Core concepts
- 01Double Taxation Avoidance Agreement: bilateral treaty under Sec 90/90A.
- 02OECD Model & UN Model — India follows UN model (source country favoured).
- 03Treaty override: Sec 90(2) — beneficial to assessee applies.
- 04Permanent Establishment (PE): fixed place, service, agency, construction (varies by treaty).
- 05Taxation of business income only if PE; dividend / interest / royalty / FTS at treaty rate.
Flowchart
DTAA Article Map | Art 4 Residence | Art 5 PE | Art 7 Business Profits | Art 10 Dividend | Art 11 Interest | Art 12 Royalty/FTS | Art 14 Independent Personal Services | Art 15 Employment | Art 23 Methods to Avoid DT
Exam-critical pointers
- ⭐Multilateral Instrument (MLI) modifies existing treaties — Principal Purpose Test (PPT) introduced.
- ⭐GAAR (Sec 95-102) — invokes anti-avoidance for arrangements lacking commercial substance.
- ⭐Equalization Levy: 2% on e-commerce operators (non-resident) for specified supplies.
- ⭐BEPS Action Plans — significant 2024 updates (Pillar 1 & Pillar 2 global minimum tax 15%).
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