Cabinet DecisionsLegislation Updates

The Union Cabinet approved the signing of the Double Taxation Avoidance Agreement (DTAA) and Protocol between the Republic of India and the Republic of Chile for the elimination of double taxation and the prevention of fiscal evasion and avoidance with respect to taxes on income.

Major impact:

The DTAA will facilitate elimination of double taxation. Clear allocation of taxing rights between Contracting States through the Agreement will provide tax certainty to investors & businesses of both countries while augmenting the flow of investment through fixing of tax rates in source State on interest, royalties and fees for technical services. The Agreement and Protocol implements minimum standards and other recommendations of G-20 OECD Base Erosion Profit Shifting (BEPS) Project. Inclusion of Preamble Text, a Principal Purpose Test, a general anti-abuse provision in the Agreement along with a Simplified Limitation of Benefits Clause as per BEPS Project will result in curbing of tax planning strategies which exploit gaps and mismatches in tax rules.

Implementation Strategy and Targets:

After Cabinet approval, necessary formalities for bringing the Agreement and Protocol into force will be completed. Implementation would be watched and reported by the Ministry.


[Press Release dt. 27-11-2019]

[Source: PIB]

NewsTreaties/Conventions/International Agreements

A Protocol was signed to amend the existing Double Taxation Avoidance Agreement (DTAA) between India and Kuwait for the avoidance of double taxation and for the prevention of fiscal evasion with respect to taxes on income. The said Protocol was entered into on 26-03-2018 and notified in the Official Gazette on 04-05-2018.

The Protocol updates the provisions in the DTAA for exchange of information as per international standards. Furthermore, it enables sharing of information received from Kuwait for tax purposes with other law enforcement agencies with authorisation of the competent authority of Kuwait and vice versa.

[Press Release no. 1531499]

Ministry of Finance

NewsTreaties/Conventions/International Agreements

The Union Cabinet has approved the signing and ratification of protocol amending the double taxation avoidance agreement with China. The Cabinet gave its nod to changes including updating the existing provisions for exchange of information to the latest international standards. Besides minimum standards, the Protocol will also bring in changes as per Base Erosion & Profit Shifting (BEPS) Action reports as agreed upon by two sides. Further the protocol will incorporate changes required to implement treaty related minimum standards under the Action reports of BEPS Project, in which India had participated on an equal footing.

[Source: The Economic Times]