Section 160
Section 160: relief where no double taxation agreement exists
Section 160 is the backstop to Section 159. Where India has no double taxation agreement with a particular country under Section 159, a resident who has actually paid tax on foreign-sourced income in that country can still claim unilateral relief in India - a deduction from Indian tax calculated at whichever is lower, the Indian rate of tax or the foreign country's rate.
Relief for a resident's own foreign income
If a person resident in India in any tax year proves that, on income which accrued or arose during that year outside India (and which is not deemed to accrue or arise in India), they have paid income-tax - by deduction or otherwise - under the law of a country with which there is no Section 159 agreement for relief or avoidance of double taxation, they are entitled to a deduction from the Indian income-tax payable, calculated on the doubly taxed income at:
- The Indian rate of tax or the rate of tax of that country, whichever is lower; or
- The Indian rate of tax, if both rates are equal.
Relief for a non-resident's share in a resident firm's foreign income
The same relief is available to a non-resident who is assessed on their share of the income of a registered firm assessed as a resident in India, where that share includes income accruing or arising outside India (and not deemed to accrue or arise in India) in a country with no Section 159 agreement, and the non-resident proves that income-tax has been paid on it by deduction or otherwise under that country's law.
Key definitions
| Term | Meaning |
|---|---|
| Income-tax (in relation to any country) | Includes any excess profits tax or business profits tax charged on the profits by the Government of any part of that country, or a local authority in that country |
| Indian income-tax | Income-tax charged as per this Act |
| Indian rate of tax | The rate found by dividing Indian income-tax (after deducting any relief due under this Act but before deducting any relief due under this Part) by the total income |
| Rate of tax of the said country | Income-tax and super-tax actually paid in that country under its laws (after deducting all relief due there, but before deducting any double-taxation relief), divided by the whole amount of income as assessed in that country |
Frequently asked questions
When does Section 160 apply instead of Section 159?
Section 160 applies where India has no double taxation avoidance agreement under Section 159 with the country where the foreign income was taxed.
How is the relief amount worked out?
As a deduction from Indian income-tax payable, calculated on the doubly taxed income at the lower of the Indian rate of tax or the foreign country's rate of tax (or at the Indian rate if both are equal).
Does the relief require the tax to have actually been paid abroad?
Yes - the assessee must prove that income-tax was paid, by deduction or otherwise, under the law in force in that foreign country.
Related sections
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Talk to our team about unilateral double taxation reliefLast updated 9 September 2026