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

Under the Income-tax Act, 2025, when a term used in a DTAA is not defined in the agreement but is defined in the Act, which meaning applies?

A term not defined in the DTAA but defined in the Income-tax Act, 2025 takes the meaning assigned in the Act, together with any explanation given by the Central Government. Other laws are only a later fallback when neither the agreement, the Act nor notifications define the term.

  1. AThe meaning in the Act, along with any explanation given by the Central GovernmentCorrect
  2. BThe meaning in the general law of the foreign country
  3. CThe meaning in any other law of the Central Government, ignoring the Act
  4. DThe term must be left undefined and cannot be applied

Explanation

Section 159(7)(a) states that a term defined in the agreement has the agreement meaning; if not defined there but defined in the Act, it has the meaning in the Act and the explanation, if any, given by the Central Government. Other laws come in only as a later fallback.

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