India has Signed DTAA with Bhutan to Share Banking and Tax Information

DTAA, India & Bhutan

India has signed Double Taxation Avoidance Agreement (DTAA) with its neighboring country Bhutan to share banking and tax information between the two nations. This move will facilitate exchange of views and suggestions in the banking operations, and it will also help the two countries to check tax evasion.

Eventually this is the very first time for Bhutan to sign a DTAA agreement with any country whatsoever. However in January, 2012 India signed revised DTAA with Nepal. Finance Minister of India signed the agreement on behalf of Indian Government, while his Bhutanese counterpart Lyonpo Wangdi Norbum signed the treaty on behalf of the Royal Government of Bhutan.

After signing the agreement Mr. Chidambaram talked with the reporters, and expressed his views by elaborating some positive outlooks of the DTAA for both the countries. "The Agreement (DTAA) will provide tax stability to the residents of India and Bhutan and facilitate mutual economic cooperation as well as stimulate the flow of investment, technology and services between India and Bhutan," Chidambaram said.

Under DTAA, each and every profit that would come from the business operations will be taxable for the source state only if the major activities of a franchisee or a big enterprise set up a permanent establishment procedure in there. However, various side factors like royalty income, interest, dividends and fees, which would be applicable for professional and technical services will be taxed in both the places i.e. the source place of income and in the country of residence.

There is a catch though, as the highest percentage of tax to be charged in the country of source income or business operations will not exceed 10 percent on such royalty income, interest, dividends and fees for technical services that the enterprises will ask for. You may know about Some Latest agreements signed by India from here.

The main capital which the enterprise will gain in form of selling the shares will be taxable in the country of source. It’s a very good move in deed, as it will benefit both the countries together. The earning profit, which will be derived by an interested enterprise from the key operation of aircraft to gain international traffic to have a better exposure, will be taxable in the country of effective management of that enterprise only. You can get the details of Some Latest Indian Government Affairs from Here.

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