India-France Amend DTAC to Grant Taxing Rights on Capital Gains from Share Sales
The Amending Protocol also deletes the so-called Most-Favoured-Nation (MFN) Clause from the DTAC.
The Governments of India and France have signed an amending Protocol to the existent DoubleTaxation Avoidance Convention (DTAC) between India and France, granting both nations full taxing rights on capital gains arising from the sale of shares, to the jurisdiction where the company is resident. French President Emmanuel Macron recently concluded a three-day visit to India...
The Governments of India and France have signed an amending Protocol to the existent DoubleTaxation Avoidance Convention (DTAC) between India and France, granting both nations full taxing rights on capital gains arising from the sale of shares, to the jurisdiction where the company is resident.
French President Emmanuel Macron recently concluded a three-day visit to India which included attendance at the India AI Impact Summit 2026. Macron also met with Prime Minister Narendra Modi and interacted with numerous members of the global tech fraternity, indicating a stronger collaboration between New Delhi and Paris.
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The Protocol was signed on February 23, 2026 in New Delhi by Ravi Agrawal - Chairperson of the Central Board of Direct Taxes (CBDT) on behalf of India, and Thierry Mathou - Ambassador of France to India for France.
The amended framework makes capital gains arising from the sale of shares of a company be taxable in the jurisdiction where such company is resident.
The Amending Protocol also deletes the Most-Favoured-Nation (MFN) Clause altogether from the Protocol to the DTAC, thus removing all sorts of irregularities and ambiguities regarding its application.
The Protocol also revises the dividend taxation regime, replacing the earlier uniform rate of 10% with a split-rate structure: 5% in cases where the beneficial owner holds at least 10% of the capital of the company, and 15% in all other cases.
The definition of “Fees for Technical Services” has also been revised to align with the corresponding definition in the India-US Double Taxation Avoidance Agreement.
The scope of “Permanent Establishment” has also been expanded to incorporate Service Permanent Establishments within it.
Additionally, the provisions pertaining to Exchange of Information have been revised, along with the introduction of a new Article on Assistance in Collection of Taxes as per international standards.
The Protocol It also incorporates applicable provisions of the BEPS Multilateral Instrument (MLI) which had already become operational following ratification by both nations.
It has been clarified that the changes introduced via the DTAC Amending Protocol shall come into effect following the conclusion of internal procedures between both nations.
Balancing the economic interests of both nations, the amendments standardize the DTAC provisions as per international standards, and provide greater tax certainty to taxpayers and businesses of both nations, amid a heightened tech-partnership.
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