India and France Amend Double Taxation Avoidance Convention

26 Feb 2026 CW Team

The Protocol grants taxing rights for capital gains from the sale of company shares to the jurisdiction where the company is resident and removes the Most Favoured Nation (MFN) clause from the DTAC. It replaces a single dividend withholding rate of 10 per cent with a split rate of five per cent for shareholders holding at least 10 per cent of capital and 15 per cent for other cases. The amendment clarifies Fees for Technical Services (FTS) by aligning the definition with the India United States Double Taxation Avoidance Agreement and expands the scope of Permanent Establishment (PE) to include Service PE.

The Protocol updates provisions on exchange of information and introduces an article on assistance in the collection of taxes in line with international standards, which should facilitate mutual tax cooperation. It incorporates the applicable provisions of the Base Erosion and Profit Shifting (BEPS) Multilateral Instrument (MLI) that became applicable after both countries signed and ratified the MLI. The changes aim to provide greater clarity and predictability for taxpayers on cross border transactions.

The changes will enter into effect after completion of internal procedures under the laws of both countries and subject to the terms agreed between the two Governments. Officials expect the updated DTAC to provide greater tax certainty, boost the flow of investment, technology and personnel and support bilateral economic ties. The Amending Protocol updates the treaty to present international standards while seeking to balance the interests of both India and France.

During the visit of the President of France to India, the Governments of the Republic of India and the French Republic signed a Protocol amending the India France Double Taxation Avoidance Convention (DTAC) which was originally signed on 29 September 1992. The Protocol was signed by the Chairperson of the Central Board of Direct Taxes (CBDT) for India and by the Ambassador of France to India for France. The update is intended to modernise tax rules and strengthen bilateral economic cooperation. The Protocol grants taxing rights for capital gains from the sale of company shares to the jurisdiction where the company is resident and removes the Most Favoured Nation (MFN) clause from the DTAC. It replaces a single dividend withholding rate of 10 per cent with a split rate of five per cent for shareholders holding at least 10 per cent of capital and 15 per cent for other cases. The amendment clarifies Fees for Technical Services (FTS) by aligning the definition with the India United States Double Taxation Avoidance Agreement and expands the scope of Permanent Establishment (PE) to include Service PE. The Protocol updates provisions on exchange of information and introduces an article on assistance in the collection of taxes in line with international standards, which should facilitate mutual tax cooperation. It incorporates the applicable provisions of the Base Erosion and Profit Shifting (BEPS) Multilateral Instrument (MLI) that became applicable after both countries signed and ratified the MLI. The changes aim to provide greater clarity and predictability for taxpayers on cross border transactions. The changes will enter into effect after completion of internal procedures under the laws of both countries and subject to the terms agreed between the two Governments. Officials expect the updated DTAC to provide greater tax certainty, boost the flow of investment, technology and personnel and support bilateral economic ties. The Amending Protocol updates the treaty to present international standards while seeking to balance the interests of both India and France.

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