The Union Cabinet chaired by the Prime Minister Shri Narendra Modi, has approved the protocol amending the Convention and the Protocol between India and Israel, for avoidance of double taxation and for prevention of fiscal evasion with respect to taxes on income and on capital.
The Protocol provides for internationally accepted standards for effective exchange of information on tax matters including bank information and information without domestic tax interest. It is further provided that the information received from Israel in respect of a resident of India can be shared with other law enforcement agencies with authorisation of the Competent Authority of Israel and vice versa.
The Protocol further provides for ‘Limitation of Benefits’ Article as an anti-abuse provision aimed at preventing misuse of the Convention. The provisions of this Article enable use of the provisions of domestic law and measures concerning tax avoidance or evasion in the event of misuse of the Convention.
The existing Double Taxation Avoidance Convention (DTAC) between Indian and Israel was signed in 1996. Both the Indian and Israeli sides agreed to update Article 27 on the ‘Exchange of Information’ in India-Israel DTAC to meet internationally accepted standards.