The Union Cabinet has gave its approval for the revision of the present double taxation avoidance agreement (DTAA) with South Korea. The current agreement was signed in 1985. The revised agreement will

• Provide tax stability to the residents of India and Korea
• Facilitate mutual economic cooperation.
• Stimulate the flow of investment, technology and services.
• Incorporates provisions for effective exchange of information.
• Provides residence based taxation of shipping income.

This Cabinet nod assumes significance as it came days before the Prime Minister Narendra Modi’s official visit to South Korea. If DTAA is signed between two countries, it means that there are agreed rates of tax and jurisdiction on specified types of income arising in a country to a tax resident of another country.

Tidbits

• India has comprehensive Double Taxation Avoidance Agreements (DTAA ) with 88 countries.
• A large number of foreign institutional investors who trade on the Indian stock markets operate from Singapore and the second being Mauritius.

GK Questions

• The largest source of foreign direct investment (FDI) in India is _______.? Mauritius
• The second largest source of foreign direct investment (FDI) in India is _______.? Singapore
• Which country topples Mauritius to become top FPI provider to India? United States
• India replaced which country to become third in Purchasing Power Parity? Japan