Govt. Notifies Revised India-Qatar DTAA Effective From FY 2026-27

Notification no. 154/2025, dated 24-10-2025

The Government of India has notified the revised Double Taxation Avoidance Agreement with the Government of the State of Qatar that was signed in February 2025. It replaces the previous agreement signed in April 1999.

The revised DTAA includes significant changes, broadly aligning with international standards such as the Base Erosion and Profit Shifting (BEPS) project and introducing anti-abuse provisions.

The provisions of the revised DTAA shall have effect in India and Qatar in respect of income arising on or after the first day of the fiscal year immediately following the calendar year in which the Agreement enters into force, i.e., 10-09-2025.

The key changes introduced in the revised DTAA of India-Qatar are as follows:

1) Hybrid entities [Article 1] – The revised DTAA includes a specific rule for income derived by or through an entity or arrangement that is wholly fiscally transparent, clarifying that it is considered income of a resident only to the extent it is treated as such for tax purposes by that State.

2) Tie-Breaker rule for non-individuals [Article 4] – The revised DTAA states that if a person (other than an individual) is a dual resident, and the competent authorities cannot determine residence by mutual agreement, such person shall not be entitled to any relief or exemption from tax provided by the Agreement. This introduces a treaty denying treaty benefits.

The previous DTAA stated that if the place of effective management could not be determined, the competent authorities shall settle the question by mutual agreement, but it did not contain the denial of relief clause.

3) Service Permanent Establishment [Article 5] – Article 5 of the revised DTAA introduces a condition that the furnishing of services (including consultancy services) constitutes a PE only where activities continue (for the same or connected project) for a period or periods aggregating more than 90 days within any 12 months.

4) Deduction of hypothetical payments by a PE [Article 7] – Article 7 of the revised DTAA explicitly restricts the deduction of amounts paid by a PE to its head office or other offices (other than reimbursement of actual expenses) by way of:

· Royalties, fees, or other similar payments in return for the use of patents, know-how, or other rights;

· Commission or other charges for specific services or for management; and

· Interest on moneys lent to the PE (except for banking enterprises).

The previous DTAA did not contain these specific prohibitions on the deduction of hypothetical head office charges.

5) Dividends paid to Sovereign Entities [Article 10] – Article 10 of the revised DTAA introduces a provision where dividends paid by a company resident in one State shall be taxable only in the other Contracting State if the beneficial owner is that other State itself, a political subdivision, or a local authority thereof.

6) Definition of interest includes Islamic Finance [Article 11] – Article 11 of the revised DTAA explicitly includes income from arrangements such as Islamic financial instruments where the substance of the underlying contract can be assimilated to a loan, within the definition of “interest”.

This specific reference to Islamic financial instruments was not present in the previous DTAA.

7) States eligible for interest exemption [Protocol to Article 11] – The Protocol to revised DTAA clarifies that the entities eligible for the sovereign interest exemption under Article 11(3) are as follows:

· In India – Reserve Bank of India and Export-Import Bank of India.

· In Qatar – Qatar Investment Authority and Qatar Holding LLC.

8) Capital gains from indirect transfer of immovable property [Article 13] – Article 13 of the revised DTAA permits taxation in the source State of gains from the alienation of shares deriving more than 50% of their value directly or indirectly from immovable property situated in the other Contracting State.

The 50% threshold was not present in the previous DTAA.

9) Students and Apprentices Benefits [Article 20] – Article 20 of the revised DTAA removes the monetary limit on employment remuneration for a student or business apprentice, provided the employment is directly related to studies or maintenance. It mentions that this income is exempt , besides grants, loans, and scholarships. Further, it also introduced an explicit time limit, stating that the benefits shall not be available for more than six consecutive years.

The previous DTAA limited the exemption on remuneration from employment to an amount not exceeding US $1000 or its equivalent amount during any fiscal year.

10) Entitlement to Benefits [Article 28] – The revised DTAA introduces Article 28 (Entitlement to Benefits), a specific anti-abuse provision. This provision, commonly known as the Principal Purpose Test (PPT), denies a treaty benefit if obtaining it was one of the principal purposes of any arrangement or transaction, unless granting the benefit is in accordance with the object and purpose of the relevant provisions.

Click Here To Read The Full Notification