Income-tax Act, 2025 | Section 160

Section 160 - Countries with which no agreement exists

Where India has no double-tax agreement with the foreign country, a resident may claim unilateral relief on foreign income taxed in both countries. The relief is the doubly taxed income multiplied by the lower of the Indian rate and the foreign-country rate. The section also contains a special rule for a non-resident partner's share from a resident registered firm.

Reviewed by CA Nikhil Gupta · Updated 9 October 2026

Section 160: operativeEffective 1 April 2026Tax Year 2026-27 onwardLegally reviewed 8 October 2026

Current law and effective date

Section 160 is controlled against the consolidated Income-tax Act, 2025 as amended by the Finance Act, 2026. The Act and Income-tax Rules, 2026 operate from 1 April 2026; earlier years and saved proceedings require the repeal-and-savings framework rather than automatic migration.

Primary statute: Income Tax Department consolidated Act | Rules: Notified Income-tax Rules, 2026

2-minute decode

Who should use this section

Indian residents with foreign income taxed in a country with which India has no applicable agreement, plus the special firm-partner situation in the section.

Old-law bridge

Section 91

The old-law bridge is navigational, not automatic precedent transfer. Match the 1961 Act wording, saved proceedings, current 2025 Act text and effective date before importing an older interpretation.

Finance Act 2026 / current-law note

No section-specific Finance Act, 2026 textual substitution is separately flagged for section 160; the consolidated post-Finance-Act-2026 text remains the controlling version and must be used instead of pre-1 April 2026 extracts.

Professional alert

Only income that accrued or arose outside India and is not deemed to accrue or arise in India enters the main formula. Compute the statutory Indian and foreign rates after the specified relief adjustments, not merely headline slab rates.

Connected Income-tax Rules, 2026 and Forms

Rule	Current control	Form
Rule 76	Foreign tax credit / unilateral-relief documentation	44, 45

Worked application

Doubly taxed foreign income is ₹10 lakh. Indian rate is 25% and the foreign-country rate is 18%. Section 160 relief is ₹1.80 lakh, subject to proof of payment and Rule 76 documentation.

Evidence / compliance checklist

Preserve the primary agreement, certificate, account statement or transaction record that establishes the facts relevant to section 160 (Countries with which no agreement exists).
Reconcile the section 160 amount to books, return schedules and third-party evidence so the computation can be reproduced without relying on a narrative assertion.
Keep the current-law source and any prescribed Rule/Form evidence with the tax-year file for section 160; do not rely on a legacy 1961 Act form merely because the section has an old-law bridge.
Where section 160 contains a threshold, election or time limit, retain dated evidence proving that the condition was satisfied before the return or proceeding was finalised.

Common mistake

A common section 160 error is to apply the old-law label or headline rate without rebuilding the current statutory conditions. For “Countries with which no agreement exists”, the safer control is to test the exact taxpayer/transaction facts, the operative tax year, every linked Rule/Form and the Finance Act 2026 consolidated wording. Only income that accrued or arose outside India and is not deemed to accrue or arise in India enters the main formula. Compute the statutory Indian and foreign rates after the specified relief adjustments, not merely headline slab rates.

Recommended approach

For section 160, start with the legal trigger in “Countries with which no agreement exists”, document the evidence for that trigger, then run the computation or procedural step against the current text. As a cross-check, verify this provision-specific checkpoint: Unilateral relief applies where India has no agreement with the foreign country and the same foreign income is taxed in both jurisdictions.

Thresholds, periods and timing checkpoints

Unilateral relief applies where India has no agreement with the foreign country and the same foreign income is taxed in both jurisdictions.
Relief uses the lower of the statutory Indian rate and foreign-country rate on doubly taxed income.

Related provisions and interaction map

Section 160 interacts with the other sections 155-160, section 202 where the rebate regime is relevant, Rules 73-76 where treaty/FTC procedure applies, and the return/assessment provisions.

Current statutory text

160. (1) If any person who is resident in India in any tax year proves that, in respect of his income which accrued or arose during that tax year outside India (and which is not deemed to accrue or arise in India), he has paid in any country with which there is no agreement under section 159 for the relief or avoidance of double taxation, income-tax, by deduction or otherwise, under the law in force in that country, he shall be entitled to the deduction from the Indian income-tax payable by him of a sum calculated on such doubly taxed income,— (a) at the Indian rate of tax or the rate of tax of the said country, whichever is the lower; or (b) at the Indian rate of tax if both the rates are equal. (2) If any non-resident person is assessed on his share in the income of a registered firm assessed as resident in India in any tax year and such share includes any income accruing or arising outside India during that tax year (and which is not deemed to accrue or arise in India) in a country with which there is no agreement under section 159 for the relief or avoidance of double taxation and he proves that he has paid income-tax by deduction or otherwise under the law in force in that country in respect of the income so included he shall be entitled to a deduction from the Indian income-tax payable by him of a sum calculated on such doubly taxed income so included,— (a) at the Indian rate of tax or the rate of tax of the said country, whichever is the lower; or (b) at the Indian rate of tax if both the rates are equal. (3) For the purposes of this section,— (a) “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; (b) “Indian income-tax” means income-tax charged as per this Act; (c) “Indian rate of tax” means the rate determined by dividing Indian income-tax after deduction of any relief due under the provisions of this Act but before deduction of any relief due under this Part, by the total income; and (d) “rate of tax of the said country” means income-tax and super-tax actually paid in the said country as per the corresponding laws in force in the said country after deduction of all relief due, but before deduction of any relief due in the said country in respect of double taxation, divided by the whole amount of the income as assessed in the said country.

Primary-source trail

Statute: Income-tax Act, 2025 as amended by Finance Act, 2026

Rules: Income-tax Rules, 2026

Law navigation: Income Tax Department 2025 Act / Rules hub

Quoting note: Use the official consolidated Act for verbatim legislative language.

FAQs

Does an old Income-tax Act, 1961 case automatically decide section 160?

No. The old-law bridge helps research, but transferability depends on materially matching language, transition rules and any Finance Act 2026 change.

Which text should be quoted in advice or litigation?

Quote the consolidated official statute for the relevant tax year. If this page presents a provision summary rather than complete statutory text, use the official consolidated Act for verbatim legislative language.

Previous section Next section