UPSC Prelims Practice Questions — India and France sign Amending Protocol to update Double Taxation Avoidance Convention (DTAC)

Q1. The India-France Amending Protocol incorporates provisions of the BEPS Multilateral Instrument (MLI). Under the OECD/G20 Base Erosion and Profit Shifting (BEPS) Project, how many Action items were developed in total?

• A. 10
• B. 12
• C. 15
• D. 18

Q2. The Multilateral Instrument (MLI), whose provisions the India-France Amending Protocol incorporates, was itself developed as the deliverable of which Action of the OECD/G20 BEPS Project?

• A. Action 6 (Prevention of Treaty Abuse)
• B. Action 7 (Permanent Establishment status)
• C. Action 14 (Dispute Resolution)
• D. Action 15 (Multilateral Instrument)

Q3. Following the Supreme Court's 2023 ruling, an MFN benefit or treaty change under a DTAA can be operationalised in India only through a notification in the Official Gazette. On the recommendation of which apex body does the Central Government issue such direct-tax treaty notifications?

• A. Central Board of Direct Taxes (Department of Revenue)
• B. Central Board of Indirect Taxes and Customs
• C. Ministry of External Affairs (Legal & Treaties Division)
• D. Securities and Exchange Board of India

Q4. In AO v. Nestlé SA (2023), the Supreme Court held that the Most-Favoured-Nation clause in a DTAA is not self-operational and requires a separate notification under which provision of the Income-tax Act, 1961?

• A. Section 90(1)
• B. Section 90A
• C. Section 91
• D. Section 195

Q5. In the context of the February 2026 India-France agreement, an 'Amending Protocol' to the Double Taxation Avoidance Convention is best described as:

• A. A supplementary instrument that modifies specific provisions of the existing 1992 Convention without replacing the Convention itself
• B. An entirely new tax treaty that supersedes and abrogates the 1992 Convention
• C. A ratified renewal of the 2016 Convention that lapses every ten years
• D. A non-binding memorandum recording the intent to negotiate a future treaty

Q6. Consider the following statements about the changes introduced by the India-France Amending Protocol to the DTAC: 1. It deletes the Most-Favoured-Nation (MFN) clause from the Protocol to the Convention. 2. It introduces a new Article on Assistance in Collection of Taxes. 3. It aligns the definition of 'Fees for Technical Services' with that in the India-US DTAA. 4. It removes the Article on Exchange of Information from the Convention. Which of the above is/are NOT correct?

1. It deletes the Most-Favoured-Nation (MFN) clause from the Protocol to the Convention.
2. It introduces a new Article on Assistance in Collection of Taxes.
3. It aligns the definition of 'Fees for Technical Services' with that in the India-US DTAA.
4. It removes the Article on Exchange of Information from the Convention.

• A. 4 only
• B. 1 and 4
• C. 2 and 3
• D. 3 only

Q7. The Central Board of Direct Taxes (CBDT), the Indian nodal body for the India-France DTAC, is most accurately described as:

• A. A statutory body constituted under the Central Boards of Revenue Act, 1963, functioning under the Department of Revenue, Ministry of Finance
• B. A constitutional body created under Article 280 of the Constitution
• C. An autonomous regulator established under the Companies Act, 2013
• D. A non-statutory advisory board created by an executive resolution of the Cabinet

Q8. Consider the following statements about the Central Board of Direct Taxes (CBDT): 1. It administers direct taxes such as income tax and corporate tax. 2. It was created, alongside the Central Board of Excise and Customs, when the erstwhile Central Board of Revenue was bifurcated in 1964. 3. It functions under the Department of Revenue, Ministry of Finance. 4. It is a constitutional authority established under Article 280 of the Constitution. Which of the above is/are NOT correctly stated?

1. It administers direct taxes such as income tax and corporate tax.
2. It was created, alongside the Central Board of Excise and Customs, when the erstwhile Central Board of Revenue was bifurcated in 1964.
3. It functions under the Department of Revenue, Ministry of Finance.
4. It is a constitutional authority established under Article 280 of the Constitution.

• A. 4 only
• B. 2 and 4
• C. 1 and 3
• D. 3 only

Q9. Section 90 of the Income-tax Act, 1961—the enabling law for the India-France DTAC—empowers the Central Government to:

• A. Enter into agreements with foreign countries for the avoidance of double taxation and, by notification in the Official Gazette, make provisions for implementing them
• B. Unilaterally grant tax credit for foreign taxes where no agreement with the foreign country exists
• C. Impose an equalisation levy on cross-border digital transactions
• D. Empower specified associations in India to adopt tax agreements with foreign associations

Q10. Under the Amending Protocol, capital gains from the sale of shares of a company become taxable in the jurisdiction where the company is resident. In India, the domestic notification giving effect to such treaty changes is issued by the Central Government primarily through which body?

• A. Central Board of Direct Taxes, Department of Revenue
• B. Department of Economic Affairs, Ministry of Finance
• C. Central Board of Indirect Taxes and Customs
• D. Department for Promotion of Industry and Internal Trade

Q11. The text of the BEPS Multilateral Instrument (MLI), whose measures the India-France Protocol incorporates, was adopted by the OECD/G20 ad hoc group in which year?

• A. 2013
• B. 2015
• C. 2016
• D. 2019

Q12. Under the India-France Amending Protocol, the concessional 5% rate on dividend income (replacing the earlier uniform 10%) applies:

• A. Where the beneficial owner holds at least 10% of the capital of the dividend-paying company, with a 15% rate in all other cases
• B. In all cases, uniformly replacing the earlier 10% rate for every recipient
• C. Only to portfolio investors holding less than 10% of the capital
• D. Never to companies, but only to individual resident shareholders