Double taxation occurs when the same income is subjected to taxation in multiple countries, typically because it is considered to have accrued, arisen, or been received in more than one nation. Double Taxation Avoidance Agreements (DTAA) are international treaties that help resolve this issue by establishing tax rules between the source country and the country of residence. The fundamental principle is to prevent the same income from being taxed twice. The Income Tax Act of 1961 addresses this principle by offering relief from double taxation through Section 90 and Section 91.

Kinds of Relief
1.Bilateral relief – This form of relief occurs when the governments of two countries collaborate through an agreement to offer solutions for double taxation. In India, bilateral relief is administered under Section 90 and 90A of the Income-tax Act, 1961. Such agreements can fall into two categories:
• Exemption Method: When two countries agree that income originating from particular sources, subject to taxation in both nations, should either be taxed in only one country or that each country should tax only a specified portion of the income to prevent double taxation.
• Tax Credit Method: In this type of agreement, complete single taxation is not guaranteed, but some relief is offered. The taxpayer receives a deduction even though their income is subject to taxation in both countries.

2. Unilateral relief refers to relief provided by a taxpayer’s home country without the requirement of an agreement with the other country involved. This type of relief exists because bilateral agreements may not cover all cases. In India, Section 91 of the Income Tax Act, 1961, offers such relief. In other words, when relief under Section 90 is not applicable, relief under Section 91 may be available. Unilateral relief applies only to income that is subject to double taxation and is included in the taxpayer’s total income.