India and Nepal signed the Double Tax Avoidance Agreement in Kathmandu replacing the one signed in 1987.

The Finance Minister, Mr. Pranab Mukherjee and his counterpart, Mr. Barshman Pun inked the agreement in the Prime Minister’s office at Singha Darbar in Kathmandu yesterday.

Mr. Mukherjee was on a day long visit to the Nepalese capital.

The Double Tax Avoidance Agreement along with the Bilateral Investment Promotion Protection Agreement which was signed during Nepal’s Prime Minister’s recent visit to India is expected to boost Indian investment in Nepal.

The Finance Minister informed that said that India has already waived additional duty of customs duty for 117 items and expressed his willingness to waive duty for hundred more as demanded by Nepal.

During the one day visit, Mr. Mukherjee called on the President, Dr. Ram Baran Yadav, met Prime Minister Baburam Bhattaari and leaders of various political parties.

The revised Double Tax Avoidance Agreement is expected to provide tax stability, to residents of India and Nepal, facilitate mutual economic cooperation and stimulate the flow of trade, investment and economic activities between the two neighbours.

The threshold of tax rates on dividends and interest has been lowered to attract Nepal’s wish for more foreign direct investment. India has signed 81 DTAA till date and the Agreement helps effective exchange of information, assistance in collection of taxes.

The Finance Minister also said that Commerce Secretaries from both countries will be meeting in next month and other bilateral meetings are also to be held strengthening ties between the two countries.