India-France DTAC Amending Protocol: Key Tax Changes
Why in the news
A protocol updating the 1992 India-France tax treaty was signed during the French President’s visit, to modernise rules, cut disputes and lift investment.
Key changes
| Item | Change |
|---|---|
| Capital gains on shares | Taxed where the company is resident; India fully taxes sales of Indian company shares |
| MFN clause | Deleted, bringing legal certainty |
| Dividends | Flat 10% replaced by 5% (holding of 10% or more) and 15% (others) |
| Technical service fees | Definition aligned with India-US treaty |
| Service PE | New; large service activity in India can be taxed |
| Cooperation | Better information exchange; assistance in tax collection |
| BEPS MLI | Provisions included to curb avoidance and profit shifting |
About DTAC
- A tax treaty that prevents double taxation, divides taxing rights and promotes cross-border investment.
Exam angle
- Original treaty: 1992; deleted: MFN; new: Service PE; rates 5% and 15%.