My client, a UK Company with UK Tax Residence Certificate, My client receives income from India. However a 10.4% tax has been deducted and remaining funds paid in to UK Bank account of company. I understand I will claim this tax paid under BOx 450 "Double taxation relief". Please correct me if I am wrong.
Now further in this case, tax paid in India on gross income were around £1900.00. However after deducting Director Salaries and other expenses tax payable as per UK Taxation is £1500. So I understand my relief for DTR will be restricted to £1500.00.
But can some please advise how will account for additional £400.00 paid in indian tax ?
Can I transfer £400.00 it to profit and loss account as foreign tax paid and then disallow it when it comes to calculation of UK Tax ? Otherwise the amount of £400.0 will stay on balance sheet as tax paid which will not receive and credit in future!
Please do correct me if any of my accounting entries are incorrect