(a) whether Japan has shown its willingness to review the tax treaty with India;
(b) if so, the reaction of the Government thereto; and
(c) the article-wise details of the duties in the field of trade and investment between India and Japan?
(a) whether Japan has shown its willingness to review the tax treaty with India;
(b) if so, the reaction of the Government thereto; and
(c) the article-wise details of the duties in the field of trade and investment between India and Japan?
MINISTER OF STATE IN THE MINISTRY OF FINANCE (SHRI GINGEE N. RAMACHANDRAN)
(a) The Government of Japan has no objection for the review of
the tax treaty with India with respect to the removal of
provisions relating to withholding of tax @ 20% on fee for
technical services.
(b) The review of the Tax Treaty to completely remove the
provision of withholding tax on fee for technical services
may not be in the interest of the country.
(c) As per Annexure.
ANNEXURE TO LOK SABHA UNSTARRED QUESTION No. 4175 TO BE ANSWERED ON FRIDAY,
THE 14TH DECEMBER, 2001 (23 AGRAHAYANA, 1923-Saka)
The existing Double Taxation Avoidance Convention (DTAC) between India and
Japan, allocates right to taxation of income between the source and resident
country. As per Article 7 of DTAC, the country of residence gets the right
to tax the business income. However, the source country gets the right to
tax Business Income only, if there is a `Permanent Establishment` or `a fixed
place of business` there. Taxation of business income is on net income from
business at the rates prescribed in the domestic law of respective countries.
The jurisdiction of taxation to other stream of income are allocated either
to the source country or to the residence country at the rates prescribed in
the domestic law of the source/resident country. The DTAC gives the right of
taxation in respect of the income of the nature of interest, dividends, royalty
and fees for technical services to the country of residence. However, the source
country is also given the right but such taxation has to be limited to the rates
prescribed in the DTAC as under :-
Article Category for receipts Rate of duty/tax as per DTAC
10 Dividends 15 %
11 Interests 10 % for Banks 15 % for others
12 Royalties and fees for technical services 20 %