The countdown for the Union Budget 2021 has begun, with the Finance Minister Nirmala Sitharaman scheduled to current her third funds on February 1. Ahead of the funds, analysis and advisory agency Taxmann has stated, in its pre-Budget report, that tax deducted out of the country must be handled as revenue of the assessee.
Section 198 of the Income-tax Act, 1961 gives that the tax deducted at supply is taken into account as gross complete revenue of the assessee. ‘All sums deducted in accordance with the foregoing provisions of this Chapter shall, for the aim of computing the revenue of an assessee, be deemed to be revenue obtained,’ Section 198(1) states.
Any tax deducted or collected below the Income-tax Act is often deemed as revenue of the assessee and added to the gross complete revenue of the assessee, below the provisions of Section 198. However, the computation of revenue is usually disputed if taxes have been withheld exterior India and the corresponding revenue is obtainable for taxation in India as Section 198 doesn’t particularly point out taxes which may be withheld exterior India.
As the taxes paid exterior India are eligible for the international tax credit score below Section 90/90A learn with Rule 128, Taxmann has really useful that the federal government ought to make obligatory amendments to Section 198 in order to deal with revenue earned exterior India at par with revenue earned inside the nation.