DTAA prevents double taxation of the same income in two countries. Here’s how it works:
- You can claim tax credit for taxes paid in the foreign country
- Tax relief is available under Section 90/91 of the Income Tax Act
- Must obtain Tax Residency Certificate (TRC) from foreign tax authority
Example: If you earned $100,000 in the US and paid 25% tax there, you can claim credit for this tax paid when filing Indian returns. To claim DTAA benefits, you must maintain proper documentation including Form 67 and foreign tax payment proofs.