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India-Bangladesh Double Taxation Avoidance Agreement (DTAA)
The Double Taxation Avoidance Agreement (DTAA) between the government of the Republic of India and the government of the People’s Republic of Bangladesh was established to prevent double taxation and combat fiscal evasion concerning taxes on income. This significant agreement was signed and officially came into effect on May 27, 1992, following the exchange of instruments of ratification.
This DTAA applies to individuals who are residents of one or both of the states and explicitly addresses the following taxes:
a. In Bangladesh:
- Income tax.
b. In India:
- Income tax, including any surcharge.
Here are the key highlights of the India-Bangladesh DTAA:
- Income derived from immovable property is subject to taxation only in the state in which the property is situated.
- Profits generated from the operation of aircraft in international traffic are subject to taxation only in the state where they are earned.
- The withholding tax rate on dividends is 10% if the beneficial owner is a company holding at least 10% of the capital of the paying company, and 15% otherwise.
- The withholding tax rate on interest is 10% of the gross amount of interest payable in accordance with the provisions of this DTAA.
- Royalties arising in one state and paid to a resident of the other state may be taxed in the other state, with a withholding tax rate of 10%.
- The contracting states employ the credit system method to eliminate double taxation.
The India-Bangladesh DTAA has not only fostered improved relations between the contracting states but has also facilitated mutual cooperation and growth. This agreement has sparked enthusiasm among investors in both countries due to its provisions for the prevention of double taxation and fiscal evasion.
Additionally, an amending protocol was later signed to incorporate provisions for the exchange of data for taxation purposes and support for its assessment. This update aligns the DTAA with international standards and practices, further enhancing its effectiveness and relevance in today’s global economic landscape.
Chandrawat & Partners specializes in international tax agreements and can provide expert legal counsel on the India-Bangladesh Double Taxation Avoidance Agreement and related matters. If you require detailed legal guidance or assistance on this matter, please do not hesitate to contact us. We are dedicated to offering professional legal services and helping you navigate the complexities of international tax laws.
For further information or to seek our expertise on this agreement or other legal matters, please reach out to us. We are here to serve your legal needs with the utmost professionalism and diligence.
To know more about DTAA relations between India and Banglesh, please download our Guide.