Feb. 17 – India has one of the largest networks of tax treaties for avoidance of double taxation and prevention of tax avoidance. The country has Double Tax Avoidance Agreements with 65 countries under Section 90 of the Income Tax Act.

The need for double taxation agreements arose because the income generated in one country which flows to another country, in the form of business profits, dividends, interest, royalties and fees for technical services, is taxed by both countries according to their respective laws resulting in the double taxation of international income. Therefore in order to allow ease of cross-border investments governments worldwide have decided to cooperate and coordinate between two taxation regimes.

The object of such tax treaties is to evolve an equitable basis for the allocation of the right to tax different types of income between the 'source' and 'residence' states ensuring in that process tax neutrality, in transactions between residents and non-residents. These Tax Treaties serve the purpose of providing exemption and protection to tax-payers against double taxation and thus preventing any discouragement which the double taxation may otherwise promote in the free flow of international trade, international investment and international transfer of technology.

Set out below is a list of a few countries with which India has double taxation avoidance agreements with:

The information above was provided by our legal partners in Mumbai Solomon & Company. In order to know more about DTAA please do contact them at aaron.solomon@slmnco.com