India and Japan on Friday signed an agreement to amend the convention for double taxation avoidance and prevention of evasion of income tax.
The existing convention was signed way back in 1989, a Finance Ministry statement read.
The protocol was signed by Revenue Secretary Hasmukh Adhia and Ambassador of Japan Kenji Hiramatsu.
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The agreement assumes added significance as it is being signed a few hours before the arrival of Japanese Prime Minister in India.
The pact provides for internationally-accepted standards for effective exchange of information on tax matters, including bank information, the statement added.
It further provides that the information received from Japan in respect of an Indian resident can be shared with other law enforcement agencies with authorisation of the competent authority of Japan and vice versa.
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As per the agreement, it is envisaged that both India and Japan will lend assistance to each other on collection of revenue claims.
The protocol allows exemption of interest income from taxation in the source country with respect to debt claims insured by the government or government-owned financial institutions, it added.