Here are the major highlights of the India-Fiji DTAA:

1. Services Permanent Establishment: The treaty introduces the concept of a permanent establishment, which is deemed to be constituted when an enterprise provides services through employees or engaged personnel for the same or connected project for a period exceeding 182 days in any 12-month period.
2. Business Profits: Business profits will be taxable in the source state if the activities of an enterprise constitute a permanent establishment in the source state.
3. Withholding Tax Rates: The applicable tax rates under the DTAA are as follows:

• • Dividends: 5%
  • Interest: 10%
  • Royalties and Fees for Technical Services: 10%

Dividends, interest, royalty income, and fees for technical or professional services will be subject to taxation in both the country of residence and the country of source.

4. Capital Gains Tax: Capital gains arising from the sale of shares will be taxable in the country of source.
5. Profits from Operation of Aircraft: Profits derived by an enterprise from the operation of aircraft in international traffic will be taxable in the country where the place of effective management of the enterprise is situated.
6. Double Taxation Relief: Both countries will apply the credit method for the elimination of double taxation. This means that income is taxed in only one country, and if it is taxed in both countries, the tax paid in one country is allowed as a deduction from the tax payable in the other country, as per the agreement.
7. Limitation on Benefits: The treaty includes a limitation on benefits clause, ensuring that the treaty’s benefits are not available to residents of either state if their affairs are structured primarily to obtain treaty benefits.
8. Anti-Abuse Provision: The DTAA incorporates anti-abuse provisions to safeguard against misuse. These provisions ensure that the treaty’s benefits are accessible only to bona fide residents of both countries, preventing any abuse of the tax treaty.