Double taxation treaty allocates taxing rights and sets procedures to prevent fiscal evasion between two States. The Agreement between India and Nepal allocates taxing rights and prevents fiscal evasion for persons resident in one or both States: taxes on income are covered and defined; residence and fiscal year rules determine applicability; business profits are taxable only in the residence State except when attributable to a permanent establishment in the source State; income from immovable property, certain capital gains, and specific personal and employment income categories have targeted source state taxing rights; withholding limits are set for dividends, interest and royalties with carve outs; mechanisms include credit relief, a mutual agreement procedure, exchange of information, assistance in collection and a limitation of benefits rule.