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CS Professional · Advanced Direct Tax Laws and Practice · Double Taxation Avoidance Agreement (DTAA)

Under the Income-tax Act, 2025, a term appears in a notified tax treaty but is not defined in the treaty. It is, however, defined in the Act. What meaning applies to it?

A term that the treaty leaves undefined but the Income-tax Act, 2025 defines takes the meaning given in the Act, along with any explanation issued by the Central Government. Terms the treaty itself defines keep the treaty meaning, and the other fallbacks apply only where neither defines the term.

  1. AThe meaning in the Act and the explanation, if any, given by the Central GovernmentCorrect
  2. BThe meaning in the general law of the other contracting country
  3. CThe meaning in the Central Government's general laws other than tax laws
  4. DThe meaning in the OECD Model Convention commentary

Explanation

Section 159(7)(a) states that where a term is defined in the agreement, that meaning applies. Where it is not defined there but is defined in the Act, it takes the Act's meaning and any explanation given by the Central Government. The other options relate to the later fallback in clause (c) or to sources not mentioned.

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