Double Tax Avoidance Agreement (DTAA) is a treaty signed between two countries to eliminate the double taxation of income earned by their residents. India and Canada have signed a DTAA to avoid double taxation of income and facilitate mutual economic relations. The agreement provides for the allocation of taxing rights between the two countries and also provides for exchange of information to prevent tax evasion.

The DTAA between India and Canada was signed in 1987 and has been amended several times since then. The latest amendment was signed in July 2019 and has been in effect from April 1, 2020. The DTAA covers various types of income, including business profits, income from immovable property, dividends, interest, royalties, and capital gains.

Under the agreement, residents of both countries are entitled to certain tax benefits. For instance, Indian residents who pay tax on their income in Canada can claim a credit for Canadian taxes paid against their Indian tax liability. Similarly, Canadian residents who earn income in India can claim a deduction for Indian taxes paid against their Canadian tax liability.

The DTAA also provides for a mechanism to resolve disputes arising from the interpretation and application of the agreement. In case of a dispute, the competent authorities of the two countries will consult each other to resolve the issue.

The DTAA between India and Canada has helped in promoting bilateral trade and investment between the two countries. It has provided certainty and predictability to taxpayers and has helped in avoiding double taxation of income. The agreement has also helped in providing a platform for exchange of information between the tax authorities of the two countries to prevent tax evasion and promote transparency.

In conclusion, the DTAA between India and Canada is an important treaty that provides tax benefits to residents of both countries and has helped in promoting bilateral economic relations. It is important for taxpayers to understand the provisions of the agreement to avail the benefits provided by it.