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Double Taxation Avoidance Agreement
Recently, the Union Cabinet has approved the signing of the Protocol amending the Convention between India and Brazil for the Double Taxation Avoidance Convention (DTAC).Consider the following given statements about the Double Taxation Avoidance Agreement:
- DTAA is a tax treaty signed between two or more countries to help taxpayers avoid paying double taxes on the same income.
- It can be either be comprehensive, encapsulating all income sources, or limited to certain areas, which means taxing of income from shipping, inheritance, air transport, etc.
Choose the correct answer from the codes given below:
A |
Only 1
|
|
B |
Only 2
|
|
C |
Both 1 and 2
|
|
D |
Neither 1 nor 2
|
Your Ans is
Right ans is C
Your Answer Is Correct
Your Answer Is Wrong
Explanation :
- The DTAA is a tax treaty signed between two or more multiple countries so that taxpayers can avoid paying double taxes on their income earned from the source country as well as the residence country.
- A DTAA becomes applicable in cases where an individual is a resident of one nation, but earns income in another.
- DTAAs can be either be comprehensive, encapsulating all income sources, or limited to certain areas, which means taxing of income from shipping, inheritance, air transport, etc.
Significance
- It helps to make country attractive investment destination by providing relief on dual taxation.
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