Image Source : Reuters
India and France have agreed to revise their 1992 Double Taxation Avoidance Agreement (DTAA), widening New Delhi’s taxation rights over share sales by French investors. The new pact will remove France’s “Most Favoured Nation” status, while allowing French firms to benefit from lower dividend taxes in India, official documents show.
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In a major update to their 1992 tax framework, India and France have finalized a new bilateral tax treaty that recalibrates taxing rights and corporate income provisions. The revised agreement enhances India’s authority to tax capital gains from share sales by French investors, aligning with global moves to curb treaty-based tax arbitrage.
Key Highlights
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Expanded Indian Tax Rights: India will now have greater powers to tax share transfers involving French investors.
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End of MFN Clause: The new treaty drops France’s “Most Favoured Nation” status, simplifying bilateral tax parity.
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Dividend Tax Relief: French companies operating in India stand to benefit from lower dividend taxation rates.
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Bilateral Modernization: Marks the first major revision to the India–France tax pact since 1992, strengthening cross-border tax cooperation.
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Policy Context: Aligns with India’s efforts to renegotiate older treaties and prevent base erosion and profit shifting (BEPS).
Source: Official treaty documents reviewed by Reuters and government disclosures from India’s Finance Ministry.
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