Mishra, a resident Indian earned some income outside India from country P. India has not entered into any DTAA with the country P. Examine whether Mishra will be allowed with any credit for the tax paid by him on the for

Foreign Tax Credit without DTAA (Section 91 of Income-tax Act, 1961): As per the provisions of Section 91 of the Income-tax Act, 1961, if any person who is a resident in India in any previous year proves that, in respect of his income which accrued or arose during that previous year outside India (and which is not deemed to accrue or arise in India), he has paid income-tax in any country with which there is no agreement under Section 90 for the relief or avoidance of double taxation, he shall be entitled to a deduction from the Indian income-tax payable by him. The deduction allowed will be a sum calculated on such doubly taxed income at the Indian rate of tax or the rate of tax of the said country, whichever is lower. If both the rates are equal, the Indian rate of tax will be applied. In this case, Mr. Mishra is a resident in India and is therefore liable to pay tax on his global income, which includes income accrued or arisen in and outside India. Since India does not have a Double Taxation Avoidance Agreement (DTAA) with Country P, Mr. Mishra shall not be entitled to tax credit under Section 90. However, he will be allowed a deduction of tax paid in Country P from the income tax payable to the Indian Government, subject to the lower of the Indian tax rate or Country P's tax rate on the doubly taxed income.