Research and Articles
![](/Content/images/arrow-3-right-red.png)
Hotline
![](/Content/images/arrow-3-right-red.png)
- Capital Markets Hotline
- Companies Act Series
- Climate Change Related Legal Issues
- Competition Law Hotline
- Corpsec Hotline
- Court Corner
- Cross Examination
- Deal Destination
- Debt Funding in India Series
- Deal Talk
- Dispute Resolution Hotline
- Education Sector Hotline
- FEMA Hotline
- Financial Service Update
- Food & Beverages Hotline
- Funds Hotline
- Gaming Law Wrap
- GIFT City Express
- Green Hotline
- HR Law Hotline
- iCe Hotline
- Insolvency and Bankruptcy Hotline
- International Trade Hotlines
- Investment Funds: Monthly Digest
- IP Hotline
- IP Lab
- Legal Update
- Lit Corner
- M&A Disputes Series
- M&A Hotline
- M&A Interactive
- Media Hotline
- New Publication
- Other Hotline
- Pharma & Healthcare Update
- Press Release
- Private Client Wrap
- Private Debt Hotline
- Private Equity Corner
- Real Estate Update
- Realty Check
- Regulatory Digest
- Regulatory Hotline
- Renewable Corner
- SEZ Hotline
- Social Sector Hotline
- Tax Hotline
- Technology & Tax Series
- Technology Law Analysis
- Telecom Hotline
- The Startups Series
- White Collar and Investigations Practice
- Yes, Governance Matters.
- Japan Desk ジャパンデスク
Tax Hotline
May 17, 2002India enters into a tax treaty with Ireland
India has recently entered into a Double Taxation Avoidance Agreement (“the treaty”) with Ireland. This treaty has come into force, in case of India, from April 1, 2002 and in case of Ireland, for the purposes of income tax and capital gains, from April 6, 2002 and for the purpose of corporation tax from January 1, 2002.
As per the provisions of the treaty, incomes in the nature of dividend, interest, royalty and fees for technical services (“FTS”) would be taxable at the rate of 10% in the country of source.
Article 11 of the treaty, which provides for a 10% withholding tax rate on interest payments exempts interest paid to certain financial institutions in India.
Ireland has agreed to allow an underlying tax credit for the corporate taxes payable on profits of the Indian companies out of which dividends are paid to Irish residents. However, an equivalent credit for underlying taxes shall not be allowed in India for Irish taxes paid.
Though the treaty contains a standard non-discrimination Article, however, as agreed under the protocol, India reserves the right to charge a permanent establishment of an Irish company in India, at a rate of tax (currently 42% for foreign companies) which is higher than that imposed on the profits of a similar Indian company (currently 36.75%). Interestingly, the Indian Income Tax Act was amended last year, with retrospective effect from April 1, 1962 to provide that subjecting foreign companies to a higher rate of tax than the Indian companies will not constitute discriminatory.
Source: Volume 254 of Income Tax Reports, Pg. 245 [254 ITR 245 [2002)]