Published: 25 February 2026PIBInternational
India and France Sign Protocol to Amend Double Taxation Avoidance Convention, Aligning with Global BEPS Standards
On 23 February 2026, the Government of India announced that India and France had signed a Protocol to amend the Double Taxation Avoidance Convention (DTAC/DTAA) originally signed on September 29, 1992, in order to modernise tax provisions and align them with the global Base Erosion and Profit Shifting (BEPS) standards developed by the OECD/G20.
The amendment updates key provisions including the Principal Purpose Test (PPT) to prevent treaty abuse, updates to Permanent Establishment (PE) definitions to address digital economy concerns, updates to Exchange of Information and a new Article on Assistance in Collection of Taxes. This aligns the India-France tax treaty with the OECD's Multilateral Instrument (MLI) and India's approach to tax treaty modernisation following the BEPS Action Plans.
India-France bilateral trade stands at approximately €13 billion annually. France is among India's top European trading partners and a significant source of foreign direct investment, particularly in sectors like defence, aerospace, energy, and luxury goods. This protocol ensures greater tax certainty for Indian companies operating in France and French companies in India. From a Rajasthan perspective, French investments in renewable energy — particularly solar — are relevant given Rajasthan's status as India's leading solar energy state with over 20 GW of installed capacity.
0Mains angle
Q: Evaluate the significance of the India-France Protocol amending the 1992 Double Taxation Avoidance Convention and its alignment with OECD BEPS standards.
Answer (50 words):
Signed around 26 February 2026, the Protocol modernises the 1992 India-France DTAC by incorporating the Principal Purpose Test, updated Permanent Establishment definitions and Mutual Agreement Procedures aligned with OECD BEPS and the Multilateral Instrument, giving tax certainty to roughly 13 billion euro annual bilateral trade and supporting Rajasthan's 20 gigawatt solar sector.
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Frequently asked questions
When did India and France sign the protocol to amend their Double Taxation Avoidance Convention (DTAC)?
India and France signed the amendment protocol to their 1992 DTAC in late February 2026. The amendment aligns the treaty with OECD/G20 BEPS (Base Erosion and Profit Shifting) standards.
What is the Principal Purpose Test (PPT) introduced in the India-France DTAC amendment?
The Principal Purpose Test (PPT) is an anti-avoidance provision under OECD BEPS standards that denies treaty benefits if obtaining those benefits was one of the principal purposes of a transaction or arrangement. It prevents multinational corporations from exploiting tax treaties purely for tax avoidance.
What is BEPS and why is it significant for India's tax treaties?
BEPS stands for Base Erosion and Profit Shifting, an OECD/G20 initiative to prevent tax avoidance by multinational corporations. It is significant because India has been revising its Double Taxation Avoidance Agreements (DTAAs) with multiple countries to plug treaty abuse and align with global standards.
What is the approximate annual bilateral trade volume between India and France?
The annual bilateral trade between India and France is approximately €13 billion. The amended DTAC protocol is expected to affect investment flows and provide greater tax certainty for businesses operating between the two countries.
What is a Mutual Agreement Procedure (MAP) in the context of tax treaties?
A Mutual Agreement Procedure (MAP) is a dispute resolution mechanism in tax treaties that allows competent authorities of two countries to resolve cases of double taxation or treaty disputes. The India-France DTAC amendment updated MAP provisions to align with BEPS Action Plan 14.
