Ahead of Japanese Premier Shinzo Abe’s visit, India and Japan have inked a pact for amending the double taxation avoidance agreement and for preventing fiscal evasion that was originally signed in 1989. The protocol provides for internationally accepted standards for effective exchange of information on tax matters, including bank information and information without domestic tax interest. It also allows for sharing of information from Japan on an Indian resident with other law enforcement agencies.

Revenue Secretary Hasmukh Adhia and Ambassador of Japan Kenji Hiramatsu signed the protocol on behalf of the two countries.

The pact would also allow the two countries to assist each other in collection of revenue claims. Further, it provides exemption of interest income from debt claims insured by the Government from taxation in the source country.

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What is Double Taxation???

Double taxation is the levying of tax by two or more jurisdictions on the same declared income (in the case of income taxes), asset (in the case of capital taxes), or financial transaction (in the case of sales taxes). This double liability is often mitigated by tax treaties between countries.