Kathmandu: India and Nepal today signed a revised Double Taxation Avoidance Agreement (DTAA), which will help exchange of information on banking between the two countries and help prevent tax evasion.
The revised tax treaty was signed by India’s Finance Minister Pranab Mukherjee and his Nepalese counterpart Barshaman Pun. It will replace prior agreement signed between the two countries in 1987.
Mukherjee told to the reporters that “I am confident that this mechanism will strengthen and deepen our bilateral relations, and we would be in a position to move forward and expand our trade and other economic activities.”
DTAA, which embodies recent trade principles, will allow Indian investors and traders to enjoy tax relaxation in India once they pay taxes in Nepal.
India is the biggest source of foreign investments in Nepal, as also its largest trading partner. However, Nepal accounts for merely 0.44 per cent of India’s total trade.
Indian firms are the biggest investors in Nepal accounting for concerning 47.5 per cent of total approved foreign direct investments.
“The agreement reflects the international environment, which is prevalent today and the old agreement needs to be amended,” Mukherjee said.