DTAA Current Affairs

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Government notifies third Protocol amending India-Singapore DTAA

The Union Finance Ministry has notified hird Protocol amending India-Singapore Double Taxation Avoidance Agreement (DTAA). The agreement came into force in February 2017and was signed in December 2016.

The Third Protocol amends the DTAA between both countries to provide for source-based taxation of capital gains arising on sale of shares in a company.

Key Facts

  • The India-Singapore DTAA at present provides for residence-based taxation of capital gains of shares in a company.
  • The addition of provision of source-based taxation of capital gains in DTAA, will help to curb revenue loss, prevent double non-taxation and streamline the flow of investments.
  • It also provides certainty to investors, investments in shares made before April 1, 2017 subject to fulfilment of conditions in Limitation of Benefits clause as per 2005 Protocol.
  • Further, it also provides a two-year transition period from April 1, 2017 to March 31, 2019 during which capital gains on shares will be taxed in source country at half the normal tax rate.
  • It also facilitates relieving of economic double taxation in transfer pricing cases. It is a taxpayer-friendly measure and is in line with India’s commitments under Base Erosion and Profit Shifting (BEPS) Action Plan.
  • It also enables application of domestic law and measures concerning prevention of tax avoidance or tax evasion.

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India and Belgium sign Protocol amending Double Taxation Avoidance Agreement and Protocol

India and Belgium have signed a Protocol to amend the existing Double Taxation Avoidance Agreement (DTAA) between the two countries.

The Protocol was signed by Sushil Chandra, Chairman Central Board of Direct Taxes (CBDT) and Jan Luykx, Ambassador of Belgium to India. 

Key Facts
  • The amendment of DTAA will broaden the scope of the existing framework of exchange of tax related information between the two countries.
  • It will help curb tax evasion and tax avoidance between the two countries and also enable mutual assistance in collection of taxes.
  • It also revises the scope of existing treaty provisions on mutual assistance in collection of taxes and further help to curb tax evasion and tax avoidance. 
Background

The Union Government has set a key priority area for dighting the menace of Black Money stashed in offshore accounts. To further this goal, India has either signed or amended international agreements, declarations or conventions for the DTAA and Prevention of Fiscal Evasion with respect to Taxes on Income and for the Exchange of Information with Mauritius, Switzerland, Cyprus, Japan, South Korea, Singapore, Kazakhstan, and Austria during the financial year 2016-17.

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