Avoidance of double taxation: treaty allocates taxing rights and limits source state withholding while providing anti abuse safeguards. Treaty provides a reciprocal system to avoid double taxation and prevent fiscal evasion between India and Iceland by defining covered taxes and persons, allocating taxing rights (residence vs source), and prescribing substantive rules for permanent establishments, business profits attribution, and specified income types including dividends, interest, royalties and capital gains. It prescribes withholding limits, credit/exemption relief mechanisms, a limitation of benefits regime with anti abuse safeguards, and administrative cooperation including mutual agreement, exchange of information and assistance in tax collection, with Protocol clarifications and entry into force and termination rules.