GoI & France Sign Protocol to Amend India-France DTAC In February 2026, Government of India (GoI) and France signed a Protocol to amend the India-France Double Taxation Avoidance Convention (DTAC), originally signed on 29 September 1992, to modernise tax provisions and align them with global standards.
Key Amendment to India-France DTAC:
Capital Gains on Sale of Shares: Following the amendment, capital gains from selling shares of a company will be taxed in the country where the company is resident, thereby granting full taxing rights to that jurisdiction.
Removal of MFN Clause: The Most-Favoured-Nation (MFN) clause has been removed, resolving past disputes and bringing greater clarity and certainty to taxation matters between India and France.
Dividend Tax Rates Revised: Earlier, dividends were taxed at a single rate of 100%. Under the amended provisions, a 5% tax will apply where the shareholder holds at least 10% of the company’s capital and 15% in all other cases, creating a two-tier system based on the level of investment.
PE Expanded: A new concept of Service Permanent Establishment (Service PE) has been introduced, enabling certain service activities to constitute a taxable presence in a country.