Apex court's verdict holding that a notification is necessary for MFN clause to kick in is expected to impact MNCs working in India; tax department may reopen cases
Tax treaties provide for a lower rate of tax in the country of source for residents of another country. They also provide for a situation where profits of MNCs are taxable in the source country only if there is a permanent establishment and provide for credit of taxes paid in the source country when the income is taxed once again in the residence country. This is to avoid double taxation.