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What is Double Taxation Avoidance Agreement (DTAA)


Date: 30 Jan 2016   Posted By: nitish kumar pandey     Group: Finance and Investments    Category: Tax Planning   

Can anyone tell me about Double Taxation Avoidance Agreement (DTAA) in India? What exactly is Double Taxation> Also, let me know the countries who are in double taxation avoidance agreement with India. I want to know about this in detail with examples.

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Author: Ganesh Babu    12 Feb 2016      Member Level: Gold     Points : 3  (Rs 3)    Voting Score: 0


Double Taxation Avoidance Agreement (DTAA) is a treaty signed between countries to avoid taxation at both the sides for a same good or service.
Let us take an example: You are having a Tea factory and you would like to export it to Singapore as there is a huge demand for it. Now if there is no agreement like DTAA between the country of your residence (that is India) and your exporting country (in this case Singapore), you need to pay export duty (read it as tax) in India and Import duty in Singapore. Now if you notice, you are paying tax in both the ends as a result your profit may come down. The point here is that, we prefer to export only when there is more profit to export than selling in our own market.This is considered as barrier for exports. So to promote exporters and importers of the both the countries, taxation is not done in one side and hence double the side taxation or double taxation in avoided. Though this an attempt to boost trade, it is misused especially with countries considered as tax havens.





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