DTAA & International Taxation

Core concepts

1. 01Double Taxation Avoidance Agreement: bilateral treaty under Sec 90/90A.
2. 02OECD Model & UN Model — India follows UN model (source country favoured).
3. 03Treaty override: Sec 90(2) — beneficial to assessee applies.
4. 04Permanent Establishment (PE): fixed place, service, agency, construction (varies by treaty).
5. 05Taxation of business income only if PE; dividend / interest / royalty / FTS at treaty rate.

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%).