Direct Tax Laws and International Taxation · Double Taxation Avoidance Agreements (DTAA)

Agreement Between Specified Associations under Section 159

Updated 11 October 2026 · Fact-checked

Under section 159(2) of the Income-tax Act, 2025, a specified association in India may agree with a specified association in a specified territory on double taxation relief. The agreement takes effect only when the Central Government notifies provisions to adopt and implement it. Once notified, the Act applies only where more beneficial to the assessee.

Understand Adoption of Agreements between Specified Associations

Normally, double taxation relief comes from a treaty between two governments. Section 159(1) lets the Central Government enter into an agreement with the Government of any other country or any specified territory. That is the government-to-government route.

Some areas outside India are not countries in the treaty sense. The Act therefore uses the term specified territory: any area outside India that the Central Government notifies as such. For these territories, bodies can negotiate on behalf of their side. This is the second route, under section 159(2).

A specified association is any institution, association or body, incorporated or not, that (A) functions under a law in force in India or under the laws of the specified territory, and (B) is notified as such by the Central Government for section 159. Both conditions must be met. Functioning under a law is not enough without notification.

The agreement made by the associations has no force by itself. The Central Government must, by notification, make the provisions necessary for adopting and implementing it. That notification is what turns a private-body agreement into tax law. Section 159(4)(b) confirms this by requiring that the agreement 'has been notified'.

After adoption, the assessee to whom the agreement applies gets the Act's provisions only to the extent they are more beneficial. The agreement can cover relief on doubly taxed income, avoidance of double taxation, exchange of information and recovery of tax. Chapter XI provisions still apply even if not beneficial.

Key rules to remember

Association route: Specified association in India + specified association in specified territory → agreement → Central Government notification; Section 159(2). The notification adopts and implements the agreement.
Specified association: Body (incorporated or not) functioning under a law in India or the specified territory AND notified by the Central Government; Section 159(9)(a). Both conditions are needed.
Specified territory: Any area outside India notified by the Central Government; Section 159(9)(b).
Purposes of the agreement: Relief on doubly taxed income; avoidance of double taxation; exchange of information; recovery of tax; Section 159(3). Avoidance must not create non-taxation or reduced taxation through evasion or avoidance, including treaty shopping.
Effect of adopted agreement: Act applies only to the extent more beneficial to the assessee; Section 159(4). Applies where the association agreement is notified.
Chapter XI override: Chapter XI applies even if not beneficial; Section 159(6) overrides sub-section (4).
Non-resident claim: Residence certificate from that country or territory's Government + prescribed documents and information; Section 159(8). Both are needed to claim relief.

How to solve Adoption of Agreements between Specified Associations questions

Use this sequence for any question on association agreements under section 159.

1Identify the route: Government agreement under 159(1) or association agreement under 159(2).
2Check the parties: is the foreign side a specified territory notified by the Central Government, and are both bodies specified associations that are notified?
3Check the purpose: relief, avoidance of double taxation, exchange of information or recovery of tax under 159(3).
4Check notification: was the agreement notified for adoption and implementation? Without it, no relief follows.
5Apply 159(4): the Act applies only where more beneficial to the assessee; then note that Chapter XI applies regardless under 159(6).
6If the claimant is a non-resident, test 159(8): residence certificate and prescribed documents.
7For undefined terms, apply 159(7): agreement definition first, then the Act, then notification, then other Central laws.
8Write a clear conclusion on whether relief is available.

Quickest way: Four-gate check

When to use it: For short case-based questions or MCQs asking whether an association agreement gives relief.

Gate 1: Is the territory notified as a specified territory?
Gate 2: Are both associations notified as specified associations?
Gate 3: Has the Central Government notified the agreement?
Gate 4: If the claimant is a non-resident, is there a residence certificate with documents? If all four pass, relief is available, subject to 159(4) and 159(6).

Common mistakes in Adoption of Agreements between Specified Associations

Saying the association agreement is effective once the two bodies sign it.
Students treat it like a normal contract.
Fix: State that the Central Government must notify provisions to adopt and implement it under 159(2).
Defining a specified association only as a body functioning under law.
Students remember the first limb only.
Fix: Add the second limb: it must be notified by the Central Government for section 159.
Treating specified territory as any foreign country.
The words sound like ordinary geography.
Fix: It is an area outside India notified as such. A country is covered by 159(1)(a) separately.
Saying the treaty always overrides the Act, even when the Act is better.
Half-remembered rule about treaty precedence.
Fix: Under 159(4) the Act applies to the extent more beneficial to the assessee.
Forgetting that Chapter XI applies even if not beneficial.
Students stop reading at sub-section (4).
Fix: Add 159(6): Chapter XI applies irrespective of sub-section (4).
Ignoring the residence certificate for a non-resident claimant.
Focus is only on the agreement.
Fix: Under 159(8) a non-resident needs a residence certificate from that Government plus prescribed documents.

Worked examples

Example 1

Bhārat Trade Forum, a body functioning under an Indian law, signs a double taxation agreement with a body in an area outside India. The Central Government has notified the Forum as a specified association, the foreign body as a specified association and the area as a specified territory, but has issued no notification on the agreement itself. Can assessees claim relief under it?

Show the solution

The route is 159(2), as the agreement is between associations.
Parties qualify: each body functions under a law and is notified, and the area is a notified specified territory.
Section 159(2) requires the Central Government to notify provisions for adopting and implementing the agreement.
Section 159(4)(b) also applies only where the agreement has been notified.
No such notification exists, so the agreement is not yet operative.

Answer: No. Although the parties and territory are notified, relief cannot be claimed until the Central Government notifies provisions adopting and implementing the agreement.

Example 2

A notified association agreement is in force. A non-resident assessee, resident in the specified territory, claims relief under it but holds no residence certificate. Another resident assessee finds the Act more favourable than the agreement. Advise both.

Show the solution

For the non-resident, 159(8) allows a claim only when a residence certificate is obtained from the Government of that territory and prescribed documents and information are provided.
Without the certificate, the claim fails; the assessee should obtain it and furnish the documents.
For the second assessee, 159(4) says the Act applies to the extent it is more beneficial.
So that assessee may follow the Act's provisions, unless Chapter XI is involved, which applies even if not beneficial under 159(6).

Answer: The non-resident cannot claim relief until the residence certificate and prescribed documents are provided. The other assessee may rely on the Act where it is more beneficial, except that Chapter XI applies regardless.

Exam tips

Quote the section numbers 159(2), 159(4), 159(6), 159(8) and 159(9); they earn marks.
In definition questions, give both limbs of specified association and say notification is essential.
In case questions, check each notification step in order and state which one is missing.
Mention 159(6) in any answer about the beneficial-provision rule.
Section 160 applies where no agreement exists; do not mix it with this topic.

Practice questions from Double Taxation Avoidance Agreements (DTAA)

Adoption of Agreements between Specified Associations in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

CS ProfessionalAdoption of Agreements between Specified Associations

Adoption of Agreements between Specified Associations: frequently asked questions

What is a specified association under the Income-tax Act, 2025?

It is any institution, association or body, incorporated or not, that functions under a law in force in India or in the specified territory. It must also be notified by the Central Government for section 159. Both conditions are needed.

What is a specified territory in a DTAA?

It is any area outside India that the Central Government notifies as a specified territory. Section 159 allows agreements with such territories as well as with other countries.

How does the Central Government adopt an agreement between specified associations?

By notification, it makes the provisions necessary for adopting and implementing the agreement under section 159(2). Relief under 159(4)(b) applies where the agreement has been notified.

Does the Act or the agreement prevail?

For an assessee to whom the notified agreement applies, the Act applies to the extent it is more beneficial. But Chapter XI applies even if it is not beneficial, as per section 159(6).