The Ministry of Finance (MoF) on February 23, 2026, notified that India and France sign Amending Protocol to update Double Taxation Avoidance Convention (DTAC).
The Amending Protocol to the Double Taxation Avoidance Convention between India and France revises key tax rules to align with modern international standards. It grants full taxing rights on capital gains from the sale of company shares to the country where the company is resident. It also removes the Most-Favoured-Nation (MFN) clause, resolving long-standing interpretational issues, and revises dividend taxation by introducing a two-tier rate—5% for shareholders holding at least 10% of capital and 15% for others.
The Protocol updates important technical definitions and scope. It aligns the definition of “Fees for Technical Services” with that used in the India–US tax treaty and broadens the concept of Permanent Establishment by including a Service Permanent Establishment. These changes aim to clarify tax treatment for cross-border services and business operations.
It also strengthens administrative cooperation by updating provisions on exchange of information and introducing assistance in the collection of taxes in line with global standards. Additionally, it incorporates relevant provisions of the Base Erosion and Profit Shifting (BEPS) Multilateral Instrument already adopted by both countries, enhancing transparency and anti-avoidance measures.
The revised provisions will take effect after both countries complete their internal legal procedures. Overall, the amendments modernize the bilateral tax framework, provide greater certainty for taxpayers, and are expected to promote investment, technology transfer, and economic cooperation between India and France.
[Release ID: 2231751]
