The role of interstate deals on the avoidance of double taxation in production sharing agreements

Investors who were compensated for the costs of extracting mineral raw materials in monetary terms, rather than at the expense of its profitable part, bear the risk of double taxation.

Income tax is charged by tax inspectorates to investors, especially non-residents, in the form of cash proceeds.

At the same time, the origin of the "compensatory" funds from the extracted hydrocarbon raw materials is not clarified by the tax inspectorates.

A clear example is the case of Delphi Bench G "New Delhi" against the local tax administration New Delphi. v. Acit of July 19, 2013.

In the opinion of the High Court of Uttarakhand, there was Double Taxation Avoidance Agreement between India and USA, as such, no tax was payable by the assessee.

Therefore, lobbying the authorities to conclude as many double taxation agreements as possible or to join double taxation conventions is a positive step towards promoting investment activity.