The Government of India and the Government of Japan signed here today a Protocol for amending the existing Convention for the avoidance of double taxation and for the prevention of fiscal evasion with respect to taxes on income. The existing Convention was signed way back in 1989. Dr Hasmukh Adhia, Revenue Secretary signed the protocol on behalf of the Government of India while Mr Kenji Hiramatsu, Ambassador of Japan on behalf of the Government of Japan. The Protocol signed today gains all the more importance as it is being signed few hours before the arrival of the Prime Minister of Japan in India.

 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 further provides that 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 Protocol also provides that both India and Japan shall lend assistance to each other in the collection of revenue claims. The Protocol further provides for exemption of interest income from taxation in the source country with respect to debt-claims insured by the Government/Government owned financial institutions.

Exchange of information standards expanded to include bank data, enabling mutual tax collection assistance and authorized information sharing. The Protocol modernises bilateral tax cooperation by embedding exchange of information standards to include bank information and information without domestic tax interest, permitting sharing with law enforcement only with the providing competent authority's authorization; it also provides for assistance in the collection of revenue claims and exempts source-country taxation of interest on debt-claims insured by Government or Government-owned financial institutions.