Double Taxation Avoidance Agreement (DTAA) between India and Australia

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Double Taxation Avoidance Agreement (DTAA) between India and Australia

The Double Taxation Avoidance Agreement (DTAA) between India and Australia aims to avoid taxpayers from being taxed twice on the same income in both countries, fostering economic cooperation and providing relief from double taxation. Here are the key features of the DTAA between India and Australia:

Key Features of the DTAA

1.Income from Immovable Property:
  • Taxed in the country where the property is located, ensuring clarity and fairness in taxation.

    2.Business Profits:

  • Taxable in the country where the enterprise conducts its activities, provided there is a permanent establishment (PE) in that country.
  • If no PE exists, the income is taxed in the country of residence.
  • The PE includes places such as offices, factories, and construction sites lasting more than six months.

    3.Capital Gains:

  • Generally taxable in the country where the seller is a resident.
  • Gains from the sale of immovable property and certain movable property can be taxed in the country where the property is located.

    4.Dividends, Interest, and Royalties:

  • Dividends: Taxable in both countries, with the treaty limiting the tax rate.
  • Interest: Arising in one country and paid to a resident of the other country is taxed in both countries, with limitations on the tax rate.
  • Royalties and Fees for Technical Services: Taxable in both countries, with a limited tax rate as per the treaty.

    5.Independent and Dependent Personal Services:

  • Independent Personal Services: Income from professional services or other independent activities is taxable only in the individual's country of residence unless a fixed base is available in the other country.
  • Dependent Personal Services: Salaries, wages, and other similar remuneration are taxable only in the individual's country of residence unless the employment is exercised in the other country.

    6.Elimination of Double Taxation:

  • Both countries provide relief through tax credits, ensuring that taxpayers do not face double taxation on the same income.

    7.Exchange of Information:

  • Provisions for the exchange of information between the tax authorities of both countries help prevent tax evasion and ensure compliance with domestic tax laws.

    For Taxpayers

    The DTAA between India and Australia offers several benefits to taxpayers, including reduced withholding tax rates, tax credits, and clear guidelines on tax treatment. This reduces the risk of double taxation and disputes, promoting cross-border trade and investment. The agreement benefits businesses and the economies of both countries by creating a favorable environment for economic growth and development.

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