DTAA: The Undefeated Culprit Of Indian Taxation Policy (A Critical Study)

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Subham Raj Panda, BBA. LLB. (Hons.), Siksha 'O' Anusandhan University Bhubaneswar.

ABSTRACT

This research paper critically examines the Indian Income Tax Act of 1961, with a specific focus on the Double Taxation Avoidance Agreement (DTAA) and its impact on India’s tax policies. DTAA was initially intended to prevent double taxation on cross-border income and foster international trade, yet it has increasingly become a tool for tax avoidance through treaty shopping and other exploitation tactics. Multinational corporations and individuals have manipulated DTAA provisions, resulting in significant revenue losses for India. In response, the Indian government introduced the General Anti- Avoidance Rule (GAAR) to curb such misuse; however, challenges in the practical application of GAAR have limited its effectiveness. This paper explores these challenges in depth, analysing how DTAA often undermines GAAR and proposing targeted reforms to close loopholes, enhance enforcement, and strengthen regulatory oversight. The study advocates for specific policy adjustments, such as aligning DTAA provisions with GAAR, revising treaties to include stringent anti-abuse clauses, and promoting greater transparency through corporate reporting and international cooperation. Through these reforms, India can better protect its tax base, ensuring that DTAA fulfils its original purpose of promoting legitimate economic activity without compromising national revenue.

Keywords: Tax, Indian Taxation Policy, Income Tax, DTAA, Treaties, GAAR.

DTAA- THE UNDEFEATED CULPRIT OF INDIAN TAXATION POLICY (A CRITICAL STUDY).pdf

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