do not claim relief under Section 90 and Section 91 for the same income. Pick the route that gives you the lower tax.
Three FAQs
1. Does relief apply to capital gains from selling a foreign house?
Veda: It can, if that income is taxable in India and you have paid tax on it abroad. The same rules of residency and proof apply. Check whether the DTAA covers capital gains specifically.
2. What if I moved back to India mid-year?
Veda: Residency is determined for the whole financial year. Your status changes the scope of your global income. Keep records of your stay dates and travel.
3. Can I claim relief for tax paid in a country with no DTAA?
Veda: Yes, that is what Section 91 is for. It gives unilateral relief even without an agreement, subject to the conditions in the Income Tax Act.
This article is for educational purposes only and does not constitute tax, legal, or investment advice. Tax laws and treaty provisions change. Please verify the current position with a qualified Chartered Accountant or the official sources below.