The Convention, as amended by this Protocol, will provide tax stability to the residents of India and the UK and will facilitate economic cooperation between the two nations.
It will also stimulate the flow of investment, technology and services between India and the UK.
The Protocol was signed here yesterday by Jaimini Bhagwati, High Commissioner of India to the UK and David Gauke, Exchequer Secretary to the Treasury.
Now, benefits of the Convention would also be available to partners of the UK partnerships.
Further, the withholding taxes on the dividends would be 10 per cent or 15 per cent and would be equally applicable in the UK and in India.
The Protocol incorporates provisions for effective exchange of information between tax authorities of the two countries in line with latest international standards including exchange of banking information and supplying of information irrespective of domestic interest.
It now also provides for sharing of information to other agencies with the consent of the supplying state.
There would now be a new article in the Convention on assistance in collection of taxes. It includes provision for taking measures of conservancy.
The Protocol also incorporates into the Convention anti-abuse (limitation of benefits) provisions to ensure that the benefits of the Convention are not misused.
Both the countries would further enter into MoUs to expedite exchange of information and assistance in collection of taxes.