What is DTAA (Double Taxation Avoidance Agreements)?

Double Taxation Relief

The incidence of Double taxation occurs when an individual is required to pay tax more than one time for the same income he generated from a country different from his home country. Double taxation occurs mainly due to overlapping tax laws and regulations of the countries where an individual operates his business or employs. . Consistent with the practice adopted in most of the countries in the world that have taken to levy tax on income / capital, India has adopted the system under which Income Tax on residents is imposed on the "total world income" i.e. income earned anywhere in the world. Whereas a tax payer’s own country (referred to as home country) has a sovereign right to tax him, the source of income may be in some other country (referred to as host country) which country also claims a right to tax the income arising in that country. The result is that income arising to a resident out of India is subjected to tax in India as it is part of total world income and, also in host country which provides the source for that income.

India has entered into Avoidance of Double Taxation Agreement (DTAA) with 65 countries including countries like U.S.A., U.K., Japan, France, Germany, etc. The agreement provides relief from the double taxation in respect of incomes by providing exemption and also by providing credits for taxes paid in one of the countries. These treaties are based on the general principles laid down in the model draft of the Organization for Economic Cooperation and Development (OECD) with suitable modifications as agreed to by the other contracting countries. In case of countries with which India has double taxation avoidance agreements, the tax rates are determined by such agreements and vary between countries. Apart from providing ways and means to avoid double taxation of same income, the agreements generally provide for other matters of common interest of the two countries such as exchange of information, mutual assistance procedure for resolution of disputes and for mutual assistance in effecting recovery of taxes

Unilateral Relief

The Indian government provides relief from double taxation irrespective of whether there is a DTAA between India and the other country concerned, if
1.The person or company has been a resident of India in the previous year.
2.The same income must be accrued to and received by the tax payer outside India in the previous year.
3.The income should have been taxed in India and in another country with which there is no tax treaty.
4.The person or company has paid tax under the laws of the foreign country concerned.

How you can avoid paying Capital Gain Tax – Invest in NHAI’s 54EC Capital Gains Bonds

Capital gain arising out of sale of Long term assets such as land, building etc can be invested in capital gain bonds issued by NHAI up to 50 lakh per annum within 6 month of the transfer of the capital long term asset. This investment is open for all assessee and only the capital gain amount to be invested not the whole of the net proceed from sale /transfer of the capital asset. Capital Gain Tax exemption is available under Section 54EC of the Income Tax Act.


The following table shows the full details
Credit Rating “AAA/Stable” by CRISIL and “ AAA(ind)(Affirmed)” by Fitch Ratings
Face Value Rs. 10000/- per Bond
Issue price Rs. 10000/- per Bond
Minimum application size One Bond of Rs. 10,000/-
Maximum application size Five Hundred Bonds of Rs. 10,000/- each (Rs. 50,00,000 ) subject to fulfillment of other conditions as specified in Income Tax Act.
Mode of Subscription 100% on application
Deemed Date of Allotment Last day of each month for application money cleared and credited in NHAI’s collection account
Transferability The Bond are non-transferable, non-negotiable and cannot be Offered as a security for any loan or advance
Maturity 3 years from Deemed Date of Allotment
Interest payment Annual
Coupon rate 6% annually
Redemption Bullet, at the time of Maturity after 3 years
Trustee Syndicate Bank, 6, Bhagwan Dass Road, New Delhi-01
Availability of the prospectus and application form Across the country with Union Bank of India/IDBI Bank and Selected Branches of other Bank as details in IM,NHAI Offices, Selected SEBI Registered Category-I Merchant Bankers
Bankers All the Branches of Union Bank of India/IDBI Bank & Selected branches of HDFC Bank, Canara Bank, Punjab National Bank & Syndicate Bank. For details of bank branches please refer Information Memorandum (IM).
Ceiling Rs.1900 Crore
Date of Allotment At the last day of every month
Date of Start 01.04.2011
Date of Closure 31.03.2012
Applicable Laws Income Tax Act 1961 and NHAI Act
Registrar M/s Beetal Finacial & Computer Services (P) Ltd, "Beetal House",3rd Floor, 99, Madangir,Behind Local Shopping Centre, New Delhi-110062 , ph. 011-29961281-83, Fax - 011-29961284,Email- nhaibonds@gmail.com
TDS No TDS from domestic investors