Text of Indian Tax Agreements

Role of tax agreements

2.1 The international economic law could be studied with reference to the development of law relating to economic in its absolute terms or determination for the rules and regulations concerning with the economic and commercial relations between the subjects of all the countries world over. However, the second aspect is more relevant. With the increasing industrialisation of trade, commerce and the globalisation of finance, production and technology, countries in the world cannot remain independent from each other. The interdependence of the countries is so great that any economic imbalance in one country affects the economy in the other or influences its course. National policy have, therefore, become international-oriented. The national policy relating to fiscal matters nowadays do not ignore its international orientation. It is reflected in the tax legislation practice. It is well-known fact that any change in tax laws of country has the effect of influencing its trade and economic relations with other countries so that country exercises great care and caution in the formulation of its tax laws so as not to endanger its international economic interests. What is, therefore, relevant in the present day context is the interest of the nations international economy. To avoid head on collision between these interests, some rules and regulations are required to be framed for the guidance of those nations.

India, till about the mid-seventies, overwhelmingly depended on domestic, rather than the world markets with an emphasis on self-reliance. Its trade, therefore, had a stunted growth and grew less rapidly than the world trade. It was mainly in the early eighties that the Indian economy started opening up and the external sector started playing a significant role in the modernisation of industry and technological advancements. Till then the rate of technological progress had been abysmally low. For its economic growth, the purchase of technology is not the only option, India has to follow the route of foreign investment, joint ventures, etc. In its anxiety to encourage foreign investment, it is prepared to trade its revenue for economic growth and thus forego taxes which could have been otherwise due, through the device of double taxation agreements.

General objectives of tax agreements

2.2 International tax agreements have a number of general objectives, viz., elimination of double taxation, the allocation of taxes between treaty partners, the encouragement of trade and investment between the Contracting States, the prevention of international tax avoidance and evasion. Thus, the tax agreements are looked upon for relief from double taxation where the co-existence of national tax systems would render the taxation of income, doubly. Mutuality of relief, equal and equitable treatment of taxpayers, accommodation of differing tax systems, resolving of conflicts and exchange of information are the main objectives of the Indian tax agreements. With industrialised and developed countries, they cover all sources of income arising out of inflow of technology industrial equipment and direct investment in India, besides programmes for exchange of teachers, research workers, students and artists as also provisions relating to avoidance of taxes. With the communist bloc countries which do not have a tax system similar to that of European and capitalist countries the agreements cover only international maritime and air traffic; and with the developing countries the agreements are structured to encourage the flow of technology, equipment and professional services which India is capable to transfer and offer. Double tax agreements help to create an environment of fiscal certainty which encourages trade and investments between countries.

Text of Indian double taxation agreements has been given in the pages linked below:

  

 


Comprehensive Agreements - With Respect to Taxes on Income

 

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DTAA Limited Agreements - With respect to income of airlines/merchant shipping

 

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DTAA - Other Agreements / Double Taxation Relief Rules

 

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