India and Luxembourg Monday signed an agreement aimed at discouraging tax evasion and preventing double taxation on income of companies operating in their respective countries. The double taxation avoidance agreement (DTAA) was signed by Indias Central Board of Direct Taxes chairman R.S. Mathoda and Marc Courte, the ambassador extraordinary and plenipotentiary on behalf of the Luxembourg government.

According to an official statement, the DTAA would cover income tax and wealth tax including any surcharge in India while Luxembourg would be covered for income tax on individuals, corporation tax, capital tax and the communal trade tax.

India hopes that the agreement would stimulate the flow of capital, technology and skills between the two countries. It will also contribute to the tax stability and facilitate mutual cooperation, the statement said.