Foreign cos may escape double taxation

Foreign companies may soon be spared of getting taxed twice on their operations in India. The revenue department is planning negotiations with its counterparts in major trading partner countries so that firms could be given credit in their home country for tax paid here. Currently, Indian tax authorities at times ask these companies to pay tax on an income higher than what they have shown initially. This is on the basis of the extra incomes which the authorities think have been made by these MNCs from their Indian operations. The extra income is also called attributable income. Since India's Double Taxation Avoidance Agreements (DTAAs) with other countries don't offset the tax on attributable income paid by the MNCs in India, these companies have no option but to bear the burden.

Source : Financial Express