„The amended agreement provides that the state from which information is requested cannot refuse information on the grounds that it has no national tax interest in that information or that the requested information is held by a bank or financial institution, etc.,“ a statement said. DBAAs can be either complete to cover all sources of income or limited to specific areas such as the taxation of income from shipping, air transport, inheritance, etc. India has DTAAs with more than eighty countries, including global agreements with Australia, Canada, Germany, Mauritius, Singapore, the United Arab Emirates, the United Kingdom and the United States. Wednesday`s amendments include changes in the text of the preamble to the agreement and inclusion in the agreement on the prevention of double taxation of the main criterion, a general provision and the fight against abuse. The aim is to increase the flow of investment, technology and personnel from India to HKSAR and vice versa, prevent double taxation and allow the exchange of information, he said in an official statement. He therefore agreed to maintain these APA and SES, whether or not this clause is included in the agreement. APAs must resolve potential disputes in advance, while APPs define the procedure for resolving a dispute as soon as this has been done. The favourable tax treatment of capital gains under certain DBAAs, such as Mauritius, has encouraged a large number of foreign investments in India. Mauritius accounted for USD 93.65 billion between April 2000 and December 2015, one third of total FDI flows to India.

It has also remained a preferred route for foreign portfolio investors. But the problem is that DBAAs can encourage legitimate investors to channel investments through low-tax systems to avoid taxation. The result is tax lines for the country. The Union cabinet announced on Wednesday for the signing of the double revisions… Under Section 90 of the Income-tax Act 1961, India can enter into an agreement with a foreign country or a specific territory to avoid double taxation of income, to exchange information on the prevention of tax evasion. The Central Office for Direct Taxes has decided to accept „MAP transfer prices and bilateral APP applications, regardless of whether or not Article 9, paragraph 2 (or its equivalent article) exists in the DBAA [double taxation agreements],“ the Finance Ministry said. In a move that could further improve India`s ease of implementing business filings, the Ministry of Income Tax said on Monday that it would allow mutual agreement (POP) and pre-price agreements (APAs) procedures with all countries, and abandoned a position that did not allow such agreements with major trading partners such as France. Germany, Italy, Singapore and South Korea. On November 26, 2018, the Indian government and the People`s Republic of China signed a protocol amending the Double Taxation Prevention Convention (DBA) to avoid double taxation and prevent tax evasion on income tax. The DBAA aims to make a country an attractive investment objective by facilitating double taxation. This is done by exempting income collected abroad in the country of reside or by granting credits as long as taxes have already been paid abroad.

In some cases, DBAs also provide for reduced rates. If the Indian tax administration did not enter into bilateral pre-price agreements or mutual agreement procedures with these countries, if agreements with a particular country did not include an „appropriate adaptation clause“, the Indian financial department would not enter into bilateral pre-price agreements or mutual agreement procedures with those countries. In other words, all transfer pricing disputes would be settled through domestic litigation instead of bilateral arbitration.