Skip to content

CS Professional · Goods and Services Tax (GST) and Corporate Tax Planning · Tax Planning and Business Restructuring

Under the official text of the Income-tax Act, 2025 on agreements with foreign countries, a tax treaty may be entered into for avoiding double taxation 'without creating opportunities for non-taxation or reduced taxation'. Which arrangement is specifically mentioned in that provision as something to be guarded against?

The provision names treaty-shopping arrangements, meaning arrangements aimed at getting treaty reliefs for the indirect benefit of residents of some other country or territory. Treaties must avoid double taxation without creating room for non-taxation or reduced taxation through evasion or avoidance.

  1. ATransfer of shares between two resident group companies
  2. BTreaty-shopping arrangements aimed at obtaining treaty reliefs for the indirect benefit of residents of any other country or territoryCorrect
  3. CPayment of advance tax in instalments
  4. DClaiming depreciation on block of assets

Explanation

Section 159(3)(b) refers to avoiding double taxation without creating opportunities for non-taxation or reduced taxation through tax evasion or avoidance, including treaty-shopping arrangements aimed at obtaining treaty reliefs for the indirect benefit of residents of any other country or territory. The other options are ordinary domestic matters and are not mentioned.

Did you get it right without looking?

One question tells you little. A timed set on Tax Planning and Business Restructuring shows your real accuracy, how long you take and where you lose marks.

Practise Tax Planning and Business RestructuringFree diagnostic mock

More Tax Planning and Business Restructuring questions