India and France have signed a Double Tax Avoidance Agreement (DTAA) to avoid double taxation for taxpayer earnings in both countries. This agreement applies to taxpayers who are residents of one or both countries. Under DTAA, taxes paid in one country can be claimed as a credit in another country, ensuring that tax is effectively paid in only one country. DTAA helps to avoid such unfair tax systems and maintain strong trade relations between countries.
This article will examine the DTAA between India and France, helping us understand the details of ways to avoid double taxes.
The agreement between the Government of India and France regarding the avoidance of double taxation came into action on 1 August 1994. The double tax avoidance agreement between India and France has 31 Articles.
India France DTAA will work in a manner where a resident of India who earns in France will have to pay taxes in France, while India will give a deduction on the amount of income tax paid. i.e., in case a resident of India earns income which is taxable in France, the Income Tax department of India will give a deduction on tax paid in France.
These articles discuss definitions of taxes, contracting states, taxation of interest, dividends, business profits, etc. Apart from that, these articles also discuss air transport, capital gains, non-government pension and annuities and much more. Therefore, this agreement offers a clear understanding of taxation of different incomes for residents of contracting states (India and France).
DTAA between India and France equally benefits residents of both countries India and France in terms of investment and tax benefits. Here are some of the benefits that residents of both contracting states will get:
According to Article 2 of DTAA between India and France, the taxes on which this convention is applicable are as follows:
In France (French tax)
In India (Indian tax)
Apart from all the taxes mentioned above, the convention will also be applicable to any identical or similar tax that is imposed by any of the contracting states after date of signature of the agreement. Authorities of contracting states need to notify each other about any changes or addition made to their taxation laws.
Tax is deductible at source when a non-resident receives payment. The percentage of tax deduction is, however, prescribed in the relevant DTAA. As per India France DTAA, withholding tax rate applicable is 10%. Whether you earn royalty, dividends, interest or fees for technical services, the rate of TDS shall not exceed 10%. This rate is, however, different for DTAA between India and other countries.
Indian France Double Tax Avoidance Agreement assures the taxpayers that they won’t be taxed more than 10% of the gross income from dividends, royalties or fees for technical services.
Article 14 of Double Tax Avoidance Agreement between India and France deals with taxation rules applicable to capital gains. These are as follows:
Indians residing in France can avail tax benefits mentioned under DTAA between India and France by submitting some documents every financial year within the due date. These include a Tax Residency certificate, PAN number and Form 10F. Process to apply for obtaining benefit of DTAA is also extremely simple, which allows hassle-free taxation.
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