India and Norway today signed a revised tax treaty for exchange of information between the two countries to prevent flows of black money and check tax evasion.
"This (the agreement) will replace the existing convention signed between the two countries on the same subject on December 31, 1986," an official statement said.
The revised Double Taxation Avoidance Agreement (DTAA) was signed by Finance Minister Pranab Mukherjee and Tora Aasland, the Minister of Research and Higher Education of Norway, to avoid double taxation and prevent fiscal evasion with respect to taxes on income and capital, the statement added.
The new DTAA provides for exchange of information, especially the sharing of banking data, between the two countries.
A DTAA is essentially a bilateral agreement between two countries to avoid the taxation of income earned in one country by both of them.
The new agreement will provide for a lower rate of taxation of dividend and interest in the source country. It provides for 10 per cent rate, as against 15 per cent or 25 per cent in the existing Double Taxation Avoidance Convention (DTAC), among other things.
Mukherjee hoped the new pact would bring out more transparency and openness in taxation and fiscal matters.
Aasland said India and Norway have good relations not only in the field of financial matters, but also with regard to climate change, water resources and research, besides other areas.
The renegotiated DTAA was approved by Cabinet at its meeting on October 20, 2010. The new DTAA will replace the existing DTAC upon entering into force.
India has initiated the process of negotiation with 65 countries to broaden the scope of articles concerning the exchange of information to specifically allow for the exchange of banking data and information regarding taxpayers not covered under existing tax pacts, Mukherjee had recently said.
"Thirteen new DTAAs have also been finalised where the Exchange of Information Article is in line with international standards," the minister had said.