Ireland And India Sign Pact On Double Taxation
India and Ireland
earlier this week signed a convention for avoidance of double
taxation and for prevention of fiscal evasion with respect to
taxes on income and capital gains. The convention was signed in
India by the chairman of India's Central Board of Direct Taxes
(CBDT), Mr A Balasubramanian, and Irish Ambassador to India Mr
Philip McDonagh. In the case of India,
the convention will cover income tax. For Ireland, it will encompass
income tax, corporation tax and capital gains tax (corporation
and capital gains tax is included in income tax in India). The
convention provides for a taxation rate of 10 per cent instead
of the current domestic rate of 20 per cent in India in respect
of interest, royalties and fees for technical services. It also provides
for dividends to be taxed at the rate of 10 per cent. Under the
Indian income tax law, dividends are not taxed at the level of
the shareholder but are subject to a withholding tax on the company
paying the dividends. According to the
convention, capital gains from alienation of shares of a company
will be taxable in the country where the company is resident.
Double taxation will be avoided by the giving of credits in one
country for taxes paid by its nationals in the other country. The convention also
provides for exchange of information in cases that are under investigation
in either India or Ireland. .
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