CBDT's Clarification as Regards Application of MFN Clause for Lower Rate of Source Taxation

Adv. Ravish Bhatt, ADIT, CIOT | Last updated: 03 April 2022

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The Central Board of Direct Taxes (CBDT) has issued a clarification regarding the application of Most Favoured Nation (MFN) clauses in Double Taxation Avoidance Agreements (DTAAs). This clarification addresses whether lower tax rates agreed with countries like Slovenia, Colombia, and Lithuania, which were not OECD members when their DTAAs with India were signed, can be applied to older DTAAs with OECD members. The CBDT's stance suggests that the third country must have been an OECD member at the time the DTAA was concluded for the MFN clause to apply.

The Central Board of Direct Taxes issued a clarificatory circular on 03.02.2022 pursuant to receipt of representations for clarity as regards application of MFN clauses available in the protocol to some of the DTAAs with OECD members. It sought to clarify as to whether the lower rate of source based

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About the Author

Adv. Ravish Bhatt, ADIT, CIOT

Dual Qualified Lawyer/ Solicitor, International Tax Affiliate, CIOT

Mr. Ravish Bhatt is an International Tax Affiliate with Chartered Institute of Taxation and also a dual qualified lawyer admitted to the roll of Bar Council of Gujarat and Solicitors Regulation Authority, England and Wales. He has experience of over 14 years in dealing with issues pertaining to Direct Taxes, Commercial ... Read more

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