Section 160 of the Income-tax Act, 2025 — Unilateral Relief from Double Taxation Where No DTAA Exists (Old Section 91)

In plain language

What Section 160 is about

Section 160 of the Income-tax Act, 2025 gives an Indian resident unilateral relief from double taxation when the same income is taxed both in India and in a foreign country with which India has NO tax treaty (no agreement under Section 159, the section that replaces old Sections 90 and 90A). It is the direct successor to Section 91 of the Income-tax Act, 1961, carried into the new Act effective 1 April 2026 with the language modernised but the core mechanism unchanged.

The idea is simple and fair. If you are a resident and you earn income abroad, India taxes your global income. That same income may already have been taxed in the source country. Where a DTAA exists, Section 159 gives treaty relief. Where no DTAA exists, India still grants relief on its own — "unilaterally" — through Section 160 so that you are not taxed twice on the same rupee of income.

Who it applies to

• Residents of India (individuals, HUFs, firms, companies) who have paid tax in a country with which India has no agreement under Section 159 [sub-section (1)].
• Non-residents who are assessed in India on their share of income of a registered/partnership firm resident in India, where that income arose in and was taxed by a non-agreement country [sub-section (2)]. This is a narrow, specific carve-out.
• You must be able to prove that the foreign income-tax was actually paid.

How the relief is calculated

Relief is a deduction (tax credit) from your Indian income-tax on the doubly taxed income, computed at:

• the Indian rate of tax, OR
• the rate of tax of the foreign country,

— whichever is lower. If the two rates are equal, relief is at the Indian rate. In short: Relief = Doubly taxed income × Lower of (Indian rate, Foreign rate).

Key definitions in the section

• "Indian rate of tax" = Indian income-tax (after deducting reliefs available, but before the relief under this Part) divided by total income.
• "Rate of tax of the said country" = foreign income-tax and super-tax actually paid (after all foreign reliefs but before its own double-tax relief) divided by the income assessed there.
• "Income-tax" for this purpose includes any excess profits tax or business profits tax charged by that country's government or a local authority.

Important conditions and limits

• The income must be doubly taxed — actually included in your total income in India AND already taxed abroad.
• Relief cannot exceed the Indian tax on that income. It is a credit, never a refund of foreign tax.
• It generally covers foreign-source income, not income deemed to accrue or arise in India.
• You must file Form 67 under Rule 128 (the Foreign Tax Credit rules) on or before the due date of your return under Section 139(1) — this settled procedure continues to apply.

How it interacts with other sections

• Section 159 (old 90/90A) handles relief where a DTAA does exist. Section 160 is the fallback when it does not.
• Residential status under the new residence provisions decides whether global income is taxable at all — only residents get 160 relief.
• A notable change from old law: the special provision for Pakistan agricultural income (old Section 91(2)) has been omitted, moving towards uniform treatment of all non-treaty countries.

Practical implications

For NRIs returning to India, freelancers billing clients in non-treaty jurisdictions, and businesses with operations in countries India has not signed a treaty with, Section 160 is the safety net that prevents genuine double taxation. Keep foreign tax payment challans, foreign returns and certificates ready, and file Form 67 in time — missing the form is the single most common reason relief is denied.