New India-Japan Tax Treaty Comes into Force

The Indian Department of Revenue informed that the amended bilateral tax treaty between India and Japan has come into force as of October 29. 

The Amending Agreement

The agreement provides for strengthened exchange of information to help reduce tax evasion. It amends the 27-year old Double Taxation Avoidance Agreement (DTAA) and was signed during the visit of Japanese Prime Minister Shinzo Abe in December 2015. 

In a notification, the Indian Department of Revenue said, "All the provisions of said Protocol amending the Convention between the Government of India and the Government of Japan for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income shall be given effect to in the Union of India with effect from October 29, 2016." 

Strengthened Exchange Of Information

Nangia & Co Managing Partner Rakesh Nangia said that by replacing the erstwhile Article 26 on exchange of information, the protocol provides a strengthened exchange of information clause.

“This will act as a deterrent and help in reducing tax avoidance and evasion and will also enable assistance in collection of taxes between India and Japan. The ambit of taxes has been widened to include indirect taxes such as wealth tax, excise duty, service tax, sales tax and VAT,” Nangia said.

Sources: The Economic Times, The Hindu Business Line, The Indian Express


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