DTAA amendment by Australia may come into effect from 1st April:
- Australia’s parliament ratified the India-Australia Economic Cooperation and Trade Agreement (ECTA) on November 22.
- During the signing of the ECTA in April, Australia had agreed to amend its domestic taxation law to stop the taxation of income of non‑resident Indian firms providing technical services remotely to Australian customers.
- Subsequently, the Australian government proposed amendments to the double tax avoidance agreement (DTAA) with India with respect to the technical services section – Treasury Laws Amendment (Measures for Consultation) Bill 2022: Adjustment to tax on certain payments or credits paid to Indian firms.
- The above development is in the context of a decision of Australia’s Full Federal Court in 2018, which had held that the payment received by an Indian resident for providing offshore services to Australian customers was taxable in Australia under the provisions of the India-Australia DTAA, even though the Australian domestic tax laws do not contain any provision to tax such offshore income.
- The DTAA ratified by Australian Parliament, along with its trade deal with India, may come into force on April 1 next year, as per the finance ministry.
