The India-Korea Double Taxation Avoidance Agreement (DTAA): A Step Towards Boosting Bilateral Trade

India and Korea enjoy a strong diplomatic and economic relationship, with trade between the two countries increasing rapidly in recent years. In order to further promote this trade relationship and provide a framework for avoiding double taxation, the India-Korea Double Taxation Avoidance Agreement (DTAA) was signed in 1985.

The DTAA is a bilateral agreement that sets out the rules for how income earned in one country by a resident of the other country will be taxed. The purpose of the agreement is to eliminate the possibility of a person or company being taxed twice on the same income, by both the country of residence and the country in which the income is earned.

Under the agreement, certain types of income, such as dividends, interest, and royalties, are taxed only in the country of residence of the recipient. Other types of income, such as capital gains and business profits, may be taxed in both countries, but the agreement provides for a system of double taxation relief to ensure that the same income is not taxed twice.

The DTAA also includes provisions for the exchange of information between the tax authorities of the two countries, in order to prevent tax evasion and ensure the proper administration of the agreement.

The India-Korea DTAA has been revised twice since its initial signing, in 1996 and 2015. The most recent revision included provisions for the taxation of certain types of income, such as income from shipping and air transport, and for the avoidance of tax evasion through the use of shell companies.

The DTAA has been an important factor in promoting bilateral trade between India and Korea. It has provided greater certainty and predictability for businesses operating in both countries, and has helped to reduce the tax burden on those businesses. This has made it easier for Indian and Korean companies to invest in each other`s markets and to expand their operations.

In addition, the DTAA has strengthened the overall economic relationship between the two countries. By providing a framework for avoiding double taxation, it has helped to increase the flow of goods, services, and capital between India and Korea. This has contributed to the growth of both economies and has created new opportunities for businesses and individuals in both countries.

The India-Korea DTAA is an example of how bilateral agreements can help to facilitate international trade and investment. It provides a model for other countries to follow, and demonstrates the importance of building strong economic relationships between nations. As trade between India and Korea continues to grow, the DTAA will continue to play a vital role in promoting bilateral economic cooperation.