How to read DTAA?
What is a Treaty? Vienna Convention on law of treaties is known as the Bible of Tax Treaties. “Treaty” has been defined by Article 2 of Vienna Convention to mean an international agreement concluded between States in written form and governed by international law, whether embodied in a single instrument or in two or more related instruments and whatever its particular designation. Tax Treaty is also known as Double Taxation Avoidance Agreement (DTAA), or Agreement for Avoidance of Double Taxation (AADT) or as Double Tax Conventions (DTCs). These terms can be used interchangeably. DTAAs can either be “Comprehensive DTAA” covering all types of incomes or “Limited DTAA” which are limited to certain type of incomes only. India has entered into Comprehensive Agreement with 97 countries and Limited Agreements with 8 countries including Pakistan, Iran, Maldives. What is the need to enter into treaty between countries? Let us understand this with the help of an illustration. US In...