Australia has assured India of getting approval from its Parliament for an amendment to the Double Tax Avoidance Agreement (DTAA) and for the Economic Cooperation and Trade Agreement (ECTA) by September.

An amendment to the DTAA will benefit the Indian information technology (IT) sector as taxation on the offshore income of Indian firms providing technical support in Australia would stop.

India has been pitching for an early amendment to the DTAA regulations, raising concerns over its IT firms paying more than the required tax in Australia.

In 2018, an Australian court mandated the taxation of payments made to Indian companies from their Australian clients. NASSCOM had pegged losses at $1 billion for the Indian IT industry due to double taxation in Australia.

Also Read: Asian Development Bank cuts India GDP forecast for FY23 to 7.2% on Covid, Ukraine war impact

India's Minister for Commerce and Industry Piyush Goyal and Australian trade Minister Dan Tehan signed the ECTA in April to expand cooperation in trade, work and travel between the nations.

India is slated to benefit from preferential market access provided by Australia on 100 percent of its tariff lines, which includes all labour-intensive sectors of export interest to India, such as gems and jewellery, textiles, leather, footwear, furniture, food, agricultural products, engineering products, medical devices and automobiles.

India will also offer preferential access to Australia on over 70 percent of its tariff lines, including lines of export interest to Australia, primarily raw materials and intermediaries such as coal, mineral ores and wines, etc.

Negotiations for the India-Australia ECTA were formally re-launched on September 30, 2021, and concluded on a fast-track basis by March end.

Australia is India's 17th largest trading partner, and India is Australia’s 9th largest trading partner. India-Australia's bilateral trade for merchandise and services was valued at $27.5 billion in 2021.

India’s merchandise exports to Australia grew 135 percent between 2019 and 2021. India’s exports comprise a broad-based basket primarily largely of finished products and were $6.9 billion in 2021. India’s merchandise imports from Australia were $15.1 billion in 2021, largely comprising raw materials, minerals and intermediate goods.

Also Read: Thomas Isaac refutes RBI claim, says no question of any state falling from unsustainable debt burden

First Published:Jul 22, 2022 1:49 PM IST