CMA Final · Direct Tax Laws and International Taxation · Assessment of Mutual Associations
Under the Income-tax Act, 2025, which of the following may an agreement between a specified association in India and a specified association in a specified territory be entered into for, once the Central Government notifies it?
A specified association in India may enter into an agreement with its counterpart in a specified territory for the purposes in section 159(3). These are relief from or avoidance of double taxation, exchange of information, and recovery of tax. Central Government notification is needed to adopt and implement it.
- AGranting relief or avoiding double taxation of income, exchange of information and recovery of taxCorrect
- BFixing the rate of tax on domestic companies in the specified territory
- CExempting all residents of the specified territory from Indian tax
- DWaiving the requirement of a tax residency certificate for all non-residents
Explanation
Section 159(2) lets a specified association in India enter into such an agreement for the purposes in sub-section (3). These cover double taxation relief, avoidance of double taxation, exchange of information and recovery of tax. The other options describe powers or exemptions that the section does not give.
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