Double Tax Avoidance Treaty
India tweaks dividend, capital gains tax under double tax treaty with France
This story was originally published at 18:56 IST on 23 February 2026
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NEW DELHI – India and France amended the Double Taxation Avoidance Convention, first signed on Sept. 29, 1992, providing full taxing rights of capital gains arising from sale of shares of a company, to the jurisdiction where such company is a resident, the finance ministry said Monday. The amendment also includes reducing tax on dividends which will help French companies make significant savings, the ministry said.
"The Amending Protocol will provide greater tax certainty to the taxpayers and thereby facilitate the flow of investment, technology and personnel between India and France, which will strengthen the economic relationship between the two countries," the ministry said.
Under the new rules, French companies holding at least 10% in an Indian entity will pay a 5% tax on dividends, down from 10?rlier. For minority French shareholdings of under 10% in Indian companies, however, dividend tax will rise from 10% to 15%. In an official announcement, the Central Board of Direct Taxes said that during French President Emmanuel Macron's recent visit to India, both the nations had agreed to amend the double tax avoidance treaty.
The revised pact also gives India the right to tax capital gains, and impose taxes on any French entity's share sale, even when it holds less than 10% in an Indian company. The revised tax treaty also scraps the 'Most Favoured Nation' clause in order to reduce disputes and clarify tax rules. The Most Favoured Nation clause meant that if India gave better tax benefits to another country in a future treaty, France could automatically claim the same benefit.
A Double Taxation Avoidance Convention is a treaty that ensures individuals and companies do not pay tax twice on the same income in two countries. End
Reported by Priyasmita Dutta
Edited by Akul Nishant Akhoury
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