India and Japan on Friday signed a protocol to amend the Double Taxation Avoidance Convention (DTAC) that would facilitate tax-related information exchange, an official here said.
The existing DTAC was signed between the two countries in 1989 for avoidance of double taxation and prevention of fiscal evasion through a protocol.
The protocol signed on Friday gains all the more importance as it is being signed few hours before the arrival of Japanese Prime Minister Shinzo Abe in India, the finance ministry said in a statement.
The protocol will facilitate exchange of information as per accepted international standards on tax matters, including bank information and information without domestic tax interest, the statement said.
There is a further provision in the protocol for sharing any information received from Japan with authorisation of the its competent authority, and vice versa, in respect of an Indian resident with other law enforcement agencies, it added.
The protocol has a provision for both countries to assist each other in collection of revenue claims, and 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 statement said.