The recent visit of the French President to India resulted in the signing of a protocol amending the India-France Double Taxation Avoidance Convention. The Indian government and the French Republican government agreed to revise the agreement, which was signed earlier on 29 September 1992 ( India-France DTAC).
Ravi Agarwal, Chairperson of the Central Board of Direct Taxes, Government of India, signed an amending protocol with Thierry Mathou, Ambassador of France to India, on behalf of their respective government.Â
The Ministry of Finance said in a statement that “The Amending Protocol provides full taxing rights in respect of capital gains arising from the sale of shares of a company, to the jurisdiction where such company is a resident.”The protocol removes the so-called Most Favoured Nation (MFN) clause from the Protocol to the DTAC, thereby resolving all related issues. Additionally, it revised dividend taxation by replacing a single 10% rate with a split rate of 5% for those owning at least 10% of the capital and 15% for all other cases.
The Amending protocol also modifies the definition of fees for technical services by aligning it with the definition in the India-US Double Taxation Avoidance deal, and by adding Service PE, they are expanding the scope of ‘Permanent Establishment’.
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All changes introduced in the Amending Protocol will come into effect upon completion of the internal procedures under the laws of both countries, subject to the terms agreed between India and France.
