India and France revise their double taxation agreement

During the visit of the French President to India, the governments of India and France signed an update to their 1992 tax agreement, to prevent people and companies from being taxed twice in both countries.

According to the new rules when someone sells shares of a company, the country where that company is based has the right to tax the profit.

The way dividends (profits from shares) are taxed has changed: if someone owns at least 10 per cent of a company, they pay 5 per cent tax, and everyone else pays 15 per cent.

While an old rule called the “Most-Favoured-Nation” clause has been removed, the update clarifies how payments for technical services are taxed and expands the rules for what counts as a “permanent establishment” -- meaning more business activities in a country can be taxed there.