Skip to content

CMA Final · Direct Tax Laws and International Taxation · Assessment of Mutual Associations

Under the Income-tax Act, 2025, a specified association in India enters into an agreement with a specified association in a specified territory for double taxation relief. What must happen for the agreement to take effect for granting relief under the Act?

The Central Government must notify provisions for adopting and implementing the agreement. A specified association may enter into the agreement, but it operates for tax relief only once the Central Government adopts and implements it through notification, so signing or board approval alone does not suffice.

  1. AThe Central Government must notify provisions for adopting and implementing the agreementCorrect
  2. BThe agreement takes effect once both associations sign it
  3. CThe agreement takes effect on approval by the Income-tax Department's local assessing officer
  4. DThe agreement takes effect once the Board of the Indian association passes a resolution

Explanation

Under section 159(2), a specified association in India may enter into such an agreement, but the Central Government must, by notification, make provisions necessary for adopting and implementing it. Signing alone by the associations is not enough, so the other options fail.

Did you get it right without looking?

One question tells you little. A timed set on Assessment of Mutual Associations shows your real accuracy, how long you take and where you lose marks.

Practise Assessment of Mutual AssociationsFree diagnostic mock

More Assessment of Mutual Associations questions