India has signed 88 Double Taxation Avoidance Agreements (DTAAs) out of which 85 have entered into force, with various countries including Sri Lanka and South Korea.
The DTAAs provide for allocation of taxation rights to source State and residence State in respect of business profits including that of a permanent establishment, operation of ships or aircraft in international traffic, dividends, interest, royalty, capital gains etc. Further, DTAAs have provisions for exchange of information for tax purposes.
The DTAAs facilitate mutual economic cooperation and provide tax certainty to the resident tax payers of both the countries. Further, the DTAAs aim to avoid the burden of double taxation on the income of residents of the two treaty countries and also simulate flow of investment, technology and services between them.
This was stated by the Minister of State for Finance, Shri S. S. Palanimanickam in a written reply to a question in the Lok Sabha today.