India-Israel DTAA protocol notified

K.R.Srivats New Delhi | Updated on January 13, 2018 Published on February 21, 2017

The protocol was signed in October 2015 in Jerusalem

The Central Board of Direct Taxes (CBDT) has given effect to the provisions in the Protocol that amended the double taxation avoidance pact between India and Israel.

This Protocol, which was signed at Jerusalem in October 2015, had entered into force on December 19, 2016.

The provisions of the Protocol have been given effect to in India with the CBDT’s latest move.

Among other things, the Protocol has introduced a new article on exchange of information based upon international best practices.

It also permits the application of domestic General anti avoidance rules (GAAR) in case of treaty misuse.

The newly inserted limitation of benefit clause provides that treaty benefit will not be available “if one of the main purposes of the creation or existence of such resident or of the transaction undertaken by it, was to obtain benefits under this Convention that would not otherwise be available”. Amit Maheshwari, Partner, Ashok Maheshwary & Associates LLP, said that after Singapore, this (India-Israel) is another treaty wherein it has been specifically provided that GAAR will override the treaty.

“Addition of LOB has become a gold standard for all new treaties which India is signing,” Maheshwari added.

Amit Singhania, Partner, Shardul Amarchand Mangaldas & Co, a law firm, said that the Protocol has introduced the concept of beneficial ownership of item of income for the purposes of availing tax treaty benefits.

“ The Protocol also takes away the benefit of reduced tax rate on royalty, fee for technical services and PE under any other tax treaty which India has entered with other jurisdiction, on said payments made to Israeli companies,” he added.


Published on February 21, 2017

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