{"id":20159,"date":"2023-04-05T11:33:44","date_gmt":"2023-04-05T06:03:44","guid":{"rendered":"https:\/\/gstguntur.com\/?p=20159"},"modified":"2023-04-05T11:34:21","modified_gmt":"2023-04-05T06:04:21","slug":"application-and-interpretation-of-tax-treaties-ca-final-dt-question-bank","status":"publish","type":"post","link":"https:\/\/gstguntur.com\/application-and-interpretation-of-tax-treaties-ca-final-dt-question-bank\/","title":{"rendered":"Application and Interpretation of Tax Treaties \u2013 CA Final DT Question Bank"},"content":{"rendered":"

Application and Interpretation of Tax Treaties \u2013 CA Final DT Question Bank<\/a> is designed strictly as per the latest syllabus and exam pattern.<\/p>\n

Application and Interpretation of Tax Treaties \u2013 CA Final DT Question Bank<\/h2>\n

Question 1.
\nExplain the meaning of \u201cTreaty\u201d as per Article 2 of Vienna Convention on Law of Treaties, 1969. Why it come into play? [CA Final May 2018 (New Syllabus)] [3 Marks]
\nAnswer:
\nArticle 2 of Vienna Convention on Law of Treaties, 1969 defines \u201cTreaty\u201d as an international agreement concluded between States in written form and governed by international law, whether embodied in a single instrument or in two or more related instruments and whatever its particular designation.<\/p>\n

Where a person earns any income, the resident country may tax the income on the basis of Residence Rule whereas the host country may also tax the same income on the basis Source Rule. In home country, tax is an obligation, while in the host country, tax is a cost.<\/p>\n

Therefore, Treaties comes into play to mitigate hardship caused by subjecting the same income to double taxation. Tax Treaties attempt to eliminate double taxation and try to achieve balance and equity. Treaties aim at sharing of tax revenues by the concerned states on a rational basis. However, the treaties do not always succeed in eliminating Double taxation, but contain.the incidence to a tolerable level.<\/p>\n

\"Application<\/p>\n

Question 2.
\nExamine and state the correctness or otherwise of each of the fol\u00aclowing statements in the context of international tax treaties between the countries and answer in brief with reasons\/contents thereof:
\n(i) \u201cProviding assistance in the collection of the fair and legitimate share of tax by the countries involved\u201d is the sole objective of Tax Treaties entered among Countries.
\n(ii) A Protocol is an integral part of the Tax Treaty and has the same binding force as the main clauses therein. [CA Final May 2019 (New Syllabus)] [6 Marks]
\nAnswer:
\n(i) Incorrect: The Important considerations while entering into the tax treaty are following:<\/p>\n