India and Nepal on 27 November 2011 signed a revised Double Taxation Avoidance Agreement (DTAA). This will help prevent tax evasion and facilitate exchange of information on banking between the two countries. DTAA, will allow Indian traders and investors to enjoy tax relaxation in India once they pay taxes in Nepal. The agreement is also likely to increase confidence of investors and help Nepal attract more investment from India.
The revised DTAA between India and Nepal will replace an earlier agreement signed between India and Nepal in 1987.
• Indian firms are the biggest investors in Nepal. They account for about 47.5 per cent of total approved FDIs (Foreign Direct Investments). • India is the biggest source of foreign investments in Nepal and its largest trading partner. However, Nepal accounts for only 0.44 per cent of India's total trade. • The bilateral trade between India and Nepal increased from USD 1.98 billion US dollars in 2009-10 to around 2.70 billion US dollars in 2010-11, which is an increase of 37 per cent.
Revised DTAA between India and Nepal
KATHMANDU, NOV 27 - Nepal and India on Sunday signed the Double Taxation Avoidance Agreement (DTAA).
The agreement, which replaces the old agreement signed between the two countries in 1987, is aimed at facilitating exchange of information on banking between the two countries and to help prevent tax evasion.
Finance Minister Barsha Man Pun and his Indian counterpart Pranab Mukharjee signed the agreement in the presence of Prime Minister Baburam Bhattarai at the PM's official residence in Baluwatar.
"The revised DTAA will provide tax stability to the residents of India and Nepal and facilitate mutual economic cooperation as well as stimulate the flow of investment, technology and services between India and Nepal," said the Mukherjee in his remarks after signing the pact.
DTAA, which is in line with best trade principles, will enable Indian investors and traders to enjoy tax relaxation in India once they pay taxes in Nepal.
He added the revised DTAA will provide tax stability to the residents of India and Nepal and facilitate mutual economic cooperation as well as stimulate the flow of investment, technology and services between India and Nepal.
“In the area of exchange of information, the revised DTAA provides for internationally accepted standards including sharing of bank information and sharing of information without domestic tax interest,” said Mukherjee.
Indian Foreign Secretary Ranjan Mathai had arrived in Kathmandu on Saturday to make preparations for Mukherjee’s visit to sign the DTAA.
During his stay in Kathmandu, Mukherjee met President Dr. Ram Baran Yadav, Prime Minister Baburam Bhattarai, and Pun.
Sources close to Mukherjee said met top leaders, including UCPN (Maoist) Chairman Pushpa Kamal Dahal, Nepali Congress President Sushil Koirala and CPN-UML Chairman Jhala Nath Khanal.
Nepal and India were supposed to sign the DTAA during Bhattarai's visit to New Delhi, but the plan was postponed citing need for more preparations.
Political situation in Nepal not to affect DTAA: PM
India on Friday said the fluid political situation in Nepal will not have any fallout on their recently signed Double Taxation Avoidance. Agreement(DTAA), a pact that is another key step to boost their economic ties. The political situation came up for discussions during a meeting with Prime Minister Manmohan Singh and his Nepalese counterpart Baburam Bhattarai on the sidelines of the Rio+20 summit in Rio de Janeiro. "The double taxation pact is in place and so is the case with other bilateral pacts signed so far," Foreign Secretary...