The Hindu Business Line : India to amend tax avoidance treaty with Italy to boost trade

THE Union Cabinet has decided to amend the Double Taxation Avoidance Convention with Italy with a view to boosting trade and investment. "The Cabinet today gave its approval for signing of the protocol amending the Double Taxation Avoidance Convention," the Information and Broadcasting Minister, Mr S. Jaipal Reddy, said after the meeting.

The two sides agreed to incorporate the Italian proposals as well as the Indian proposals through a `Protocol' amending the existing convention, he said. The main provisions of the protocol include substitution of local income tax with a regional tax on productive activities by Italy. It also envisages broadening the scope of Permanent Establishment for taxation of services and insurance covers. The protocol also covers tax treatment of business profits, air transport and shipping.

The Cabinet also gave its ex-post-facto approval for India's participation as the `Guest of Honour Country' in the Frankfurt Book Fair 2006, which will enable India to arrange for a display of its books, art, culture and academic achievements.

The National Book Trust had been designated as the nodal agency and the overall expenditure for the event had been pegged at around Rs 20 crore, he said.

The Cabinet Committee on Economic Affairs, which also met on Thursday, approved implementation of the revised scheme of `Quality Improvement in Schools' having a Tenth Five Year Plan outlay of Rs 115 crore. Mr Reddy said the implementation of the scheme wouldexpedite the enhancement of quality of education in Government and Government-aided schools. An allocation of Rs 5 crore made by the Planning Commission for the new scheme of education libraries would also be utilised for science education under the component, he said.

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