A protocol amending the Double Taxation Avoidance Convention (DTAC) signed between India and Japan came into force on 29 October 2016 on completion of procedural requirements by both the countries. The amendment aims to promote transparency and cooperation between the two countries.
The DTAC pact for avoidance of double taxation and prevention of fiscal evasion with respect to taxes on income was signed on 11 December 2015.
About the Protocol
• It provides for internationally accepted standards for effective exchange of information on tax matters including bank information and information without domestic tax interest.
• It states that the information received from Japan in respect of a resident of India can be shared with other law enforcement agencies with authorization of the Competent Authority of Japan and vice versa.
• It also provides for exemption of interest income from taxation in the source country with respect to debt-claims insured by the Government or Government owned financial institutions.
• It inserts a new article on assistance in collection of taxes. Here on, both India and Japan shall assist each other in the collection of revenue claims.
The existing DTAC was signed earlier on 7 March 1989 and notified on 1 March 1990. It was amended later on 24 February 2006.