India, Japan sign protocol to amend tax agreement

NEW DELHI: India and Japan have inked a protocol for amending the existing convention for double taxation avoidance that provides for effective exchange of information in tax matters including bank accounts.

"The protocol provides for internationally accepted standards for effective exchange of information on tax matters including bank information and information without domestic tax interest," the finance ministry said in a statement on Friday. The protocol was signed a few hours before the arrival of Japanese Prime Minister Shinzo Abe, whose visit is expected to boost flow of investments from both sides. India is eyeing large-scale investments from Japan in its infrastructure.

As per the protocol, the information received from Japan in respect of a resident of India can be shared with other law enforcement agencies with authorisation of the competent authority of Japan and vice versa. The amendment will allow India and Japan to assist each other in collection of revenue claims.

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. The existing convention was signed in 1989.

The protocol was signed by revenue secretary Hasmukh Adhia on behalf of India and ambassador of Japan Kenji Hiramatsu on behalf of his government.