India and China have amended the bilateral tax treaty which will help prevent tax evasion by allowing exchange of information, the Finance Ministry said Monday.
The Government of India and the People's Republic of China have signed a protocol on November 26, 2018, to amend the Double Taxation Avoidance Agreement (DTAA) for the avoidance of double taxation and for the prevention of fiscal evasion with respect to taxes on income.
?"The Protocol updates the existing provisions for exchange of information to the latest international standards," the ministry said in a statement.
Further, the Protocol incorporates changes required to implement treaty related minimum standards under the Action reports of Base Erosion & Profit shifting (BEPS) Project.
Besides minimum standards, the Protocol brings in changes as per BEPS Action reports as agreed upon by the two sides, the ministry added.
Under Section 90 of the Income-tax Act, 1961, India can enter into an agreement with a foreign country or specified territory for avoidance of double taxation of income, for exchange of information for the prevention of evasion.