Amendment to India-France Double Taxation Avoidance Convention

Government of India and France sign the Amending Protocol to amend the India-France Double Taxation Avoidance Convention

CBT has stated that during the recent visit of the President of France to India, the Government of the Republic of India and the Government of the French Republic have signed a Protocol amending the India- France Double Taxation Avoidance Convention, signed on 29 September 1992 (‘India-France DTAC’).

According to the Press Release issued in this regard, the Amending Protocol provides full taxing rights in respect of capital gains arising from sale of shares of a company, to the jurisdiction where such company is a resident. The Amending Protocol also deletes the so-called Most-Favoured-Nation (MFN) Clause from the Protocol to the DTAC, thereby bringing to rest all issues relating to it. The Amending Protocol also modifies the taxation of income from dividends by replacing a single rate of 10% of tax with a split rate of 5% for those holding at least ten percent of capital and 15% of tax for all other cases. It also modifies the definition of ‘Fees for Technical Services’ by aligning it with the definition in India US Double Taxation Avoidance Agreement, and expands the scope of ‘Permanent Establishment’ by adding Service PE.

It is further stated that the Amending Protocol also updates the provisions on Exchange of Information and introduces a new Article on Assistance in Collection of Taxes, as per international standards. This would enable and facilitate seamless exchange of information and strengthen mutual tax cooperation between India and France. The Amending Protocol also incorporates within the DTAC, the applicable provisions of BEPS Multilateral Instrument (MLI), that had already become applicable consequent to the signing and ratification of MLI by India and France.

However, the changes shall enter into effect subsequent to the completion of internal procedures under the laws of both the countries and subject to the terms agreed between the two countries. 

• Exemption u/s 54 allowed despite failure to deposit in Capital Gains Accounts Scheme
• No addition to be made in hands of assessee solely on basis of uncorroborated loose-sheet
• Claim of Leave Encashment exemption u/s 10(10AA)(ii) dismissed beyond Rs. 3 lakhs
• AO took a reasonable stand that 25 kg written in WhatsApp chat was 25 lakh – ITAT
• Shareholders can’t be taxed for income from properties owned by the company – HC