Archive · 15 Dec 2025
India, France Revamp 1992 Tax Treaty
India and France have agreed to update their old tax treaty from 1992.
This new deal will cut the tax on dividends that French companies get from their Indian operations in half if they own more than 10% of a company.
But for smaller stakes, the tax will go up.
India will also be able to tax French investors on all share sales, not just big ones.
France wanted this change to make sure their companies feel safe investing in India.
Both countries think this will bring more investment and make things clearer for businesses.
The deal still needs the final approval from India's government.
India and France have agreed to revise their 1992 tax treaty to modernize it and adapt to global tax transparency standards.
The new treaty will halve the dividend tax for French companies with a 10%+ stake in Indian entities, reducing it from 10% to 5%.
For minority French shareholdings of under 10%, the dividend tax will increase from 10% to 15%.
India will gain full source-based taxation rights on capital gains from equity shares in Indian companies, removing the previous 10% stake threshold.
The 'most favoured nation' (MFN) clause, which had historically benefited France, will be removed from the treaty to end disagreements and tax uncertainty.
- Who
- India and France
- What
- Revamp of the 1992 tax treaty
- When
- Agreement reached in 2024, expected to be signed in the coming weeks
- Where
- India and France
- Why
- To modernize the treaty, adapt to global tax transparency standards, and address disagreements over the MFN clause
- Bilateral Trade
- $15 billion (2023)
- Dividend Tax (10%+ stake)
- 5% (reduced from 10%)
- Dividend Tax (<10% stake)
- 15% (increased from 10%)
- Capital Gains Tax
- Full source-based taxation rights for India
- Most Favoured Nation (MFN) Clause
- Removed from the treaty
- French FPI Investments in India
- $21 billion (November 2025)
- French Companies with Minority Stakes in India
- More than 40