When Section 90 or Section 91 relief may apply to foreign income

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Many NRIs earn salaries, rental income, or dividends while living abroad, and the same money can attract tax both in the source country and in India. This double taxation can feel like paying for the same service twice, which is why the Income Tax Act provides mechanisms to avoid it. Understanding when Section 90 or Section 91 relief applies helps you claim the credit you are entitled to and keeps your tax filing smooth.

Section 90 comes into play when India has a Double Taxation Avoidance Agreement (DTAA) with the foreign country where the income arises. Under such treaties, you can usually claim relief for tax paid overseas, either as an exemption or a credit, depending on the treaty’s wording. Section 91, on the other hand, offers unilateral relief when no DTAA exists; it allows a credit for foreign tax paid, subject to certain conditions laid out by the Indian tax authorities.

This guide walks through the practical steps to determine which section applies to your situation, highlights common pitfalls, and offers a checklist and FAQs you can refer to before filing your return. All information is general; you should verify the latest provisions on the official sources linked below.

When does Section 90 relief apply?

Section 90 relief is available if:

• India has a DTAA with the country where the income is sourced.
• The income falls under a category covered by the treaty (e.g., employment income, business profits, dividends, interest, royalties).
• You have proof of tax paid in the foreign jurisdiction (such as a foreign tax return or a certificate from the foreign tax authority).

If these conditions are met, you can claim relief under the treaty, either by excluding the foreign income from Indian tax or by claiming a credit for the tax already paid abroad.

When does Section 91 relief apply?

Section 91 relief may be relevant when:

• There is no DTAA between India and the foreign country.
• You have actually paid tax on the income in that foreign country.
• The income is taxable in India under the relevant head (salary, house property, capital gains, etc.).

In such cases, you can claim a credit for the foreign tax paid, limited to the amount of Indian tax attributable to that income.

Veda and Rohan’s quick chat

Veda: Hey Rohan, I saw you sweating over that foreign salary slip again. What’s the worry?

Rohan: Veda, I got paid in Dubai last year and now the Indian tax guy says I might owe tax on the same money twice. I’m scared I’ll end up paying double.

Veda: Take a breath. First check if India has a DTAA with the UAE. If yes, Section 90 steps in.

Rohan: Yeah, I remember hearing about that treaty. So I just show the Dubai tax paid and get relief?

Veda: Exactly. You need the foreign tax certificate or return, then fill Schedule SI in your ITR claiming the credit. If the treaty exempts the income, you may not even have to include it.

Rohan: What if I worked in a country without a treaty, like some African nation?

Veda: Then you look at Section 91. As long as you paid tax there and the income is taxable in India, you can claim a credit for the foreign tax, but only up to the Indian tax on that income.

Rohan: Got it. So the key is proof of foreign tax and knowing whether a treaty exists.

Veda: Spot on. And always double‑check the latest DTAA list on the tax department site before you file.

Practical checklist

• Identify the country where the foreign income arose.
• Verify whether India has a DTAA with that country (refer to the Income Tax Department’s DTAA list).
• Gather proof of foreign tax paid (tax return, withholding certificate, or official statement).
• Determine the head of income under which the amount is taxable in India (salary, house property, etc.).
• If a DTAA exists, check the treaty article that covers your income type to see if it offers exemption or credit.
• If no DTAA, compute the Indian tax attributable to the foreign income and claim a credit for the foreign tax paid under Section 91, limited to that Indian tax amount.
• Report the relief in the appropriate schedule of your ITR (usually Schedule SI for DTAA credit or Schedule TR for Section 91 credit).
• Keep all documents for at least six years in case the tax department asks for verification.

Frequently Asked Questions

Q: Do I need to convert foreign tax paid into Indian rupees?

A: Yes. The foreign tax amount should be converted to INR using the telegraphic transfer buying rate on the date the tax was paid or deducted, as prescribed by the CBDT.

Q: Can I claim relief if I am a resident but not ordinarily resident (RNOR)?

A: Relief under Sections 90 and 91 is available to residents, including RNORs, for income that is taxable in India. Non‑residents generally do not need to claim relief for foreign income that is not taxable in India.

Q: What if the foreign country does not issue a tax certificate?

A: You can use other reliable evidence such as foreign salary slips showing tax deductions, bank statements showing tax payments, or a statement from your employer. The tax officer may accept such proof if it clearly shows the tax paid.

Disclaimer: This article is for general educational purposes only and does not constitute personalized tax or legal advice. Tax laws and treaty provisions can change; readers should verify the current position with the Income Tax Department of India (https://www.incometax.gov.in/iec/foportal/) or consult a qualified tax professional for advice tailored to their specific circumstances.