Download Word Document In English. (Rs.80/-) South Korea Double Taxation Avoidance Agreement CONVENTION BETWEEN THE GOVERNMENT OF REPUBLIC OF INDIA AND THE GOVERNMENT OF THE REPUBLIC OF KOREA FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME. NOTIFICATION Notification No.G.S.R. 1111(E), dtd. 26.9.1986. Whereas the annexed Convention between the Government of the Republic of India and the Government of the Republic Korea for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income has been ratified and the instruments of ratification exchanged, as required by paragraph 1 of Article 29 of the said Convention, on 1st August 1986; Now, therefore, in exercise of the powers conferred by section 90 of the Income-tax Act, 1961 (43 of 1961), and section 24A of the Companies (Profits) Surtax Act, 1964 (7 of 1964) the Central Government hereby directs that all the provisions of the said Convention shall be given effect to in the Union of India. CONVENTION BETWEEN THE GOVERNMENT OF THE REPUBLIC OF INDIA AND THE GOVERNMENT OF THE REPUBLIC OF KOREA FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME The Government of the Republic of India and the Government of the Republic of Korea, Desiring to conclude a Convention for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income, Have agreed as follows: Article 1 PERSONAL SCOPE This Convention shall apply to persons who are residents of one or both of the Contracting States. Article 2 TAXES COVERED 1.     The Convention shall apply to taxes on income imposed on behalf of each Contracting State irrespective of the manner in which they are levied. 2.     There shall be regarded as taxes on income all taxes imposed on total income, or on elements of income, including taxes on gains from the alienation of movable or immovable property and taxes on the total amounts of wages or salaries paid by enterprises. 3.     The existing taxes to which the Convention shall apply are: a.       In the case of Korea:                               i.        the income-tax;                              ii.        the corporation tax; and                             iii.        the inhabitant tax; (hereinafter referred to as " Korean tax ") b.      In the case of India:                               i.        the income-tax including any surcharge thereon imposed under the Income-tax Act, 1961 (43 of 1961);                              ii.        the surtax imposed under the Companies (Profits) Surtax Act, 1964 (7 (of 1964); (hereinafter referred to as " Indian tax "). 4.     The Convention shall apply also to any identical or substantially similar taxes which are imposed after the date of signature of this Convention in addition to, or in place of, the existing taxes. The Competent authorities of the Contracting States shall notify each other of any substantial changes which have been made in their respective taxation laws. Article 3 GENERAL DEFINITIONS 1.     In this Convention unless the context otherwise requires: a.     the term " a Contracting State " and " the other Contracting State " mean Korea or India as the context requires; b.    the term " tax " means Korean tax or Indian tax, as the context requires; c.     the term " Person " includes an individual, a company and any other body of persons which is treated as an entity for tax purposes; d.    the term " company " means any body corporate or any entity which is treated is a corporate for tax purposes; e.     the terms " enterprise of a Contracting State " and " enterprise of the other Contracting State " mean respectively an enterprise carried on by a resident of a Contracting State and an enterprise carried on by a resident of the other Contracting State: f.     the term " competent authority " means, in the case of Korea the Minister of Finance or his authorised representative; and in the case of India, the Central Government in the Ministry of Finance (Department of Revenue) or its authorised representative; g.    the term " national " means any individual possessing the nationality of a Contracting State and any legal person, partnership, association or other entity deriving its status as such from the laws in force in the Contracting State; h.     the term " international traffic " means any transport by a ship or aircraft operated by an enterprise of a Contracting State, except when the ship or aircraft is operated solely between places in the other Contracting State. 2.     As regards the application of this Convention by either Contracting State any term not otherwise defined shall, unless the Context otherwise requires, have the meaning which it has under the laws of that Contracting State relating to the taxes which are the subject of this Convention. Article 4 FISCAL DOMICILE 1.     For the purposes of the Convention the term " resident of a Contracting State " means any person who under the laws of that State is liable to taxation therein by reason of his domicile, residence, place of head or main office, place of management or any other criterion of a similar nature. 2.     Where by reason of the provisions of paragraph 1, an individual is a resident of both Contracting States, then his status shall be determined as follows: a.     he shall be deemed to be a resident of the State in which he has a permanent home available to him, if he has a permanent home available to him in both States, he shall be deemed to be a resident of the State with which his personal and economic relations are closer (centre of vital interests); b.    if the State in which he has his centre of vital interests cannot be determined, or if he has not a permanent home available to him in either State, he shall be deemed to be a resident of the State in which he has an habitual abode; c.     if he has an habitual abode in both States or in neither of them, he shall be deemed to be a resident of the State of which he is a national; d.    if he is a national of both States or of neither of them, the competent authorities of the Contracting States shall settle the question by mutual agreement. Where by reason of the provisions of paragraph 1 a persons other than an individual is a resdent of both Contracting States, then it shall be deemed to be a resident of the State in which its place of effective management is situated. In case of doubt the competent authorities of the Contracting States shall settle the question by mutual agreement. Article 5 PERMANENT ESTABLISHMENT 1.     For the purposes of this Convention, the term "permanent establishment" means a fixed place of business through which the business of an enterprise is wholly or partly carried on. 2.     The term "permanent establishment" shall include especially: a.     a place of management; b.    a branch; c.     an office; d.    a factory; e.     a workshop; and f.     a mine, an oil or gas well, a quarry or any other place of extraction of natural resources. 3.     The term "permanent establishment" likewise encompasses a building site, a construction assembly or installation project or supervisory activities in connection therewith, but only where such site project or activities continue for a period of more than nine months. 4.     Notwithstanding the preceding provisions of this Article, the term " permanent establishment " shall be deemed not to include: a.     the use of facilities solely for the purpose of storage, display or delivery of goods or merchandise belonging to the enterprise; b.    the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of storage display or, delivery; c.     the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of processing by another enterprise; d.    the maintenance of a fixed place of business solely for the purpose of purchasing goods or merchandise or for collecting information, for the enterprise e.     the maintenance of a fixed place of business solely for the purpose of advertising, the supply of information, scientific research, or any other activity, if it has a preparatory or auxiliary character in the trade or business of the enterprise; f.     the maintenance of a fixed place of business solely for any combination of activities mentioned in sub-paragraphs (a) to (e) of this paragraph, provided that the overall activity of the fixed place of business resulting from this combination is of a preparatory or auxiliary character. 5.     Notwithstanding the provisions of paragraphs 1 and 2 if a person--other than an agent of independent status to whom paragraph 6 applies--is acting on behalf of an enterprise and has, and habitually exercise, in a Contracting State an authority to conclude contracts in the name of the enterprise, that enterprise shall be deemed to have a permanent establishment in that State in respect of any activities which that person undertakes for the enterprise unless the activities of such person are limited to those mentioned in paragraph 4 which, if exercise through a fixed place of business, would not make this fixed place of business a permanent establishment by virtue of that paragraph. 6.     An enterprise shall not be deemed to have a permanent establishment in a Contracting State merely because it carries on business in that State through a broker, general commission agent or any other agent of an independent status, where such persons are acting in the ordinary course of their business. 7.     The fact that a company which is a resident of a Contracting State controls or is controlled by a company which is a resident of the other Contracting State, or which carries on business in that other State (whether through a permanent establishment or otherwise) shall not of itself constitute either company a permanent establishment of the other. Article 6 INCOME FROM IMMOVABLE PROPERTY 1.     Income from immovable property may be taxed in the Contracting State in which such property is situated. 2.     The term "immovable property" shall be defined in accordance with the law of the Contracting State in which the property in question is situated. The term shall in any case incrude property accessory to immovable property, livestock and equipment used in agriculture and forestry, rights to which the provisions of general law respecting landed property apply, usufruct of immovable property and rights to variable or fixed payments as consideration for the working of, or the right to work mineral deposits, sources and other natural resources; ships boats, and aircraft shall riot be regarded as immovable property. 3.     The provisions of paragraph 1 shall apply to income derived from the direct use, letting, or use in any other form of immovable property. 4.     The provisions of paragraphs 1 and 5 shall also apply to the income from immovable property of an enterprise and to income from immovable property used for the peformance of independent personal services. Article 7 BUSINESS PROFITS 1.     The profits of an enterprise of a Contracting State shall be taxable only in that State unless the enterprise carries in business in the other Contracting State through a permanent establishment situated therein. If the enterprise carries on business as aforesaid the profits of the enterprise may be taxed in the other State but only so much of them as is attributable to that permanent establishment. 2.     Subject to the provisions of paragraph 3 where an enterprise of a Contracting State carries on business in the other Contracting State through a permanent establishment situated therein, there shall in each Contracting State be attributed to that permament establishment the profits which it might be expected to make if it were a distinct and separate enterprise engaged in thesame or similar acivities under the same or similar conditions and dealing wholly independently with the enterprise of which it is a permanent establishment. 3.     In the determination of the profits of a permanent establishment, there shall be allowed as deductions expenses which are incurred for the purposes of the permanent establishment including executive and general administrative expenses so incurred, whether in the State in which the permanent establishment is situated or elsewhere which are allowed under the provisions of the domestic law of the Contracting State in which the permanent establishment is situated. 4.     No profits shall be attributed to a permanent establishment by reason of the mere purchase by that permanent establishment of goods or merchandise for the enterprise. 5.     For the purposes of the preceding paragraphs, the profits to be attributed to the permanent establishment shall be determined by the same method year by year unless here is good and sufficient reason to the contrary. 6.     Where income or profits include items of income which are dealt with separately in other Articles of this Convention, then the provisions of those Articles shall not be effected by the provisions of this Article. Article 8 AIR TRANSPORT 1.     Profits from the operation of aircraft in international traffic carried on by an enterprise of a Contracting State shall be taxable only in that State. 2.     The provisions of paragraph 1 shall also apply to profits derived from the participation in a pool a joint business or in an international operating agency. 3.     For the purposes of this Article the term " operation of aircraft " shall include transportation by air of persons, livestock, goods or mail carried on by the owners or lessees or characters, of aircraft including the sale of tickets for such transportation on behalf of other enterprises the incidental lease of aircraft on a character basis and any other activity directly connected with such, transportation. Article 9 SHIPPING TRANSPORT 1.     Profits derived by an enterprise of a Contracting State from the operation of ships in international traffic shall be taxable only in that State. 2.     Notwithstanding the provisions of paragraph 1 of this Article, profits derived from the operation of ships in international traffic may be taxed in the Contracting State in which such operation is carried on; but the tax so charged shall not exceed 50 per cent, of the tax otherwise imposed by the internal law of that state. 3.     The provisions of paragraphs 1 and 2 of this Article shall also apply to profit derived from the participation in a pool, a joint business or an international operating agency. Article 10 ASSOCIATED ENTERPRISES Where: a.     an enterprise of a Contracting State participates directly or indirectly in the management, control or capital of an enterprise of the other Contracting State, or b.    the same persons participate directly or indirectely in the management, control or capital of an enterprise of a Contracting State and an enterprise of the other Contracting State, and in either case conditions are made or imposed between the two enterprises in their commercial or financial relation which differ from those which would be made between independent enterprises, then any profits which would, but for those conditions, have accrued to one of the erterprises, but, by reason of those conditions, have not so accrucd, may he included in the profits of that enterprise and taxed accordigly. Article 11 DIVIDENDS 1.     Dividends paid by a company which is a resident of a Contracting State to a resident of the other Contracting Stay be taxed in that other State. 2.     However, such dividends may also be taxed in the Contracting State of which the company paying the dividends is a resident, and according to the laws of that State, but if he recipion is the beneficial owner of the dividends, the tax so charged shall not exceed: a.     15 per cent of the gross amount of the dividends the beneficial owner is a company which owns directly at least 20 per cent of the capital of the company paying the dividends; b.    20 per cent of the gross amount of the dividends in all other cases. This paragraph shall not affect the taxation of the company in respect of the profits out of which the dividends are paid. 3.     The term ' dividends ' as used in this Article means income from shares, or other rights, not being debt-claims, participating in profits, as well as income from other corporate rights which is subjected to the same taxation treatment as income from shares by the laws of the State of which the company making the distribution is a resident. 4.     The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the dividends, being a resident of a Contracting State, carries on business in the other Contracting State of which the company paying the dividends is a rsident through a permanent establishment situated therein or perfoms in that other State independent personal services from a fixed base situated therein and the holding in respect of which the dividends are paid is effectively connected with such permanent establishment or fixed base. In such cases the provisions of Article 7 or Article 15, as the case may be shall apply. 5.     Where a company which is a resident of a Contracting State derives profits or income from the other Contracting State that other State may not impose any tax on the dividends paid by the company, except insofar as such dividends are paid to a resident of that other state or insofar as the holding in respect of which the dividends are paid is effectively connected with a permanent establishment or a fixed base situated in that other State, nor subject the company's undistributed profits to a tax on the company's undistributed profits, even if the dividends paid or the undistributed profits consist wholly or partly of profits or income arising in such other State. ARTICLE 12 INTEREST 1.     Interest arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State. 2.     However, such interest may also be taxed in the Contracting State in which it arises, and according to the laws of that State but if he recipient is the beneficial owner of the interest the tax so charged shall not exceed 15 per cent of the gross amount of the interest. 3.     Notwithstanding the provisions of paragraph 2 of this Article: a.     where the interest is paid to a bank carrying on a bona fide banking business which is a resident of the other Contracting State and is the beneficial owner of the interest, the tax charged in the Contracting State in which the interest arises shall not exceed 10 per cent of the gross amount of the interest; b.    where the interest is paid to the Government of on of the Contracting States or a political sub-division or local authority or the Central Bank or the Export Import Bank of that State, it shall not be subjected to tax by the State in which it arises. 4.     The term "interest" as used in this Article mean income from debt-claims of every kind, whether or not secured by mortgage and whether or not carrying a right to participate in the debtor's profits and, in particular, income from government securities and income from bonds or debentures, including premiums and prizes attaching to such securities, bonds or debentures. 5.     The provisions of paragraphs 1, 2 and 3 shall not apply if the beneficial owner of the interest, being a resident of a Contracting State, carries on business in the other Contracting State in which the interest arises, through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the debt-claims in respeot of which the interest is paid is effectively connected with such permanent establishment or fixed base. In such cases the provisions of Article 7 or Article 15, as the case may be, shall apply. 6.     Interest shall be deemed to arise in a Contracting State When the payer is that State itself, apolitical sub-division, a local authority or a resident of that Sate. Where, however, the person paying the interest, whether he is a resident of a Contracting State or not has in a Contracting State a permanent establishment or a fixed base in connection with which the indebtedness on which the interest is paid was incurred, and such interest is borne by such permanent establishment or fixed base, then such interest shall be deemed to arise in the state in which the permanent establlishment or the fixed base is situated. 7.     Where, owing to a special relationship between the payer and the beneficial owner or between both of them and some other person, the amount of the interest, having regard to the debt-claim for which it is paid, exceeds the amount which would have been agreed upon by the payer and the beneficial owner in the absence of such relationship, the provisions of this Article shall amount. In such cases, the shall remain taxable according to the due regard being had to the other provisions of this Convention. Article 13 ROYALTIES AND FEES FOR TECHNICAL SERVICES 1.     Royalties and fees for technical services arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State. 2.     However, such royalties and fees for technical services may also be taxed in the Contracting State in which they arise and according to the laws of that State, but if the recipient is the beneficial owner of the royalties or fees for technical services, the tax so charged shall not exceed 15 per cent of the gross amount of the royalties or fees for technical services. 3.     The term " royalties " as used in this Article means payments of any kind received as a consideration for the use of, or the right to use, any copyright of literary, artistic or scientific work including cinematograph film, or films or tapes used for radio or television broadcasting, any patent, trade mark, design or model, plan, secret formula or process, or for the use of, or the right to use, industrial, commercial or scientific equipment, or for information concerning industrial, commercial or scientific experience. 4.     The term " fees for technical services " as used in this Article means payments of any kind to any person, other than payments to an employee of the person making the payments and to any individual for independent personal services mentioned in Article 15, in consideration for services of managerial, technical or consultative nature, including the provison of services of technical or other personnel. 5.     The provisions of paragraphs 1 and 2 of this Article shall not apply if the benecficial owner of the royalties or fees for technical services, being a resident of a Contracting State, carries on business in the other Contracting State in which the royalties or fees for technical services arise through a permanent establishment situated there or perform in that other State independent personal services from a fixed base situated therein, and the right, property or contract in respect of which the royalties or fees for technical services and paid is effectively connected with such permanent establishment or fixed base. In such cases the provisions of Article 7 or Article 15, as the case may be, shall apply. 6.     Royalties and fees for technical services shall be deemed to arise in a Contracting State when the payer is that State itself, a political sub-division, a local authority or a resident of that State. Where, however, the person paying the royalties or fees for technical services, whether he is a resident of a Contracting State or not has in a contracting State a permanent establishment or a fixed base in connection with which the obligation to make the payments was incurred and the payments are borne by the permanent establishment or fixed base, then the royalties or fees for technical services shall be deemed to arise in the Contracting State in which the permanent estiblishment or fixed base is situated. 7.     Where, owing to a special relationship between the payer and the beneficial owner or between both of them and some other person, the amount of the royalties or fees for technical services paid, having regard to the use, right or information for which they are paid, exceeds the amount which would have been agreed upon by the payer and the recipient in the absence of such relationship, the provisions of this Article shall apply only to the last-mentioned amount. In such cases, the excess part of the payments shall remain taxable according to the law of each Contracting State due regard being had to the other provisions of this Convention. Article 14 CAPITAL GAINS 1.     Capital gains from the alienation of immovable property as defined in paragraph 2 of Article 6 or from the alienation of shares in a company the assets of which consist prinicpally of immovable property, may be taxed in the State in property is situated. 2.     Gains from the alienation of movable Property forming part of the business property of a permanent estabilishment which an enterprise of a Contracting State has in the other Contracting State or of movable property pertaining to a fixed base available to a resident of a Contracting State in the other Contracting State for the purposes of performing professional services including such gains from the alienation of such a permanent establishment (alone or together with the whole enterprise) or of such a fixed' base may be taxed in the other State. 3.     Notwithstanding the provisions of pagraph 2, gains by an enterprise of a Contracting State from alienation of ships and aircraft which it operates in international traffic and movable property pertaining to the operation of such ships and aircraft shall be taxable only in that State. 4.     Gains from the alienation of any property, other than those mentioned in preceding paragraphs of this Article, shall be taxable only in the Contracting State of which the alienator is a resident. 5.     The term ' alienation "shall mean alienation in accordance with the law of the Contracting State in which the property question is siutated. Article 15 INDEPENDENT PERSONAL SERVICES 1.     Income derived by an individual who is a resident of a Contracting State from the performance of professional services or other independent activities of a similar character shall be taxable only in that State unless he has a fixed based regularly available to him in the other Contracting State for the purpose of performing his activities. If he has such a fixed base, the income may be taxed in the other contracting State but only so much of it as it attributable to that fixed base. 2.     The term "professional services " includes especially iudependent scientific, literary, artistic, educational or teaching activities as well as the independent activities of physicians surgeons, lawyers, engineers, architects, dentists and accountants. Article 16 DEPENDENT PERSONAL SERVICES 1.     Subject to the provisions of Articles 17, 19, 20, 21 and 22, salaries, wages and other similar remuneration derived by a resident of a Contracting State in respect of an employment shall be taxable only in that State unless the employment is exercised in the other Contracting State. If the employment is so exericed, such remuneration as is derived therefrom may be taxed in that other State. 2.     Notwithstanding the provisions of paragraph 1, remuneration derived by a resident of a Contracting State in respect of in employment exercised in the other Contracting State shall be taxable only in the first-mentioned State if: a.     the recipient is present in the other State for a period or periods not exceeding in the aggregate 183 days in the " previous year " or " taxation year " concerned, as the case may be; and b.    the remuneration is paid by, or on behalf of, an employer who is not a resident of the of the other State; and c.     the remuneration is not borne by a permanent establishment or a fixed base which the employer has in the other State. 3.     Notwithstanding the preceding provisions of this Article, remuneration derived by a resident of a Contracting State into respect of an employment exercised abroad a ship or aircraft operated in international traffic shall be taxable only in that State. Article 17 DIRECTORS' FEES AND REMUNERATIOIN OF TOP LEVEL MANAGERIAL OFFICIALS 1.     Directors' fees and other similar payments derived by a resident of a Contracting State in his capacity as a member of' the Board of Directors of a Company which is a resident of theother Contracting State may be taxed in that other State. 2.     Salaries, wages and other similar remuneration derived by a resident of a Contracting State in his capacity as an official in a top-level managerial position of a company which is a resident of the other Contracting State may be taxed in that other State. Article 18 ARTISTES AND ATHLETES 1.     Notwithstanding the provisions of Article 15, income derived by a resident of a Contractins State as an entertainer such as a theatre, motion pictures, radio or television artiste,or a musician, or as an athlete, from his personal activities as such exercised in the other Contracting State, may be taxed in that other State. 2.     Where income in respect of personal activites by an entertainer or athlete in his capacity as such accrues not to the entertainer or athlete himself but to another person, that income may, notwithstanding the provisions of Articles 7 and 15, be taxed in the Contracting State in which the activities of the entertainer or athlete are exercised. 3.     The provisions of paragraphs 1 and 2 shall not apply to remuneration or profits, salaries, wages and similar income derived from activities performed in a Contracting State by entertainers or athletes if their visit to that State is substantially supported from the public funds of the other Contracting State, a political sub-division or a local authority thereof. Article 19 PENSIONS Subject to the provisions of paragrapha 2 and 3 of Article 20. pensions and other similar remuneration paid to a resident of a Contracting State in consideration of past employment shall be taxable only in that State. Article 20 GOVERNMENT FUNCTIONS 1.       a.     Remuneration, other than a pension, paid by a Contracting State or a political sub-division or a local authority thereof, to an individual in respect of service rendered to that State or sub-division or authority shall be taxable only in that State. b.    However, such remuneration shall be taxable only in the other Contracting State if the services are rendered in that State and the individual is a resident of that State who:                       i.        is a national of that State; or                      ii.        did not become a resident of that State solely for the purpose of rendering the services, 2.     a.     Any pension paid by or out of funds created by, a Contracting State or a political sub-division or a local authority thereof to an individual in respect of services rendered to that State or sub-division or authority shall be taxable only in that State. b.    However such pensions shall be taxable only in the other Contracting State if the individual is a resident of, and a national of, that State. 3.     The provisions of Article 16, 17 and 19 shall apply to remuneration and pensions in respect of services rendered in connection with a business carried on by a Contracting State or a political Sub-division or a local authority thereof. 4.     The provisions of paragraph 1 of this Article shall likewise apply in respect of remuneration or pensions paid, in the case of Korea, by the Bank of Korea, the Export-Import Bank of Korea and the Korea Trade Promotion Corporation and in the case of India, by the Reserve Bank of India and the EXIM Bank of India, and by organizations recognised by and agreed between the competent authorities of the Contracting States. ARTICLE 21 PAYMENTS RECEIVED BY STUDENTS AND APPRENTICES 1.     A student or business apprentice who is or was a resident of one of the Contracting States immediately before visiting the other Contracting State and who is present in that other State solely for the purpose of his education or training shall be exempt from tax in that other State on: a.     payments made to him by persons residing outside that other State for the purposes of his maintenance, education or training; and b.    remuneration from employment in that other State, in an amount not exceeding one million and seven hundred thousand Korean Won or its equivalent in Indian currency during any " previous year " or the " taxation year ", as the case may be, provided that such employment is directly related to his studies or is undertaken for the purpose of his maintenance. 2.     The benefits of this article shall extend only for such period of time as may be reasonable or customarily required; to complete the education or training undertaken, but in no event shall any individual have the benefits of this article for more than five consecutive years from the date of his first arrival in that other Contracting State. ARTICLE 22 PROFESSORS, TEACHERS AND RESEARCH SCHOLARS 1.     An individual who is or was a resident of a Contracting State immediately before making a visit to the other Contracting State, and who, at the invitation of any university, college, school or other similar educational institution, which is recognised by the competent authority in that other State, visits that other State solely for the purpose of teaching or research or boh at such educational institution shall be exempt from tax in that other State on his remuneration for such teaching or research, for a period not exceeding two consecutive years from the date of his first arrival in that other State. 2.     This Article shall not apply to income from rearch if such research is undertaken primarily for the private of a specific person or persons. ARTICLE 23 OTHER INCOME Items of income of a resident of a Contracting State, whereever arising, not dealt with in the foregoing Articles of this Convention shall be taxable only in that State. ARTICLE 24 ELIMINATION OF DOUBLE TAXATION 1.     In the case of a resident of Korea, double taxation shall be avoided as follows: Subject to the provisions of Korean tax law regarding the allowance as a credit against Korean tax of tax payable in any country other than Korea (which shall not affect the general Principle hereof), the Indian tax payable (excluding in the case of a dividend, tax payable in respect of the profits out of which the dividend is paid) under the laws of India and in accordance this Convention, whether directly or by deduction, in respect of income from sources within India shall be allowed as a credit against Korean tax payable in respect of that income. The credit shall not however, exceed that proportion of Korean tax which the income from sources within India bears to the entire income subject to Korean tax. 2.     For the purposes of paragraph 1, the term " Indian tax payale " shall be deemed to include the amount of Indian tax which would have been payable in accordance with Indian tax laws but for the exemption or reduction of Indian tax in accordance with the laws relating to incenitves for the promotion of economic development in India which were in force on the date, of signature of this Convention or any other provisions which may subsequently be introduced in India in modification of, or in addition to, those laws so far as they are agreed by the competent authorities of the Contracting States, provided that the amount of the tax referred to in this paragraph shall not, however, exceed: a.     in the case of dividends referred to in paragraph 2 (a) of Article 11 an amount of 15 per cent of the gross amount of such dividends and, in the case of dividends referred to in paragraph 2 (b) of Article 11 an amount of 20 per cent of the gross amount of such dividends; b.    in the case of interest referred to in paragraph 2 of Article 12 an amount of 15 per cent of the gross amount of such interest and in the case of interest referred to in paragraph 3 (a) of Article 12 an amount of 10 per cent of the gross amount of such inerest; and... c.     in the case of royalties referred to in paragraph 2 of Article 12 an amount of 15 per cent of the gross amount of such royalties. 3.     In the case of a resident of India, double taxation shall be avoided as follows: - Subject to the provisions of Indian tax law regarding the allowance as a credit against lndian tax of tax payable in any country other than India (which shall not affect the general principle hereof), the Korean tax payable (excluding in the case of a dividend, tax payable in respect of the profits out of which the dividend is paid) under the laws of Korea and in accordance with this convention, whether directely or by deduction, in respect of income from sources within Korea shall be allowed as a credit against Indian tax payable in respect of that income.The credit shall not, however,exceed that proportion of Indian tax which the income from sources to the entire income subject to Indian tax. 4.     For the purposes of paragraph 3, the term " Korean tax payable " shall be deemed to include the amount of Korean tax which would have been payable in accordance with Korean tax laws but for the exemption or reduction of Korean tax in accordance with the laws relating to incentives for the promotion of economic development in Korea which were in force on the date of signature of this Convention or any other Provisions which may subsequently be introduced in Korea in modification of or if addition to those laws so far as they are agreed by the competent authorities of the Contracting States, provided that the amount of the tax referred to in this paragraph shall not, however, exceed: a.     in the case of dividends referred to in paragraph 2 (a) of Article 11 an amount of 15 per cent of the gross amount of such dividends and, in the case of dividends referred to in paragraph 2 (b) of Article11 an amount of 20 per cent of the gross amount of such dividends; b.    in the case of interest referred to in paragraph 2 of Article 12 an amount of 15 per cent of the gross amount of such interest and in the case of interest referred to in paragraph 3 (a) of Article 12 an amount of 10 per cent of the gross amount of such interest; and c.     in the case of royalties referred to in paragraph 2 of Article 13 an amount of 15 per cent of the gross amount of such royalties. ARTICLE 25 NON-DISCRIMINATION 1.     The nationals of a Contracting State shall not be subjected in the other Contracting State to any taxation or any requirement connected therewith which is other or more burden some than the taxation and connected requirements to which nationals of that other State in the same are or may be subjected. 2.     The taxation on a permanent establishment which an enterprise of a Contracting State has in the other Contracting State shall not be less favourably levied in that other State than the taxation levied on enterprises of that other State carrying on the same activities. This provision shall not be constituted as obliging a Contracting State to grant to residents of the other Contracting State any personal allowances, reliefs and reductions for taxation purposes on account of civil status or family responsibilities which it grants to its own residents. 3.     Except where the provisions of Article 10, paragraph 7 of Article 12, or paragraph 7 of Article 13 apply, interest, royalties and other disbursements paid by an enterprise of a Contracting State to a resident of the other Contracting State shall, for the purpose of determining the taxable profits of such enterprises, be deductible under the same condition as if they had been paid to a resident of the first-mentioned State. 4.     Enterprises of a Contracting State, the capital of which is wholly or partly owned or controlled, directly or indirectly, by one or more residents of the other Contracting State, shall not be subjected in the first-mentioned Contracting State to any taxation of any requirement connected therewith which is other or more burdensome the in the taxation and connected requirements to other similar enterprises of that first-mentioned State are or may be subjected. 5.     provisions of this Article shall, notwithstanding the of Article 2, apply to taxes of every kind and description. ARTICLE 26 MUTUAL AGREEMENT PROCEDURE 1.     Where a resident of a Contracting State considers that the actions of one or both of the Contracting States result or will result for him in taxation not in accordance with this Convention he may, notwithstanding the remedies provided by the national laws of those States, present his case to the competent authority of the Contracting State of which he is a resident of it has case comes under paragraph 1 of Article 25, to that of the Contracting State of which he is a national. This case must be presented within three years from the first Notification of the action giving rise to taxation not in with the Convention. 2.     The competent authority shall endeavour, if the objection appears to it to be justified and if it is not itself about to arrive at an apropriate solution, to resolve the case by mutual agreement with the competent authority of the other Contracting State, with a view to the avoidance of the taxation which is not in accordance with the Convention. Any agreement reached shall be implemented notwithstanding any time limits in the national laws of the Contracting States. 3.     The competent authoritys of the Contracting states shall endeavour to resolve by mutual agreement any difficulties or doubts arising as to the interpretation or application of the Convention. The may also consult together for the elimination of double taxotion in cases not provided for in the Convention. 4.     The conmpetent authorities of the Contracting States may communicate with each other directly for the purpose of reaching an agreement in the sense of the preceeding paragraphs. When it seems advisiable in order to reach agreement to have an oral exchange of opinions, such exchange may take place through a Commission consisting of representatives of the competent authorities of the Contracting State. Article 27 EXCHANGE OF INFORMATION 1.     The competent authorities if the Contractiong States shall exchange such information (including documents) as is necessary for carrying out the provisions of this Convention or of the domestic laws of the Contracting States concerning taxes covered by the Convention, in so far as the taxation thereunder is not contrary to the Convention in particular for the prevention of fraud or evasion of such taxes. The exchange of information is not restricted by Article 1. Any information received by a Contracting State shall be treated to secret in the same manner as information obtained under the domestic laws of that State. However, if the information originally regarded as secret in the transmitting State it shall be disclosed enjoy to persons or authorities (including courts and administrative bodies) involed in the assessment, or collection of, the enforcement orm prosecution in respect on the determination of appeils in relation to, the taxes which are the subject of the Convention. Such persons or authorities shall use the information only for such purposes but may disclose the informationin public court, proceedings or in judicial decisions. The competent authorities shall, through consultation, develop appropriate conditions, methods and techniques concerning the matters in respect of which such exchanges of information shall be made including where appropriate, exchanges of information regarding tax avoidance. 2.     In no case shall the provision of Paragraph 1 be construed so as to impose on a Contracting State the obligation: a.     to carry out administrative measures at variance with the laws and administrative practice of that or of the other Contracting State; b.    to supply information which is not obtainable under the laws or in the normal course of the administration of that or of the other Contracting State; c.     to supply information which would disclose any trade, business, industrial, commercial or professional secret or trade process, or information, the disclosure of which would be contrary to public policy (order public). Article 28 DIPLOMATIC AGENTS AND CONSULAR OFFICERS Nothing in this Convention shall affect the fiscal privileges of diplomatic agents and consular officers under the general rules of international law or under the provisions of special agreements. Article 29 ENTRY INTO FORCE 1.     This Convention shall be ratified and the instruments of ratification shall be exchanged at Seoul as soon as possible. The Convention shall enter into force on the thirtieth day after the date of exchange of the instruments of ratification. This Convention shall have effect: a.       In Korea:               i.        in respect of tax withheld at the source on amounts paid or credited to non-residents on or after the first day of January of the calendar year next following that in which the Convention is initialled; and              ii.        in respect of other taxes for taxation years beginning on or after the first day of January of the calendar year next following that in which the Convention is initialled. b.      In India:               i.        in respect of tax withheld at the source on amounts paid or credited to non-residents on or after the first day of April of the calendar year next following that in which the Convention is initialled; and              ii.        in respect of other taxes for previous years beginning on or after the first day of April of the calendar year next following that in which the Convention is initialled. Article 30 TERMINATION The Convention shall remain in force indefinitely but either of the Contracting States may, on or before the thirtieth day of June in any calendar year beginning after the expiration of a period of five years from the date of its entry into force, give the other Contracting State through diplomatic channels, written notice of termination and, in such event, this Convention shall cease to have effect: a.       In Korea:               i.        in respect of tax withheld at the source on amounts paid or credited to non-residents on or after the first day of January next following the calender year in which the notice of termination is given; and              ii.        in respect of other taxes for taxation years beginning on or after the first day of January next following the calendar year in which the notice of termination is given. b.     In India:               i.        in respect of tax withheld at the source on amounts paid or credited to non-residents on or after the first day of April next following the calendar year in which the notice of termination is given; and              ii.        in respect of other taxes for previous beginning on or after the first day of April next following the calendar year in which the notice of termination is given. In witness whereof the undersigned, being duly authorsed thereto, have signed the present Convention. Done in duplicate at New Delhi this 19th day of July one thousand nine hundred and eighty-five on three original each in the Hindi, Korean and English languages, all the texts being equally authentic. In case of divergence between the three texts, the English text shall be the operative one. For the Government of the Republic of India For the Government of the Republic of Korea (Vishwanath Pratap Singh) (Won Kyung Lee) Minister Of Foreign Affairs, Minister Of Finance Embassy Of India Seoul PROTOCOL At the moment of signing the Convention between the Govenment of the Republic of India and the Government of the Repiablic of Korea for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on income the undersigned have agreed that the following provisions form an integral part of the convention. 1.     In respect of sub-paragraph (a) of paragraph 3 of Article 2 of the convention it is understood that the Convention shall also apply to the Korean defence tax where charged by reference to the income-tax for the corporation tax. 2.     for the purposes of Articles 8 and 9 of the Convention it is understood that:               i.        interest on funds connected with the operation of aircraft and ships in international traffic

Download Word Document In English. (Rs.75/-) Vietnam SECTION 90 OF THE INCOME-TAX ACT, 1961---DOUBLE TAXATION AGREEMENT AGREEMENT FOR AVOIDANCE OF DOUBLE TAXATION AND PREVENTION OF FISCAL EVASION WITH FOREIGN COUNTRIES---WITH VIETNAM Notification No. 9758 [F. NO. 503/7/91---FTD], dated 28-4-1995 Whereas the annexed Agreement between the Government of the Republic of India and the Government of the Socialist Republic of Vietnam for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income has come into force on the 2nd day of February, 1995 after the notification by both the Contracting States to each other of the Completion of the procedures required under their laws for bringing into force of the said Agreement in accordance with Article 29 of the said Agreement; Now, therefore, in exercise of the powers conferred by section 90 of the Income-tax Act, 1961 (43 of 1961), the Central Government hereby directs that all the provisions of the said Agreement shall be given effect to in the Union of India. ANNEXURE AGREEMENT BETWEEN THE REPUBLIC OF INDIA AND THE SOCIALIST REPUBLIC OF VIETNAM FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME The Government of the Republic of India and the Government of the Socialist Republic of Vietnam, desiring to conclude an Agreement for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income, have agreed as follows: Article 1: PERSONAL SCOPE This Agreement shall apply to persons who are residents of one or both of the Contracting States. Article 2: TAXES COVERED 1.     This Agreement shall apply to taxes on income imposed on behalf of a Contracting State or of its political subdivisions or local authorities, irrespective of the manner in which they are levied. 2.     There shall be regarded as taxes on income all taxes imposed on total income or on elements of income, including taxes on gains from the alienation of movable or immovable property, taxes on the total amounts of wages or salaries paid by enterprises. 3.     The existing taxes to which the Agreement shall apply are: a.       in India: the income-tax including any surcharge thereon; (hereinafter referred to as "Indian tax"); b.      in Vietnam:                       i.        the personal income-tax;                      ii.        the profit tax; and                     iii.        the profit remittance tax; (hereinafter referred to as "Vietnamese tax"). 4.     The Agreement shall also apply to any identical or substantially similar taxes which are imposed after the date of signature of this Agreement in addition to, or in place of, the existing taxes. The competent authorities of the Contracting States shall notify each other of substantial changes which have been made in their respective taxation laws. Article 3: GENERAL DEFINITIONS 1.     In this Agreement, unless the context otherwise requires: a.     the term "India" means the territory of India and includes the territorial sea and airspace above it, as well as any other maritime zone in which India has sovereign rights, other rights and jurisdictions, according to the Indian law and in accordance with international law or the U.N. Convention on the Law of the Sea; b.    the term "Vietnam" means the Socialist Republic of Vietnam; when used in a geographical sense, it means all its national territory, including its territorial sea and any area beyond and adjacent to its territorial sea, within which Vietnam, by Vietnamese legislation and in accordance with international law, has sovereign rights of exploration for and exploitation of natural resources of the sea bed and its sub-soil and superjacent watermass; c.     the terms "a Contracting State" and "the other Contracting State" mean India or Vietnam as the context requires; d.    the term "company" means any body corporate or any entity which is treated as a company or body corporate under the taxation law in force in the respective Contracting States; e.     the term "competent authority" means:                       i.        in the case of India, the Central Government in the Ministry of Finance (Department of Revenue) or their authorized representative; and                      ii.        in the case of Vietnam, the Minister of Finance or his authorized representative; f.     the terms "enterprise of a Contracting State" and "enterprise of the other Contracting State" mean respectively an enterprise carried on by a resident of a Contracting State and an enterprise carried on by a resident of the other Contracting State; g.    the term "fiscal year" means:                       i.        in the case of India, "previous year" as defined under section 3 of the Income-tax Act, 1961; and                      ii.        in the case of Vietnam, the accounting year comprising of a twelve-month period; h.     the term "international traffic" means any transport by a ship or aircraft operated by an enterprise of a Contracting State, except when the ship or aircraft is operated solely between places in the other Contracting State; i.      the term "national" means any individual, possessing the nationality of a Contracting State and any legal person, partnership or association deriving its status from the laws in force in the Contracting State; j.      the term "person" includes an individual, a company, a body of persons and any other entity which is treated as a taxable unit under the taxation laws in force in the respective Contracting States; k.     the term "tax" means Indian tax or Vietnamese tax, as the context requires, but shall not include any amount which is payable in respect of any default or omission in relation to the taxes to which this Agreement applies or which represents a penalty imposed relating to those taxes. 2.     As regards the application of the Agreement by a Contracting State, any term not defined therein shall, unless the context otherwise requires, have the meaning which it has under the law of that State concerning the taxes to which the Agreement applies. Article 4: RESIDENT 1.     For the purposes of this Agreement, the term "resident of a Contracting State" means any person who, under the laws of that State, is liable to tax therein by reason of his domicile, residence, place of management, place of registration or any other criterion of a similar nature. 2.     Where by reason of the provisions of paragraph 1, an individual is a resident of both Contracting States, then his status shall be determined as follows: a.     he shall be deemed to be a resident of the State in which he has a permanent home available to him; if he has a permanent home available to him in both States, he shall be deemed to be a resident of the State with which his personal and economic relations are closer (centre of vital interests); b.    if the State in which he has his centre of vital interests cannot be determined, or if he has no permanent home available to him in either State, he shall be deemed to be a resident of the State in which he has an habitual abode; c.     if he has an habitual abode in both States or in neither of them, he shall be deemed to be a resident of the State of which he is a national; d.    if he is a national of both States or of neither of them, the competent authorities of the Contracting States shall settle the question by mutual agreement. 3.     Where by reason of the provisions of paragraph 1, a person other than an individual is a resident of both Contracting States, then it shall be deemed to be a resident of the State in which its place of effective management is situated. Article 5: PERMANENT ESTABLISHMENT 1.     For the purposes of this Agreement, the term "permanent establishment" means a fixed place of business through which the business of the enterprise is wholly or partly carried on. 2.     The term "permanent establishment" includes especially: a.     a place of management; b.    a branch; c.     an office; d.    a factory; e.     a workshop; f.     a mine, an oil or gas well, a quarry or any other place of extraction of natural resources; g.    a warehouse, in relation to a person providing storage facilities for others; and h.     a building site or construction or assembly project or supervisory activities in connection therewith; but only where such site, project or activity continues for a period of more than six months. 3.     Notwithstanding the preceding provisions of this Article, the term "permanent establishment" shall be deemed not to include: a.     the use of facilities solely for the purpose of storage, display or occasional delivery of goods or merchandise belonging to the enterprise; b.    the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of storage, display or occasional delivery; c.     the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of processing by another enterprise; (d) the maintenance of a fixed place of business solely for the purpose of purchasing goods or merchandise or of collecting information for the enterprise; d.    the maintenance of a fixed place of business solely for the purpose of carrying on, for the enterprise, any other activity of a preparatory or auxiliary character. 4.     Notwithstanding the provisions of paragraphs 1 and 2, where a person---other than an agent of an independent status to whom paragraph 5 applies---is acting in a Contracting State on behalf of an enterprise of the other Contracting State, that enterprise shall be deemed to have a permanent establishment in the first-mentioned Contracting State in respect of any activities which that person undertakes for the enterprise, if such a person: a.     has and habitually exercises in that State an authority to conclude contracts in the name of the enterprise, unless the activities of such person are limited to those mentioned in paragraph 3 which, if exercised through a fixed place of business, would not make this fixed place of business a permanent establishment under the provisions of that paragraph; or b.    has no such authority, but habitually maintains in the first-mentioned State a stock of goods or merchandise from which he regularly delivers goods or merchandise on behalf of the enterprise. 5.     An enterprise of a Contracting State shall not be deemed to have a permanent establishment in the other Contracting State merely because it carries on business in that State through a broker, general commission agent or any other agent of an independent status, provided that such persons are acting in the ordinary course of their business. However, when the activities of such an agent are devoted wholly or almost wholly on behalf of that enterprise, he will not be considered an agent of an independent status within the meaning of this paragraph. 6.     The fact that a company which is a resident of a Contracting State controls or is controlled by a company which is a resident of the other Contracting State, or which carries on business in that other State (whether through a permanent establishment or otherwise), shall not of itself constitute either company a permanent establishment of the other. Article 6: INCOME FROM IMMOVABLE PROPERTY 1.     Income derived by a resident of a Contracting State from immovable property (including income from agriculture or forestry) situated in the other Contracting State may be taxed in that other State. 2.     The term "immovable property" shall have the meaning which it has under the law of the Contracting State in which the property in question is situated. The term shall in any case include property accessory to immovable property, livestock and equipment used in agriculture and forestry, rights to which the provisions of general law respecting landed property apply, usufruct of immovable property and rights to variable or fixed payments as consideration for the working of, or the right to work, mineral deposits, sources and other natural resources. Ships, boats and aircraft shall not be regarded as immovable property. 3.     The provisions of paragraph 1 shall also apply to income derived from the direct use, letting, or use in any other form of immovable property. 4.     The provisions of paragraphs 1 and 3 shall also apply to the income from immovable property of an enterprise and to income from immovable property used for the performance of independent services. Article 7: BUSINESS PROFITS 1.     The profits of an enterprise of a Contracting State shall be taxable only in that State unless the enterprise carries on business in the other Contracting State through a permanent establishment situated therein. If the enterprise carries on business as aforesaid, the profits of the enterprise may also be taxed in the other State but only so much of them as is attributable directly or indirectly to that permanent establishment. The words "directly or indirectly" mean, for the purposes of this Article, that where a permanent establishment takes an active part in negotiating, concluding or fulfilling contracts entered into by the enterprise, then notwithstanding that other parts of the enterprise have also participated in those transactions, there shall be attributed to the permanent establishment that proportion of profits of the enterprise arising out of those contracts as the contribution of the permanent establishment to those transactions bears to that of the enterprise as a whole. 2.     Subject to the provisions of paragraph 3, where an enterprise of a Contracting State carries on business in the other Contracting State through a permanent establishment situated therein, there shall in each Contracting State be attributed to that permanent establishment the profits which it might be expected to make if it were a distinct and separate enterprise engaged in the same or similar activities under the same or similar conditions and dealing wholly independently with the enterprise of which it is a permanent establishment. 3.     In determining the profits of a permanent establishment, there shall be allowed as deductions expenses which are incurred for the purposes of the business of the permanent establishment, including executive and general administrative expenses so incurred, whether in the State in which the permanent establishment is situated or elsewhere in accordance with the provisions of and subject to the limitations of the tax laws of that State. 4.     Nothing in this Article shall affect the application of any law of a Contracting State relating to the determination of the tax liability of a person in cases where information is not available to the competent authority of that State in order to determine the profits to be attributed to a permanent establishment, provided that law shall be applied consistently with the principles of this Article. 5.     Insofar as it has been customary in a Contracting State to determine the profits to be attributed to a permanent establishment on the basis of an apportionment of the total profits of the enterprise to its various parts, nothing in paragraph 2 shall preclude that Contracting State from determining the profits to be taxed by such an apportionment as may be customary. The method of apportionment adopted shall, however, be such that the result shall be in accordance with the principles contained in this Article. 6.     No profits shall be attributed to a permanent establishment by reason of the mere purchase by that permanent establishment of goods or merchandise for the enterprise. 7.     For the purposes of the preceding paragraphs, the profits to be attributed to the permanent establishment shall be determined by the same method year by year unless there is good and sufficient reason to the contrary. 8.     Where profits include items of income which are dealt with separately in other Articles of this Agreement, then the provisions of those Articles shall not be affected by the provisions of this Article. Article 8: SHIPPING AND AIR TRANSPORT 1.     Profits derived by an enterprise of a Contracting State from the operation of ships or aircraft in inter-national traffic shall be taxable only in that State. 2.     For the purposes of this Article, profits from the operation of ships or aircraft in international traffic include: a.     income from the lease of ships or aircraft; and b.    profits from the use, maintenance or rental of containers (including trailers and related equipment for the transport of containers). Where such lease or such use, maintenance or rental, as the case may be, is incidental to the operation of ships or aircraft in international traffic. 3.     The provisions of paragraph 1 shall also apply to profits from the participation in a pool, a joint business or an international operating agency. 4.     For the purposes of this Article, interest on funds connected with the operation of ships or aircraft in international traffic earmarked for the purpose of payments of all kinds of wages and maintenance of ships or aircraft and their crew shall be regarded as income or profits derived from the operation of such ships or aircraft and the provisions of Article 11 shall not apply in relation to such interest. Article 9: ASSOCIATED ENTERPRISES Where--- a.     an enterprise of a Contracting State participates directly or indirectly in the management, control or capital of an enterprise of the other Contracting State, or b.    the same persons participate directly or indirectly in the management, control or capital of an enterprise of a Contracting State and an enterprise of the other Contracting State, and in either case conditions are made or imposed between the two enterprises in their commercial or financial relations which differ from those which would be made between independent enterprises, then any profits which would, but for those conditions, have accrued to one of the enterprises, but, by the reason of those conditions, have not so accrued, may be included in the profits of that enterprise and taxed accordingly. Article 10: DIVIDENDS 1.     Dividends paid by a company which is a resident of a Contracting State to a resident of the other Contracting State may be taxed in that other State. 2.     However, such dividends may also be taxed in the Contracting State of which the company paying the dividends is a resident and according to the laws of that State, but if the recipient is the beneficial owner of the dividends, the tax so charged shall not exceed 10 per cent of the gross amount of the dividends. This paragraph shall not affect the taxation of the company in respect of the profits out of which the dividends are paid. 3.     The term "dividends" as used in this Article means income from shares or other rights, not being debt-claims, participating in profits, as well as income from other corporate rights which is subjected to the same taxation treatment as income from shares by the laws of the State of which the company making the distribution is a resident. 4.     The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the dividends, being a resident of a Contracting State, carries on business in the Other Contracting State of which the company paying the dividends is a resident through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the holding in respect of which the dividends are paid is effectively connected with such permanent establishment or fixed base. In such case, the provisions of Article 7 or Article 15, as the case may be, shall apply. 5.     Where a company which is a resident of a Contracting State derives profits or income from the other Contracting State, that other State may not impose any tax on the dividends paid by the company, except insofar as such dividends are paid to a resident of that other Contracting State or insofar as the holding in respect of which the dividends are paid is effectively connected with a permanent establishment or a fixed base situated in that other State, nor subject the company's undistributed profits to a tax on the company's undistributed profits, even if the dividends paid or the undistributed profits consist wholly or partly of profits or income arising in such other State. Article 11: INTEREST 1.     Interest arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State. 2.     However, such interest may also be taxed in the Contracting State in which it arises and according to the laws of that State, but if the recipient is the beneficial owner of such interest the tax so charged shall not exceed 10 per cent of the gross amount of the interest. 3.     Notwithstanding the provisions of paragraph 2,---- a.     interest arising in a Contracting State shall be exempt from tax in that State provided it is derived and beneficially owned by:                       i.        the Government, a political sub-division or a local authority of the other Contracting State; or                      ii.        the Central Bank of the other Contracting State; b.    interest arising in a Contracting State shall be exempt from tax in that Contracting State to the extent approved by the Government of that State if it is derived and beneficially owned by any person [other than a person referred to in sub-paragraph (a)] who is a resident of the other Contracting State provided that the transaction giving rise to the debt-claim has been approved in this regard by the Government of the first-mentioned Contracting State. 4.     The term "interest" as used in this Article means income from debt-claims of every kind, whether or not secured by mortgage and whether or not carrying a right to participate in the debtor's profits, and in particular, income from Government securities and income from bonds or debentures, including premiums and prizes attaching to such securities, bonds or debentures. Penalty charges for late payment shall not be regarded as interest for the purpose of this Article. 5.     The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the interest, being a resident of a Contracting State, carries on business in the other Contracting State in which the interest arises, through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein and the debt-claim in respect of which the interest is paid is effectively connected with such permanent establishment or fixed base. In such case, the provisions of Article 7 or Article 15, as the case may be, shall apply. 6.     Interest shall be deemed to arise in a Contracting State when the payer is that Contracting State itself, a political sub-division, a local authority or a resident of that State. Where, however, the person paying the interest, whether he is a resident of a Contracting State or not, has in a Contracting State a permanent establishment or a fixed base in connection with which the indebtedness on which the interest is paid was incurred, and such interest is borne by such permanent establishment or fixed base, then such interest shall be deemed to arise in the State in which the permanent establishment or fixed base is situated. 7.     Where, by reason of a special relationship between the payer and the beneficial owner or between both of them and some other person, the amount of the interest, having regard to the debt-claim for which it is paid, exceeds the amount which would have been agreed upon by the payer and the beneficial owner in the absence of such relationship, the provisions of this Article shall apply only to the last-mentioned amount. In such case, the excess part of the payments shall remain taxable according to the laws of each Contracting State, due regard being had to the other provisions of this Agreement. Article 12: ROYALTIES 1.     Royalties arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State. 2.     However, such royalties may also be taxed in the Contracting State in which they arise and according to the laws of that State, but if the recipient is the beneficial owner of the royalties, the tax so charged shall not exceed 10 per cent of the gross amount of the royalties. 3.     The term " royalties " as used in this Article means payments of any kind received as a consideration for the use of, or the right to use, any copyright of literary, artistic or scientific work including cinematograph films, or films or tapes used for radio or television broadcasting, any patent, trade mark, design or model, plan, secret formula or process, or for the use of, or the right to use, industrial, commercial or scientific equipment, or for information concerning industrial, commercial or scientific experience. 4.     The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the royalties, being a resident of a Contracting State, carries on business in the other Contracting State in which the royalties arise, through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the right or property in respect of which the royalties are paid is effectively connected with such permanent establishment or fixed base. In such case, the provisions of Article 7 or Article 15, as the case may be, shall apply. 5.     Royalties shall be deemed to arise in a Contracting State when the payer is that State itself, a political sub-division, a local authority or a resident of that State. Where, however, the person paying the royalties, whether he is a resident of a Contracting State or not, has in a Contracting State a permanent establishment or a fixed base in connection with which the liability to pay the royalties was incurred, and such royalties are borne by such permanent establishment or fixed base, then such royalties shall be deemed to arise in the State in which the permanent establishment or fixed base is situated. 6.     Where, by reason of a special relationship between the payer and the beneficial owner or between both of them and some other person, the amount of the royalties, having regard to the use, right or information for which they are paid, exceeds the amount which would have been agreed upon by the payer and the beneficial owner in the absence of such relationship, the provisions of this Article shall apply only to the last-mentioned amount. In such case, the excess part of the payments shall remain taxable according to the laws of each Contracting State, due regard being had to the other provisions of this Agreement. Article 13: TECHNICAL FEES 1.     Technical fees arising in a Contracting State which are derived by a resident of the other Contracting State may be taxed in that other State. 2.     However, such technical fees may also be taxed in the Contracting State in which they arise, and according to the laws of that State; but if the recipient is the beneficial owner of the technical fees, the tax so charged shall not exceed 10 per cent of the gross amount of the technical fees. 3.     The term "technical fees" as used in this Article means payments of any kind to any person, other than to an employee of the person making the payments, in consideration for any services of a technical, managerial or consultancy nature. 4.     The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the technical fees, being a resident of a Contracting State carries on business in the other Contracting State in which the technical fees arise through a permanent establishment situated therein, or performs in that other State independent personal services, and the technical fees are effectively connected with such permanent establishment or such services. In such case, the provisions of Article 7 or Article 15, as the case may be, shall apply. 5.     Technical fees shall be deemed to arise in a Contracting State when the payer is that State itself, a political sub-division, a local authority or a statutory body thereof, or a resident of that State. Where, however, the person paying the technical fees, whether he is a resident of a Contracting State or not, has in a Contracting State a permanent establishment in connection with which the obligation to pay the technical fees was incurred, and such technical fees are borne by that permanent establishment, then such technical fees shall be deemed to arise in the Contracting State in which the permanent establishment is situated. 6.     Where, by reason of a special relationship between the payer and the recipient or between both of them and some other person, the amount of the technical fees paid, exceeds for whatever reason, the amount which would have been agreed upon by the payer and the beneficial owner in the absence of such relationship, the provisions of this Article shall apply only to the last-mentioned amount. In such case, the excess part of the payments shall remain taxable according to the law of each Contracting State due regard being had to the other provisions of this Agreement. Article 14: CAPITAL GAINS 1.     Gains derived by a resident of a Contracting State from the alienation of immovable property, referred to in Article 6, and situated in the other Contracting State may be taxed in that other State. 2.     Gains from the alienation of movable property forming part of the business property of a permanent establishment which an enterprise of a Contracting State has in the other Contracting State or of movable property pertaining to a fixed base available to a resident of a Contracting State in the other Contracting State for the purpose of performing independent personal services, including such gains from the alienation of such a permanent establishment (alone or together with the whole enterprise) or of such fixed base, may be taxed in that other State. 3.     Gains from the alienation of ships or aircraft operated in international traffic or movable property pertaining to the operation of such ships or aircraft shall be taxable only in the Contracting State of which the alienator is a resident. 4.     Gains from the alienation of share of the capital stock of a company the property of which consists directly or indirectly principally of immovable property situated in a Contracting State may be taxed in that State. 5.     Gains from the alienation of shares other than those mentioned in paragraph 4 in a company which is a resident of a Contracting State may be taxed in that State. 6.     Gains from the alienation of any property other than that mentioned in paragraphs 1, 2, 3, 4 and 5 shall be taxable only in the Contracting State of which the alienator is a resident. Article 15: INDEPENDENT PERSONAL SERVICES 1.     Income derived by a resident of a Contracting State in respect of professional services or other independent activities of a similar character shall be taxable only in that State except in the following circumstances when such income may also be taxed in the other Contracting State: a.     if he has a fixed base regularly available to him in the other Contracting State for the purpose of performing this activities; in that case, only so much of the income as is attributable to that fixed base may be taxed in that other Contracting State; or b.    if his stay in the other Contracting State is for a period or periods amounting to or exceeding in the aggregate 183 days in the relevant fiscal year concerned; in that case, only so much of the income as is derived from his activities performed in that other State may be taxed in that other State. 2.     The term "professional services" includes independent scientific, literary, artistic, educational or teaching activities, as well as the independent activities of physicians, surgeons, lawyers, engineers, architects, dentists and accountants. Article 16: DEPENDENT PERSONAL SERVICES 1.     Subject to the provisions of Articles 17, 18, 19, 20, 21 and 22, salaries, wages and other similar remuneration derived by a resident of a Contracting State in respect of an employment shall be taxable only in that State unless the employment is exercised in the other Contracting State. If the employment is so exercised, such remuneration as is derived therefrom may be taxed in that other State. 2.     Notwithstanding the provisions of paragraph 1, remuneration derived by a resident of a Contracting State in respect of an employment exercised in the other Contracting State shall be taxable only in the first-mentioned State if: a.     the recipient is present in the other State for a period or periods not exceeding in the aggregate 183 days in the relevant fiscal year; and b.    the remuneration is paid by, or on behalf of, an employer who is not a resident of the other State; and c.     the remuneration is not borne by a permanent establishment or a fixed base which the employer has in the other State. 3.     Notwithstanding the preceding provisions of this Article, remuneration derived in respect of an employment exercised aboard a ship or aircraft operated in international traffic by an enterprise of a Contracting State shall be taxable only in that State. Article 17: DIRECTORS' FEES Directors' fees and similar payments derived by a resident of a Contracting State in his capacity as a member of the Board of Directors of a company which is a resident of the other Contracting State may be taxed in that other State. Article 18: INCOME EARNED BY ENTERTAINERS AND ATHLETES 1.     Notwithstanding the provisions of Articles 15 and 16, income derived by a resident of a Contracting State as an entertainer such as a theatre, motion picture, radio or television artists, or a musician, or as an athlete, from his personal activities as such exercised in the other Contracting State may be taxed in that other State. 2.     While income in respect of personal activities exercised by an entertainer or an athlete in his capacity as such accrues not to the entertainer or athlete himself but to another person, that income may, notwithstanding the provisions of Articles 7, 15 and 16, be taxed in the Contracting State in which the activities of the entertainer or athlete are exercised. 3.     Notwithstanding the provisions of paragraph 1, income derived by an entertainer or an athlete who is a resident of a Contracting State from his personal activities as such exercised in the other Contracting State, shall be taxable only in the first-mentioned Contracting State, if the activities in the other Contracting State are supported wholly or substantially from the public funds of the first-mentioned Contracting State, including any of its political sub-divisions or local authorities. 4.     Notwithstanding the provisions of paragraph 2 and Articles 7, 15 and 16, where income in respect of personal activities exercised by an entertainer or an athlete in his capacity as such in a Contracting State accrues not to the entertainer or athlete himself but to another person, that income shall be taxable only in the other Contracting State, if that other person is supported wholly or substantially from the public funds of the other State, including any of its political sub-divisions or local authorities. Article 19: REMUNERATION AND PENSIONS IN RESPECT OF GOVERNMENT SERVICE 1.       a.     Remuneration, other than a pension, paid by a Contracting State or a political sub-division or a local authority thereof to an individual in respect of services rendered to that State or sub-division or authority shall be taxable only in that State. b.    However, such remuneration shall be taxable only in the other Contracting State if the services are rendered in that other State and the individual is a resident of that State who:                       i.        is a national of that State; or                      ii.        did not become a resident of that State solely for the purpose of rendering the services. 2.     a.     Any pension paid by, or out of funds created by a Contracting State or a political sub-division or a local authority thereof to an individual in respect of services rendered to that State or sub-division or authority shall be taxable only in that State. b.    However, such pension shall be taxable only in the other Contracting State if the individual is a resident of, and a national of that other State. 3.     The provisions of Articles 16, 17 and 20 shall apply to remuneration and pensions in respect of services rendered in connection with a business carried on by a Contracting State or a political sub-division or a local authority thereof. Article 20: NON-GOVERNMENT PENSIONS AND ANNUITIES 1.     Any pension, other than a pension referred to in Article 19, or any annuity derived by a resident of a Contracting State from sources within the other Contracting State shall be taxed only in the first-mentioned Contracting State. 2.     The term "pension" means a periodic payment made in consideration of past services or by way of compensation for injuries received in the course of performance of services. 3.     The term "annuity" means a stated sum payable periodically at stated times during life or during a specified or ascertainable period of time, under an obligation to make the payments in return for adequate and full consideration in money's worth. Article 21: PAYMENTS RECEIVED BY STUDENTS AND APPRENTICES 1.     A student or business apprentice who is or was a resident of one of the Contracting States immediately before visiting the other Contracting State and who is present in that other State solely for the purpose of his education or training, shall be exempt from tax in that other State on: a.     payments made to him by persons residing outside that other State for the purposes of his maintenance, education or training; and b.    remuneration from employment in that other State, in an amount not exceeding US $ 2,000 or its equivalent in respective currencies during any fiscal year, as the case may be, provided that such employment is directly related to his studies or is undertaken for the purpose of his maintenance. 2.     The benefits of this Article shall extend only for such period of time as may be reasonable or customarily required to complete the education or training undertaken, but in no event shall any individual have the benefits of this Article for more than five consecutive years from the date of his first arrival in that other Contracting State. Article 22: PAYMENTS RECEIVED BY PROFESSORS, TEACHERS AND RESEARCH SCHOLARS 1.     A professor or teacher who is or was a resident of one of the Contracting States immediately before visiting the other Contracting State for the purpose of teaching or engaging in research, or both, at a university, college, school or other approved institution in that other Contracting State shall be exempt from tax in that other State on any remuneration for such teaching or research for a period not exceeding two years from the date of his arrival in that other State. 2.     This Article shall not apply to income from research if such research is undertaken primarily for the private benefit of a specific person or persons. 3.     For the purposes of paragraph 1, "approved institution" means an institution which has been approved in this regard by the competent authority of the concerned Contracting State. Article 23: OTHER INCOME 1.     Subject to the provisions of paragraph 2, items of income of a resident of a Contracting State, wherever arising, which are not expressly dealt with in the foregoing Articles of this Agreement, shall be taxable only in that Contracting State. 2.     The provisions of paragraph 1 shall not apply to the income, other than income from immovable property as defined in paragraph 2 of Article 6, if the recipient of such income, being a resident of a Contracting State, carries on business in the other Contracting State through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the right or property in respect of which the income is paid is effectively connected with such permanent establishment or fixed base. In such case, the provisions of Article 7 or Article 15, as the case may be, shall apply. 3.     Notwithstanding the provisions of paragraphs 1 and 2, items of income of a resident of a Contracting State not dealt with in the foregoing Articles of this Agreement and arising in other Contracting State may also be taxed in that other State. Article 24: AVOIDANCE OF DOUBLE TAXATION 1.     The laws in force in either of the Contracting States will continue to govern the taxation of income in the respective Contracting States except where provisions to the contrary are made in this Agreement. 2.     Where a resident of a Contracting State derives income which, in accordance with the provisions of this Agreement, may be taxed in the other Contracting State, the first-mentioned Contracting State shall allow as a deduction from the tax on the income of that resident an amount equal to the income-tax paid in the other Contracting State whether directly or by deduction. Such deduction shall not, however, exceed that part of the income-tax (as computed before the deduction is given) in the first-mentioned Contracting State which is attributable to the income which may be taxed in the other Contracting State. 3.     The tax paid in the other Contracting State mentioned in paragraph 2 of this Article shall be deemed to include the tax which would have been payable but for the tax incentives granted under the laws of that Contracting State and which are designed to promote economic development. Article 25: NON-DISCRIMINATION 1.     Nationals of a Contracting State shall not be subjected in the other Contracting State to any taxation or any requirement connected therewith which is other or more burdensome than the taxation and connected requirements to which nationals of that other State in the same circumstances are or may be subjected. 2.     The taxation on a permanent establishment which an enterprise of a Contracting State has in the other Contracting State shall not be less favourably levied in that other State than the taxation levied on enterprises of that other State carrying on the same activities in the same circumstances. This provision shall not be construed as preventing a Contracting State from charging the profits of a permanent establishment which an enterprise of the other Contracting State has in the first-mentioned State at a rate higher than that imposed on the profits of a similar enterprise of the first-mentioned Contracting State, nor as being in conflict with the provisions of paragraph 3 of Article 7 of this Agreement. 3.     Nothing contained in this Article shall be construed as obliging a Contracting State to grant to persons not resident in that State any personal allowances, reliefs, reductions and deductions for taxation purposes which are by law available only to persons who are so resident. 4.     Enterprises of a Contracting State, the capital of which is wholly or partly owned or controlled, directly or indirectly by one or more residents of the other Contracting State, shall not be subjected in the first-mentioned Contracting State to any taxation or any requirement connected therewith which is other or more burdensome than the taxation and connected requirements to which other similar enterprises of that first-mentioned State are or may be subjected in the same circumstances. 5.     The provisions of paragraphs 2 and 4 of this Article shall not apply to the Vietnamese profit remittance tax, which in any case shall not exceed 10 per cent of the gross amount of profits remitted, and the Vietnamese taxation in respect of agricultural production activities. 6.     In this Article, the term "taxation" means taxes which are the subject of this Agreement. Article 26: MUTUAL AGREEMENT PROCEDURE 1.     Where a resident of a Contracting State considers that the actions of one or both of the Contracting States result or will result for him in taxation not in accordance with this Agreement, he may, notwithstanding the remedies provided by the national laws of those States, present his case to the competent authority of the Contracting State of which he is a resident. This case must be presented within three years of the date of receipt of notice of the action which gives rise to taxation not in accordance with the Agreement. 2.     The competent authority shall endeavour, if the objection appears to it to be justified and if it is not itself able to arrive at a satisfactory solution, to resolve the case by mutual agreement with the competent authority of the other Contracting State, with a view to the avoidance of taxation not in accordance with the Agreement. Any agreement reached shall be implemented notwithstanding any time limits in the national laws of the Contracting States. 3.     The competent authorities of the Contracting States shall endeavour to resolve by mutual agreement any difficulties or doubts arising as to the interpretation or application of the Agreement. They may also consult together for the elimination of double taxation in cases not provided for in the Agreement. 4.     The competent authorities of the Contracting States may communicate with each other directly for the purpose of reaching an agreement in the sense of the preceding paragraphs. When it seems advisable in order to reach agreement to have an oral exchange of opinions, such exchange may take place through a Commission consisting of representative of the competent authorities of the Contracting State. Article 27: EXCHANGE OF INFORMATION 1.     The competent authorities of the Contracting States shall exchange such information (including documents) as is necessary for carrying out the provisions of the Agreement or of the domestic laws of the Contracting States concerning taxes covered by the Agreement, insofar as the taxation thereunder is not contrary to the Agreement, in particular for the prevention of fraud or evasion of such taxes. Any information received by a Contracting State shall be treated as secret in the same manner as information obtained under the domestic laws of the State. However, if the information is originally regarded as secret in the transmitting State, it shall be disclosed only to persons or authorities (including courts and administrative bodies) involved in the assessment or collection of, the enforcement or prosecution in respect of, or the determination of appeals in relation to, the taxes which are the subject of the Agreement. Such persons or authorities shall use the information only for such purposes but may disclose the information in public court proceedings or in judicial decisions. The competent authorities shall, through consultation, develop appropriate conditions, methods and techniques concerning the matters in respect of which such exchange of information shall be made, including, where appropriate, exchange of information regarding tax avoidance. 2.     The exchange of information or documents shall be either on a routine basis or on request with reference to particular cases or both. The competent authorities of the Contracting States shall agree from time to time on the list of the information or documents which shall be furnished on a routine basis. 3.     In no case shall the provisions of paragraph 1 be construed so as to impose on a Contracting State the obligation: a.     to carry out administrative measures at variance with the laws or administrative practice of that or of the other Contracting State; b.    to supply information or documents which are not obtainable under the laws or in the normal course of the administration of that or of the other Contracting State; c.     to supply information or documents which would disclose any trade, business, industrial, commercial or professional secret of trade process of information the disclosure of which would be contrary to public policy. Article 28: DIPLOMATIC AGENTS AND CONSULAR OFFICERS Nothing in this Agreement shall affect the fiscal privileges of diplomatic or consular officers under the general rules of international law or under the provisions of special agreements. Article 29: ENTRY INTO FORCE Each of the Contracting State shall notify to the other the completion of the procedures required by its law for the bringing into force of this Agreement. This Agreement shall enter into force on the date of the latter of these notifications and shall thereupon have effect: a.     in India, in respect of income arising in any previous year beginning on or after the first day of April next following the calendar year in which the latter of the notifications is given; b.    in Vietnam:               i.        in respect of taxes withheld at source, in relation to taxable amount paid on or after 1 January following the calendar year in which the Agreement enters into force;              ii.        in respect of other Vietnamese taxes, in relation to income, profits or gains arising in the calendar year following the calendar year in which the Agreement enters into force, and in subsequent calendar years. Article 30: TERMINATION This Agreement shall remain in force indefinitely but either of the Contracting States may, on or before the thirtieth day of June in any calendar year beginning after the expiration of a period of five years from the date of its entry into force, give the other Contracting State through diplomatic channels, written notice of termination and, in such event, this Agreement shall cease to have effect: a.     in India, in respect of income arising in any previous year beginning on or after the first day of April next following the calendar year in which the notice is given; b.    in Vietnam:               i.        in respect of taxes withheld at source, in relation to taxable amount paid on or after 1 January following the calendar year in which the notice of termination is given;              ii.        in respect of other Vietnamese taxes, in relation to income, profits or gains arising in the calendar year following the calendar year in which the notice of termination is given, and in subsequent calendar years. In witness whereof  the undersigned, being duly authorized thereto by their respective Governments, have signed the present Agreement. Done  in duplicate at Hanoi this 7th day of September one thousand nine hundred and ninety four in Hindi, Vietnamese and English languages. In case of divergence of interpretation, the English text shall prevail. (Sd.)............ For the Government of the Republic of India (Sd.)............ For the Government of the Socialist Republic of Vietnam.

Download Word Document In English. (Rs.40/-) New Zealand AGREEMENT BETWEEN INDIA AND NEW ZEALAND. Whereas the annexed Second Protocol to the Convention between the Government of the Republic of India and the Government of New Zealand for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income, comes into force on 30th December, 1999, thirty days after the date of receipt of the later of notifications by both the Contracting States to each other, under article 9 of the Second Protocol, of the completion of the procedures required under their respective laws for bringing into force the said Second Protocol. Now, therefore, in exercise if the powers conferred by section 90 of the Income-tax Act, 1961 (43 of 1961), the Central Government hereby directs that all the provisions of the said Second Protocol shall be given effect to in the Union of India. ANNEXURE SECOND PROTOCOL TO THE CONVENTION BETWEEN THE GOVERNMENT OF THE REPUBLIC OF INDIA AND THE GOVERNMENT OF NEW ZEALAND FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME. SECOND PROTOCOL TO THE CONVENTION BETWEEM THE GOVERNMENT OF THE REPUBLIC OF INDIA AND THE GOVERNMENT OF NEW ZEALAND FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME. The Government of the Republic of India and the Government of New Zealand, Having regard to the convention between the Government of the Republic of India and the Government of New Zealand for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income done at Auckland on the 17th day of October, 1986 (hereinafter referred to as "the Convention"), Have agreed as follows: Article 1 Paragraph 1(a)(ii) of article 3 of the Convention is replaced by the following: "(ii) the term 'India' means the territory of India and includes the territorial sea and the airspace above it, as well as any other maritime zone in which India has sovereign rights, other rights and jurisdiction, according to the Indian law and in accordance with international law, including the U.N. Convention of the Law of the Sea;" Article 2 Paragraph 3 of article 4 of the Convention is replaced by the following: "3. Where by reason of the provisions of paragraph 1 a person other than an individual is a resident of both Contracting States, then it shall be deemed to be a resident of the State in which its place of effective management is situated cannot be determined, then the competent authorities of the Contracting States shall settle the question by mutual agreement." Article 3 Paragraph 1 of article 6 of the Convention is replaced by the following: "1. Income derived by a resident of a Contracting State from immovable property (including income from agriculture or forestry) situated in the other Contracting State may also be taxed in that other State." Article 4 In paragraph 2 of article 10 of the Convention, "20 per cent" is replaced by "15 per cent." Article 5 In paragraph 2 of article 11 of the Convention, "15 per cent" is replaced by "10 per cent." Article 6 In paragraph 2 of article 12 of the Convention' " 30 per cent" is replaced by "10 per cent." Article 7 Paragraph 1 of article 13 of the Convention is replaced by the following: "1. Income or gains derived by a resident of a Contracting State from the alienation of immovable property referred to in article 6 and situated in the other Contracting State may also be taxed in that other State." Article 8 1.     Paragraph 2 of article 24 of the Convention is replaced by the following: 2.     "2. The taxation on a permanent establishment which an enterprise of a Contracting State has in the other Contracting State shall not be less favourably levied in that other 3.     State carrying on the same activities. This provision shall not be construed as preventing a contracting State from charging the profits of a permanent establishment which a company of the other Contracting State has in the first-mentioned State at a rate of tax which is higher then that imposed on the profits of a similar company of the first-mentioned Contracting State." 4.     A new paragraph 5 is inserted immediately after paragraph 4 of article 24 of the convention and the original paragraph 5 of the article is renumbered paragraph 6. 5.     "5. The article shall not apply to any provisions of the taxation laws of a Contracting State which are reasonably designed to prevent or defeat the avoidance or evasion of taxes." Article 9 1.     The Contracting States shall notify each other through diplomatic channels of the completion of the procedures required by the respective laws for the entry into force of this protocol. 2.     This Protocol shall enter into force 30 days after the date of receipt of the later of the notifications referred to in paragraph 1 of this article and its provisions shall have effect: a.     in New Zealand: for any income year beginning on or after 1st April in the calendar year next following the date on which the Protocol enters into force; b.    in India: for any "previous year" (as defined in the Income-tax Act,1961) beginning on or after 1st April in the calendar year next following the date on which the Protocol enters into force. In WITNESS WHEREOF  the undersigned, duly authorized by their respective Governments, have signed this Protocol. Done  in duplicate at New Delhi this twenty first day of June, 1999, in the Hindi and English languages, both texts being equally authentic. In case of divergence between the two texts, the English text shall be the operative one. For the Government of the Republic of India................................. (Ravi Kant). For the Government of the New Zealand........................................ (Adrian G.Simcock) -------------------------------------------------------------------------------- Notification No. S. O. 166(E), dated 5th March, 1997. WHEREAS the annexed Protocol to the Convention between the Government of the Republic of India and the Government of New Zealand for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income has come into force on 9th January, 1997, on the notification by both the Contracting States to each other of the compliance with the domestic requirements as required by Article 2 of the said Protocol; NOW, THEREFORE, in exercise of the powers conferred under section 90 of the Income-tax Act, 1961 (43 of 1961), the Central Government hereby directs that all the provisions of the said Protocol shall be given effect to in the Union of India. ANNEXURE PROTOCOL TO THE CONVENTION BETWEEN THE GOVERNMENT OF THE REPUBLIC OF INDIA AND THE GOVERNMENT OF NEW ZEALAND FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME The Government of the Republic of India and the Government of Newzealand, Having regard to the Convention between the Government of the Republic of India and the Government of New Zealand for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income done at Auckland on 17th October, 1986 (hereinafter referred to as "the Convention"), HAVE  agreed that the following provisions shall form an integral part of the Convention: Article 1 Notwithstanding paragraph 3 of Article 23 of the Convention, a New Zealand resident deriving income from India, being income referred to in that paragraph, shall not be deemed to have paid Indian tax in respect of such income where the competent authority of New Zealand considers, after consultation with the competent authority of India, that it is inappropriate to do so having regard to: a.     whether any arrangements have been entered into by any person for the purpose of taking advantage of paragraph 3 of Article 23 for the benefit of that person or any other person; b.    whether any benefit accrues or may accrue to a person who is neither a New Zealand resident nor an Indian resident; c.     the prevention of fraud or the avoidance of the taxes to which the Convention applies; d.    any other matter which either competent authority considers relevant in the particular circumstances of the case, including any submissions from the New Zealand resident concerned. Article 2 1.     The Contracting States shall notify each other that the domestic requirements for entry into force of this Protocol have been complied with. 2.     This Protocol shall enter into force on the date of the later of the notifications referred to in paragraph (1) of this article. Article 3 Article 1 of this Protocol shall apply to income derived on or after the 1st day of the month following the date on which this Protocol enters into force. DONE  at New Delhi in duplicate this the Twenty-ninth day of August, One Thousand Nine Hundred Ninety-six in the Hindi and the English languages, both texts being equally authentic. In case of divergence between the two texts, the English text shall be the operative one. For the Government of the Republic of India (Sd.)(G. K. Mishra) Chairman, Central Board of Direct Taxes and Ex-Officio Special Secretary to the Government of India. For the Government of New Zealand. (Sd.) (Nicholas William Bridge) High Commissioner of New Zealand in India [Notification No. 10280/F. No. 500/151/93-FTD]

Download Word Document In English. (Rs.85/-) United States of America Double Taxation Avoidance Agreement Convention between the Government of the United States of America and the Government of the Republic of India for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income Notification No. G. S. R. 990(E), dtd. 20.12.1990. Whereas the annexed Convention between the Government of the United States of America and the Government of the Republic of India for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income has entered into force on the 18th December, 1990, after the notification by both the Contracting States to each other of the completion of the procedures required under their laws for bringing into force the said Convention in accordance with paragraph 1 of Article 30 of the said Convention; Now, therefore, in exercise of the powers conferred by section 90 of the Income-tax Act, 1961 (43 of 1961), and section 24A of the Companies (Profits) Surtax Act, 1964 (7 of 1964), the Central Government hereby directs that all the provisions of the said Convention shall be given effect to in the Union of India. Further, in exercise of the powers conferred by section 44A(b) of the Wealth-tax Act, 1957 (27 of 1957) and section 44(b) of the Gift-tax Act, 1958 (18 of 1958), the Central Government also directs that the provisions of Article 28 of the said Convention shall be given effect to in the Union of India. ANNEXURE CONVENTION BETWEEN THE GOVERNMENT OF THE UNITED STATES OF AMERICA AND THE GOVERNMENT OF THE REPUBLIC OF INDIA FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME The Government of the United States of America and the Government of the Republic of India, desiring to conclude a Convention for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income, have agreed as follows: Article 1 GENERAL SCOPE 1.     This Convention shall apply to persons who are residents of one or both of the Contracting States, except as otherwise provided in the Convention. 2.     The Convention shall not restrict in any manner any exclusion, exemption, deduction, credit, or other allowance now or hereafter accorded: a.     by the laws of either Contracting State; or b.    by any other agreement between the Contracting States. 3.     Notwithstanding any provision of the Convention except paragraph 4, a Contracting State may tax its residents (as determined under article 4 (Residence)), and by reason of citizenship may tax its citizens, as if the Convention had not come into effect. For this purpose, the term "citizen" shall include a former citizen whose loss of citizenship had as one of its principal purposes the avoidance of tax, but only for a period of 10 years following such loss. 4.     The provisions of paragraph 3 shall not affect-- a.     the benefits conferred by a Contracting State under paragraph 2 of article 9 (Associated enterprises), under paragraphs 2 and 6 of article 20 (Private pensions, annuities, alimony, and child support), and under articles 25 (Relief From Double Taxation), 26 (Non-Discrimination), and 27 (Mutual Agreement Procedure); and b.    the benefits conferred by a Contracting State under articles 19 (remuneration and pensions in respect of Government service), 21 (payments received by students and apprentices), 22 (payments received by professors, teachers and research scholars) and 29 (diplomatic agents and consular officers), upon individuals who are neither citizens of, nor have immigrant status in, that State. Article 2 TAXES COVERED 1.     The existing taxes to which this Convention shall apply are: a.       In the United States, The federal income taxes imposed by the Internal Revenue Code (but excluding the accumulated earnings tax, the personal holding company tax, and social security taxes), and the excise taxes imposed on insurance premiums paid to foreign insurers and with respect to private foundations (hereinafter referred to as "United States tax"); provided, however, the Convention shall apply to the excise taxes imposed on insurance premiums paid to foreign insurers only to the extent that the risks covered by such premiums are not reinsured with a person not entitled to exemption from such taxes under this or any other Convention which applies to these taxes; and b.      In India:                       i.        the income-tax including any surcharge thereon, but excluding income-tax on undistributed income of companies, imposed under the Income-tax Act; and                      ii.        the surtax. (hereinafter referred to as "Indian tax"). Taxes referred to in (a) and (b) above shall not include any amount payable in respect of any default or omission in relation to the above taxes or which represent a penalty imposed relating to those taxes. 2.     The Convention shall apply also to any identical or substantially similar taxes which are imposed after the date of signature of the Convention in addition to, or in place of, the existing taxes. The competent authorities of the Contracting States shall notify each other of any significant changes which have been made in their respective taxation laws and of any official published material concerning the application of the Convention. Article 3 GENERAL DEFINITIONS 1.     In this Convention, unless the context otherwise requires: a.     the term "India" means the territory of India and includes the territorial sea and airspace above it, as well as any other maritime zone in which India has sovereign rights, other rights and jurisdictions, according to the Indian law and in accordance with international law; b.    the term "United States", when used in a geographical sense, means all the territory of the United States of America, including its territorial sea, in which the laws relating to United States tax are in force, and all the area beyond its territorial sea, including the seabed and subsoil thereof, over which the United States has jurisdiction in accordance with international law and in which the laws relating to United States tax are in force; c.     the terms "a Contracting State" and "the other Contracting State" mean India or the United States as the context requires; d.    the term "tax" means Indian tax or United States tax, as the context requires; e.     the term "person" includes an individual, an estate, a trust, a partnership, a company, any other body of persons, or other taxable entity; f.     the term "company" means any body corporate or any entity which is treated as a company or body corporate for tax purposes; g.    the terms "enterprise of a Contracting State" and "enterprise of the other Contracting State" mean respectively an enterprise carried on by a resident of a Contracting State and an enterprise carried on by a resident of the other Contracting State; h.     the term "competent authority" means, in the case of India, the Central Government in the Ministry of Finance (Department of Revenue) or their authorized representative, and in the case of the United States, the Secretary of the Treasury or his delegate; i.      the term "national," means any individual possessing the nationality or citizenship of a Contracting State; j.      the term "international traffic" means any transport by a ship or aircraft operated by an enterprise of a Contracting State, except when the ship or aircraft is operated solely between places within the other Contracting State; k.     the term "taxable year" in relation to Indian tax means "previous year" as defined in the Income-tax Act, 1961. 2.     As regards the application of the Convention by a Contracting State any term not defined therein shall, unless the context otherwise requires or the competent authorities agree to a common meaning pursuant to the provisions of article 27 (Mutual Agreement Procedure), have the meaning which it has under the laws of that State concerning the taxes to which the Convention applies. Article 4 RESIDENCE 1.     For the purposes of this Convention, the term "resident of a Contracting State" means any person who, under the laws of that State, is liable to tax therein by reason of his domicile, residence, citizenship, place of management, place of incorporation, or any other criterion of a similar nature, provided however, that a.     this term does not include any person who is liable to tax in that State in respect only of income from sources in that State; and b.    in the case of income derived or paid by a partnership, estate, or trust, this term applies only to the extent that the income derived by such partnership, estate, or trust is subject to tax in that State as the income of a resident, either in its hands or in the hands of its partners or beneficiaries. 2.     Where by reason of the provisions of paragraph 1, an individual is a resident of both Contracting States, then his status shall be determined as follows: a.     he shall be deemed to be a resident of the State in which he has a permanent home available to him; if he has a permanent home available to him in both States, he shall be deemed to be a resident of the State with which his personal and economic relations are closer (centre of vital interests); b.    if the State in which he has his centre of vital interests cannot be determined, or if he does not have a permanent home available to him in either State, he shall be deemed to be a resident of the State in which he has an habitual abode; c.     if he has an habitual abode in both States or in neither of them, he shall be deemed to be a resident of the State of which he is a national; d.    if he is a national of both States or of neither of them, the competent authorities of the Contracting States shall settle the question by mutual agreement. 3.     Where, by reason of paragraph 1, a company is a resident of both Contracting States, such company shall be considered to be outside the scope of this Convention except for purposes of paragraph 2 of article 10 (Dividends), article 26 (Non-discrimination), article 27 (Mutual agreement procedure), article 28 (Exchange of information and administrative assistance) and article 30 (Entry into force). 4.     Where, by reason of the provisions of paragraph 1, a person other than an individual or a company is a resident of both Contracting States, the competent authorities of the Contracting States shall settle the question by mutual agreement and determine the mode of application of the Convention to such person. Article 5 PERMANENT ESTABLISHMENT 1.     For the purposes of this Convention, the term "permanent establishment" means a fixed place of business through which the business of an enterprise is wholly or partly carried on. 2.     The term "permanent establishment" includes especially: a.     a place of management; b.    a branch; c.     an office; d.    a factory; e.     a workshop; f.     a mine, an oil or gas well, a quarry, or any other place of extraction of natural resources; g.    a warehouse, in relation to a person providing storage facilities for others; h.     a farm, plantation or other place where agriculture, forestry, plantation or related activities are carried on; i.      a store or premises used as a sales outlet; j.      an installation or structure used for the exploration or exploitation of natural resources, but only if so used for a period of more than 120 days in any twelve-month period; k.     a building site or construction, installation or assembly project or supervisory activities in connection therewith, where such site, project or activities (together with other such sites, projects or activities, if any) continue for a period of more than 120 days in any twelve-month period; l.      the furnishing of services, other than included services as defined in article 12 (royalties and fees for included services), within a Contracting State by an enterprise through employees or other personnel, but only if:                       i.        activities of that nature continue within that State for a period or periods aggregating to more than 90 days within any twelve-month period; or                      ii.        the services are performed within that State for a related enterprise (within the meaning of paragraph 1 of article 9 (associated enterprises)). 3.     Notwithstanding the preceding provisions of this article, the term "permanent establishment" shall be deemed not to include any one or more of the following: a.     the use of facilities solely for the purpose of storage, display, or occasional delivery of goods or merchandise belonging to the enterprise; b.    the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of storage, display or occasional delivery; c.     the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of processing by another enterprise; d.    the maintenance of a fixed place of business solely for the purpose of purchasing goods or merchandise, or of collecting information, for the enterprise; e.     the maintenance of a fixed place of business solely for the purpose of advertising, for the supply of information, for scientific research or for other activities which have a preparatory or auxiliary character, for the enterprise. 4.     Notwithstanding the provisions of paragraphs 1 and 2, where a person--other than an agent of an independent status to whom paragraph 5 applies--is acting in a Contracting State on behalf of an enterprise of the other Contracting State, that enterprise shall be deemed to have a permanent establishment in the first-mentioned State, if: a.     he has and habitually exercises in the first-mentioned State an authority to conclude contracts on behalf of the enterprise, unless his activities are limited to those mentioned in paragraph 3 which, if exercised through a fixed place of business, would not make that fixed place of business a permanent establishment under the provisions of that paragraph; b.    he has no such authority but habitually maintains in the first-mentioned State a stock of goods or merchandise from which he regularly delivers goods or merchandise on behalf of the enterprise, and some additional activities conducted in that State on behalf of the enterprise have contributed to the sale of the goods or merchandise; or c.     he habitually secures orders in the first-mentioned State, wholly or almost wholly for the enterprise. 5.     An enterprise of a Contracting State shall not be deemed to have a permanent establishment in the other Contracting State merely because it carries on business in that other State through a broker, general commission agent, or any other agent of an independent status, provided that such persons are acting in the ordinary course of their business. However, when the activities of such an agent are devoted wholly or almost wholly on behalf of that enterprise and the transactions between the agent and the enterprise are not made under arm's-length conditions, he shall not be considered an agent of independent status within the meaning of this paragraph. 6.     The fact that a company which is a resident of a Contracting State controls or is controlled by a company which is a resident of the other Contracting State, or which carries on business in that other State (whether through a permanent establishment or otherwise), shall not of itself constitute either company a permanent establishment of the other. Article 6 INCOME FROM IMMOVABLE PROPERTY (REAL PROPERTY) 1.     Income derived by a resident of a Contracting State from immovable property (real property), including income from agriculture or forestry, situated in the other Contracting State may be taxed in that other State. 2.     The term "immovable property" shall have the meaning which it has under the law of the Contracting State in which the property in question is situated. 3.     The provisions of paragraph 1 shall also apply to income derived from the direct use, letting, or use in any other form of immovable property. 4.     The provisions of paragraphs 1 and 3 shall also apply to the income from immovable property of an enterprise and to income from immovable property used for the performance of independent personal services. Article 7 BUSINESS PROFITS 1.     The profits of an enterprise of a Contracting State shall be taxable only in that State unless the enterprise carries on business in the other Contracting State through a permanent establishment situated therein. If the enterprise carries on business as aforesaid, the profits of the enterprise may be taxed in the other State but only so much of them as is attributable to (a) that permanent establishment; (b) sales in the other State of goods or merchandise of the same or similar kind as those sold through that permanent establishment; or (c) other business activities carried on in the other State of the same or similar kind as those effected through that permanent establishment. 2.     Subject to the provisions of paragraph 3, where an enterprise of a Contracting State carries on business in the other Contracting State through a permanent establishment situated therein, there shall in each Contracting State be attributed to that permanent establishment the profits which it might be expected to make if it were a distinct and independent enterprise engaged in the same or similar activities under the same or similar conditions and dealing wholly at arm's length with the enterprise of which it is a permanent establishment and other enterprises controlling, controlled by or subject to the same common control as that enterprise. In any case where the correct amount of profits attributable to a permanent establishment is incapable of determination or the determination thereof presents exceptional difficulties, the profits attributable to the permanent establishment may be estimated on a reasonable basis. The estimate adopted shall, however, be such that the result shall be in accordance with the principles contained in this article. 3.     In the determination of the profits of a permanent establishment, there shall be allowed as deductions expenses which are incurred for the purposes of the business of the permanent establishment, including a reasonable allocation of executive and general administrative expenses, research and development expenses, interest, and other expenses incurred for the purposes of the enterprise as a whole (or the part thereof which includes the permanent establishment), whether incurred in the State in which the permanent establishment is situated or elsewhere, in accordance with the provisions of and subject to the limitations of the taxation laws of that State. However, no such deduction shall be allowed in respect of amounts, if any, paid (otherwise than towards reimbursement of actual expenses) by the permanent establishment to the head office of the enterprise or any of its other offices, by way of royalties, fees or other similar payments in return for the use of patents, know-how or other rights, or by way of commission or other charges for specific services performed or for management, or, except in the case of banking enterprises, by way of interest on moneys lent to the permanent establishment. likewise, no account shall be taken, in the determination of the profits of a permanent establishment, for amounts charged (otherwise than toward reimbursement of actual expenses), by the permanent establishment to the head office of the enterprise or any of its other offices, by way of royalties, fees or other similar payments in return for the use of patents, know-how or other rights, or by way of commission or other charges for specific services performed or for management, or, except in the case of a banking enterprise, by way of interest on moneys lent to the head office of the enterprise or any of its other offices. 4.     No profits shall be attributed to a permanent establishment by reason of the mere purchase by that permanent establishment of goods or merchandise for the enterprise. 5.     For the purposes of this Convention, the profits to be attributed to the permanent establishment as provided in paragraph 1(a) of this article shall include only the profits derived from the assets and activities of the permanent establishment and shall be determined by the same method year by year unless there is good and sufficient reason to the contrary. 6.     Where profits include items of income which are dealt with separately in other articles of the convention, then the provisions of those articles shall not be affected by the provisions of this article. 7.     For the purposes of the Convention, the term "business profits" means income derived from any trade or business including income from the furnishing of services other than included services as defined in article 12 (royalties and fees for included services) and including income from the rental of tangible personal property other than property described in paragraph 3(b) of article 12 (royalties and fees for included services). Article 8 SHIPPING AND AIR TRANSPORT 1.     Profits derived by an enterprise of a Contracting State from the operation by that enterprise of ships or aircraft in international traffic shall be taxable only in that State. 2.     For the purposes of this article, profits from the operation of ships or aircraft in international traffic shall mean profits derived by an enterprise described in paragraph 1 from the transportation by sea or air respectively of passengers, mail, livestock or goods carried on by the owners or lessees or charterers of ships or aircraft including-- a.     the sale of tickets for such transportation on behalf of other enterprises; b.    other activity directly connected with such transportation; and c.     the rental of ships or aircraft incidental to any activity directly connected with such transportation. 3.     Profits of an enterprise of a Contracting State described in paragraph 1 from the use, maintenance, or rental of containers (including trailers, barges, and related equipment for the transport of containers) used in connection with the operation of ships or aircraft in international traffic shall be taxable only in that State. 4.     The provisions of paragraphs 1 and 3 shall also apply to profits from participation in a pool, a joint business, or an international operating agency. 5.     For the purposes of this article, interest on funds connected with the operation of ships or aircraft in international traffic shall be regarded as profits derived from the operation of such ships or aircraft, and the provisions of article 11 (Interest) shall not apply in relation to such interest. 6.     Gains derived by an enterprise of a Contracting State described in paragraph 1 from the alienation of ships, aircraft or containers owned and operated by the enterprise, the income from which is taxable only in that State, shall be taxed only in that State. Article 9 ASSOCIATED ENTERPRISES 1.     Where: a.     an enterprise of a Contracting State participates directly or indirectly in the management, control or capital of an enterprise of the other Contracting State; or b.    the same persons participate directly or indirectly in the management, control, or capital of an enterprise of a Contracting State and an enterprise of the other Contracting State, and in either case conditions are made or imposed between the two enterprises in their commercial or financial relations which differ from those which would be made between independent enterprises, then any profits which, but for those conditions would have accrued to one of the enterprises, but by reason of those conditions have not so accrued, may be included in the profits of that enterprise and taxed accordingly. 2.     Where a Contracting State includes in the profits of an enterprise of that State, and taxes accordingly, profits on which an enterprise of the other Contracting State has been charged to tax in that other State, and the profits so included are profits which would have accrued to the enterprise of the first-mentioned State if the conditions made between the two enterprises had been those which would have been made between independent enterprises, then that other State shall make an appropriate adjustment to the amount of the tax charged therein on those profits. In determining such adjustment, due regard shall be had to the other provisions of this Convention and the competent authorities of the Contracting States shall if necessary consult each other. Article 10 DIVIDENDS 1.     Dividends paid by a company which is a resident of a Contracting State to a resident of the other Contracting State may be taxed in that other State. 2.     However, such dividends may also be taxed in the Contracting State of which the company paying the dividends is a resident, and according to the laws of that State, but if the beneficial owner of the dividends is a resident of the other Contracting State, the tax so charged shall not exceed: a.     15 per cent. of the gross amount of the dividends if the beneficial owner is a company which owns at least 10 per cent. of the voting stock of the company paying the dividends; b.    25 per cent. of the gross amount of the dividends in all other cases. Sub-paragraph (b) and not sub-paragraph (a) shall apply in the case of dividends paid by a United States person which is a Regulated Investment Company. Sub-paragraph (a) shall not apply to dividends paid by a United States person which is a Real Estate Investment Trust, and sub-paragraph (b) shall only apply if the dividend is beneficially owned by an individual holding a less than 10 per cent. interest in the Real Estate Investment Trust. This paragraph shall not affect the taxation of the company in respect of the profits out of which the dividends are paid. 3.     The term "dividends" as used in this article means income from shares or other rights, not being debt-claims, participating in profits, income from other corporate rights which are subjected to the same taxation treatment as income from shares by the taxation laws of the State of which the company making the distribution is a resident; and income from arrangements, including debt obligations, carrying the right to participate in profits, to the extent so characterised under the laws of the Contracting State in which the income arises. 4.     The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the dividends, being a resident of a Contracting State, carries on business in the other Contracting State, of which the company paying the dividends is a resident, through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the dividends are attributable to such permanent establishment or fixed base. In such case the provisions of article 7 (business profits) or article 15 (Independent Personal Services), as the case may be, shall apply. 5.     Where a company which is a resident of a Contracting State derives profits or income from the other Contracting State, that other State may not impose any tax on the dividends paid by the company except in so far as such dividends are paid to a resident of that other State or insofar as the holding in respect of which the dividends are paid is effectively connected with a permanent establishment or a fixed base situated in that other State, nor subject the company's undistributed profits to a tax on the company's undistributed profits, even if the dividends paid or the undistributed profits consist wholly or partly of profits or income arising in such other State. Article 11 INTEREST 1.     Interest arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State. 2.     However, such interest may also be taxed in the Contracting State in which it arises, and according to the laws of that State, but if the beneficial owner of the interest is a resident of the other Contracting State, the tax so charged shall not exceed: a.     10 per cent. of the gross amount of the interest if such interest is paid on a loan granted by a bank carrying on a bona fide banking business or by a similar financial institution (including an insurance company); and b.    15 per cent. of the gross amount of the interest in all other cases. 3.     Notwithstanding the provisions of paragraph 2 of this article, interest arising in a Contracting State: a.     and derived and beneficially owned by the Government of the other Contracting State, a political sub-division or local authority thereof, the Reserve Bank of India, or the Federal Reserve Bank of the United States, as the case may be, and such other institutions of either Contracting State as the competent authorities may agree pursuant to article 27 (Mutual Agreement Procedure); b.    with respect to loans or credits extended or endorsed                       i.        by the Export Import Bank of the United States, when India is the first-mentioned Contracting State; and                      ii.        by the EXIM Bank of India, when the United States is the first-mentioned Contracting State; and c.     to the extent approved by the Government of that State, and derived and beneficially owned by any person, other than a person referred to in sub-paragraphs (a) and (b), who is a resident of the other Contracting State, provided that the transaction giving rise to the debt-claim has been approved in this behalf by the Government of the first-mentioned Contracting State; shall be exempt from tax in the first-mentioned Contracting State. 4.     The term "interest" as used in this Convention means income from debt-claims of every kind, whether or not secured by mortgage, and whether or not carrying a right to participate in the debtor's profits, and in particular, income from government securities, and income from bonds or debentures, including premiums or prizes attaching to such securities, bonds, or debentures. Penalty charges for late payment shall not be regarded as interest for the purposes of the Convention. However, the term "interest" does not include income dealt with in article 10 (Dividends). 5.     The provisions of paragraphs 2 and 3 shall not apply if the beneficial owner of the interest, being a resident of a Contracting State, carries on business in the other Contracting State in which the interest arises, through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the interest is attributable to such permanent establishment or fixed base. In such case the provisions of article 7 (Business Profits) or article 15 (Independent Personal Services), as the case may be, shall apply. 6.     Interest shall be deemed to arise in a Contracting State when the payer is that State itself or a political sub-division, local authority, or resident of that State. Where, however, the person paying the interest, whether he is a resident of a Contracting State or not, has in a Contracting State a permanent establishment or a fixed base, and such interest is borne by such permanent establishment or fixed base, then such interest shall be deemed to arise in the Contracting State in which the permanent establishment or fixed base is situated. 7.     Where, by reason of a special relationship between the payer and the beneficial owner or between both of them and some other person, the amount of the interest, having regard to the debt-claim for which it is paid, exceeds the amount which would have been agreed upon by the payer and the beneficial owner in the absence of such relationship, the provisions of this article shall apply only to the last-mentioned amount. In such case the excess part of the payments shall remain taxable according to the laws of each Contracting State, due regard being had to the other provisions of the Convention. Article 12 ROYALTIES AND FEES FOR INCLUDED SERVICES 1.     Royalties and fees for included services arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State. 2.     However, such royalties and fees for included services may also be taxed in the Contracting State in which they arise and according to the laws of that State; but if the beneficial owner of the royalties or fees for included services is a resident of the other Contracting State, the tax so charged shall not exceed: a.     in the case of royalties referred to in sub-paragraph (a) of paragraph 3 and fees for included services as defined in this article (other than services described in sub-paragraph (b) of this paragraph):                       i.        during the first five taxable years for which this Convention has effect, A.    15 per cent. of the gross amount of the royalties or fees for included services as defined in this article, where the payer of the royalties or fees is the Government of that Contracting State, a political sub-division or a public sector company; and B.    20 per cent. of the gross amount of the royalties or fees for included services in all other cases; and                      ii.        during the subsequent years, 15 per cent. of the gross amount of royalties or fees for included services; and b.    in the case of royalties referred to in sub-paragraph (b) of paragraph 3 and fees for included services as defined in this article that are ancillary and subsidiary to the enjoyment of the property for which payment is received under paragraph 3(b) of this article, 10 per cent. of the gross amount of the royalties or fees for included services. 3.     The term "royalties" as used in this article means: a.     payments of any kind received as consideration for the use of, or the right to use, any copyright of a literary, artistic, or scientific work, including cinematograph films or work on film, tape or other means of reproduction for use in connection with radio or television broadcasting, any patent, trademark, design or model, plan, secret formula or process, or for information concerning industrial, commercial or scientific experience, including gains derived from the alienation of any such right or property which are contigent on the productivity, use or disposition thereof; and b.    payments of any kind received as consideration for the use of, or the right to use, any industrial, commercial or scientific equipment, other than payments derived by an enterprise described in paragraph 1 of article 8 (Shipping and Air Transport) from activities described in paragraph 2(c) or 3 of article 8. 4.     For purposes of this article, "fees for included services" means payments of any kind to any person in consideration for the rendering of any technical or consultancy services (including through the provision of services of technical or other personnel) if such services: a.     are ancillary and subsidiary to the application or enjoyment of the right, property or information for which a payment described in paragraph 3 is received; or b.    make available technical knowledge, experience, skill, know-how. or processes, or consist of the development and transfer of a technical plan or technical design. 5.     Notwithstanding paragraph 4, "fees for included services" does not include amounts paid: a.     for services that are ancillary and subsidiary, as well as inextricably and essentially linked, to the sale of property other than a sale described in paragraph 3(a); b.    for services that are ancillary and subsidiary to the rental of ships, aircraft, containers or other equipment used in connection with the operation of ships or aircraft in international traffic; c.     for teaching in or by educational institutions; d.    for services for the personal use of the individual or individuals making the payment; or e.     to an employee of the person making the payments or to any individual or firm of individuals (other than a company) for professional services as defined in article 15 (Independent Personal Services). 6.     The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the royalties or fees for included services, being a resident of a Contracting State, carries on business in the other Contracting State, in which the royalties or fees for included services arise, through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the royalties or fees for included services are attributable to such permanent establishment or fixed base. In such case the provisions of article 7 (business profits) or article 15 (Independent Personal Services), as the case may be, shall apply. 7.       a.     Royalties and fees for included services shall be deemed to arise in a Contracting State when the payer is that State itself, a political sub-division, a local authority, or a resident of that State. Where, however, the person paying the royalties or fees for included services, whether he is a resident of a Contracting State or not, has in a Contracting State a permanent establishment or a fixed base in connection with which the liability to pay the royalties or fees for included services was incurred, and such royalties or fees for included services are borne by such permanent establishment or fixed base, then such royalties or fees for included services shall be deemed to arise in the Contracting State in which the permanent establishment or fixed base is situated. b.    Where under sub-paragraph (a) royalties or fees for included services do not arise in one of the Contracting States, and the royalties relate to the use of, or the right to use, the right or property, or the fees for included services relate to services performed, in one of the Contracting States, the royalties or fees for included services shall be deemed to arise in that Contracting State. 8.     Where, by reason of a special relationship between the payer and the beneficial owner or between both of them and some other person, the amount of the royalties or fees for included services paid exceeds the amount which would have been paid in the absence of such relationship, the provisions of this article shall apply only to the last-mentioned amount. In such case, the excess part of the payments shall remain taxable according to the laws of each Contracting State, due regard being had to the other provisions of the Convention. Article 13 GAINS Except as provided in article 8 (Shipping and Air Transport) to this Convention, each Contracting State may tax capital gains in accordance with the provisions of its domestic law. Article 14 PERMANENT ESTABLISHMENT TAX 1.     A company which is a resident of India may be subject in the United States to a tax in addition to the tax allowable under the other provisions of this Convention. a.     Such tax, however, may be imposed only on:                       i.        the portion of the business profits of the company subject to tax in the United States which represents the dividend equivalent amount; and                      ii.        the excess, if any, of interest deductible in the United States in computing the profits of the company that are subject to tax in the United States and either attributable to a permanent establishment in the United States or subject to tax in the United States under article 6 (Income From Immovable Property (Real Property)), article 12 (Royalties and Fees for Included Services) as fees for included services, or article 13 (Gains) of this Convention over the interest paid by or from the permanent establishment or trade or business in the United States. b.    For purposes of this article, business profits means profits that are effectively connected (or treated as effectively connected) with the conduct of a trade or business within the United States and are either attributable to a permanent establishment in the United States or subject to tax in the United States under article 6 (Income From Immovable Property (Real Property)), article 12 (Royalties and Fees for Included Services) as fees for included services or article 13 (Gains) of this Convention. c.     The tax referred to in sub-paragraph (a) shall not be imposed at a rate exceeding:                       i.        the rate specified in paragraph 2(a) of article 10 (Dividends) for the tax described in sub-paragraph (a)(i); and                      ii.        the rate specified in paragraph 2(a) or (b) (whichever is appropriate) of article 11 (Interest) for the tax described in sub-paragraph (a)(ii). 2.     A company which is a resident of the United States may be subject to tax in India at a rate higher than that applicable to the domestic companies. The difference in the tax rate shall not, however, exceed the existing difference of 15 per centage points. 3.     In the case of a banking company which is a resident of the United States, the interest paid by the permanent establishment of such a company in India to the head office may be subject in India to a tax in addition to the tax imposable under the other provisions of this Conventon at a rate which shall not exceed the rate specified in paragraph 2(a) of article 11 (Interest). Article 15 INDEPENDENT PERSONAL SERVICES 1.     Income derived by a person who is an individual or firm of individuals (other than a company) who is a resident of a Contracting State from the performance in the other Contracting State of professional services or other independent activities of a similar character shall be taxable only in the first-mentioned State except in the following circumstances when such income may also be taxed in the other Contracting State: a.     if such person has a fixed base regularly available to him in the other Contracting State for the purpose of performing his activities, in that case, only so much of the income as is attributable to that fixed base may be taxed in that other State; or b.    if the person's stay in the other Contracting State is for a period or periods amounting to or exceeding in the aggregate 90 days in the relevant taxable year. 2.     The term "professional services" includes independent scientific, literary, artistic, educational or teaching activities as well as the independent activities of physicians, surgeons, lawyers, engineers, architects, dentists and accountants. Article 16 DEPENDENT PERSONAL SERVICES 1.     Subject to the provisions of article 17 (Director's Fees), 18 (Income Earned by Entertainers and Athletes), 19 (Remuneration and Pensions in Respect of Government Service), 20 (Private Pensions, Annuities, Alimony and Child Support), 21 (Payments Received by Students and Apprentices) and 22 (Payments Received by Professors, Teachers and Research Scholars), salaries, wages, and other similar remuneration derived by a resident of a Contracting State in respect of an employment shall be taxable only in that State unless the employment is exercised in the other Contracting State. If the employment is so exercised, such remuneration as is derived therefrom may be taxed in that other State. 2.     Notwithstanding the provisions of paragraph 1, remuneration derived by a resident of a Contracting State in respect of an employment exercised in the other Contracting State shall be taxable only in the first-mentioned State if: a.     the recipient is present in the other State for a period or periods not exceeding in the aggregate 183 days in the relevant taxable year; b.    the remuneration is paid by, or on behalf of, an employer who is not a resident of the other State; and c.     the remuneration is not borne by a permanent establishment or a fixed base or a trade or business which the employer has in the other State. 3.     Notwithstanding the preceding provisions of this article, remuneration derived in respect of an employment exercised aboard a ship or aircraft operating in international traffic by an enterprise of a Contracting State may be taxed in that State. Article 17 DIRECTOR'S FEES Director's fees and similar payments derived by a resident of a Contracting State in his capacity as a member of the board of directors of a company which is a resident of the other Contracting State may be taxed in that other State. Article 18 INCOME EARNED BY ENTERTAINERS AND ATHLETES 1.     Notwithstanding the provisons of articles 15 (Independent Personal Services) and 16 (Dependent Personal Services), income derived by a resident of a Contracting State as an entertainer, such as a theatre, motion picture, radio or television artiste, or a musician, or as an athlete, from his personal activities as such exercised in the other Contracting State, may be taxed in that other State, except where the amount of the net income derived by such entertainer or athlete from such activities (after deduction of all expense incurred by him in connection with his visit and performance) does not exceed one thousand five hundred United States dollars ($1,500) or its equivalent in Indian rupees for the taxable year concerned. 2.     Where income in respect of activities exercised by an entertainer or an athlete in his capacity as such accrues not to the entertainer or athlete but to another person, that income of that other person may, notwithstanding the provisions of articles 7 (Business Profits), 15 (Independent Personal Services) and 16 (Dependent Personal Services), be taxed in the Contracting State in which the activities of the entertainer or athlete are exercised unless the entertainer, athlete, or other person establishes that neither the entertainer or athlete nor persons related thereto participate directly or indirectly in the profits of that other person in any manner, including the receipt of deferred remuneration, bonuses, fees, dividends, partnership distributions, or other distributions. 3.     Income referred to in the preceding paragraphs of this article derived by a resident of a Contracting State in respect of activities exercised in the other Contracting State shall not be taxed in that other State if the visit of the entertainers or athletes to that other State is supported wholly or substantially from the public funds of the Government of the first-mentioned Contracting State, or of a political sub-division or local authority thereof. 4.     The competent authorities of the Contracting States may, by mutual agreement, increase the dollar amounts referred to in paragraph 1 to reflect economic or monetary developments. Article 19 REMUNERATION AND PENSIONS IN RESPECT OF GOVERNMENT SERVICE 1.       a.     Remuneration, other than a pension, paid by a Contracting State or a political sub-division or a local authority thereof to an individual in respect of services rendered to that State or sub-division or authority shall be taxable only in that State. b.    However, such remuneration shall be taxable only in the other Contracting State if the services are rendered in that other State and the individual is a resident of that State who:                       i.        is a national of that State; or                      ii.        did not become a resident of that State solely for the purpose of rendering the services. 2.     a.     Any pension paid by, or out of funds created by a Contracting State or a political sub-division or a local authority thereof to an individual in respect of services rendered to that state or sub-division or authority shall be taxable only in that State. b.    However, such pension shall be taxable only in the other Contracting State if the individual is a resident of, and a national of, that State. 3.     The provisions of article 16 (Dependent Personal Services), 17 (Directors' Fees), 18 (Income Earned by Entertainers and Athletes) and 20 (Private Pensions, Annuities, Alimony and Child Support) shall apply to remuneration and pensions in respect of services rendered in connection with a business carried on by a Contracting State or a political sub-division or a local authority thereof. Article 20 PRIVATE PENSIONS, ANNUITIES, ALIMONY AND CHILD SUPPORT 1.     Any pension, other than a pension referred to in article 19 (Remuneration and Pensions in Respect of Government Service), or any annuity derived by a resident of a Contracting State from sources within the other Contracting State may be taxed only in the first-mentioned Contracting State. 2.     Notwithstanding paragraph 1, and subject to the provisions of article 19 (Remuneration and Pensions in Respect of Government Service), Social security benefits and other public pensions paid by a Contracting State to a resident of the other Contracting State or a citizen of the United States shall be taxable only in the first-mentioned State. 3.     The term "pension" means a periodic payment made in consideration of past services or by way of compensation for injuries received in the course of performance of services. 4.     The term "annuity" means stated sums payable periodically at stated times during life or during a specified or ascertainable number of years, under an obligation to make the payments in return for adequate and full consideration in money or money's worth (but not for services rendered). 5.     Alimony paid to a resident of a Contacting State shall be taxable only in that State. The term "alimony" as used in this paragraph means periodic payments made pursuant to a written separation agreement or a decree of divorce, separate maintenance, or compulsory support, which payments are taxable to the recipient under the laws of the State of which he is a resident. 6.     Periodic payments for the support of a minor child made pursuant to a written separation agreement or a decree of divorce, separate maintenance or compulsory support, paid by a resident of a Contracting State to a resident of the other Contracting State shall be taxable only in the first-mentioned State. Article 21 PAYMENTS RECEIVED BY STUDENTS AND APPRENTICES 1.     A student or business apprentice who is or was a resident of one of the Contracting States immediately before visiting the other Contracting State and who is present in that other State principally for the purpose of his education or training shall be exempt from tax in that other State, on payments which arise outside that other State for the purposes of his maintenance, education or training. 2.     In respect of grants, scholarships and remuneration from employment not covered by paragraph 1, a student or business apprentice described in paragraph 1 shall, in addition, be entitled during such education or training to the same exemptions, reliefs or reductions in respect of taxes available to residents of the State which he is visiting. 3.     The benefits of this article shall extend only for such period of time as may be reasonable or customarily required to complete the education or training undertaken. 4.     For the purposes of this article, an individual shall be deemed to be resident of a Contracting State if he is resident in that Contracting State in the taxable year in which he visits the other Contracting State or in the immediately preceding taxable year. Article 22 PAYMENTS RECEIVED BY PROFESSORS, TEACHERS AND RESEARCH SCHOLARS 1.     An individual who visits a Contracting State for a period not exceeding two years for the purpose of teaching or engaging in research at a university, college or other recognized educational institution in that State, and who was immediately before that visit a resident of the other Contracting State, shall be exempted from tax by the first-mentioned Contracting State on any remuneration for such teaching or research for a period not exceeding two years from the date he first visits that State for such purpose. 2.     This article shall apply to income from research only if such research is undertaken by the individual in the public interest and not primarily for the benefit of some other private person or persons. Article 23 OTHER INCOME 1.     Subject to the provisions of paragraph 2, items of income of a resident of a Contracting State, wherever arising, which are not expressly dealt within the foregoing articles of this Convention shall be taxable only in that Contracting State. 2.     The provisions of paragraph 1 shall not apply to income, other than income from immovable property as defined in paragraph 2 of article 6 (Income from Immovable Property (Real Property)), if the beneficial owner of the income, being a resident of a Contracting State, carries on business in the other Contracting State through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the income is attributable to such permanent establishment or fixed base. In such case the provisions of article 7 (Business Profits) or article 15 (Independent Personal Services), as the case may be, shall apply. 3.     Notwithstanding the provisions of paragraphs 1 and 2, items of income of a resident of a Contracting State not dealt with in the foregoing articles of this Convention and arising in the other Contracting State may also be taxed in that other State. Article 24 LIMITATION ON BENEFITS 1.     A person (other than an individual) which is a resident of a Contracting State and derives income from the other Contracting State shall be entitled under this Convention to relief from taxation in that other Contracting State only if: a.     more than 60 per cent. of the beneficial interest in such person (or in the case of a company, more than 50 per cent. of the number of shares of each class of the company's shares) is owned, directly or indirectly, by one or more individual residents of one of the Contracting States, one of the Contracting States or its political sub-divisions or local authorities, or other individuals subject to tax in either Contracting State on their worldwide incomes, or citizens of the United States; and b.    the income of such

Download Word Document In English. (Rs.85/-) Bulgaria Double Taxation Avoidance Agreement Income-Tax Act, 1961: Notification under section 90: Convention between the Government of Republic of India and the Government of Republic of Bulgaria for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and on capital Notification No. G.S.R. 205(E), dtd. 9TH MAY, 1996. Whereas the annexed Convention between the Government of the Republic of India and the Government of the Republic of Bulgaria for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and on capital has come into force on the 23rd June, 1995, after the notification by both the Contracting States to each other of the completion of the procedures required under their laws for bringing into force of the said Convention in accordance with Article 30 of the said Convention; Now, therefore, in exercise of the powers conferred by section 90 of the Income-tax Act, 1961 (43 of 1961), the Central Government hereby directs that all the provisions of the said Convention shall be given effect to in the Union of India. ANNEXURE CONVENTION BETWEEN THE GOVERNMENT OF THE REPUBLIC OF INDIA AND THE GOVERNMENT OF THE REPUBLIC OF BULGARIA FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME AND ON CAPITAL. The Government of the Republic of India and the Government of the Republic of Bulgaria. Desiring to further expand and facilitate mutual economic relations, Have resolved to conclude a Convention for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and on capital and have agreed as follows: ARTICLE 1 PERSONAL SCOPE This Convention shall apply to persons who are residents of one or both of the Contracting States. ARTICLE 2 TAXES COVERED 1.     The taxes to which this Convention shall apply are: a.     In India:                       i.        the income-tax, including any surcharge thereon; and                      ii.        the wealth-tax; (hereinafter referred to as "Indian tax"); b.    In Bulgaria:                       i.        the tax on total income;                      ii.        the tax on profits; and                     iii.        the tax on buildings; (hereinafter referred to as "Bulgarian tax") 2.     This Convention shall also apply to any identical or substantially similar taxes which are imposed by either Contracting State after the date of signature of this Convention in addition to, or in place of, the taxes of that Contracting State referred to in paragraph 1 of this Article. The competent authorities of the Contracting States shall notify each other of any substantial changes which are made in their respective laws. ARTICLE 3 GENERAL DEFINITIONS 1.     In this Convention, unless the context otherwise requires: a.     the term "India" means the territory of India and includes the territorial sea and airspace above it, as well as any other maritime zone in which India has sovereign rights, other rights and jurisdiction, according to the Indian laws and in accordance with International law; b.    the term "Bulgaria" means, the Republic of Bulgaria, and, when used in a geographical sense means the territory over which it exercises its State sovereignty, as well as the continental shelf and exclusive economic zone over which it exercises sovereign rights and jurisdiction according to International law; c.     the terms "Contracting State" and "the other Contracting State" mean India or Bulgaria, as the context requires; d.    the term "tax" means Indian tax or Bulgarian tax, as the context requires, but shall not include any amount which is payable in respect of any default or omission in relation to the taxes to which this Convention applies or which represents a penalty imposed relating to those taxes; e.     the term "person" shall have the meaning assigned to it in the taxation laws in force in the respective Contracting State; f.     the term "company" means any body corporate or any entity which is treated as a company or body corporate under the taxation laws in force in the respective Contracting States; g.    (g) the term "enterprise of a Contracting State" and "enterprise of the other Contracting State" mean respectively an enterprise carried on by a resident of a Contracting State and an enterprise carried on by a resident of the other Contracting State; g. (h) the term "competent authority" means in the case of India, the Central Government in the Ministry of Finance (Department of Revenue) or their authorised representative; and in the case of Bulgaria - The Minister of Finance or his authorised representative; h.     the term "international traffic" means any transport by a ship or aircraft operated by an enterprise of a Contracting State, except when the ship or aircraft is operated solely between places in the other Contracting State. 2.     As regards the application of this Convention by a Contracting State, any term not defined therein shall, unless the context otherwise requires, have the meaning which it has under the law of that State concerning the taxes to which the Convention applies. ARTICLE 4 RESIDENT 1.     For the purposes of this Convention, the term "resident of a Contracting State" means: a.     in the case of India, any person who, under the laws of India, is liable to tax therein by reason of his domicile, residence, place of management or any other criterion of a similar nature. b.    in the case of Bulgaria, any individual who is national of Bulgaria, as well as any legal person which has its head office in Bulgaria or is registered therein. 2.       a.     where by reason of the provisions of paragraph 1 of this Article an individual is a resident of both Contracting States, then he shall be deemed to be a resident of the State with which his personal and economic relations are closer (centre of vital interest); b.    if the Contracting State in which he has his centre of vital interest cannot be determined, the competent authorities of the Contracting States shall settle the question by mutual agreement. 3.     Where by reason of the provisions of paragraph 1 of this Article, a person other than an individual is a resident of both Contracting States, then it shall be deemed to be a resident of the State in which its place of effective management is situated. ARTICLE 5 PERMANENT ESTABLISHMENT 1.     For the purposes of this Convention, the term "permanent establishment" means a fixed place of business through which the business of the enterprise is wholly or partly carried on, separately or together with other persons. 2.     The term "permanent establishment" includes especially: a.     a place of management; b.    a branch; c.     an office; d.    a factory; e.     a workshop; f.     a mine, an oil or gas well, a quarry or any other place of extraction of natural resources; g.    a warehouse in relation to a person providing storage facilities for others; h.     an installation or structure used for the exploration or exploitation of natural resources; i.      a building site or construction, installation or assembly project or supervisory activities in connection therewith, where such site, projects or activities (together with other such sites, projects or activities, if any) continue for a period of more than six months: Provided that for the purpose of this paragraph an enterprise shall be deemed to have a permanent establishment in a Contracting State and to carry on business through that permanent establishment if it provides services or facilities in connection with or supplies plant and machinery on hire used or to be used in the prospecting for, or extraction or production of mineral oils in the State. 3.     Notwithstanding the preceding provisions of this Article, the term "permanent establishment" shall not be deemed to include: a.     the use of facilities solely for the purpose of storage, or display of goods or merchandise belonging to the enterprise; b.    the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of storage or display; c.     the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of processing by another enterprise; d.    the maintenance of a fixed place of business solely for the purpose of purchasing goods or merchandise, or of collecting information, for the enterprise; e.     the maintenance of a fixed place of business solely for the purpose of advertising, for the supply of information, for scientific research, or for similar activities which have a preparatory or auxiliary character, for the enterprise; f.     the selling of goods or merchandise belonging to the enterprises displayed in an occasional temporary fair or exhibition in the process of closing down of such fair or exhibition; g.    the maintenance of a fixed place of business solely for any combination of activities mentioned in sub-paragraphs (a) to (f), provided that overall activity of the fixed place of business resulting from this combination is of a preparatory or auxiliary character. However, the provisions of sub-paragraphs (a) to (g) shall not be applicable where the enterprise maintains any other fixed place of business in the other Contracting State for any purposes other than the purposes specified in the said sub-paragraphs. 4.     Notwithstanding the provisions of paragraphs 1 and 2, where a person - other than agent of an independent status to whom paragraph 5 applies - is acting in a Contracting State on behalf of an enterprise of the other Contracting State, that enterprise shall be deemed to have a permanent establishment in the first mentioned Contracting State, if: a.     he has, and habitually exercises in that State an authority to conclude contracts on behalf of the enterprise, unless his activities are limited to the purchase of goods or merchandise for the enterprise; b.    he has no such authority, but habitually maintains in the first mentioned State a stock of goods or merchandise from which he regularly delivers goods or merchandise on behalf of the enterprise; c.     he habitually secures orders in the first mentioned State wholly or almost wholly for the enterprise itself or for the enterprise and other enterprises in which the first mentioned enterprise has a majority participation, or for the enterprise and other enterprises which have a majority participation in the first mentioned enterprise. 5.     An enterprise of a Contracting State shall not be deemed to have a permanent establishment in the other Contracting State merely because it carries on business in that other State through a broker, a general commission agent or any other agent of an independent status, provided that such persons are acting in the ordinary course of their business. 6.     The fact that a company which is a resident of a Contracting State controls or is controlled by a company, which is a resident of the other Contracting State, or which carries on business in the other State (whether through a permanent establishment or otherwise), shall not of itself constitute either company a permanent establishment of the other. ARTICLE 6 INCOME FROM IMMOVABLE PROPERTY 1.     Income, derived by a resident of a Contracting State from immovable property (including income from agriculture or forestry) situated in the other Contracting State may be taxed in that other State. 2.     The term "immovable property" shall have the meaning which it has under the laws of the Contracting State in which the property in question is situated. The term shall in any case include property accessory to immovable property, usufruct of immovable property and rights to variable or fixed payments as consideration for the working of, or the right to work, mineral deposits, sources and other natural resources. Ships, boats and aircraft shall not be regarded as immovable property. 3.     The provisions of paragraph 1 shall also apply to income derived from the direct use, letting or use in any other form of immovable property. 4.     The provisions of paragraphs 1 and 3 shall also apply to the income from immovable property of an enterprise and to income from immovable property used for the performance of independent personal services. ARTICLE 7 BUSINESS PROFITS 1.     The profits of an enterprise of a Contracting State shall be taxable only in that State unless the enterprise carries on business in the other Contracting State through a permanent establishment situated therein. If the enterprise carries on business as aforesaid, the profits of the enterprise may be taxed in the other State, as is attributable to that permanent establishment. 2.     Subject to the provisions of paragraph 3, where an enterprise of a Contracting State carries on business in the other Contracting State through a permanent establishment situated therein, there shall in each Contracting State be attributed to that permanent establishment the profits which it might be expected to make if it were a distinct and separate enterprise engaged in the same or similar activities under the same or similar conditions and dealing wholly independently with the enterprise of which it is a permanent establishment. 3.     In the determination of the profits of a permanent establishment, there shall be allowed as deductions expenses which are incurred for the purposes of the business of the permanent establishment including executive and general administrative expenses so incurred, whether in the State in which the permanent establishment is situated or elsewhere, in accordance with the provisions of and subject to the limitation of the taxation laws of that State. 4.     No profits shall be attributed to a permanent establishment by reason of the mere purchase by that permanent establishment of goods or merchandise for the enterprise. 5.     For the purposes of the preceding paragraphs, the profits to be attributed to the permanent establishment shall be determined by the same method year by year unless there is good and sufficient reason to the contrary. 6.     Where profits include items of income which are dealt with separately in other Articles of this Convention, then the provisions of those Articles shall not be affected by the provisions of this Article. ARTICLE 8 AIR TRANSPORT 1.     Profits derived by an enterprise of a Contracting State from the operation of aircraft in international traffic shall be taxable only in that State. 2.     The provisions of paragraph 1 shall also apply to profits from the participation in a pool, a joint business or an international operating agency. 3.     The provisions of paragraphs 1 and 2 shall also apply where the enterprise has an office or agency in the other State for the transportation of goods or persons. However, this shall apply only to activities directly connected with the business of the operation of aircraft in international traffic. 4.     For the purposes of this Article, interest on funds connected with the operation of aircraft in international traffic shall be regarded as profits derived from the operation of such aircraft, and the provisions of Article 12 shall not apply in relation to such interest. 5.     The term "operation of aircraft" shall mean business of transportation by air of passengers, mail, livestock or goods carried on by the owners or lessees or charterers of aircraft, including the sale of tickets for such transportation on behalf of other enterprises, the incidental lease of aircraft and any other activity directly connected with such transportation. ARTICLE 9 SHIPPING 1.     Income derived by an enterprise of a Contracting State from the operation of ships in international traffic shall be taxable only in that State. 2.     Notwithstanding anything contained in paragraph 1 of this Article and paragraph 2 of Article 10 of the Agreement on Merchant Shipping dated 18th November, 1976 between the Government of the Republic of India and the Government of the People's Republic of Bulgaria, income derived by an enterprise of a Contracting State from the operation of ships in international traffic from the ports of the other Contracting State to the ports of third countries and from the ports of third countries to the ports of the other Contracting State may be taxed in the other Contracting State, but the tax imposed in that other Contracting State shall not exceed: a.     50 per cent of the tax otherwise imposed by the taxation law of that other Contracting State, or; b.    2.50 per cent of the gross amount payable in respect of such operation of ships, whichever is lower. 3.     For the purposes of clause (b) of paragraph 2 of this Article, the gross amount payable in respect of the operation of ships shall mean the aggregate of the following amounts, namely: a.     the gross amount paid or payable on account of the carriage of passengers, livestock, mail or goods shipped at a port or ports in the other Contracting State; b.    the gross amount received in the other Contracting State on account of carriage of passengers, livestock, mail or goods shipped at a port of the third country; c.     interest arising in the other Contracting State on funds connected with the operation of ships in international traffic; d.    the gross amount payable on account of the use, maintenance or rent of containers (including trailers and related equipments for the transport of containers) in connection with the transport of goods or merchandise in international traffic. 4.     The provisions of paragraphs 1 and 2 shall also apply to profits from the participation in a pool, a joint business or an international operating agency engaged in the operation of ships. 5.     For the purposes of this Article: a.     interest on funds connected with the operation of ships in international traffic shall be regarded as income from the operation of such ships and the provisions of Article 12 shall not apply in relation to such interest; and b.    income from the operation of ships includes income derived from the use, maintenance or rental of containers (including trailers and related equipments for the transport of containers) in connection with the transport of goods or merchandise in international traffic. ARTICLE 10 ASSOCIATED ENTERPRISE Where - a.     an enterprise of a Contracting State participates directly or indirectly in the management, control or capital of an enterprise of the other Contracting State, or b.    the same persons participate directly or indirectly in the management, control or capital of an enterprise of a Contracting State, and an enterprise of the other Contracting State, and in either case conditions are made or imposed between the two enterprises in their commercial or financial relations which differ from those which would be made between independent enterprises, then any profits which would, but for those conditions, have accrued to one of the enterprises, but by reason of those conditions, have not so accrued, may be included in the profits of that enterprise and taxed accordingly. ARTICLE 11 DIVIDENDS 1.     Dividends paid by a company which is resident of a Contracting State to a resident of the other Contracting State may be taxed in that other State. 2.     However, such dividends may also be taxed in the Contracting State of which the company paying the dividends is a resident and according to the laws of that State, but if the recipient is the beneficial owner of the dividends, the tax so charged shall not exceed 15 per cent of the gross amount of the dividends. This paragraph shall not affect the taxation of the company in respect of the profits out of which the dividends are paid. 3.     The term "dividends" as used in this Article means income from shares or other rights, not being debt-claims, participating in profits, as well as income from corporate rights which is subjected to the same taxation treatment as income from shares by the laws of the State of which the company making the distribution is a resident. 4.     The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the dividends, being a resident or a Contracting State, carries on business in the other Contracting State of which the company paying the dividends is a resident, through a permanent establishment situated therein or performs in that other State independent personal services from a fixed base situated therein, and the holding in respect of which the dividends are paid is effectively connected with such permanent establishment or fixed base. In such case the provisions of Article 7, or Article 15, as the case may be, shall apply. 5.     Where a company which is a resident of a Contracting State derives profits or income from the other Contracting State, that other State may not impose any tax on the dividends paid by the company, except insofar as such dividends are paid to a resident of that other State or so far as the holding in respect of which the dividends are paid is effectively connected with a permanent establishment or a fixed base situated in that other State, nor subject the company's undistributed profits to a tax on the company's undistributed profits, even if the dividends paid or the undistributed profits consist wholly or partly of profits or income arising in such other State. ARTICLE 12 INTEREST 1.     Interest arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State. 2.     However, such interest may also be taxed in the Contracting State in which it arises and according to the laws of that State, if the recipient is the beneficial owner of the interest, the tax so charged shall not exceed 15 per cent of the gross amount of the interest. 3.     Notwithstanding the provisions of paragraph 2, a.     interest arising in a Contracting State shall be exempt from tax in that State provided it is derived and beneficially owned by:                                           i.    the Government, a political subdivision or a local authority of the other Contracting State, or                                          ii.    the Central Bank of the other Contracting State; b.    Interest arising in a Contracting State shall be exempt from tax in that State if it is beneficially owned by a resident of the other Contracting State and it is derived in connection with a loan or credit extended or endorsed by:                                           i.    in the case of Bulgaria, the Foreign Trade Bank to the extent such interest is attributable to financing of exports and imports only;                                          ii.    in the case of India, the Export-Import Bank of India (Exim Bank), to the extent such interest is attributable to financing of exports and imports only;                                         iii.    any institution of a Contracting State in charge of public financing of external trade;                                         iv.    any other person provided that the loan or credit is approved by the Government of the first mentioned Contracting State. 1.     The term "interest" as used in this Article means income from debt-claims of every kind, whether or not secured by mortgage and whether or not carrying a right to participate in the debtor's profits, and in particular, income from Government securities and income from bonds or debentures, including premiums and prizes attaching to such securities, bonds or debentures. Penalty charges for late payments shall not be regarded as interest for the purpose of this Article. 2.     The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the interest, being a resident of a Contracting State, carries on business in the other Contracting State in which the interest arises, through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the debt-claim in respect of which the interest is paid is effectively connected with such permanent establishment or fixed base. In such a case the provisions of Article 7 or Article 15, as the case may be, shall apply. 3.     Interest shall be deemed to arise in a Contracting State when the payer is that Contracting State itself, a political sub-division, a local authority thereof or a resident of that State. Where, however, the person paying the interest, whether he is a resident of a Contracting State or not, has in a Contracting State a permanent establishment or a fixed base in connection with which the indebtedness on which the interest is paid was incurred, and such interest is borne by such permanent establishment or fixed base, then such interest shall be deemed to arise in the Contracting State in which the permanent establishment or fixed base is situated. 4.     Where, by reason of a special relationship between the payer and the beneficial owner or between both of them and some other person, the amount of the interest, having regard to the debt claim for which it is paid, exceeds the amount which would have been agreed upon by the payer and the beneficial owner in the absence of such relationship, the provisions of this Article shall apply to the last mentioned amount. In such case, the excess part of the payments shall remain taxable according to the laws of each Contracting State, due regard being had to the other provisions of this Convention. ARTICLE 13 ROYALTIES AND FEES FOR TECHNICAL SERVICES 1.     Royalties and fees for technical services arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State. 2.     However, such royalties and fees for technical services may also be taxed in the Contracting State in which they arise, and according to the laws of that State, but if the recipient is the beneficial owner of the royalties, or fees for technical services, the tax so charged shall not exceed: a.     15 per cent of the gross amount of the royalties relating to copyrights of literary, artistic or scientific works, other than cinematograph films or films or tapes used for radio or television broadcasting; and b.    20 per cent of the gross amount of the royalties in all other cases or fees for technical services. 3.     The term "royalties" as used in this Article means payments of any kind received as a consideration for the use of, or the right to use, any copyright of literary, artistic or scientific work including cinematograph films, or films or tapes used for radio or television broadcasting, any patent, trade mark, design or model, plan, secret formula or process, or for the use of, or the right to use, industrial, commercial or scientific equipment, or for information concerning industrial, commercial or scientific experience. 4.     The term "fees for technical services" as used in this Article means payments of any amount to any person other than payments to an employee of a person making payments, in consideration for the services of a managerial, technical or consultancy nature, including the provision of services of technical or other personnel. 5.     The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the royalties or fees for technical services, being a resident of a Contracting State, carries on business in the other Contracting State in which the royalties or fees for technical services arise, through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the right, property or contract in respect of which the royalties or fees for technical services are paid is effectively connected with such permanent establishment or fixed base. In such case the provisions of Article 7 or Article 15, as the case may be, shall apply. 6.     Royalties and fees for technical services shall be deemed to arise in a Contracting State when the payer is that State itself, a political sub-division, a local authority thereof, or a resident of that State. Where, however, the person paying the royalties or fees for technical services, whether he is a resident of a Contracting State or not, has in a Contracting State a permanent establishment or a fixed base in connection with which the liability to pay the royalties or fees for technical services was incurred, and such royalties or fees for technical services are borne by such permanent establishment or fixed base, then such royalties or fees for technical services shall be deemed to arise in the State in which the permanent establishment or fixed base is situated. ARTICLE 14 CAPITAL GAINS 1.     Gains derived by a resident of a Contracting State from the alienation of immovable property referred to in Article 6 and situated in the other Contracting State may be taxed in that other State. 2.     Gains from the alienation of movable property forming part of the business property of a permanent establishment which an enterprise of a Contracting State has in the other Contracting State or of movable property pertaining to a fixed base available to a resident of a Contracting State in the other Contracting State for the purpose of performing independent personal services, including such gains from the alienation of such a permanent establishment (alone or together with the whole enterprise) or of such fixed base, may be taxed in that other State. 3.     Gains from the alienation of ships or aircraft operated in international traffic or movable property pertaining to the operation of such ships or aircraft shall be taxable only in the Contracting State of which the alienator is resident. 4.     Gains from the alienation of shares of the capital stock of a company the property of which consists directly or indirectly principally of immovable property situated in a Contracting State may be taxed in that State. 5.     Gains from the alienation of shares, other than those mentioned in paragraph 4 of a company which is a resident of a Contracting State may be taxed in that State. 6.     Gains from the alienation of any property other than that mentioned in paragraphs 1, 2, 3, 4 and 5 shall be taxable only in the Contracting State of which the alienator is a resident. ARTICLE 15 INDEPENDENT PERSONAL SERVICES 1.     Income derived by an individual, who is a resident of a Contracting State from the performance of professional services or other independent activities of a similar character shall be taxable only in that State except in the following circumstances when such income may also be taxed in the other Contracting State: a.     if he has a fixed base regularly available to him in the other Contracting State for the purpose of performing his activities; in that case only so much of the income as is attributable to that fixed base may be taxed in that other State; or b.    if his stay in the other Contracting State is for a period or periods amounting to or exceeding in the aggregate 183 days in the relevant "previous year" or 'year of income', as the case may be; in that case, only so much of the income as is derived from his activities performed in that other State may be taxed in that other State. 2.     The term "professional services" includes independent scientific, literary, artistic, educational or teaching activities, as well as the independent activities of physicians, surgeons, lawyers, engineers, architects, dentists and accountants. ARTICLE 16 DEPENDENT PERSONAL SERVICES 1.     Subject to the provisions of Articles 17, 18, 19, 20, 21 and 22, salaries, wages and other similar remuneration derived by a resident of a Contracting State in repect of an employment shall be taxable only in that State unless the employment is exercised in the other Contracting State. If the employment is so exercised, such remuneration as is derived therefrom may be taxed in that other State. 2.     Notwithstanding the provisions of paragraph 1, remuneration derived by a resident of a Contracting State in respect of an employment exercied in the other Contracting State shall be taxable only in the first mentioned State if: a.     the recipient is present in the other State for a period or periods not exceeding in the aggregate 183 days in the relevant "previous year" or "year of income", as the case may be; and b.    the remuneration is paid by, or on behalf of, an employer who is not a resident of the other State; and c.     the remuneration is not borne by a permanent establishment or a fixed base which the employer has in the other State. 3.     Notwithstanding the preceding provisions of this Article, remuneration derived in respect of an employment exercised aboard a ship or aircraft operated in international traffic by an enterprise of a Contracting State may be taxed in that State. ARTICLE 17 DIRECTORS' FEES Directors' fees and similar payments derived by a resident of a Contracting State in his capacity as member of the Board of Directors of a company which is a resident of the other Contracting State may be taxed in that other State. ARTICLE 18 INCOME EARNED FROM ENTERTAINERS AND ATHLETES 1.     Notwithstanding the provisions of Articles 15 and 16, income derived by a resident of a Contracting State as an entertainer, such as a theatre, motion picture, radio or television artiste, or a musician, or as an athlete, from his personal activities as such exercised in the other Contracting State may be taxed in that other State. 2.     Where income in aspect of personal activities exercised by an entertainer or athlete in his capacity as such accrues not to the entertainer or athlete himself but to another person, that income may, notwithstanding the provisions of Articles 7, 15 and 16, be taxed in the Contracting State, in which the activities of the entertainer or athlete are exercised. 3.     Notwithstanding the provisions of paragraph 1, income derived by an entertainer or an athlete who is a resident of a Contracting State, from his personal activities as such, exercised in the other Contracting State, shall be taxable only in the first mentioned Contracting State, if the activities in the other Contracting State are performed within the framework of cultural exchange between the two Contracting States, or are supported wholly or substantially, from the public funds of the first mentioned Contracting State, including any of its political sub-divisions or local authorities. 4.     Notwithstanding the provisions of paragraph 2 and Articles 7, 15 and 16, where income in respect of personal activities exercised by an entertainer or an athlete in his capacity as such in a Contracting State accrues not to the entertainer or athlete himself but to another person, that income shall be taxable only in the other Contracting State, if that other person is supported wholly or substantially from the public funds of that other State, including any of its political subdivisions or local authorities. ARTICLE 19 REMUNERATIONS AND PENSIONS IN RESPECT OF GOVERNMENT SERVICE 1.       a.     Remuneration, other than a pension, paid by a Contracting State or a political sub-division or a local authority thereof to an individual in respect to services rendered to that State or sub-division or authority shall be taxable only in that State; a. b.    However, such remuneration shall be taxable only in the other Contracting State if the services are rendered in that other State and the individual is a resident of that State, who:                                           i.    is a national of that State; or                                          ii.    did not become a resident of that State solely for the purpose of rendering the services. 2.       a.     Any pension paid by, or out of funds, created by a Contracting State or a political sub-division or a Contracting State or a political sub-division or a local authority thereof to an individual in respect of services rendered to that State or sub-division or authority shall be taxable only in that State; b.    However, such pension shall be taxable only in the other Contracting State if the individual is a resident of, and a national of that other State. 3.     The provisions of Articles 16, 17 and 20 shall apply to remuneration and pensions in respect of services rendered in connection with a business carried on by a Contracting State or a political sub-division or local authority thereof. ARTICLE 20 NON-GOVERNMENT PENSIONS AND ANNUITIES 1.     Any pension, other than a pension referred to in Article 19, or any annuity derived by a resident of a Contracting State from sources within the other Contracting State may be taxed only in the first mentioned Contracting State. 2.     The term "pension" means a periodic payment made in consideration of past services or by way of compensation for injuries received in the course of performance of services. 3.     The term "annuity" means a stated sum payable periodically at stated times during life or during a specified or ascertainable period of time, under an obligation to make the payments in return for adequate and full consideration in money or money's worth. ARTICLE 21 PAYMENTS RECEIVED BY STUDENTS AND APPRENTICES 1.     A student or business apprentice who is or was a resident of one of the Contracting States immediately before visiting the other Contracting State and who is present in that State solely for the purpose of his education or training, shall be exempt from tax in that other State on: a.     payments made to him by persons resident outside that other State for the purposes of his maintenance, education or training; and b.    remuneration from employment in that other State, in an amount not exceeding Lv. 1500 or its equivalent in Indian currency during any "previous year" or "year of income", as the case may be, provided that such employment is directly related to his studies or is undertaken for the purposes of his maintenance. 2.     The benefits of this Article shall extend only for such period of time as may be reasonable or customarily required to complete the education or training undertaken, but in no event shall any individual have the benefits of this Article, for more than five consecutive years from the date of his first arrival in that other Contracting State. ARTICLE 22 PAYMENTS RECEIVED BY PROFESSORS, TEACHERS AND RESEARCH SCHOLARS 1.     A professor or teacher who is or was a resident of one of the Contracting States immediately before visiting the other Contracting State for the purpose of teaching or engaging in research, or both, at a university, college, school or other approved institution in that other Contracting State shall be exempt from tax in that other State on any remuneration for such teaching or research for a period not exceeding two years from the date of his arrival in that other State. 2.     This paragraph shall not apply to income from research if such research is undertaken primarily for the private benefit of a specific person or persons. 3.     For the purpose of this Article and Article 21, an individual shall be deemed to be a resident of a Contracting State if he is resident in that Contracting State in the "previous year" or the "year of income", as the case may be, in which he visits the other Contracting State or in the immediately preceding "previous year" or "year of income". 4.     For the purposes of paragraph 1, "approved institution" means an institution which has been approved or established by the competent authority of the concerned Contracting State. ARTICLE 23 OTHER INCOME 1.     Subject to the provisions of paragraphs 2 and 3 items of income of a resident of a Contracting State, wherever arising, which are not expressly dealt with in the foregoing Articles of this Convention shall be taxable only in that Contracting State. 2.     The provisions of paragraph 1 shall not apply to income, other than income from immovable property as defined in paragraph 2 of Article 6, if the recipient of such income, being a resident of a Contracting State, carries on business in the other Contracting State through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the right or property in respect of which the income is paid is effectively connected with such permanent establishment or fixed base. In such case, the provisions of Article 7 or Article 15, as the case may be, shall apply. 3.     Notwithstanding the provisions of paragraphs 1 and 2, items of income of a resident of a Contracting State not dealt with in the foregoing Articles of this Convention and arising in the other Contracting State may be taxed in that other State. ARTICLE 24 CAPITAL 1.     Capital represented by immovable property referred to in Article 6, owned by a resident of a Contracting State and situated in the other Contracting State, may be taxed in that other State. 2.     Capital represented by movable property forming part of the business property of a permanent establishment which an enterprise of a Contracting State has in the other Contracting State or by movable property pertaining to a fixed base available to a resident of a Contracting State in the other Contracting State for the purpose of performing independent personal services, may be taxed in that other State. 3.     Capital represented by ships or aircraft operated in international traffic and by movable property pertaining to the operation of such ships or aircraft, shall be taxable only in the Contracting State of which the enterprise owning such property is a resident. 4.     All other elements of capital of a resident of a Contracting State may be taxed in the Contracting State in which such elements of capital are situated. ARTICLE 25 ELIMINATION OF DOUBLE TAXATION 1.     The laws in force in either of the Contracting States shall continue to govern the taxation of income or capital in the respective Contracting State except where provisions to the contrary are made in this Convention. 2.     In both the Contracting States, double taxation shall be avoided in the following manner: a.     where a resident of a Contracting State derives income or owns capital which, in accordance with the provisions of this Convention, may be taxed in the other Contracting State, the first mentioned State shall, subject to the provisions of sub-paragraph (b) of this paragraph, exempt such income or capital from tax but may, in calculating tax on the remaining income or capital of that person, apply the rate of tax which would have been applicable if the exempted income or capital had not been so exempted; b.    Either of the Contracting States when imposing taxes on its residents may include in the tax base upon which such taxes are imposed the items of income which according to the provisions of Articles 9, 11, 12 and 13 of this Convention may also be taxed in the other State but shall allow as a deduction from the amount of tax computed on such a base an amount equal to the tax paid in the other Contracting State. Such deduction shall not, however, exceed that part of tax, leviable by the first mentioned State, as computed before the deduction is given, which is appropriate to the income which, in accordance with the provisions of Articles 9, 11, 12 and 13 of this Convention may be taxed in the other State. 3.     For the purposes of sub-paragraph (b) of paragraphs 2 the term "tax paid in the other Contracting State" shall be deemed to include any amount which would have been payable as tax but for any relief by way of deduction allowed in computing the taxable income or an exemption or a reduction of tax or otherwise under the laws relating to taxation of income in force in that other Contracting State. ARTICLE 26 NON-DISCRIMINATION 1.     The nationals of a Contracting State shall not be subjected in the other Contracting State to any taxation or any requirement connected therewith which is other or more burdensome than the taxation and connected requirements to which nationals of that other State in the same circumstances and under the same conditions are or may be subjected. 2.     The term "nationals" means: a.     All individuals possessing the nationality of a Contracting State; b.    All legal persons, partnerships and associations deriving their status as such from the laws in force in a Contracting State. 3.     The taxation on a permanent establishment which an enterprise of a Contracting State has in the other Contracting State shall not be less favourably levied in that other State than the taxation levied on enterprises of that other State carrying on the same activities in the same circumstances or under the same conditions. This provision shall not be construed as preventing a Contracting State from charging the profits of a permanent establishment which an enterprise of the other Contracting State has in the first mentioned State at a rate of tax which is higher than that imposed on the profits of a similar enterprise of the first mentioned Contracting State, nor as being not in accordance with the provisions of paragraph 3 of Article 7 of this Convention. 4.     Nothing in this Article shall be construed as obliging a Contracting State to grant to non-residents of that State any personal allowances, reliefs, reductions and deductions for taxation purposes which are by law available only to persons who are so resident. 5.     Enterprises of a Contracting State, the capital of which is wholly or partly owned or controlled directly or indirectly, by one or more residents of the other Contracting State, shall not be subjected in the first mentioned Contracting State to any taxation or any requirement connected therewith which is other or more burdensome than the taxation and connected requirements to which other similar enterprises of that first mentioned State are or may be subjected in the same circumstances and under the same conditions. 6.     In this Article the term "taxation" means taxes which are subject of this Convention. ARTICLE 27 MUTUAL AGREEMENT PROCEDURE 1.     Where a resident of a Contracting State considers that the actions of one or both of the Contracting States result or will result for him in taxation not in accordance with this Convention, he may, notwithstanding the remedies provided by the national laws of these States, present his case to the competent authority of the Contracting State of which he is a resident. This case must be presented within three years of the date of receipt of notice of the action which gives rise to taxation, not in accordance with the Convention. 2.     The competent authority shall endeavour, if the objection appears to it to be justified and if it is not itself able to arrive at an appropriate solution, to resolve the case by mutual agreement with the competent authority of the other Contracting State with a view to avoidance of taxation not in accordance with the Convention. Any agreement reached shall be implemented notwithstanding any time limits in the national laws of the Contracting States. 3.     The competent authorities of the Contracting States shall endeavour to resolve by mutual agreement any difficulties or doubts arising as to the interpretation or application of the Convention. They may also consult together for the elimination of double taxation in cases not provided for in this Convention. 4.     The competent authorities of the Contracting States may communicate with each other directly for the purpose of reaching an agreement in the sense of the preceding paragraphs. When it seems advisable in order to reach agreement to have an oral exchange of opinions, such exchange may take place through a Commission consisting of representatives of the competent authorities of the Contracting States. ARTICLE 28 EXCHANGE OF INFORMATION 1.     The competent authorities of the Contracting States shall exchange such information (including documents) as is necessary for carrying out the provisions of the Convention or of the domestic laws of the Contracting States concerning taxes covered by the Convention insofar as the taxation thereunder is not contrary to the Convention, in particular for the prevention of fraud or evasion of such taxes. Any information received by a Contracting State shall be treated as secret in the same manner as information obtained under the domestic laws of that State. However, if the information is originally regarded as secret in the transmitting State, it shall be disclosed only to persons or authorities (including Courts and administrative bodies) involved in the assessment or collection of, the enforcement or prosecution in respect of, or the determination of appeals in relation to, the taxes which are subject of the Convention. Such persons or authorities shall use the information only for such purposes but may disclose the information in public Court proceedings or in judicial decisions. The competent authorities shall, through consultation, develop appropriate conditions, methods and techniques concerning the matters in respect of which such exchange of information shall be made, including, where appropriate, exchange of information regarding tax avoidance. 2.     The exchange of information or documents shall be either on a routine basis or on request with reference to particular case or both. The competent authorities of the Contracting States shall agree from time to time on the list of the information or documents which shall be furnished on a routine basis. 3.     In no case shall the provisions of paragraph 1 be construed so as to impose on a Contracting State the obligation: a.     to carry out administrative measures at variance with the laws or administrative practice of that or of the other Contracting State; b.    to supply information or documents which are not obtainable under the laws or in the normal course of the administration of that or of the other Contracting State; c.     to supply information or documents which would disclose any trade, business, industrial, commercial or professional secret or trade process, or information, the disclosure of which would be contrary to public policy (ordre public). ARTICLE 29 DIPLOMATIC AND CONSULAR OFFICIALS Nothing in this Convention shall affect the fiscal privileges of diplomatic or consular officials under the general rules of international law or under the provisions of special agreements. ARTICLE 30 ENTRY INTO FORCE 1.     Each of the Contracting States shall notify to the other the completion of the procedures required by its law for the bringing into force of this Convention. This Convention shall enter into force on the date of the latter of these notifications and shall thereupon have effect: a.     In India:                                           i.    in respect of income arising in any previous year beginning on or after the first day of April next following the calendar year in which the Convention enters into force; and                                          ii.    in respect of capital which is held on the last day of any previous year beginning on or after the first day of April next following the calendar year in which the Convention enter into force; and b.    In Bulgaria:                                           i.    in respect of income arising in any year of income beginning on or after the first day of January next following the calendar year in which the Convention enters into force; and                                          ii.    in respect of capital which is held on the last day of any year of income beginning on or after the first day of January next following the calendar year in which the Convention enters into force. ARTICLE 31 TERMINATION This Convention shall remain in force indefinitely but either of the Contracting States may, on or before the thirtieth day of June in any calendar year beginning after the expiration of a period of five years from the date of its entry into force, give to the other Contracting State through diplomatic channels, written notice of termination. In such event, the Convention shall cease to have effect: a.     In India

Download Word Document In English. (Rs.80/-) South Africa Double Taxation Avoidance Agreement Income Tax-Act,1961: Notification under section 90: Agreement between the Government of the Republic of India and the Government of the Republic of South Africa for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income Notification No.G.S.R. No.198(E), dtd. 21.04.1998 Whereas the annexed agreement between the Government of the Republic of India and the Government of the Republic of South Africa for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income, has entered into force on the twenty-eighth day of November, 1997, in accordance with article 28 of the said Agreement, after the notification by both the contracting States to each other of the completion of the procedures required under their laws for the bringing into force of the said agreement; Now, therefore, in exercise of the powers conferred by section 90 of the Income-tax Act, 1961 (43 of 1961), the Central Government hereby directs that all the provisions of the said agreement shall be given effect to in the Union of India. ANNEXURE AGREEMENT BETWEEN THE GOVERNMENT OF THE REPUBLIC OF INDIA AND THE GOVERNMENT OF THE REPUBLIC OF SOUTH AFRICA FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME. Preamble The Government of the Republic of India and the Government of the Republic of South Africa desiring to conclude an Agreement for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income, Have agreed as follows: Article 1 PERSONAL SCOPE This Agreement shall apply to persons who are residents of one or both of the Contracting States. Article 2 TAXES COVERED 1.     The existing taxes to which this Agreement shall apply are: a.       In India, The income-tax (including any surcharge thereon); (hereinafter referred to as "Indian tax"); b.      In South Africa:                       i.        the income tax (the normal tax) and                      ii.        the secondary tax on companies; (hereinafter referred to as "South African tax"). 2.     The Agreement shall apply also to any identical or substantially similar taxes which are imposed by either Contracting State after the date of signature of the Agreement in addition to, or in place of, the existing taxes. The competent authorities of the Contracting States shall notify each other of any significant changes which have been made in their respective taxation laws. Article 3 GENERAL DEFINITIONS 1.     For the purposes of this Agreement, unless the context otherwise requires: a.     the term "India" means the territory of the Republic of India and includes the territorial sea and airspace above it. For the purposes of this Agreement the term shall cover any other maritime zone in which the Republic of India has sovereign rights, other rights and jurisdiction, according to the Indian law and in accordance with international law in particular as laid down in the UN Convention of the Law of the Sea, 1982; and b.    the term "South Africa" means the Republic of South Africa and, when used in a geographical sense, includes the territorial sea thereof as well as any area outside the territorial sea, including the continental shelf, which has been or may hereafter be designated, under the laws of South Africa and in accordance with international law, as an area within which South Africa may exercise sovereign rights or jurisdiction; c.     the terms "a Contracting State" and "the other Contracting State" mean India or South Africa, as the context requires; d.    the term "company" means any body corporate or any entity which is treated as a company or body corporate for tax purposes; e.     the term "competent authority" means;                       i.        in India, the Central Government in the Ministry of Finance (Department of Revenue) or their authorised representative; and                      ii.        in South Africa, the Commissioner for Inland Revenue or his authorised representative; f.     the terms "enterprise of a Contracting State" and "enterprise of the other Contracting State" mean respectively an enterprise carried on by a resident of a Contracting State and an enterprise carried on by a resident of the other Contracting State; g.    the term "fiscal year" means:                       i.        in India, the twelve-month period beginning on 1 April;                      ii.        in South Africa, the "year of assessment" as defined in the Income-tax Act, 1962; h.     the term "international traffic" means any transport by a ship or aircraft operated by an enterprise of a Contracting State, except when the ship or aircraft is operated solely between places in the other Contracting State; i.      the term "national" means:                       i.        any individual possessing the nationality of a Contracting State;                      ii.        any legal person or association deriving its status as such from the laws in force in a Contracting State; j.      the term "person" includes an individual, a company and any other body of persons which is treated as an entity for tax purposes under the taxation laws in force in the respective Contracting States; and k.     the term "tax" means Indian tax or South African tax, as the context requires, but shall not include any amount which is payable in respect of any default or omission in relation to the taxes to which this Agreement applies or which represents a penalty imposed relating to those taxes. 2.     As regards the application of the provisions of the Agreement at any time by a Contracting State, any term not defined therein shall, unless the context otherwise requires, have the meaning which it has at that time under the law of that State for the purposes of the taxes to which the Agreement applies, any meaning under the applicable tax laws of that State prevailing over a meaning given to the term under other laws of that State. Article 4 RESIDENT 1.     For the purposes of this Agreement, the term "resident of a Contracting State" means; a.     in India, any person who, under the laws of India, is liable to tax therein by reason of his domicile, residence, place of management or any other criterion of a similar nature, but this term does not include any person who is liable to tax in India in respect only of income from sources in India; b.    in South Africa, any individual who is ordinarily resident in South Africa and any other person which has its place of effective management in South Africa; 2.     Where by reason of the provisions of paragraph 1 an individual is a resident of both Contracting States, then his status shall be determined as follows: a.     he shall be deemed to be a resident only of the State in which he has a permanent home available to him; if he has a permanent home available to him in both States, he shall be deemed to be a resident of the State with which his personal and economic relations are closer (centre of vital interests); b.    if the State in which he has his centre of vital interests cannot be determined, or if he has not a permanent home available to him in either State, he shall be deemed to be a resident only of the State in which he has an habitual abode; c.     if he has an habitual abode in both States or in neither of them, he shall be deemed to be a resident only of the State of which he is a national; d.    if he is a national of both States or of neither of them, the competent authorities of the Contracting States shall settle the question by mutual agreement. 3.     Where by reason of the provisions of paragraph 1 a person other than an individual is a resident of both Contracting States, then it shall be deemed to be a resident only of the State in which its place of effective management is situated. If the State in which its place of effective management is situated cannot be determined, then the competent authorities of the Contracting States shall settle the question by mutual agreement. Article 5 PERMANENT ESTABLISHMENT 1.     For the purposes of this Agreement, the term "permanent establishment" means a fixed place of business through which the business of an enterprise is wholly or partly carried on. 2.     The term "permanent establishment" includes especially: a.     a place of management; b.    a branch; c.     an office; d.    a factory; e.     a workshop; f.     a mine, an oil or gas well, a quarry or any other place of extraction of natural resources, including an installation or structure used for the exploration or exploitation of natural resources; and g.    a warehouse, in relation to a person providing storage facilities for others. 3.     A building site, a construction, installation or assembly project or any supervisory activity in connection with such site or project constitutes a permanent establishment only if it lasts more than six months. 4.     Notwithstanding the preceding provisions of this Article, the term permanent establishment shall be deemed not to include: a.     the use of facilities solely for the purpose of storage, display or delivery of goods or merchandise belonging to the enterprise; b.    the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of storage, display or delivery; c.     the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of processing by another enterprise; d.    the maintenance of a fixed place of business solely for the purpose of purchasing goods or merchandise, or for collecting information, for the enterprise; e.     the maintenance of a fixed place of business solely for the purpose of carrying on, for the enterprise, any other activity of a preparatory or auxiliary character; and f.     the maintenance of a fixed place of business solely for any combination of activities mentioned in sub-paragraphs (a) to (e), provided that the overall activity of the fixed place of business resulting from this combination is of a preparatory or auxiliary character. 5.     Notwithstanding the provisions of paragraph 1 and 2, where a person---other than an agent of an independent status to whom paragraph 6 applies---is acting on behalf of an enterprise and has, and habitually exercises, in a Contracting State an authority to conclude contracts in the name of the enterprise, that enterprise shall be deemed to have a permanent establishment in that State in respect of any activities which that person undertakes for the enterprise, unless the activities of such person are limited to those mentioned in paragraph 4 which, if exercised through a fixed place of business, would not make this fixed place of business a permanent establishment under the provisions of that paragraph. 6.     An enterprise shall not be deemed to have a permanent establishment in a Contracting State merely because it carries on business in that State through a broker, general commission agent or any other agent of an independent status, provided that such persons are acting in the ordinary course of their business. 7.     The fact that a company which is a resident of a Contracting State controls or is controlled by a company which is a resident of the other Contracting State, or which carries on business in that other State (whether through a permanent establishment or otherwise), shall not of itself constitute either company a permanent establishment of the other. Article 6 INCOME FROM IMMOVABLE PROPERTY 1.     Income derived by a resident of a Contracting State from immovable property, including income from agriculture or forestry, situated in the other Contracting State may be taxed in that other State. 2.     The term "immovable property" shall have the meaning which it has under the law of the Contracting State in which the property in question is situated. The term shall in any case include property accessory to immovable property, livestock and equipment used in agriculture and forestry, rights to which the provisions of general law respecting landed property apply, usufruct of immovable property and rights to variable or fixed payments as consideration for the working of, or the right to work, mineral deposits, sources and other natural resources. Ships, boats and aircraft shall not be regarded as immovable property. 3.     The provisions of paragraph 1 shall apply to income derived from the direct use, letting or use in any other form of immovable property. 4.     The provisions of paragraph 1 and 3 shall also apply to the income from immovable property of an enterprise and to income from immovable property used for the performance of independent personal services. Article 7 BUSINESS PROFITS 1.     The profits of an enterprise of a Contracting State shall be taxable only in that State unless the enterprise carries on business in the other Contracting State through a permanent establishment situated therein. If the enterprise carried on business as aforesaid, the profits of the enterprise may be taxed in the other State but only so much of them as is attributable to that permanent establishment. 2.     Subject to the provisions of paragraph 3, where an enterprise of a Contracting State carries on business in the other Contracting State through a permanent establishment situated therein, there shall in each Contracting State be attributed to that permanent establishment the profits which it might be expected to make if it were a distinct and separate enterprise engaged in the same or similar activities under the same or similar conditions and dealing wholly independently with the enterprise of which it is a permanent establishment. 3.     In determining the profits of a permanent establishment, there shall be allowed as deductions expenses which are incurred for the purposes of the permanent establishment, including executive and general administrative expenses so incurred, whether in the Contracting State in which the permanent establishment is situated or elsewhere, in accordance with and subject to the limitations prescribed in the taxation laws in that Contracting State. 4.     In so far as it has been customary in a Contracting State to determine the profits to be attributed to a permanent establishment on the basis of an apportionment of the total profits of the enterprise to its various parts, nothing in paragraph 2 shall preclude that Contracting State from determining the profits to be taxed by such an apportionment as may be customary. The method of apportionment adopted shall, however, be such that the result shall be in accordance with the principles contained in this article. 5.     No profits shall be attributed to a permanent establishment by reason of the mere purchase by that permanent establishment of goods or merchandise for the enterprise. 6.     For the purposes of the preceding paragraphs, the profits to be attributed to the permanent establishment shall be determined by the same method year by year unless there is good and sufficient reason to the contrary. 7.     Where profits include items of income which are dealt with separately in other articles of this Agreement, then the provisions of those articles shall not be affected by the provisions of this article. Article 8 SHIPPING AND AIR TRANSPORT 1.     Profits of an enterprise of a Contracting State from the operation of ships or aircraft in international traffic shall be taxable only in that State. 2.     For the purposes of this Article, profits from the operation of ships or aircraft in international traffic shall include: a.     profits derived from the rental on a bare boat basis of ships or aircraft used in international traffic, b.    profits derived from the use or rental of containers, if such profits are incidental to the profits to which the provisions of paragraph 1 apply. 3.     For the purposes of this Article, interest on funds connected with the operation of ships or aircraft in international traffic shall be regarded as profits derived from the operation of such ships or aircraft and the provisions of article 11 shall not apply in relation to such interest. 4.     The provisions of paragraph 1 shall also apply to profits from the participation in a pool, a joint business or an international operating agency. Article 9 ASSOCIATED ENTERPRISES 1.     Where: a.     an enterprise of a Contracting State participates directly or indirectly in the management, control or capital of an enterprise of the other Contracting State; or b.    the same persons participate directly or indirectly in the management, control or capital of an enterprise of a Contracting State and an enterprise of the other Contracting State, and in either case conditions are made or imposed between the two enterprises in their commercial or financial relations which differ from those which would be made between independent enterprises, then any profits which would, but for those conditions, have accrued to one of the enterprises, but, by reason of those conditions, have not so accrued, may be included in the profits of that enterprise and taxed accordingly. 2.     Where a Contracting State includes in the profits of an enterprise of that State and taxes accordingly-profits on which an enterprise of the other Contracting State has been charged to tax in that other State and the profits so included are profits which would have accrued to the enterprise of the first-mentioned State if the conditions made between the two enterprises had been those which would have been made between independent enterprises, then that other State shall make an appropriate adjustment to the amount of the tax charged therein on those profits if that other State considers the adjustment justified. In determining such adjustment, due regard shall be had to the other provisions of this Agreement and the competent authorities of the Contracting State shall if necessary consult each other. Article 10 DIVIDENDS 1.     Dividends paid by a company which is a resident of a Contracting State to a resident of the other Contracting State may be taxed in that other State. 2.     However, such dividends may also be taxed in the Contracting State of which the company paying the dividends is a resident and according to the laws of that State, but if the beneficial owner of the dividends is a resident of the other Contracting State, the tax so charged shall not exceed 10 per cent. of the gross amount of the dividends. The competent authorities of the Contracting States shall settle the mode of application of these limitations by mutual agreement. This paragraph shall not affect the taxation of the company in respect of the profits out of which the dividends are paid. 3.     The term "dividends" as used in this article means income from shares or other rights participating in profits (not being debt-claims), as well as income from other corporate rights which is subjected to the same taxation treatment as income from shares by the laws of the Contracting State of which the company making the distribution is a resident. 4.     The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the dividends, being a resident of a Contracting State, carries on business in the other Contracting State of which the company paying the dividends is a resident, through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the holding in respect of which the dividends are paid is effectively connected with such permanent establishment or fixed base. In such case, the provisions of Article 7 or Article 14, as the case may be, shall apply. 5.     Where a company which is a resident of a Contracting State derives profits or income from the other Contracting State, that other State may not impose any tax on the dividends paid by the company, except in so far as such dividends are paid to a resident of that other State or in so far as the holding in respect of which the dividends are paid is effectively connected with a permanent establishment or a fixed base situated in that other State, nor subject the company's undistributed profits to a tax on undistributed profits, even if the dividends paid or the undistributed profits consist wholly or partly of profits or income arising in such other State. Article 11 INTEREST 1.     Interest arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State. 2.     However, such interest may also be taxed in the Contracting State in which it arises and according to the laws of that State, but if the recipient is the beneficial owner of the interest the tax so charged shall not exceed 10 per cent. of the gross amount of the interest. 3.     Notwithstanding the provisions of paragraphs 1 and 2, interest arising in a Contracting State shall be exempt from tax in that State if it is derived and beneficially owned y: a.     the Government, a political sub-division or a local authority of the other Contracting State; b.    the Reserve Bank of India or the South African Reserve Bank; or c.     any agency or instrumentality which is wholly owned by the Government of a Contracting State and which has been approved in writing by the competent authorities of the Contracting States for the purposes of this paragraph. 4.     The term "interest" as used in this article means income from debt-claims of every kind, whether or not secured by mortgage and whether or not carrying a right to participate in the debtor's profits, and in particular, income from government securities and income from bonds or debentures, including premiums and prizes attaching to such securities, bonds or debentures. Penalty charges for late payment shall not be regarded as interest for the purposes of this article. 5.     The provisions of paragraph 1 shall not apply if the beneficial owner of the interest, being a resident of a Contracting State, carries on business in the other Contracting State in which the interest arises, through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the debt-claim in respect of which the interest is paid is effectively connected with such permanent establishment or fixed base. In such case, the provisions of Article 7 or Article 14, as the case may be, shall apply. 6.     Interest shall be deemed to arise in a Contracting State when the payer is that State itself, a political sub-division, a local authority or a resident of that State. Where, however, the person paying the interest, whether he is a resident of a Contracting State or not, has in a Contracting State a permanent establishment or a fixed base in connection with which the indebtedness on which the interest is paid was incurred, and such interest is borne by such permanent establishment or fixed base, then such interest shall be deemed to arise in the State in which the permanent establishment or fixed base is situated. 7.     Where, by reason of a special relationship between the payer and the beneficial owner or between both of them and some other person, the amount of the interest, having regard to the debt-claim for which it is paid, exceeds the amount which would have been agreed upon by the payer and the beneficial owner in the absence of such relationship, the provisions of this article shall apply only to the last-mentioned amount. In such case, the excess part of the payments shall remain taxable according to the laws of each Contracting State, due regard being had to the other provisions of this Agreement. Article 12 ROYALTIES AND FEES FOR TECHNICAL SERVICES 1.     Royalties or fees for technical services arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State. 2.     However, such royalties or fees for technical services may also be taxed in the Contracting State in which they arise, and according to the laws of that State, but if the recipient is the beneficial owner of the royalties or fees for technical services, the tax so charged shall not exceed 10 per cent. of the gross amount of the royalties or fees for technical services. 3.     The term "royalties" as used in this article means payments of any kind received as a consideration for the use of, or the right to use, any copyright of literary, artistic or scientific work (including cinematograph films and films, tapes or discs for radio or television broadcasting), any patent, trade mark, design or model, plan, secret formula or process, or for the use of, or the right to use, industrial, commercial or scientific equipment, or for information concerning industrial, commercial or scientific experience. 4.     The term "fees for technical services" as used in this article means payments of any kind received as a consideration for services of a managerial, technical or consultancy nature, including the provision of services by technical or other personnel, but does not include payments for services mentioned in article 15. 5.     The provisions of paragraph 1 and 2 shall not apply if the beneficial owner of the royalties or fees for technical services, being a resident of a Contracting State, carries on business in the other Contracting State in which the royalties or fees for technical services arise, through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the right, property or contract in respect of which the royalties or fees for technical services are paid is effectively connected with such permanent establishment or fixed base. In such case, the provisions of article 7 or article 14 as the case may be, shall apply. 6.     Royalties or fees for technical services shall be deemed to arise in a Contracting State when the payer is that State itself, a political subdivision, a local authority or a resident of that State. Where, however, the person paying the royalties or fees for technical services, whether he is a resident of a Contracting State or not, has in a Contracting State a permanent establishment or a fixed base with which the right, property or contract in respect of which the royalties or fees for technical services are paid is effectively connected, and such royalties or fees for technical services are borne by such permanent establishment or fixed base, then such royalties or fees for technical services shall be deemed to arise in the State in which the permanent establishment or fixed base is situated. 7.     Where, by reason of a special relationship between the payer and the beneficial owner or between both of them and some other person, the amount of the royalties or fees for technical services exceeds the amount which would have been agreed upon by the payer and the beneficial owner in the absence of such relationship, the provisions of this article shall apply only to the last-mentioned amount. In such case, the excess part of the payments shall remain taxable according to the laws of each Contracting State, due regard being had to the other provisions of this Agreement. Article 13 CAPITAL GAINS 1.     Gains derived by a resident of a Contracting State from the alienation of immovable property referred to in article 6 and situated in the other Contracting State may be taxed in that other State. 2.     Gains from the alienation of movable property forming part of the business property of a permanent establishment which an enterprise of a Contracting State has in the other Contracting State or of movable property pertaining to a fixed base available to a resident of a Contracting State in the other Contracting State for the purpose of performing independent personal services, including such gains from the alienation of such a permanent establishment (alone or with the whole enterprise) or of such fixed base, may be taxed in that other State. 3.     Gains of an enterprise of a Contracting State from the alienation of ships or aircraft operated in international traffic or movable property pertaining to the operation of such ships or aircraft, shall be taxable only in that State. 4.     Gains from the alienation of shares or similar rights in a company, or of an interest in a partnership, trust or estate, the assets of which consist principally of immovable property situated in a Contracting State, may be taxed in that State. 5.     Gains derived by a resident of a Contracting State from the sale, exchange or other disposition, directly or indirectly, of shares or similar rights in a company, other than those mentioned in paragraph 4, which is a resident of the other Contracting State, may be taxed in that other State. 6.     Gains from the alienation of any property other than that referred to in the preceding paragraphs, shall be taxable only in the Contracting State of which the alienator is a resident. Article 14 INDEPENDENT PERSONAL SERVICES 1.     Income derived by an individual who is a resident of a Contracting State in respect of professional services or other activities of an independent character shall be taxable only in that State unless he has a fixed base regularly available to him in the other Contracting State for the purpose of performing his activities. If he has such a fixed base, the income may be taxed in the other State but only so much of it as is attributable to that fixed base. For the purposes of this Agreement, where an individual who is a resident of a Contracting State stays in the other Contracting State for a period or periods exceeding in the aggregate 183 days in any twelve-months period commencing or ending in the fiscal year concerned, he shall be deemed to have a fixed base regularly available to him in that other State and the income that is derived from his activities that are performed in that other State shall be attributable to that fixed base. 2.     The term "professional services" includes especially independent scientific, literary, artistic, educational or teaching activities as well as the independent activities of physicians, lawyers, engineers, architects, dentists and accountants. Article 15 DEPENDENT PERSONAL SERVICES 1.     Subject to the provisions of Articles 16, 18 and 19, salaries, wages and other similar remuneration derived by a resident of a Contracting State in respect of an employment shall be taxable only in that State unless the employment is exercised in the other Contracting State. If the employment is so exercised, such remuneration as is derived therefrom may be taxed in that other State. 2.     Notwithstanding the provisions of paragraph 1, remuneration derived by a resident of a Contracting State in respect of an employment exercised in the other Contracting State shall be taxable only in the first-mentioned State if: a.     the recipient is present in the other State for a period or periods not exceeding in the aggregate 183 days in any twelve-months period commencing or ending in the fiscal year concerned; and b.    the remuneration is paid by or on behalf of an employer who is not a resident of the other State; and c.     the remuneration is not borne by a permanent establishment or a fixed base which the employer has in the other State. 3.     Notwithstanding the preceding provisions of this article, remuneration derived in respect of an employment exercised aboard a ship or aircraft operated in international traffic by an enterprise of a Contracting State may be taxed in that State. Article 16 DIRECTORS' FEES Directors' fees and similar payments derived by a resident of a Contracting State in his capacity as a member of the board of directors of a company which is a resident of the other Contracting State may be taxed in that other State. Article 17 ENTERTAINERS AND SPORTSPERSONS 1.     Notwithstanding the provisions of Articles 7, 14 and 15, income derived by a resident of a Contracting State as an entertainer such as a theatre, motion picture, radio or television artiste, or a musician, or as a sportsperson, from his personal activities as such exercised in the other Contracting State, may be taxed in that other State. 2.     Where income in respect of personal activities exercised by an entertainer or a sportsperson in his capacity as such accrues not to the entertainer or sportsperson himself but to another person, that income may, notwithstanding the provisions of Articles 7, 14 and 15, be taxed in the Contracting State in which the activities of the entertainer or sportsperson are exercised. 3.     Notwithstanding the provisions of paragraph 1, income derived by an entertainer or sportsperson from his personal activities as such shall be exempt from tax in the Contracting State in which these activities are exercised if the activities are exercised within the framework of a visit which is wholly or mainly supported by the other Contracting State, political sub-division, a local authority or public institution thereof. Article 18 PENSIONS AND ANNUITIES 1.     Subject to the provisions of paragraph 2 of Article 19, pensions and other similar remuneration and annuities arising in a Contracting State and paid to a resident of the other Contracting State, may be taxed in the first-mentioned State. 2.     The term "annuity" means a stated sum payable periodically at stated times during life or during a specified or ascertainable period of time under an obligation to make the payments in return for adequate and full consideration in money or money's worth. Article 19 GOVERNMENT SERVICE 1.       a.     Salaries, wages and similar remuneration, other than a pension, paid by a Contracting State or a political sub-division or a local authority thereof to an individual in respect of services rendered to that State or sub-division or authority shall be taxable only in that State. b.    However, such salaries, wages and similar remuneration shall be taxable only in the other Contracting State if the services are rendered in that State and the individual is a resident of that State who:                       i.        is a national of that State; or                      ii.        did not become a resident of that State solely for the purpose of rendering the services. 2.     . a.     Any pension paid by, or out of funds created by, a Contracting State or a political sub-division or a local authority thereof to an individual in respect of services rendered to that State or sub-division or authority shall be taxable only in that State. b.    However, such pension shall be taxable only in the other Contracting State if the individual is a resident of, and a national of, that State. 3.     The provisions of Article 15, 16, 17 or 18 shall apply to salaries, wages and similar remuneration, and to pensions, in respect of services rendered in connection with a business carried on by a Contracting State or a political sub-division or a local authority thereof. Article 20 STUDENTS, APPRENTICES AND BUSINESS TRAINEES 1.     A student, apprentice or business trainee who is present in a Contracting State solely for the purpose of his education or training and who is, or immediately before being so present was, a resident of the other Contracting State, shall be exempt from tax in the first-mentioned State on payments received from outside that first-mentioned State for the purposes of his maintenance, education or training. 2.     Payments which a student or business apprentice receives as remuneration from employment in the first-mentioned State, in an amount not exceeding a sum equivalent to 3000 US dollars in the currency of the first-mentioned State during any fiscal year shall be exempt from tax in the first-mentioned State during the period ending five years after the date of his first arrival in the first-mentioned Contracting State. Article 21 OTHER INCOME Items of income arising in a Contracting State which are not dealt with in the foregoing articles of this agreement may be taxed in that State. Article 22 ELIMINATION OF DOUBLE TAXATION Double taxation shall be eliminated as follows: a.     In India, where a resident of India derives income which, in accordance with the provisions of this Agreement, may be taxed in South Africa, India shall allow as a deduction from the tax on the income of that resident an amount equal to the South African tax paid, whether directly or by deduction. Such deduction shall not, however, exceed that part of the income-tax (as computed before the deduction is given) which is attributable to the income which may be taxed in South Africa. b.    In South Africa, Indian tax paid by residents of South Africa in respect of income taxable in India, in accordance with the provisions of the Agreement, shall be deducted from the taxes due according to South African fiscal law. Such deduction shall not, however, exceed an amount which bears to the total South African tax payable the same ratio as the income concerned bears to the total income. Article 23 NON-DISCRIMINATION 1.     Nationals of a Contracting State shall not be subjected in the other Contracting State to any taxation or any requirement connected therewith which is other or more burdensome than the taxation and connected requirements to which nationals of that other State in the same circumstances are or may be subjected. This provision shall notwithstanding the provisions of Article 1, also apply to persons who are not residents of one or both of the Contracting States. 2.     The taxation on a permanent establishment which an enterprise of a Contracting State has in the other Contracting State shall not be less favourably levied in that other State than the taxation levied on enterprises of that other State carrying on the same activities. This provision shall not be construed as preventing a Contracting State from charging the profits of a permanent establishment which a company of the other Contracting State has in the first-mentioned State at a rate of tax which is not more than 10 per centage points higher than that imposed on the profits of a similar company of the first-mentioned Contracting State, nor as being in conflict with the provisions of paragraph 3 of Article 7 of this Agreement. 3.     Nothing contained in this article shall be construed as obliging a Contracting State to grant to residents of the other Contracting State any personal allowances, reliefs and reductions for taxation purposes on account of civil status or family responsibilities which it grants to its own residents. 4.     Enterprises of a Contracting State, the capital of which is wholly or partly owned or controlled, directly or indirectly, by one or more residents of the other Contracting State, shall not be subjected in the first-mentioned State to any taxation or any requirement connected therewith which is other or more burdensome than the taxation and connected requirements to which other similar enterprises of that first-mentioned State are or may be subjected. 5.     Except where the provisions of paragraph 1 of Article 9, paragraph 5 of Article 11 or paragraph 6 of Article 12 apply, interest, royalties, fees for technical services and other disbursements paid by an enterprise of a Contracting State to a resident of the other Contracting State shall, for the purpose of determining the taxable profits of such enterprise, be deductible under the same conditions as if they had been paid to a resident of the first-mentioned State. 6.     In this article the term "taxation" means taxes which are the subject of the Agreement. Article 24 MUTUAL AGREEMENT PROCEDURE 1.     Where a person considers that the actions of one or both of the Contracting States result or will result for him in taxation not in accordance with this Agreement, he may, irrespective of the remedies provided by the domestic law of those States, present his case to the competent authority of the Contracting State of which he is a resident or, if his case comes under paragraph 1 of Article 23, to that of the Contracting State of which he is a national. The case must be presented within three years from the first notification of the action resulting in taxation not in accordance with the Agreement. 2.     The competent authority shall endeavour, if the objection appears to it to be justified and if it is not itself able to arrive at a satisfactory solution, to resolve the case by mutual Agreement with the competent authority of the other Contracting State, with a view to the avoidance of taxation which is not in accordance with the Agreement. Any Agreement reached shall be implemented notwithstanding any time limits in the domestic law of the Contracting States. 3.     The competent authorities of the Contracting States shall endeavour to resolve by mutual agreement any difficulties or doubts arising as to the interpretation or application of the Agreement. They may also consult together for the elimination of double taxation in cases not provided for in the Agreement. 4.     The competent authorities of the Contracting States may communicate with each other directly for the purpose of reaching an Agreement in the sense of the preceding paragraphs. When it seems advisable in order to reach Agreement to have an oral exchange of opinions, such exchange may take place through a joint commission consisting of representatives of the competent authorities of the Contracting States. Article 25 EXCHANGE OF INFORMATION 1.     The competent authorities of the Contracting States shall exchange such information, including documents, as is necessary for carrying out the provisions of this Agreement or of the domestic laws of the Contracting States concerning taxes covered by the Agreement in so far as the taxation thereunder is not contrary to the Agreement. The exchange of information is not restricted by Article 1. Any information received by a Contracting State shall be treated as secret in the same manner as information obtained under the domestic law of that State and shall be disclosed only to persons or authorities (including courts and administrative bodies) concerned with the assessment or collection of, the enforcement or prosecution in respect of, or the determination of appeals in relation to, the taxes covered by the Agreement. Such persons or authorities shall use the information only for such purposes. They may disclose the information in public court proceedings or in judicial decisions. 2.     In no case shall the provisions of paragraph 1 be construed so as to impose on a Contracting State the obligation: a.     to carry out administrative measures at variance with the laws or the administrative practice of that or of the other Contracting State; b.    to supply information which is not obtainable under the laws or in the normal course of the administration of that or of the other Contracting State; c.     to supply information which would disclose any trade, business, industrial, commercial or professional secret or trade process, or information, the disclosure of which would be contrary to public policy (ordre public). Article 26 ASSISTANCE IN RECOVERY 1.     The Contracting States shall, to the extent permitted by their respective domestic law, lend assistance to each other in order to recover the taxes referred to in Article 2 as well as interest and penalties with regard to such taxes, provided that reasonable steps to recover such taxes have been taken by the Contracting State requesting such assistance. 2.     Claims which are the subject of requests for assistance shall not have priority over taxes owing in the Contracting State rendering assistance and the provisions of paragraph 1 of Article 25 shall also apply to any information which, by virtue of this article, is supplied to the competent authority of a Contracting State. 3.     The competent authorities of the Contracting States shall by mutual Agreement settle the mode of application of the provisions of this article. Article 27 MEMBERS OF DIPLOMATIC MISSIONS AND CONSULAR POSTS Nothing in this Agreement shall affect the fiscal privileges of members of diplomatic missions or consular posts under the general rules of international law or under the provisions of special agreements. Article 28 ENTRY INTO FORCE 1.     Each of the Contracting States shall notify to the other the completion of the procedures required by its law for the bringing into force of this Agreement. The Agreement shall enter into force on the date of receipt of the later of these notifications. 2.     The provisions of the agreement shall apply: a.       In India:                       i.        in respect of taxes withheld at source, for amounts paid or credited in the fiscal year beginning in the calendar year next following that in which the Agreement enters into force; and                      ii.        in respect of other taxes, for any fiscal year beginning in the calendar year next following that in which the Agreement enters into force; b.      In South Africa, In respect of fiscal years beginning on or after the first day of January next following the date upon which the Agreement enters into force. Article 29 TERMINATION 1.     This agreement shall remain in force indefinitely but either of the Contracting States may terminate the Agreement through the diplomatic channel, by giving to the other Contracting State written notice of termination not later than 30th June of any calendar year starting five years after the year in which the Agreement entered into force. 2.     In such event the agreement shall cease to apply: a.       In India;                       i.        in respect of taxes withheld at source, for amounts paid or credited in the fiscal year beginning in the calendar year next following that in which such notice is given; and                      ii.        in respect of other taxes, for any fiscal year beginning in the calendar year next following that in which such notice is given; b.      In South Africa, In respect of fiscal years beginning after the end of the calendar year in which such notice is given. In witness whereof the undersigned, being duly authorised thereto, have signed this agreement. Done at New Delhi in duplicate, this fourth day of December, 1996, in the English and Hindi languages, both texts being equally authentic. In case of divergence in interpretation, the English text shall prevail. (Sd.) P. Chidambaram, (Sd.) Alec Erwin, The Minister of Finance. The Minister of Trade and Industry. For the Government of the Republic of India For the Government of the Republic of South Africa. PROTOCOL At the signing of the Agreement concluded today between the Government of the Republic of India and the Government of the Republic of South Africa for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income, the undersigned have agreed that the following provisions shall form an integral part of the said Agreement: 1.     With reference to any provision of the Agreement in terms of which income derived by a resident of a Contracting State may be taxed in the other Contracting State, it is understood that such income may, subject to the provisions of Article 22, also be taxed in the first-mentioned

Download Word Document In English. (Rs.85/-) Poland Double Taxation Avoidance Agreement Poland Agreement between the Government of the Republic of India and the Government of the Polish People's Republic for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on Income Notification No. G. S. R. 72(E), dtd. 12.02.1990. Whereas the annexed Agreement between the Government of the Republic of India and the Government of the Polish People's Republic for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income has come into force on the 26th October, 1989, after the notification by both the Contracting States and communication to each other of the completion of procedures required under their laws for bringing into force of the said Agreement in accordance with article 30 of the said Agreement; Now, therefore, in exercise of the powers conferred by section 90 of the income-tax Act, 1961 (43 of 1961), and section 24A of the Companies (Profits) Surtax Act, 1964 (7 of 1964), the Central Government hereby directs that all the provisions of the said Agreement shall be given effect to in the Union of India. ANNEXURE AGREEMENT BETWEEN THE REPUBLIC OF INDIA AND THE GOVERNMENT OF THE POLISH PEOPLE's REPUBLIC FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME. The Government of the Republic of India and the Government of the Polish People's Republic desiring to further develop and facilitate the economic relationship between the two countries, and having decided to conclude an Agreement for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income, have agreed as follows Article 1 PERSONAL SCOPE This Agreement shall apply to persons who are residents of one or both of the Contracting States. Article 2 TAXES COVERED 1.     The taxes to which this Agreement shall apply are: a.     In India:                       i.        the income-tax including any surcharge thereon imposed under the Income-tax Act, 1961;                      ii.        the surtax imposed under the Companies (Profits) Surtax Act, 1964; (hereinafter referred to as " Indian tax "). b.    In Poland:                       i.        the income-tax (podatek dechodowy);                      ii.        the tax on wages and salaries (podatek od wynagrodzen');                     iii.        the equalisation-tax (podatek wyrdwnawczy); and                     iv.        the agriculture-tax (podatek rolny); (hereinafter referred to as " Polish tax "). 2.     The Agreement shall also apply to any identical or substantially similar taxes which are imposed by either Contracting State after the date of signature of the present Agreement in addition to, or in place of, the taxes referred to in paragraph 1. The competent authorities of the Contracting States shall notify each other of any substantial changes which are made in their respective taxation laws which are the subject of this Agreement. Article 3 GENERAL DEFINITIONS 1.     In this Agreement, unless the context otherwise requires: a.     the term " India " means the Republic of India and, when used in a geographical sense means the territory of the Republic of India and any maritime area adjacent to the territorial waters of the Republic of India within which, under the laws of India and in accordance with international law, the Republic of India has sovereignty or sovereign and exclusive rights; b.    the term " Poland " means the Polish People's Republic and when used in a geographical sense means the territory of the Polish People's Republic and any maritime area adjacent to the territorial waters of the Polish People's Republic within which, under the laws of the Polish People's Republic and in accordance with international law, the Polish People's Republic has sovereignty or sovereign and exclusive rights; c.     the terms " a Contracting State " and " the other Contracting State " mean India or Poland, as the context requires; d.    the term " tax " means Indian tax or Polish Tax as the context requires, but shall not include any amount which is payable in respect of any default or omission in relation to the taxes to which this Agreement applies or which represents a penalty imposed relating to those taxes; e.     the term "person" includes an individual, a company and any other entity which is treated as a taxable unit under the taxation laws in force in the respective Contracting States; f.     the term "company" means any body corporate or any entity which is treated as a company or body corporate under the taxation laws in force in the respective Contracting States; g.    the terms "enterprise of a Contracting State" and "enterprise of the other Contracting State" mean respectively an enterprise carried on by a resident of a Contracting State and an enterprise carried on by a resident of the other Contracting State; h.     the term "competent authority" means, in the case of India, the Central Government in. the Ministry of Finance (Department of Revenue) or their authorised representative; and, in the case of Poland, the Minister of Finance or his authorised representative; i.      the term "national" means any individual possessing the nationality of a Contracting State and any legal person, partnership or association deriving the status from the laws in force in the Contracting State; j.      the term "international traffic" means any transport by a ship or aircraft operated by an enterprise of a Contracting State, except when the ship or aircraft is operated solely between places in the other Contracting State. 2.     As regards the application of the Agreement by a Contracting State, any term not defined therein shall, unless the context otherwise requires, have the meaning which it has under the law of that State concerning the taxes to which the Agreement applies. Article 4 FISCAL RESIDENCE 1.     For the purposes of this Agreement, the term "resident of a Contracting State" means any person who, under the laws of that State, is liable to tax therein by reason of his domicile, residence, place of management or any other criterion of a similar nature. 2.     Where by reason of the provisions of paragraph 1, an individual is a resident of both Contracting States, then his status shall be determined as follows: a.     he shall be deemed to be a resident of the State in which he has a permanent home available to him; if he has a permanent home available to him in both States, he shall be deemed to be a resident of the State with which his personal and economic relations are closer (centre of vital interests); b.    if the State in which he has his centre of vital interests cannot be determined, or if he has not a permanent home available to him in either State, he shall be deemed to be a resident of the State in which he has a habitual abode; c.     if he has a habitual abode in both States or in neither of them, he shall be deemed to be a resident of the State of which he is a national; d.    if the question of residence cannot be determined according to the provisions of sub-paragraphs (a) to (c), the competent authorities of the Contracting States shall settle the question by mutual agreement. 3.     Where by reason of the provisions of paragraph 1, a person other than an individual is a resident, of both Contracting States, then it shall be deemed to be a resident of the State in which its place of effective management is situated. Article 5 PERMANENT ESTABLISHMENT 1.     For the purposes of this Agreement, the term " permanent establishment " means a fixed place of business through which the business of the enterprise is wholly or partly carried on. 2.     The term " permanent establishment " includes especially: a.     a place of management; b.    a branch; c.     an office; d.    a factory; e.     a workshop; f.     a mine, an oil or gas well, a quarry or any other place of extraction of natural resources; g.    a warehouse in relation to a person providing storage facilities for others; h.     a farm, plantation or other place where agriculture, forestry, plantation or related activities are carried on; i.      premises used as a sales outlet or for receiving or soliciting orders; j.      an installation or structure used for the exploration of natural resources; k.     a building site or construction, installation or assembly project or supervisory activities in connection therewith, where such site, project or activities continue for a period of more than six months. 3.     Notwithstanding the preceding provisions of this article, the term " permanent establishment " shall be deemed not to include: a.     the use of facilities solely for the purpose of storage or display of goods or merchandise belonging to the enterprise; b.    the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of storage or display; c.     the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of processing by another enterprise; d.    the maintenance of a fixed place of business solely for the purpose of purchasing goods or merchandise, or of collecting information for the enterprise; e.     the maintenance of a fixed place of business solely for the purpose of advertising, for the supply of information, for scientific research, or for similar activities which have a preparatory or auxiliary character for the enterprise. However, the provisions of sub-paragraphs (a) to (e) shall not be applicable where the enterprise maintains any other fixed place of business in the other Contracting State for any purposes other than the purposes specified in the said sub-paragraphs. 4.     Notwithstanding the provisions of paragraphs 1 and 2 where a person, other than an agent of an independent status to whom paragraph 5 applies, is acting in a Contracting State on behalf of an enterprise of the other Contracting State, that enterprise shall be deemed to have a permanent establishment in the first-mentioned State, if- a.     he has and habitually exercises in that State an authority to conclude contracts on behalf of the enterprise, unless his activities are limited to the purchase of goods or merchandise for the enterprise; or b.    he has no such authority, but habitually maintains in the firstmentioned State a stock of goods or merchandise from which he regularly delivers goods or merchandise on behalf of the enterprise. 5.     An enterprise of a Contracting State shall not be deemed to have a permanent establishment in the other Contracting State merely because it carries on business in that other State through a broker, general commission agent or any other agent of an independent status provided that such persons are acting in the ordinary course of their business. However, when the activities of such an agent are devoted wholly or almost wholly on behalf of that enterprise itself or on behalf of that enterprise and other enterprises controlling, controlled by, or subject to the same common control, as that enterprise, he will not be considered an agent of an independent status within the meaning of this paragraph. 6.     The fact that a company which is a resident of a Contracting State controls or is controlled by a company which is a resident of the other Contracting State, or which carries on business in that other Contracting State (whether through a permanent establishment or otherwise), shall not of itself constitute either company a permanent establishment of the other. Article 6 INCOME FROM IMMOVABLE PROPERTY 1.     Income derived by a resident of a Contracting State from immovable property (including income from agriculture or forestry) situated in the other Contracting State may be taxed in that other State. 2.     The term " immovable property " shall have the meaning which it has under the law of the Contracting State in which the property in question is situated. The term shall in any case include property accessory to immovable property, livestock and equipment used in agriculture and forestry, rights to which the provisions of general law respecting landed property apply, usufruct for immovable and rights to variable or fixed payments as consideration for the working of, or the right to work, mineral deposits, sources and other natural resources. Ships, boats and aircraft shall not be regarded as immovable property. 3.     The provisions of paragraph 1 shall also apply to income derived from the direct use, letting, or use in any other form of immovable property. 4.     The provisions of paragraphs 1 and 3 shall also apply to the income from immovable property of an enterprise and to income from immovable property used for the performance of independent personal services. Articte 7 BUSINESS PROFITS 1.     The profits of an enterprise of a Contracting State shall be taxable only in that State unless the enterprise carries on business in the other Contracting State through a permanent establishment situated therein. If the enterprise carries on business as aforesaid, the profits of the enterprise may be taxed in the other State but only so much of them as is attributable to (a) that permanent establishment; (b) sales in that other State of goods or merchandise of the same or similar kind as those sold through that permanent establishment; or (c) other business activities carried on in that other State of the same or similar kind as those effected through that permanent establishment. 2.     Subject to the provisions of paragraph 3, where an enterprise of a Contracting State carries on business in the other Contracting State through a permanent establishment situated therein, there shall in each Contracting State be attributed to that permanent establishment the profits which it might be expected to make if it were a distinct and separate enterprise engaged in the same or similar activities under the same or similar conditions and dealing wholly independently with the enterprise of which it is a permanent establishment. In any case where the correct amount of profits attributable to a permanent establishment is incapable of determination or the determination thereof presents exceptional difficulties, the profits attributable to the permanent establishment may be estimated on a reasonable basis. 3.     In the determination of the profits of a permanent establishment, there shall be allowed as deduction expenses which are incurred for the purposes of the business of the permanent establishment including executive and general administrative expenses so incurred, whether in the State in which the permanent establishment is situated or elsewhere, in accordance with the provisions of and subject to the limitations of the taxation laws of that State. However, no such deduction shall be allowed in respect of amounts, if any, paid (other than towards reimbursement of actual expenses) by the permanent establishment to the head office of the enterprise or any of its other offices, by way of royalties, fees or other similar payments in return for the use of patents, know-how or other rights, or by way of commission or other charges, for specific services performed or for management, or, except in the case of a banking enterprise, by way of interest on moneys lent to the permanent establishment. Likewise, no account shall be taken, in the determination of the profits of a permanent establishment, for amounts charged (otherwise than towards reimbursement of actual expenses) by the permanent establishment to the head office of the enterprise or arty of its other offices, by way of royalties, fees or other similar payments in return for the use of patents, know-how or other rights, or by way of commission or other charges for specific services performed or for management, or, except in the case of a banking enterprise, by way of interest on moneys lent to the head office of the enterprise or any of its other offices. 4.     No profits shall be attributed to a permanent establishment by reason of the mere purchase by that permanent establishment of goods or merchandise for the enterprise. 5.     For the purposes of the preceding paragraphs, the profits to be attributed to the permanent establishment shall be determined by the same method year by year unless there is good and sufficient reason to the contrary. 6.     Where profits include items of income which are dealt with separately in other articles of this Agreement, then the provisions of those articles shall not be affected by the provisions of this article. Article 8 AIR TRANSPORT 1.     Profits derived by an enterprise of a Contracting State from the operation of aircraft in international traffic shall be taxable only in that State. 2.     The provisions of paragraph 1 shall also apply to profits from the participation in a pool, a joint business or an international operating agency. 3.     For the purposes of this article, interest on funds connected with the operation of aircraft in international traffic shall be regarded as profits derived from the operation of such aircraft and the provisions of article 12 shall not apply in relation to such interest. 4.     The term " operation of aircraft " shall mean business of transportation by air of passengers, mail, livestock or goods carried on by the owners or lessees or charterers of aircraft, including the sale of tickets for such transportation on behalf of other enterprises, the incidental lease of aircraft and any other activity directly connected with such transportation. Article 9 SHIPPING 1.     Profits from the operation of ships in international traffic shall be taxable only in the Contracting State in which the place of effective management of the enterprise is situated. 2.     If the place of effective management of an enterprise carrying on shipping in international traffic is aboard a ship, then it shall be deemed to be situated in the Contracting State in which the home harbour of the ship is situated, or, if there is no such home harbour, in the Contracting State in which the operator of the ship is a resident. 3.     The provisions of paragraph 1 shall also apply to profits derived from the participation in a pool, a joint business or in an international operating agency. 4.     Notwithstanding anything contained in paragraph 1 and article VIII of the agreement dated 27th June, 1960, between the Government of India and the Government of the Polish People's Republic regarding shipping co operation, income derived by an enterprise of a Contracting State from the operation of ships from the ports of the other Contracting State to the ports of third countries and from the ports of third countries to the ports of the other Contracting State may be taxed in the other Contracting State, but the tax imposed in that other Contracting State shall be reduced by an amount equal to 50 per cent. thereof. Article 10 ASSOCIATED ENTERPRISES Where: a.     an enterprise of a Contracting State participates directly or indirectly in the management, control or capital of an enterprise of the other Contracting State, or b.    the same persons participate directly or indirectly in the management, control or capital of an enterprise of a Contracting State and an enterprise of the other Contracting State, and, in either case, conditions are made or imposed between the two enterprises in their commercial or financial relations which differ from those which would be made between independent enterprises, then any profits which would, but for those conditions, have accrued to one of the enterprises, but, by reason of those conditions, have not so accrued, may be included in the profits of that enterprise and taxed accordingly. Article 11 DIVIDENDS 1.     Dividends paid by a company which is resident of a Contracting State to a resident of the other Contracting State may be taxed in that other State. 2.     However, such dividends may also be taxed in the Contracting State of which the company paying the dividends is a resident and according to the laws of that State, but if the recipient is the beneficial owner of the dividends, the tax so charged shall not exceed 15 per cent. of the gross amount of the dividends where such dividends relate to contributions made after the entry into force of this Agreement. The paragraph shall not affect the taxation of the company in respect of the profits out of which the dividends are paid. 1.     The term " dividends " as used in this article means income from shares or other rights, not being debt-claims, participating in profits, as well as income from other corporate rights which is subjected to the same taxation treatment as income from shares by the laws of the State of which the company making the distribution is resident. 2.     The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the dividends, being a resident of a Contracting State, carries on business in the other Contracting State of which the company paying the dividends is a resident, through a permanent establishment situated therein or performs in that other State independent personal services from a fixed base situated therein, and the holding in respect of which the dividends are paid is effectively connected with such permanent establishment or fixed base. In such case, the provisions of article 7 or article 15, as the case may be, shall apply. 3.     Where a company which is a resident of a Contracting State derives profits or income from the other Contracting State, that other State may not impose any tax on the dividends paid by the company except in so far as such dividends are paid to a resident of that other State or so far as the holding in respect of which the dividends are paid is effectively connected with a permanent establishment or a fixed base situated in that other State, nor subject the company's undistributed profits to a tax on the company's undistributed profits, even if the dividends paid or the undistributed profits consist wholly or partly of profits or income arising in such other State. Article 12 INTEREST 1.     Interest arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State. 2.     However, such interest may also be taxed in the Contracting State in which it arises and according to the laws of that State, but if the recipient is the beneficial owner of the interest the tax so charged shall not exceed 15 per cent. of the gross amount of the interest. 3.     Notwithstanding the provisions of paragraph 2:- a.     interest arising in a Contracting State shall be exempt from tax in that State provided it is derived and beneficially owned by:                       i.        the Government, a political sub-division or a local authority of the other Contracting State; or                      ii.        the Central Bank of the other Contracting State; b.    interest arising in a Contracting State shall be exempt from tax in that State if it is beneficially owned by a resident of the other Contracting State and is derived in connection with a loan or credit extended or endorsed by:                       i.        in the case of Poland, Bank Handlowy w Warszawie SA to the extent such interest is attributable to financing of exports and imports only;                      ii.        in the case of India, the Export-Import Bank of India (Exim Bank) to the extent such interest is attributable to financing of exports and imports only;                     iii.        any institution of a Contracting State in charge of public financing of external trade;                     iv.        any other person provided that the loan or credit is approved by the Government of the first-mentioned Contracting State. 4.     The term " interest " as used in this article means income from debtclaims of every kind, whether or not secured by mortgage and whether or not carrying a right to participate in the debtor's profits, and in particular, income from Government securities and income from bonds or debentures, including premiums and prizes attaching to such securities, bonds or debentures, Penalty charges for late payment shall not be regarded as interest for the purpose of this article. 5.     The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the interest, being a resident of a Contracting State, carries on business in the other Contracting State in which the interest arises, through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the debt-claim in respect of which the interest is paid is effectively connected with such permanent establishment or fixed base. In such case, the provisions of article 7 or article 15, as the case may be, shall apply. 6.     Interest shall be deemed to arise in a Contracting State when the payer is that Contracting State itself, a political sub-division, a local authority or a resident of that State. Where, however, the person paying the interest, whether he is a resident of a Contracting State or not, has in a Contracting State a permanent establishment or a fixed base in connection with which the indebtedness on which the interest is paid was incurred and such interest is borne by such permanent establishment or fixed base, then such interest shall be deemed to arise in the Contracting State in which the permanent establishment or fixed base is situated. 7.     Where, by reason of a special relationship between the payer and the beneficial owner or between both of them and some other person, the amount of the interest, having regard to the debt-claim for which it is paid, exceeds the amount which would have been agreed upon by the payer and the beneficial owner in the absence of such relationship, the provisions of this article shall apply to the last mentioned amount. In such case, the excess part of the payments shall remain taxable according to the laws of each Contracting State, due regard being had to the other provisions of this Agreement. Article 13 ROYALTIES AND FEES FOR TECHNICAL SERVICES 1.     Royalties and fees for technical services arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State. 2.     However, such royalties and fees for technical services may also be taxed in the Contracting State in which they arise and according to the laws of that State, but if the recipient is the beneficial owner of the royalties or fees for technical services, the tax so charged shall not exceed 22.5 per cent. of the gross amount of the royalties or fees for technical services. 3.     The term " royalties " as used in this article means payments of any kind received as a consideration for the use of, or the right to use, any copyright of literary, artistic or scientific work, including cinematograph films or tapes used for radio or television broadcasting, any patent, trade mark, design or model, plan, secret formula or process, or for the use of, or the right to use, industrial, commercial or scientific equipment, or for information concerning industrial, commercial or scientific experience. 4.     The term " fees for technical services " as used in this article means payments of any amount to any person other than payments to an employee of a person making payments, in consideration for the services of a managerial, technical or consultancy nature, including the provision of services of technical or other personnel. 5.     The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the royalties or fees for technical services, being a resident of a Contracting State, carries on business in the other Contracting State in which the royalties or fees for technical services arise, through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the right, property or contract in respect of which the royalties or fees for technical services are paid is effectively connected with such permanent establishment or fixed base. In such case, the provisions of article 7 or article 15, as the case may be, shall apply. 6.     Royalties and fees for technical services shall be deemed to arise in a Contracting State when the payer is that State itself, a political sub-division, a local authority or a resident of that State. Where, however, the person paying the royalties or fees for technical services, whether he is a resident of a Contracting State or not, has in a Contracting State a permanent establishment or a fixed base in connection with which the liability to pay the royalties or fees for technical services was incurred, and such royalties or fees for technical services are borne by such permanent establishment or fixed base, then such royalties or fees for technical services shall be deemed to arise in the State in which the permanent establishment or fixed base is situated. 7.     Where, by reason of special relationship between the payer and the beneficial owner or between both of them and some other person, the amount of royalties or fees for technical services paid exceeds the amount which would have been paid in the absence of such relationship, the provisions of this article shall apply only to the last-mentioned amount, and in such case, the excess part of the payments shall remain taxable according to the laws of each Contracting State, due regard being had to the other provisions of this Agreement. Article 14 CAPITAL GAINS 1.     Gains derived by a resident of a Contracting State from the alienation of immovable property, referred to in article 6, and situated in the other Contracting State, may be taxed in that other State. 2.     Gains from the alienation of movable property forming part of the business property of a permanent establishment which an enterprise of a Contracting State has in the other Contracting State or of movable property pertaining to a fixed base available to a resident of a Contracting State in the other Contracting State for the purpose of performing independent personal services, including such gains from the alienation of such a permanent establishment (alone or together with the whole enterprise), or of such fixed base, may be taxed in that other State. 3.     Gains from the alienation of ships or aircraft operated in international traffic or movable property pertaining to the operation of such ships or aircraft, shall be taxable only in the Contracting State of which the alienator is a resident. 4.     Gains from the alienation of shares of the capital stock of a company the property of which consists directly or indirectly principally of immovable property situated in a Contracting State may be taxed in that State. 5.     Gains from the alienation of shares other than those mentioned in paragraph 4 in a company which is a resident of a Contracting State may be taxed in that State. 6.     Gains from the alienation of any property other than that mentioned in paragraphs 1, 2, 3, 4 and 5 shall be taxable only in the Contracting State of which the alienator is a resident. Article 15 INDEPENDENT PERSONAL SERVICES 1.     Income derived by an individual who is a resident of a Contracting State from the performance of professional services or other independent activities of a similar character shall be taxable only in that State except in the following circumstances when such income may also be taxed in the other Contracting State: a.     if he has a fixed base regularly available to him in the other Contracting State for the purpose of performing his activities; in that case, only so much of the income as is attributable to that fixed base may be taxed in that other State; or b.    if his stay in the other Contracting State is for a period or periods amounting to or exceeding in the aggregate 183 days in the relevant " previous year " or " year of income ", as the case may be; in that case, only so much of the income as is derived from his activities performed in that other State may be taxed in that other State. 2.     The term " professional services " includes independent scientific, literary, artistic, educational, or teaching activities, as well as the independent activities of physicians, surgeons, lawyers, engineers, architects, dentists and accountants. Article 16 DEPENDENT PERSONAL SERVICES 1.     Subject to the provisions of articles 17, 18, 19, 20, 21 and 22, salaries, wages and other similar remuneration derived by a resident of a Contracting State in respect of an employment shall be taxable only in that State unless the employment is exercised in the other Contracting State. If the employment is so exercised, such remuneration as is derived therefrom may be taxed in that other State. 2.     Notwithstanding the provisions of paragraph 1, remuneration derived by a resident of a Contracting State in respect of an employment exercised in the other Contracting State shall be taxable only in the firstmentioned State if: a.     the recipient is present in the other State for a period or periods not exceeding in the aggregate 183 days in the relevant "previous year" or "year of income", as the case may be; and b.    the remuneration is paid by, or on behalf of, an employer who is not a resident of the other State; and c.     the remuneration is not borne by a permanent establishment or a fixed base which the employer has in the other State. 3.     Notwithstanding the preceding provisions of this article, remuneration derived in respect of an employment exercised aboard a ship or aircraft operated in international traffic by an enterprise of a Contracting State may be taxed in that State. Article 17 DIRECTORS' FEES REMUNERATION OF TOP LEVEL MANAGERIAL OFFICIALS 1.     Directors' fees and similar payments derived by a resident of a Contracting State in his capacity as a member of the Board of Directors of a company which is a resident of the other Contracting State may be taxed in that other State. 2.     Salaries, wages and other similar remuneration derived by a resident of a Contracting State in his capacity as an official in a top-level managerial position of a company which is a resident of the other. Contracting State may be taxed in that other State. Article 18 INCOME EARNED BY ENTERTAINERS AND ATHLETES 1.     Notwithstanding the provisions of articles 15 and 16, income derived by a resident of a Contracting State as an entertainer such as a theatre, motion-picture, radio or television artiste or a musician or as an athlete, from his personal activities as such exercised in the other Contracting State may be taxed in that other State. 2.     Where income in respect of personal activities exercised by an entertainer or athlete in his capacity as such accrues not to the entertainer or athlete himself but to another person, that income may, notwithstanding the provisions of articles 7, 15 and 16, be taxed in the Contracting State in which the activities of the entertainer or athlete are exercised. 3.     Notwithstanding the provisions of paragraph 1, income derived by an entertainer or an athlete who is a resident of a Contracting State from his personal activities as such exercised in the other Contracting State, shall be taxable only in the first-mentioned Contracting State, if the activities in the other Contracting State are within the framework of cultural or sports exchange programmes agreed to by both Contracting States and are supported wholly or substantially from the public funds of the first-mentioned Contracting State, including any of its political sub-divisions or local authorities. 4.     Notwithstanding the provisions of paragraph 2 and articles 7, 15 and 16, where income in respect of personal activities exercised by an entertainer or an athlete in his capacity as such in a Contracting State accrues not to the entertainer or athlete himself but to another person, that income shall be taxable only in the other Contracting State, if the activities of that other person are within the framework of cultural or sports exchange programmes agreed to by both Contracting States and are supported wholly or substantially from the public funds of that other State, including any of its political sub-divisions or local authorities. Article 19 REMUNERATION AND PENSIONS IN RESPECT OF GOVERNMENT SERVICE 1.       a.     Remuneration other than pension paid by a Contracting State or a political sub-division or a local authority thereof to an individual in respect of services rendered to that Contracting State or a political sub-division or local authority thereof in the discharge of functions of a Governmental nature shall be taxable only in that Contracting State. b.    However, such remuneration shall be taxable only in the other Contracting State, if the services are rendered in that other State and the individual is a resident of that State who:                       i.        is a national of that State, or                      ii.        did not become a resident of that State solely for the purpose of rendering the services. 2.     a.     Any pension paid by, or out of funds created by a Contracting State or a political sub-division or a local authority thereof to an individual in respect of services rendered to that State or sub-division or authority shall be taxable only in that State. b.    However, such pension shall be taxable only in the other Contracting State if the individual is a resident of, and a national of, that other State. 3.     The provisions of articles 16, 17 and 18 shall apply to remuneration and pensions in respect of services rendered in connection with a business carried on by a Contracting State or a political sub-division or local authority thereof. Article 20 NON-GOVERNMENT PENSIONS AND ANNUITIES 1.     Any pension, other than a pension referred to in article 19, or any annuity derived by a resident of a Contracting State from sources within the other Contracting State may be taxed only in the first-mentioned Contracting State. 2.     The term " pension " means a periodic payment made in consideration of past services or by way of compensation for injuries received in the course of performance of services. 3.     The term "annuity" means a stated sum payable periodically at stated times during life or during a specified or ascertainable period of time, under an obligation to make the payments in return for adequate and full consideration in money or money's worth. Article 21 PAYMENTS RECEIVED BY STUDENTS AND APPRENTICES 1.     Payments which a student or business apprentice who is or was immediately before visiting a Contracting State a resident of the other Contracting State and who is present in the first- mentioned State solely for the purpose of his education or training receives for the purpose of his maintenance, education or training shall not be taxed in that State, provided that such payments arise from sources outside that State. 2.     Income derived by a student or business apprentice in respect of activities exercised in a Contracting State in which he is present solely for the purpose of his education or training, shall not be taxable in that State, unless it exceeds the amount necessary for his maintenance, education or training. 3.     The benefits of this article shall extend only for such period of time as may be reasonable or customarily required to complete the education or training undertaken, but in no event shall any individual have the benefits of this article, for more than five consecutive years from the date of his first arrival in that other Contracting State. 4.     For the purposes of this article and article 22, an individual shall be deemed to be a resident of a Contracting State if he is resident in that Contracting State in the "previous year" or the "year of income", as the case may be, in which he visits the other Contracting State or in the immediately preceding "previous year" or "year of income". Article 22 PAYMENTS RECEIVED BY PROFESSORS, TEACHERS AND RESEARCH SCHOLARS 1.     A professor or teacher who is or was a resident of one of the Contracting States immediately before visiting the other Contracting State for the purpose of teaching or engaging in research, or both, at a university, college, school or other approved institution in that other Contracting State shall be exempt from tax in that other State or any remuneration for such teaching or research for a period not exceeding two years from the date of his arrival in that other State. 2.     This article shall not apply to income from research if such research is not in public interest but is undertaken primarily for the private benefit of a specific person or persons. 3.     For the purposes of paragraph 1, "approved institution" means an institution which has been approved in this regard by the competent authority of the concerned Contracting State. Article 23 OTHER INCOME 1.     Subject to the provisions of paragraph 2, items of income of a resi dent of a Contracting State, wherever arising, which are not expressly dealt with in the foregoing articles of this Agreement, shall be taxable only in that Contracting State. 2.     The provisions of paragraph 1 shall not apply to income, other than income from immovable property as defined in paragraph 2 of article 6, if the recipient of such income, being a resident of a Contracting State, carries on business in the other Contracting State through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the right of pro perty in respect of which the income is paid is effectively connected with such permanent establishment or fixed base. In such cases, the provisions of article 7 or article 15, as the case may be, shall apply. 3.     Notwithstanding the provisions of paragraphs 1 and 2, items of income of a resident of a Contracting State not dealt with in the foregoing articles of this Agreement and arising in the other Contracting State may be taxed in that other State. 4.     The competent authorities of the Contracting States may communicate with each other directly for the purpose of reaching an agreement in the sense of the preceding paragraphs. The competent authorities shall through consultations develop, appropriate bilateral procedures, conditions, methods and techniques for the implementation of the mutual agreement procedure provided for in this article. Article 24 ELIMINATION OF DOUBLE TAXATION 1.     The laws in force in either of the Contracting States will continue to govern the taxation of income in the respective Contracting States except where provisions to the contrary are made in this Agreement. 2.     In both the Contracting States, double taxation will be avoided in the following manner: a.     Where a resident of a Contracting State derives income which, in accordance with the provisions of this Agreement, may be taxed in the other Contracting State, the first-mentioned State shall, subject to the provisions of sub-paragraph (b) of this paragraph, exempt such income from tax but may, in calculating tax on the remaining income of that person, apply the rate of tax which would have been applicable if the exempted income had not been so exempted. b.    Either of the Contracting States when imposing taxes on its residents may include in the tax base upon which such taxes are imposed the items of income which according to the provisions of articles 11, 12 and 13 of this Agreement may also be taxed in the other State but shall allow as a deduction from the amount of tax computed on such a base an amount equal to the tax paid in the other Contracting State. Such deduction shall not, however, exceed that part of tax leviable by the first-mentioned State, as computed before the deduction is given, which is appropriate to the income which, in accordance with the provisions of articles 11, 12 and 13 of this Agreement, may be taxed in the other State. 3.     For the purpose of sub-paragraph (b) of paragraph 2 the term "tax paid in the other Contracting State" shall be deemed to include. any amount which would have been payable as tax but for any relief by way of a deduction allowed in computing the taxable income or an exemption or a reduction of tax or otherwise under the laws relating to taxation of income in force in that other Contracting State. Article 25 NON-DISCRIMINATION 1.     The nationals of a Contracting State shall not be subjected in the other Contracting State to any taxation or any requirement connected therewith which is other or more burdensome than the taxation and connected requirements to which nationals of that other State in the same circumstances and under the same conditions are or may be subjected. 2.     The taxation on a permanent establishment which an enterprise of a Contracting State has in the other Contracting State shall not be less favourably levied in that other State than the taxation levied on enterprises of that other State carrying on the same activities in the same circumstances or under the same conditions. 3.     Nothing contained in this article shall be construed as obliging a Contracting State to grant to persons not resident in that State any personal allowances, reliefs, reductions and deductions for taxation purposes which are by law available only to persons who are so resident. 4.     Enterprises of a Contracting State, the capital of which is wholly or partly owned or controlled, directly or indirectly, by one or more residents of the other Contracting State, shall not be subjected in the first-mentioned Contracting State to any taxation or any requirement connected therewith which is other or more burdensome than the taxation and connected requirements to which other similar enterprises of that first-mentioned State are or may be subjected in the same circumstances and under the same conditions. 5.     In this article, the term "taxation" means taxes which are the subject of this Agreement. 6.     Except where the provisions of article 11, paragraph 7 of article 12, or paragraph 7 of article 13 of this Agreement apply, interest, royalties and other disbursements paid by an enterprise of a Contracting State to a resident of the other Contracting State shall, for the purpose of determining the taxable profits of such enterprise, be deductible under the same conditions as if they had been paid to a resident of the first-mentioned State. Similarly, any debts of an enterprise of a Contracting State to a resident of the other Contracting State shall, for the purpose of determining the taxable capital of such enterprise, be deductible under the same conditions as if they had been contracted to a resident of the first-mentioned State. 7.     The exemptions, reliefs, reductions, deductions and allowances for taxation purposes available under the domestic laws of the two Contracting States shall not be adversely affected by any provision of this Agreement. Article 26 MUTUAL AGREEMENT PROCEDURE 1.     Where a resident of a Contracting State considers that the actions of one or both of the Contracting States result or will result for him in taxation not in accordance with this Agreement, he may, notwithstanding the remedies provided by the national laws of those States, present his case to the competent authority of the Contracting State of which he is a resident. This case must be presented within three years of the date of receipt of notice of the action which gives rise to taxation not in accordance with the Agreement. 2.     The competent authority shall endeavour, if the objection appears to it to be justified and if it is not itself able to arrive at an appropriate solution, to resolve the case by mutual agreement with the competent authority of the other Contracting State, with a view to avoidance of taxation not in accordance with the Agreement. Any agreement reached shall be implemented notwithstanding any time limits in the national laws of the Contracting States. 3.     The competent authorities of the Contracting States shall endeavour to resolve by mutual agreement any difficulties or doubts arising as to the interpretation or application of the Agreement. They may also consult together for the elimination of double taxation in cases not provided for in the Agreement. 4.     The competent authorities of the Contracting States may communicate with each other directly for the purpose of reaching an agreement in the sense of the preceding paragraphs. When it seems advisable in order to reach agreement to have an oral exchange of opinions, such exchange may take place through a Commission consisting of representatives of the competent authorities of the Contracting States. Article 27 EXCHANGE OF INFORMATION 1.     The competent authorities of the Contracting States shall exchange such information (including documents) as is necessary for carrying out the provisions of the Agreement or of the domestic laws of the Contracting States concerning taxes covered by the Agreement, in so far as the taxation thereunder is not contrary to the Agreement, in particular for the prevention of fraud or evasion of such taxes. Any information received by a Contracting State shall be treated as secret in the same manner as information obtained under the domestic laws of that State. However, if the information is originally regarded as secret in the transmitting State, it shall be disclosed only to persons or authorities (including courts and administrative bodies) involved in the assessment or collection of, the enforcement or prosecution in respect of, or the determination of appeals in relation to, the taxes which are the subject of the Agreement. Such persons or authorities shall use the information only for such purposes but may disclose the information in public court proceedings or in judicial decisions. The competent authorities shall, through consultation, develop appropriate conditions, methods and techniques concerning matters in respect of which such exchange of information shall be made, including, where appropriate, exchange of information regarding tax avoidance. 2.     The exchange of information or documents shall be either on a routine basis or on request with reference to particular cases or both. The competent authorities of the Contracting States shall agree from time to time on the list of the information or documents which shall be furnished on a routine basis. 3.     In no case shall the provisions of paragraph 1 be construed so as to impose on a Contracting State the obligation: a.     to carry out administrative measures at variance with the laws or administrative practice of that or of the other Contracting State; b.    to supply information or documents which are not obtainable under the laws or in the normal course of the administration of that or of the other Contracting State; c.     to supply information or documents which would disclose any trade, business, industrial, commercial or professional secret or trade process or information the disclosure of which would be contrary to public policy. Article 28 ASSISTANCE IN COLLECTION 1.     The Contracting States undertake to lend assistance and support to each other, in the collection of the taxes to which this Agreement relates, in the cases where the taxes are definitely due according to the laws of the States making the request. 2.     In the case of a request for enforcement of collection, tax claims of either of the Contracting States which have been finally determined will be accepted for enforcement by the other Contracting State to which the request is made and collected in that State in accordance with the laws applicable to the enforcement and collection of its taxes. 3.     In the case of Indian tax, the request will be sent by the Central Board of Direct Taxes, Department of Revenue, Ministry of Finance, India to Minister of Finance, Poland or his authorised representative and will be accompanied by such certificate as is required by the laws of India to establish that the taxes have been finally determined and are due from the taxpayer. 4.     In the case of Poland tax, the request will be sent by the Minister of Finance, Poland or his authorised representative to the Central Board of Direct Taxes, Department of Revenue, Ministry of Finance, India and will be accompanied by such certificate as is required by the laws of Poland to establish that the taxes have been finally determined and are due from the taxpayer. 5.     Where the tax claim has not become final by reason of its being subject to appeal or any other proceeding, a Contracting State may, in order to protect its revenues, request the other Contracting State to take such interim measures in this behalf as are lawful under the laws of that other Contracting State. 6.     A request for assistance in collection of taxes due from a taxpayer shall be made only if adequate assets of that taxpayer are not available for recovering the taxes from him in the Contracting State making the request. 7.     The Contracting State in which tax is recovered in pursuance of paragraphs 1, 2 and 5 of this article shall immediately thereafter remit the amount so recovered to the Contracting State which made the request. Article 29 DIPLOMATIC AND CONSULAR ACTIVITIES Nothing in this Agreement shall affect the fiscal privileges of diplomatic or consular officials under the general rules of international law or under the provisions of special agreements. Article 30 ENTRY INTO FORCE Each of the Contracting States shall notify to the other the completion of the procedures required by its law for the bringing into force of this Agreement. This Agreement shall enter into force on the date of the later of these notifications and shall thereupon have effect: a.     In India, in respect of income arising in any previous year beginning on or after the first day of April next following the calendar year in which the later of the notifications is given; b.    In Poland, in respect of income arising in any year of income beginning on or after the first day of January next following the calendar year in which the later of the notifications is given. Article 31 TERMINATION This Agreement shall remain in force indefinitely but either of the Contracting States may, on or before the thirtieth day of June in any calendar year beginning after the expiration of a period of five years from the date of its entry into force, give the other Contracting State through diplomatic channels, written notice of termination and, in such event, this Agreement shall cease to have effect: a.     In India, in respect of income arising in any previous year beginning on or after the 1st day of April next following the calendar year in which the notice is given. b.    In Poland, in respect of income arising in any year of income beginning on or after the

Download Word Document In English. (Rs.80/-) Trinidad and Tobago Double Taxation Avoidance Agreement Income Tax Act, 1961:Notifications under section 90:Convention between the Government of the Republic of India and the Government of the Republic of Trinidad and Tobago for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income. Notification No. G.S.R. 720(E),dtd.26.10.1999 Whereas the annexed Convention between the Government of the Republic of India and the Government of the Republic of Trinidad and Tobago for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income has entered into force on the thirteenth day of October, 1999, thirty days after the receipt of the later of the notifications by both the Contracting States to each other of the completion of the procedures required under their laws for bringing into force of the said Convention in accordance with Article 29 of the said Convention; Now, therefore, in exercise of the powers conferred by section 90 of the Income-tax Act, 1961 (43 of 1961), the Central Government hereby directs that all the provisions of the Convention shall be given effect to in the Union of India. CONVENTION BETWEEN THE GOVERNMENT OF THE REPUBLIC OF INDIA AND THE GOVERNMENT OF THE REPUBLIC OF TRINIDAD AND TOBAGO FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME The Government of the Republic of India and the Government of the Republic of Trinidad and Tobago desiring to conclude a Convention for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and with a view to promoting economic co-operation between the two countries have agreed as follows: ARTICLE 1 Personal Scope This Convention shall apply to persons who are residents of one or both of the Contracting States. ARTICLE 2 Taxes Covered 1.     This Convention shall apply to taxes on income imposed on behalf of a Contracting State or of its political sub-divisions or local authorities irrespective of the manner in which they are levied. 2.     There shall be regarded as taxes on income all taxes imposed on total income or on elements of income including taxes on gains from the alienation of movable or immovable property, taxes on the total amounts of wages or salaries paid by enterprises, as well as taxes on capital appreciation. 3.     The existing taxes which are the subject of this Convention are: a.     in the case of Trinidad and Tobago, the corporation tax, the income-tax, the unemployment levy and the petroleum profits tax (hereinafter referred to as "Trinidad and Tobago tax"); b.    in the case of India, the income-tax, including any surcharge thereon (hereinafter referred to as "Indian tax"). 4.     This Convention shall apply also to any identical or substantially similar taxes which are imposed by a Contracting State after the date of signature of this Convention in addition to, or in place of, the taxes referred to in paragraph 3. The competent authorities of the Contracting States shall notify each other of any substantial changes which have been made in their respective taxation laws. ARTICLE 3 General Definitions 1.     For the purposes of this Convention, unless the context otherwise requires: a.     the term 'Trinidad and Tobago" means the Archipelagic State of Trinidad and Tobago, comprising the several islands of Trinidad and Tobago, its archipelagic waters, territorial sea and the airspace thereof, together with the adjacent submarine areas of the Exclusive Economic Zone and the continental shelf beyond the territorial sea over which Trinidad and Tobago exercises sovereign or other rights in accordance with the laws of Trinidad and Tobago and with international law; b.    the term "India" means the territory of India and includes the territorial sea and airspace above it, as well as any other maritime zone in which India has sovereign rights, other rights and jurisdiction, according to the Indian law and in accordance with international law, including the UN Convention on the Law of the Sea; c.     the terms "a Contracting State" and "the other Contracting State" mean the Republic of Trinidad and Tobago or the Republic of India, as the context requires; d.    the term "person" includes an individual, a company, a body of persons and any other entity which is treated as a taxable unit under the taxation laws in force in the respective Contracting States; e.     the term "company" means any body corporate or any entity which is treated as a body corporate for tax purposes; f.     the terms "enterprise of a Contracting State" and "enterprise of the other Contracting State" mean respectively an enterprise carried on by a resident of a Contracting State and an enterprise carried on by a resident of the other Contracting State; g.    the term "international traffic" means any transport by ship or aircraft operated by an enterprise which is a resident of a Contracting State, except when the ship or aircraft is operated solely between places in the other Contracting State; h.     the term "competent authority" means:                       i.        in the case of Trinidad and Tobago, the Minister to whom the responsibility for Finance is assigned or his authorized representative;                      ii.        in the case of India, the Central Government in the Ministry of Finance (Department of Revenue) or their authorised representative; i.      the term "national" means:                       i.        any individual possessing the nationality of a Contracting State;                      ii.        any legal person, partnership or association deriving its status as such from the laws in force in a Contracting State; j.      the term "fiscal year" means:                       i.        in the case of Trinidad and Tobago, the "year of income" as defined in section 2(1) of the Income-tax Act, Chapter 75:01;                      ii.        in the case of India, "previous year" as defined under section 3 of the Income-tax Act, 1961; k.     the term "tax" means Trinidad and Tobago tax or Indian tax, as the context requires, but shall not include any amount which is payable in respect of any default or omission in relation to the taxes to which this Convention applies or which represents a penalty or fine imposed relating to those taxes. 2.     In the application of this Convention by a Contracting State, any term not defined herein shall, unless the context otherwise requires, have the meaning which it has under the laws of that contracting State relating to the taxes which are the subject of this Convention. ARTICLE 4 Resident 1.     For purposes of this Convention, the term "resident of a Contracting State" means any person who, under the laws of that State is liable to tax therein by reason of his domicile, residence, place of management or any other criterion of a similar nature. 2.     Where by reason of the provisions of paragraph 1 an individual is a resident of both Contracting States, then his status shall be determined as follows: a.     he shall be deemed to be a resident of the State in which he has a permanent home available to him; if he has a permanent home available to him in both States, he shall be deemed to be a resident of the State with which his personal and economic relations are closer ("centre of vital interests"); b.    if the State in which he has his centre of vital interests cannot be determined, or if he has not a permanent home available to him in either State, he shall be deemed to be a resident of the State in which he has a habitual abode; c.     if he has a habitual abode in both States or in neither of them, he shall be deemed to be a resident of the State of which he is a national; d.    if he is a national of both States or of neither of them, the competent authorities of the Contracting States shall settle the question by mutual agreement. 3.     Where by reason of the provisions of paragraph 1 a person other than an individual is a resident of both Contracting States, then it shall be deemed to be a resident of the State in which its place of effective management is situated. If the State in which its place or effective management is situated cannot be determined, then the competent authorities of the Contracting State shall settle the question by mutual agreement. ARTICLE 5 Permanent Establishment 1.     For the purposes of this Convention, the term "permanent establishment" means a fixed place of business through which the business of an enterprise is wholly or partly carried on. 2.     The term "permanent establishment" includes especially: a.     a place of management; b.    a branch; c.     an office; d.    a factory; e.     a workshop; f.     a warehouse in relation to a person providing storage facilities for others: g.    a sales outlet; h.     a mine, an oil or gas well, a quarry or any other place of extraction of natural resources; i.      a drilling rig or ship used for, or in connection with, the exploration or development of natural resources; j.      a dredging project; k.     a farm, plantation or other place where agricultural, forestry, plantation or related activities are carried on; and l.      a building site or construction or assembly project or supervisory activities in connection therewith only if such site, project or activity last more than nine months. 3.     Notwithstanding the preceding provisions of this Article the term "permanent establishment" shall be deemed not to include: a.     the use of facilities solely for the purpose of storage, display delivery of goods or merchandise belonging to the enterprise; b.    the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of storage, display or delivery; c.     the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of processing by another enterprise; d.    the maintenance of a fixed place of business solely for the purpose of purchasing goods or merchandise or of collecting information, for the enterprise; e.     the maintenance of a fixed place of business solely for the purpose of carrying on, for the enterprise, any other activity of a preparatory or auxiliary character; f.     the maintenance of a fixed place of business solely for any combination of activities mentioned in sub-paragraphs (a) to (e), provided that the overall activity of the fixed place of business resulting from this combination is of a preparatory or auxiliary character. 4.     Notwithstanding the provisions of paragraphs 1 and 2, where a person, other than an agent of an independent status to whom paragraph 6 applies, is acting in a Contracting State on behalf of an enterprise of the other Contracting State, that enterprise shall be deemed to have a permanent establishment in the first-mentioned Contracting State in respect of any activities which that person undertakes for the enterprise, if such person: a.     has and habitually exercises in that State an authority to conclude contracts in the name of the enterprise, unless the activities of such person are limited to those mentioned in paragraph 3 which, if exercised through a fixed place of business, would not make this fixed place of business a permanent establishment under the provisions of that paragraph; or b.    has no such authority but habitually maintains in the first-mentioned State a stock of goods or merchandise from which he regularly delivers goods or merchandise on behalf of the enterprise; or c.     habitually secures orders in the first-mentioned State, wholly or almost wholly for the enterprise itself or for the enterprise and other enterprises controlling, controlled by, or subject to the same control, as that enterprise. 5.     Notwithstanding the preceding provisions of this Article an insurance enterprise of a Contracting State shall, except in regard to re-insurance, be deemed to have a permanent establishment in the other Contracting State if it collects premiums in the territory of that other State or insures risks situated therein through a person other than an agent of an independent status to whom paragraph 6 applies. 6.     An enterprise shall not be deemed to have a permanent establishment in a Contracting State merely because it carries on business in that State through a broker, general commission agent or any other agent of an independent status, provided that such person is acting in the ordinary course of their business. However, when the activities of such an agent are devoted wholly or almost wholly on behalf of that enterprise, he will not be considered an agent of an independent status within the meaning of this paragraph. 7.     The fact that a company which is a resident of a Contracting State controls or is controlled by a company which is a resident of the other Contracting State, or which carries on business in that other State (whether through a permanent establishment or otherwise), shall not of itself constitute either company a permanent establishment of the other. ARTICLE 6 Income from Immovable Property 1.     Income derived by a resident of a Contracting State from immovable property (including income from agriculture or forestry) situated in the other Contracting State may also be taxed in that other State. 2.     The term "immovable property" shall have the meaning which it has under the laws of the Contracting State in which the property in question is situated. The term shall in any case, include property accessory to immovable property, livestock and equipment used in agriculture and forestry, rights to which the provisions of general law respecting landed property apply, usufruct of immovable property and rights to variable or fixed payments as consideration for the working of, or the right to work, mineral deposits, sources and other natural resources; ships, boats, motor vehicles and aircraft shall not be regarded as immovable property. 3.     The provisions of paragraph 1 shall apply to income derived from the direct use, letting, or use in any other form of immovable property. 4.     The provisions of paragraphs 1 and 3 shall also apply to the income from immovable property of an enterprise and to income from immovable property used for the performance of independent personal services. ARTICLE 7 Business Profits 1.     The profits of an enterprise of a Contracting State shall be taxable only in that State unless the enterprise carries on business in the other Contracting State through a permanent establishment situated therein. If the enterprise carries on business as aforesaid, the profits of the enterprise may also be taxed in the other State but only so much of them as is attributable to that permanent establishment. 2.     Subject to the provisions of paragraph 3, where an enterprise of a Contracting State carries on business in the other Contracting State through a permanent establishment situated therein, there shall in each Contracting State be attributed to that permanent establishment the profits which it might be expected to make if it were a distinct and separate enterprise engaged in the same or similar activities under the same or similar conditions and dealing wholly independently with the enterprise of which it is a permanent establishment. 3.     In determining the profits of a permanent establishment, there shall be allowed as deductions expenses which are incurred for the purposes of the business of the permanent establishment, including executive and general administrative expenses so incurred, whether in the State in which the permanent establishment is situated or elsewhere, in accordance with the provisions of and subject to the limitations of the laws of that State. 4.     No profits shall be attributed to a permanent establishment by reason of the mere purchase by that permanent establishment of goods or merchandise for the enterprise. 5.     For the purposes of the preceding paragraphs, the profits to be attributed to the permanent establishment shall be determined by the same method year by year, unless there is good and sufficient reason to the contrary. 6.     Where profits include items of income which are dealt with separately in other Articles of this Convention, then the provisions of those Articles shall not be affected by the provisions of this Article. ARTICLE 8 Shipping and Air Transport 1.     Profits derived by an enterprise of a Contracting State from the operation of ships or aircraft in international traffic shall be taxable only in that State. 2.     Profits derived by a transportation enterprise which is a resident of a Contracting State from the use, maintenance, or rental of containers (including trailers and other equipment for the transport of containers) used in the transport of goods or merchandise in international traffic shall be taxable only in that Contracting State unless the containers are used solely within the other Contracting State. 3.     For the purposes of this Article, interest earned incidentally on funds connected with the operation of ships or aircraft in international traffic shall be regarded as profits derived from the operation of such ships or aircraft, and the provisions of Article 11 shall not apply in relation to such interest. 4.     The provisions of paragraph 1 shall also apply to profits from the participation in a pool, a joint business or an international operating agency. ARTICLE 9 Associated Enterprises 1.     Where: a.     an enterprise of a Contracting State participates directly or indirectly in the management, control or capital of an enterprise of the other Contracting State; or b.    the same persons participate directly or indirectly in the management, control or capital of an enterprise of a Contracting State and an enterprise of the other Contracting State; and in either case conditions are made or imposed between the two enterprises in their commercial or financial relations which differ from those which would be made between independent enterprises, then any profits which would, but for those conditions, have accrued to one of the enterprises, but, by reason of those conditions have not so accrued, may be included in the profits of that enterprise and taxed accordingly. 2.     Where a Contracting State includes in the profits of an enterprise of that State and taxes accordingly-profits on which an enterprise of the other Contracting State has been charged to tax in that other State and the profits so included are profits which would have accrued to the enterprise of the first-mentioned State if the conditions made between the two enterprises had been those which would have been made between independent enterprises, then that other State shall make appropriate adjustment to the amount of the tax charged therein on those profits. In determining such adjustment, due regard shall be had to the other provisions of this Convention and the competent authorities of the Contracting States shall, if necessary consult each other. ARTICLE 10 Dividends 1.     Dividends paid by a company which is a resident of a Contracting State to a resident of the other Contracting State may also be taxed in that other State. 2.     However, such dividends may also be taxed in the Contracting State of which the company paying the dividends is a resident and according to the laws of that State, but if the recipient is the beneficial owner of the dividends the tax so charged shall not exceed 10 per cent of the gross amount of the dividends. This paragraph shall not affect the taxation of the company in respect of the profits out of which the dividends are paid. 3.     The term "dividends" as used in this Article means income from shares or other rights, not being debt-claims, participating in profits, as well as income from other corporate rights which is subjected to the same taxation treatment as income from shares by the laws of the State of which the company making the distribution is a resident. 4.     The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the dividends, being a resident of a Contracting State, carries on business in the other Contracting State of which the company paying the dividends is a resident, through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the holding in respect of which the dividends are paid is effectively connected with such permanent establishment or fixed base. In such case, the provisions of Article 7 or Article 14, as the case may be, shall apply. 5.     Where a company which is a resident of a Contracting State derives profits or income from the other Contracting State, that other State may not impose any tax on the dividends paid by the company, except insofar as such dividends are paid to a resident of that other State or insofar as the holding in respect of which the dividends are paid is effectively connected with a permanent establishment or a fixed base situated in that other State, nor subject the company's undistributed profits to a tax on the company's undistributed profits, even if the dividends paid or the undistributed profits consist wholly or partly of profits or income arising in such other State. ARTICLE 11 Interest 1.     Interest arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State. 2.     However, such interest may also be taxed in the Contracting State in which it arises and according to the laws of that State, but if the recipient is the beneficial owner of the interest the tax so charged shall not exceed 10 per cent of the gross amount of the interest. The competent authorities of the Contracting States shall by mutual agreement settle the mode of application of this limitation. 3.     Notwithstanding the provisions of paragraph 2, interest arising in a Contracting State shall be exempt from tax in that State provided it is derived and beneficially owned by:               i.        the Government, a political sub-division or a local authority of the other Contracting State; or              ii.          a.     in the case of Trinidad and Tobago, the Central Bank of Trinidad and Tobago, the Agricultural Development Bank, the Export. Insurance Company, the National Housing Authority, the National Insurance Board, the Home Mortgage Bank, the Deposit Insurance Corporation, the Small Business Development Company, the Development Finance Limited and the Trinidad and Tobago Mortgage Finance Company; b.    in the case of India, the Reserve Bank of India, the Industrial Finance Corporation of India, the Industrial Development Bank of India, the Export Import Bank of India, the National Housing Bank, the Small Industries Development Bank of India and the Industrial Credit and Investment Corporation of India (ICICI); or             iii.        any other institution of agency as may be mutually agreed upon between the two contracting States. 4.     The term "interest" as used in this Article means income from debt-claims of every kind, whether or not secured by mortgage and whether or not carrying a right to participate in the debtor's profits, and in particular, income from Government securities and income from bonds or debentures, including premiums and prizes attaching to such securities, bonds or debentures, but shall not include any item which is treated as a distribution under the provisions of Article 10 of this Convention. Penalty charges for late payment shall not be regarded as interest for the purpose of this Article. 5.     The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the interest, being a resident of a Contracting State, carries on business in the other Contracting State in which the interest arises, through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the debt-claim in respect of which the interest is paid is effectively connected with such permanent establishment or fixed base. In such case, the provisions of Article 7 or 14, as the case may be, shall apply. 6.     Interest shall be deemed to arise in a Contracting State when the payer is that State itself, a political sub-division, a local authority or a resident of that State. Where, however, the person paying the interest, whether he is a resident of a Contracting State or not, has in a Contracting State a permanent establishment or a fixed base in connection with which the indebtedness on which the interest is paid was incurred, and such interest is borne by such permanent establishment or fixed base, then such interest shall be deemed to arise in the State in which the permanent establishment or fixed base is situated. 7.     Where by reason of a special relationship between the payer and the beneficial owner or between both of them and some other person, the amount of the interest, having regard to the debt-claim for which it is paid, exceeds the amount which would have been agreed upon by the payer and the beneficial owner in the absence of such relationship, the provisions of this Article shall apply only to the last-mentioned amount. In such case, the excess part of the payment shall remain taxable according to the laws of each Contracting State, due regard being had to the other provisions of this Convention. ARTICLE 12 Royalties and Fees for Technical Services 1.     Royalties or fees for technical services arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State. 2.     However, such royalties or fees for technical services may also be taxed in the Contracting State in which they arise and according to the laws of that State, but if the recipient is the beneficial owner of the royalties or fees for technical services the tax so charged shall not exceed 10 per cent of the gross amount of the royalties or fees for technical services. 3.       a.     The term "royalties" as used in this Article means payments of any kind received as a consideration for the use of, or the right to use, any copyright of a literary, artistic or scientific work including cinematograph films or recordings on any means of reproduction for use in connection with television or radio broadcasting, any patent, trade-mark, design or model, plan, know-how, computer software programme, secret formula or process, or any industrial, commercial or scientific equipment or for information concerning industrial, commercial or scientific experience; b.    the term "fees for technical services" means payment of any kind in consideration for the rendering of any managerial, technical or consultancy services including the provision of services by technical or other personnel but does not include payments for services mentioned in Articles 14 and 15 of this Convention. 4.     The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the royalties or fees for technical services being a resident of a Contracting State, carries on business in the other Contracting State in which the royalties or fees for technical services arise, through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the right or property in respect of which the royalties or fees for technical services are paid is effectively connected with such permanent establishment or fixed base. In such case the provisions of Article 7 or Article 14, as the case may be, shall apply. 5.     Royalties or fees for technical services shall be deemed to arise in a Contracting State when the payer is that State itself, a political sub-division, a local authority or a resident of that State. Where, however, the person paying the royalties or fees for technical services, whether he is a resident of a Contracting State or not, has in a Contracting State a permanent establishment or a fixed base in connection with which the liability to pay the royalties or fees for technical services was incurred, and such royalties or fees for technical services are borne by such permanent establishment, or fixed base then such royalties or fees for technical services shall be deemed to arise in the State in which the permanent establishment or fixed base is situated. 6.     Where, by reason of a special relationship between the payer and the beneficial owner or between both of them and some other person, the amount of the royalties or fees for technical services having regard to the use, right or information for which they are paid, exceeds the amount which would have been agreed upon by the payer and the beneficial owner in the absence of such relationship, the provisions of this Article shall apply only to the last mentioned amount. In such case, the excess part of the payments shall remain taxable according to the laws of each Contracting State, due regard being had to the other provisions of this Convention. ARTICLE 13 Capital Gains 1.     Gains derived by a resident of a Contracting State from the alienation of immovable property referred to in Article 6 and situated in the other Contracting State may also be taxed in that other State. 2.     Gains from the alienation of movable property forming part of the business property of a permanent establishment which an enterprise of a Contracting State has in the other Contracting State or of movable property pertaining to a fixed base available to a resident of a Contracting State in the other Contracting State for the purpose of performing independent personal services, including such gains from the alienation of such a permanent establishment (alone or with the whole enterprise) or of such fixed base, may also be taxed in that other State. 3.     Gains derived by an enterprise of a Contracting State from the alienation of ships or aircraft operated in international traffic or movable property pertaining to the operation of such ships, aircraft shall be taxable only in that State. 4.     Gains from the alienation of shares of the capital stock of a company the property of which consists directly or indirectly principally of immovable property situated in a Contracting State may be taxed in that State. 5.     Gains from the alienation of shares other than those mentioned in paragraph 4 in a company which is a resident of a Contracting State may be taxed in that State. 6.     Gains from the alienation of any property other than that referred to in paragraphs 1, 2, 3, 4 and 5, shall be taxable only in the Contracting State of which the alienator is resident. ARTICLE 14 Independent Personal Services 1.     Income derived by a resident of a Contracting State in respect of professional services or other activities of an independent character shall be taxable only in that State except in the following circumstances, when such income may also be taxed in the other Contracting State: a.     if he has a fixed base regularly available to him in the other Contracting State for the purpose of performing his activities; in that case, only so much of the income as is attributable to that fixed base may be taxed in that other State; or b.    if his stay in the other State is for a period or periods aggregating 183 days or more in any 12-month period commencing or ending in the fiscal year concerned; in that case, only so much of the income as is derived from his activities performed in that other State may be taxed in that other State; or c.     if the remuneration for his activities in the other Contracting State is paid by a resident of that Contracting State or is borne by a permanent establishment or a fixed base situated in that Contracting State and exceeds in the fiscal year a sum of Rupees 40,000 or its equivalent in Trinidad and Tobago currency. 2.     The term "professional services" includes especially independent scientific, literary, artistic, educational or teaching activities as well as the independent activities of medical practitioners, lawyers, engineers, architects, dentists and accountants. ARTICLE 15 Dependent Personal Services 1.     Subject to the provisions of Articles 16, 18, and 19 salaries, wages emoluments and other similar remuneration derived by a resident of a Contracting State in respect of an employment shall be taxable only in that State unless the employment is exercised in the other Contracting State. If the employment is so exercised, such remuneration as is derived therefrom may also be taxed in that other State. 2.     Notwithstanding the provisions of paragraph 1, remuneration derived by a resident of a Contracting State in respect of an employment exercised in the other Contracting State shall be taxable only in the first-mentioned State if: a.     the recipient is present in the other State for a period or periods not exceeding in the aggregate 183 days in any 12-month period commencing or ending in the fiscal year concerned; and b.    the remuneration is paid by, or on behalf of, an employer who is not a resident of the other State; and c.     the remuneration is not borne by a permanent establishment or a fixed base which the employer has in the other State. 3.     Notwithstanding the preceding provisions of this Article, remuneration derived in respect of an employment exercised aboard a ship or aircraft operated in international traffic, by an enterprise of a Contracting State may be taxed in that State. ARTICLE 16 Directors' Fees Directors' fees and other similar payments derived by a resident of a Contracting State in his or her capacity as a member of the Board of Directors of a company which is a resident of the other Contracting State may also be taxed in that other State. ARTICLE 17 Artistes and Sportspersons 1.     Notwithstanding the provisions of Articles 14 and 15 income derived by a resident of a Contracting State as an entertainer, such as a theatre, motion picture, radio or television artiste, or a musician, or as a sportsperson, from his personal activities as such exercised in the other Contracting State, may also be taxed in that other State. 2.     Where income in respect of personal activities exercised by an entertainer or a sportsperson in his capacity as such accrues not to the entertainer or sportsperson himself but to another person, that income may, notwithstanding the provisions of Articles 7, 14 and 15 be taxed in the Contracting State in which the activities of the entertainer or sportsperson are exercised. 3.     The provisions of paragraphs 1 and 2, shall not apply to income from activities performed in a Contracting State by entertainers or sportspersons if the visit to that State is substantially supported by public funds of one or both of the Contracting States or of political sub-divisions or local authorities thereof. In such a case, the income is taxable only in the Contracting State of which the entertainer or sportsperson is a resident. ARTICLE 18 Pensions and Social Security Payments 1.     Subject to the provisions of paragraph 2 of Article 19, pensions and other similar remuneration paid in consideration of past employment to a resident of a Contracting State and any annuity paid to such a resident may also be taxed in that State. 2.     Notwithstanding the provisions of paragraph 1, pensions paid and other payments made under a public scheme which is part of the social security system of a Contracting State or a political sub-division or a local authority thereof shall be taxable only in that State. ARTICLE 19 Government Service 1.       a.     Remuneration, other than a pension, paid by a Contracting State or a political sub-division or a local authority thereof to an individual in respect of services rendered to that State or sub-division or authority shall be taxable only in that State. b.    However, such remuneration shall be taxable only in the other Contracting State if the services are rendered in that other State and the individual is a resident of that State who:                       i.        is a national of that State; or                      ii.        did not become a resident of that State solely for the purpose of rendering the services. 2.     a.     Any pension paid by, or out of funds created by, a Contracting State or a political sub-division or a local authority thereof to an individual in respect of services rendered to that State or sub-division or authority shall be taxable only in that State; b.    However, such pension shall be taxable only in the other Contracting State if the individual is a resident of, and a national of, that other State. 3.     The provisions of Articles 15, 16 and 18 shall apply to remuneration and pensions in respect of services rendered in connection with a business carried on by a Contracting State or a political sub-division or a local authority thereof. ARTICLE 20 Students and Apprentices 1.     A student or business apprentice who is or was a resident of a Contracting State immediately before visiting the other Contracting State and who is present in that other Contracting State solely for the purpose of his education or training shall, besides grants, loans and scholarships, be exempt from tax in that other State on: a.     payments made to him by persons residing outside that other State for the purposes of his maintenance, education or training; and b.    remuneration from employment in that other State for an amount not exceeding the amount which is exempt from tax under the laws of that other Contracting State for any fiscal year, provided that such employment is directly related to his studies or is undertaken for the purpose of his maintenance. 2.     The benefit of this Article shall extend only for such period of time as may be reasonable or customarily required to complete the education or training undertaken, but in no event shall any individual have the benefits of this Article for more than seven consecutive years from the date of his first arrival in that other Contracting State. ARTICLE 21 Professors, Teachers and Research Scholars 1.     A professor, teacher or research scholar who is or was a resident of the Contracting State immediately before visiting the other Contracting State for the purpose of teaching or engaging in research, or both, at a university, college, school or other approved institution in that other Contracting State shall be exempt from tax in that other State on any remuneration for such teaching or research for a period not exceeding two years from the date of his arrival in that other State. 2.     This Article shall not apply to income from research, if such research is undertaken primarily for the private benefit of a specific person or persons. 3.     For the purposes of this Article and Article 20, an individual shall be deemed to be a resident of a Contracting State if he is resident in that State in the fiscal year in which he visits the other Contracting State or in the immediately preceding fiscal year. 4.     For the purposes of paragraph 1 "approved institutions" means an institution which has been approved in this regard by the competent authority of the State in which the institution is located. ARTICLE 22 Other Income 1.     Items of income of a resident of a contracting State, wherever arising, not dealt with in the foregoing Articles of this Convention shall be taxable only in that State. 2.     The provisions of paragraph 1 shall not apply to income, other than income from immovable property as defined in paragraph 2 of Article 6: a.     if the recipient of such income, being a resident of a Contracting State, carries on business in the other Contracting State through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the right of property in respect of which the income is paid is effectively connected with such permanent establishment or fixed base. In such case the provisions of Article 7 or Article 14, as the case may be, shall apply; b.    if the resident of a Contracting State derives income from sources within the other Contracting State in the of lotteries, crossword puzzles, races including horse races, card games and other games of any sort or gambling or betting of any form or nature whatsoever, such income may be taxed in the other Contracting State. 3.     Notwithstanding the provisions of paragraphs 1 and 2, items of income of a resident of a Contracting State not dealt with in the foregoing Articles of this Convention and arising in the other Contracting State may also be taxed in that other State. ARTICLE 23 Elimination of Double Taxation 1.     The laws in force in either of the Contracting State will continue to govern the taxation of income in the respective Contracting States except where provisions to the contrary are made in this Convention. 2.     In the case of Trinidad and Tobago, double taxation shall be eliminated as follows: Where a resident of Trinidad and Tobago derives income which, in accordance with the provisions of this Convention, may be taxed in India, Trinidad and Tobago shall allow as a deduction from the tax on the income of that resident an amount equal to the income-tax paid in India, whether directly or by deduction at source. Such deduction shall not, however, exceed that part of the income-tax as computed before the deduction is given, which is attributable to the income which may be taxed in India. 3.     In the case of India, double taxation shall be eliminated as follows: Where a resident of India derives income which, in accordance with the provisions of this Convention, may be taxed in Trinidad and Tobago, India shall allow as a deduction from the tax on the income of that resident an amount equal to the income-tax paid in Trinidad and Tobago, whether directly or by deduction at source. Such deduction shall not, however, exceed that part of the income-tax, as computed before the deduction is given, which is attributable to the income which may be taxed in Trinidad and Tobago. 4.     The tax payable in the Contracting State mentioned in paragraphs 2 and 3 of this Article shall be deemed to include the tax which would have been payable but for the tax incentives granted under the laws of the Contracting State and which are designed to promote economic development. 5.     Income which in accordance with the provisions of this Convention, is not to be subjected to tax in a Contracting State, may be taken into account for calculating the rate of tax to be imposed in that Contracting State. ARTICLE 24 Non-discrimination 1.     Nationals of a Contracting State shall not be subjected in the other Contracting State to any taxation or any requirement connected therewith, which is other or more burdensome than the taxation and connected requirements to which nationals of that other State in the same circumstances are or may be subjected. This provision shall, notwithstanding the provisions of Article 1, also apply to persons who are not residents of one or both of the Contracting States. 2.     The taxation on a permanent establishment which an enterprise of a Contracting State has in the other Contracting State shall not be less favourably levied in that other State than the taxation levied on enterprises of that other State carrying on the same activities. This provision shall not be construed a preventing a Contracting State from charging the profits of a permanent establishment which a company of the other Contracting State has in the first-mentioned State at a rate of tax which is higher than that imposed on that profits of a similar company of the first-mentioned Contracting State, nor as being in conflict with the provisions of paragraph 3 of Article 7 of this Convention. 3.     Nothing in this Article shall be construed as obliging a Contracting State to grant to the residents of the other Contracting State any personal allowances, reliefs or deductions for taxation purposes on account of civil status or family responsibilities which it grants to its own residents. 4.     Except where the provisions of Article 9, paragraph 7 of Article 11 or paragraph 6 of Article 12 apply, interest, royalties and fees for technical services and other disbursements paid by an enterprise of a Contracting State to a resident of the other Contracting State shall, for the purpose of determining the taxable profits of such enterprise, be deductible under the same conditions as if they had been paid to a resident of the first-mentioned State. 5.     Enterprises of a Contracting State, the capital of which is wholly or partly owned or controlled, directly or indirectly by one or more residents, of the other Contracting State, shall not be subjected in the first-mentioned State to any taxation or any requirement connected therewith which is other or more, burdensome than the taxation and connected requirements to which other similar enterprises of the first-mentioned State are or may be subjected. 6.     The provisions of this Article shall, notwithstanding the provisions of Article 2, apply to taxes of every kind and description. ARTICLE 25 Mutual Agreement Procedure 1.     Where a person considers that the action of one or both of the Contracting States result or will result for him in taxation not in accordance with the provisions of this convention, he may, irrespective of the remedies provided by the domestic law of those States, present his case to the competent authority of the Contracting State of which he is a resident or, if his case comes under paragraph 1 of Article 24, to that of the Contracting State of which he is a national. The case must be presented within three years from the first notification of the action resulting in taxation not in accordance with the provisions of this Convention. 2.     The competent authority shall endeavour if the objection appears to it to be justified and if it is not itself able to arrive at a satisfactory solution, to resolve the case by mutual agreement with the competent authority of the other Contracting State, with a view to the avoidance of taxation which is not in accordance with this Convention. Any agreement reached shall be implemented notwithstanding any time limits in the domestic law of the Contracting States. 3.     The competent authorities of the Contracting States shall endeavour to resolve by mutual agreement any difficulties or doubts arising as to the interpretation or application of this convention. They may also consult together for the elimination of double taxation in cases not provided for in this Convention. 4.     The competent authorities of the Contracting States may communicate with each other directly for the purpose of reaching an agreement in the sense of the preceding paragraphs. The competent authorities shall, through consultations, develop appropriate bilateral procedures, conditions, methods and techniques for the implementation of the mutual agreement procedure provided for in this Article. ARTICLE 26 Exchange of Information 1.     The competent authorities of the Contracting States shall exchange such information (including documents), as is necessary for carrying out the provisions of this Convention or of the domestic laws of the Contracting States concerning taxes covered by this Convention insofar as the taxation thereunder is not contrary to this Convention in particular for the prevention of fraud or evasion of such taxes. The exchange of information is not restricted by Article 1. Any information received by a Contracting State shall be treated as secret in the same manner as information obtained under the domestic laws of that State and shall be disclosed only to persons or authorities (including Courts and administrative bodies) involved in the assessment or collection of, the enforcement or prosecution in respect of, or the determination of appeals in relation to, the taxes covered by this Convention. Such persons or authorities shall use the information. Such persons or authorities shall use the information only for such purposes. They may disclose the information in public Court proceedings or in judicial decision. 2.     In no case shall the provisions of paragraph 1 be construed so as to impose on a Contracting State the obligation: a.     to carry out administrative measures at variance with the laws and administrative practice of that or of the other Contracting State; b.    to supply information or documents which are not obtainable under the laws or in the normal course of the administration of that or of the other Contracting State; c.     to supply information or documents which would disclose any trade, business, industrial, commercial or professional secret or trade process, or information, the disclosure of which would be contrary to public policy. ARTICLE 27 Diplomatic Agents and Consular Officers Nothing in this Convention shall affect the fiscal privileges of diplomatic agents or consular officers under the general rules of international law or under the provisions of special agreements. ARTICLE 28 Collection Assistance 1.     The Contracting States undertake to lend assistance to each other in the collection of taxes to which this Convention relates, together with interest, costs, and civil penalties relating to such taxes, referred to in this Article as a "revenue claim". 2.     Request for assistance by the competent authority of a Contracting State in the collection of a revenue claim shall include a certification by such authority that, under the laws of that State, the revenue claim has been finally determined. For the purposes of this Article, a revenue claim is finally determined when a Contracting State has the right under its internal law to collect the revenue claim and the taxpayer has no further rights to restrain collection. 3.     Amount collected by the competent authority of a Contracting State pursuant to this Article shall be forwarded to the competent authority of the other Contracting State. However, the first-mentioned Contracting State shall be entitled to reimbursement of costs, if any, incurred in the course of rendering such assistance to the extent mutually agreed between the competent authorities of the two States. 4.     Nothing in this Article shall be construed as imposing on either Contracting State the obligation to carry out administrative measures of a different nature from those used in the collection of its own taxes or those which would be contrary to this public policy. ARTICLE 29 Entry into Force 1.     The Contracting States shall notify each other in writing, through diplomatic channels, of the completion of the procedures required by the respective laws for the entry into force of this Convention. 2.     This Convention shall enter into force thirty days after the receipt of the later of the notifications referred to in paragraph 1 of this Article. 3.     The provisions of this Convention shall have effect: a.       In Trinidad and Tobago:                       i.        in respect of taxes withheld at source, to income paid or credited on or after first January in the calendar year next following that in which this Convention enters into force;

Download Word Document In English. (Rs.85/-) Turkmenistan Notification No. G. S. R. 567(E), dated 25th September, 1997. Whereas the annexed Convention between the Government of the Republic of India and the Government of Turkmenistan for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and on capital has entered into force on the seventh day of July, 1997, after the notification by the Contracting States to each other of the completion of procedures required by its law for bringing into force of the said Convention in accordance with Article 30 of the said Convention; Now, therefore, in exercise of the powers conferred by section 90 of the Income-tax Act, 1961 (43 of 1961), and section 44A of the Wealth-tax Act, 1957 (27 of 1957), the Central Government hereby directs that all the provisions of the said Convention shall be given effect to in the Union of India. ANNEXURE CONVENTION BETWEEN THE GOVERNMENT OF REPUBLIC OF INDIA AND THE GOVERNMENT OF TURKMENISTAN FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME AND ON CAPITAL The Government of the Republic of India and the Government of Turkmenistan desiring to conclude a Convention for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and on capital and with a view to promoting economic cooperation between the two countries. Have agreed as follows: Article 1 PERSONAL SCOPE This Convention shall apply to persons who are residents of one or both of the Contracting States. Article 2 TAXES COVERED 1.     This Convention shall apply to taxes on income and on capital imposed on behalf of a Contracting State or of its political sub-divisions or local authorities, irrespective of the manner in which they are levied. 2.     There shall be regarded as taxes on income and on capital all taxes imposed on total income, on total capital, or on elements of income or of capital, including taxes on gains from the alienation of movable or immovable property, taxes on the total amounts of wages or salaries paid by enterprises, as well as taxes on capital appreciation. 3.     The taxes to which the Convention shall apply are in particular: a.       In Turkmenistan ;                       i.        the profits (income) tax;                      ii.        the personal income-tax from the individuals;                     iii.        the tax on natural resources;                     iv.        the tax on the property of the enterprises;                      v.        the payment for the lands, (hereinafter referred to as "Turkmen tax"); b.      In India:                       i.        the income-tax including any surcharge thereon;                      ii.        the wealth-tax; (hereinafter referred to as "Indian tax"). 4.     The Convention shall apply also to any identical or substantially similar taxes which are imposed after the date of signature of the Convention in addition to, or in place of, the taxes referred to in paragraph 3. The competent authorities of the Contracting States shall notify each other of significant changes which have been made in their respective taxation laws. Article 3 GENERAL DEFINITIONS 1.     For the purposes of this Convention, unless the context otherwise requires:-- a.     the term "Turkmenistan" means Turkmenistan and, when used in a geographical sense, includes any area beyond the territorial waters of Turkmenistan which in accordance with international law and the laws of Turkmenistan is an area within which Turkmenistan may exercise rights with respect to the sea bed and subsoil and their natural resources; b.    the term "India" means the territory of India and includes the territorial sea and airspace above it, and other maritime zones in which India has sovereign rights, other rights and jurisdictions, according to the Indian law and in accordance with international law, including the UN Convention on the Law of the Sea; c.     the term "person" includes an individual, a company, a body of persons and any other entity which is treated as a taxable unit under the taxation laws in force in the respective Contracting States; d.    the term "company" means any body corporate or any entity which is treated as a body corporate for tax purposes; e.     the terms "enterprise of a Contracting State" and "enterprise of the other Contracting State" mean respectively an enterprise carried on by a resident of a Contracting State and an enterprise carried on by a resident of the other Contracting State; f.     the term "international traffic" means any transport by a ship or aircraft operated by an enterprise of a Contracting State, except when the ship or aircraft is operated solely between places in the other Contracting State; g.    the term "competent authority" means:--                       i.        in Turkmenistan, the Head of the Main State Tax Inspectorate or his authorised representative;                      ii.        in India, the Central Government in the Ministry of Finance (Department of Revenue) or their authorised representative; h.     the term "national" means:                       i.        any individual possessing the nationality of a Contracting State;                      ii.        any legal person, partnership or association deriving its status as such from the laws in force in a Contracting State; i.      the term "fiscal year" means:                       i.        in the case of Turkmenistan, the calendar year from 1st of January to 31st of December of the year under review;                      ii.        in the case of India, the "previous year" as defined under section 3 of the Income-tax Act, 1961; j.      the term "tax" means Indian tax or Turkmen tax as the context requires, but shall not include any amount which is payable in respect of any default or omission in relation to the taxes to which this Convention applies or which represents a penalty imposed relating to those taxes. 2.     As regards the application of the Convention by a Contracting State any term not defined therein shall, unless the context otherwise requires, have the meaning which it has under the law of that State concerning the taxes to which the Convention applies. Article 4 RESIDENT 1.     For the purposes of this Convention, the term "resident of a Contracting State" means any person who, under the laws of that State, is liable to tax therein by reason of his domicile, residence, place of management or any other criterion of a similar nature. But this term does not include any person who is liable to tax in that State in respect only of income from sources in that State or capital situated therein. 2.     Where by reason of the provisions of paragraph 1, an individual is a resident of both Contracting States, then his status shall be determined as follows:-- a.     he shall be deemed to be a resident of the State in which he has a permanent home available to him; if he has a permanent home available to him in both States, he shall be deemed to be a resident of the State with which his personal and economic relations are closer (centre of vital interests); b.    if the State in which he has his centre of vital interests cannot be determined, or if he has not a permanent home available to him in either State, he shall be deemed to be a resident of the State in which he has an habitual abode; c.     if he has an habitual abode in both States or in neither of them, he shall be deemed to be a resident of the State of which he is a national; d.    if he is a national of both States or of neither of them, the competent authorities of the Contracting States shall settle the question by mutual agreement. 3.     Where by reason of the provisions of paragraph 1 a person other than an individual is a resident of both Contracting States, then it shall be deemed to be a resident of the State in which its place of effective management is situated. Article 5 PERMANENT ESTABLISHMENT 1.     For the purposes of this Convention, the term "permanent establishment" means a fixed place of business through which the business of an enterprise is wholly or partly carried on. 2.     The term "permanent establishment" includes especially: a.     a place of management; b.    a branch; c.     an office; d.    a factory; e.     a workshop; f.     a mine, an oil or gas well, a quarry or any other place of extraction of natural resources; g.    sales outlet; h.     warehouse in relation to a person providing storage facilities for others. 3.     The term "permanent establishment" likewise encompasses a building site, a construction, assembly or installation project or supervisory activities in connection therewith, but only when such site, project, or activities continue for a period of more than six months. 4.     Notwithstanding the preceding provisions of this article, the term "permanent establishment" shall be deemed not to include:-- a.     the use of facilities solely for the purpose of storage or display of goods or merchandise belonging to the enterprise; b.    the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of storage or display; c.     the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of processing by another enterprise; d.    the maintenance of a fixed place of business solely for the purpose of purchasing goods or merchandise or of collecting information, for the enterprise; e.     the maintenance of a fixed place of business solely for the purpose of carrying on, for the enterprise, any other activity of a preparatory or auxiliary character; f.     the maintenance of a fixed place of business solely for any combination of activities mentioned in sub-paragraphs (a) to (e), provided that the overall activity of the fixed place of business resulting from this combination is of a preparatory or auxiliary character. 5.     Notwithstanding the provisions of paragraphs 1 and 2, where a person -- other than an agent of an independent status to whom paragraph 7 applies -- is acting in a Contracting State on behalf of an enterprise of the other Contracting State, that enterprise shall be deemed to have a permanent establishment in the first-mentioned Contracting State in respect of any activities which that person undertakes for the enterprise, if such a person:-- a.     has and habitually exercises in that State an authority to conclude contracts in the name of the enterprise, unless the activities of such person are limited to those mentioned in paragraph 4 which, if exercised through a fixed place of business, would not make this fixed place of business a permanent establishment under the provisions of that paragraph; or b.    has no such authority, but habitually maintains in the first-mentioned State a stock of goods or merchandise from which he regularly delivers goods or merchandise on behalf of the enterprise. 6.     Notwithstanding the preceding provisions of this article, an insurance enterprise of a Contracting State shall, except in regard to reinsurance, be deemed to have a permanent establishment in the other Contracting State if it collects premiums in the territory of that other State or insures risks situated therein through a person other than an agent of an independent status to whom paragraph 7 applies. 7.     An enterprise shall not be deemed to have a permanent establishment in a Contracting State merely because it carries on business in that State through a broker, general commission agent or any other agent of an independent status, provided that such persons are acting in the ordinary course of their business. However, when the activities of such an agent are devoted wholly or almost wholly on behalf of that enterprise, he will not be considered an agent of an independent status within the meaning of this paragraph. 8.     The fact that a company which is a resident of a Contracting State controls or is controlled by a company which is a resident of the other Contracting State, or which carries on business in that other State (whether through a permanent establishment or otherwise), shall not of itself constitute either company a permanent establishment of the other. Article 6 INCOME FROM IMMOVABLE PROPERTY 1.     Income derived by a resident of a Contracting State from immovable property (including income from agriculture or forestry) situated in the other Contracting State may also be taxed in that other State. 2.     The term "immovable property" shall have the meaning which it has under the law of the Contracting State in which the property in question is situated. The term shall in any case include property accessory to immovable property, livestock and equipment used in agriculture and forestry, rights to which the provisions of general law respecting landed property apply, usufruct of immovable property and rights to variable or fixed payments as consideration for the working of, or the right to work, mineral deposits, sources and other natural resources; ships and aircraft shall not be regarded as immovable property. 3.     The provisions of paragraph 1 shall apply to income derived from the direct use, letting, or use in any other form of immovable property. 4.     The provisions of paragraphs 1 and 3 shall also apply to the income from immovable property of an enterprise and to income from immovable property used for the performance of independent personal services. Article 7 BUSINESS PROFITS 1.     The profits of an enterprise of a Contracting State shall be taxable only in that State unless the enterprise carries on business in the other Contracting State through a permanent establishment situated therein. If the enterprise carries on business as aforesaid, the profits of the enterprise may be taxed in the other State but only so much of them as is attributable to that permanent establishment. 2.     Subject to the provisions of paragraph 3, where an enterprise of a Contracting State carries on business in the other Contracting State through a permanent establishment situated therein, there shall in each Contracting State be attributed to that permanent establishment the profits which it might be expected to make if it were a distinct and separate enterprise engaged in the same or similar activities under the same or similar conditions and dealing wholly independently with the enterprise of which it is a permanent establishment. 3.     In determining the profits of a permanent establishment, there shall be allowed as deductions expenses which are incurred for the purposes of the permanent establishment, including executive and general administrative expenses so incurred, whether in the State in which the permanent establishment is situated or elsewhere, in accordance with the provisions of and subject to the limitations of the tax laws of that State. 4.     No profits shall be attributed to a permanent establishment by reason of the mere purchase by that permanent establishment of goods or merchandise for the enterprise. 5.     For the purposes of the preceding paragraphs, the profits to be attributed to the permanent establishment shall be determined by the same method year by year unless there is good and sufficient reason to the contrary. 6.     Where profits include items of income which are dealt with separately in other articles of this Convention, then the provisions of those articles shall not be affected by the provisions of this article. Article 8 SHIPPING AND AIR TRANSPORT 1.     Profits derived by an enterprise of a Contracting State from the operation of ships or aircraft in international traffic shall be taxable only in that State. 2.     Profits derived by a transportation enterprise which is a resident of a Contracting State from the use, maintenance, or rental of containers (including trailers and other equipment for the transport of containers) used for the transport of goods or merchandise in international traffic shall be taxable only in that Contracting State unless the containers are used solely within the other Contracting State. 3.     The provisions of paragraph 1 shall also apply to profits from the participation in a pool, a joint business or an international operating agency. Article 9 ASSOCIATED ENTERPRISES 1.     Where, a.     an enterprise of a Contracting State participates directly or indirectly in the management, control or capital of an enterprise of the other Contracting State, or b.    the same persons participate directly or indirectly in the management, control or capital of an enterprise of a Contracting State and an enterprise of the other Contracting State; and in either case conditions are made or imposed between the two enterprises in their commercial or financial relations which differ from those which would be made between independent enterprises, then any profits which would, but for those conditions, have accrued to one of the enterprises but, by reason of those conditions, have not so accrued, may be included in the profits of that enterprise and taxed accordingly. 2.     Where a Contracting State includes in the profits of an enterprise of that State--and taxes accordingly--profits on which an enterprise of the other Contracting State has been charged to tax in that other State and the profits so included are profits which would have accrued to the enterprise of the first-mentioned State if the conditions made between the two enterprises had been those which would have been made between independent enterprises, then that other State shall make an appropriate adjustment to the amount of the tax charged therein on those profits. In determining such adjustment, due regard shall be had to the other provisions of this Convention and the competent authorities of the Contracting States shall if necessary consult each other. Article 10 DIVIDENDS 1.     Dividends paid by a company which is a resident of a Contracting State to a resident of the other Contracting State may be taxed in that other State. 2.     However, such dividends may also be taxed in the Contracting State of which the company paying the dividends is a resident and according to the laws of that State, but if the recipient is the beneficial owner of the dividends the tax so charged shall not exceed 10 per cent. of the gross amount of the dividends. The competent authorities of the Contracting States shall by mutual agreement settle the mode of application of this limitation. This paragraph shall not affect the taxation of the company in respect of the profits out of which the dividends are paid. 3.     The term "dividends" as used in this article means income from shares or other rights, not being debt-claims, participating in profits, as well as income from other corporate rights which is subjected to the same taxation treatment as income from shares by the laws of the State of which the company making the distribution is a resident. 4.     The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the dividends, being a resident of a Contracting State, carries on business in the other Contracting State of which the company paying the dividends is a resident, through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the holding in respect of which the dividends are paid is effectively connected with such permanent establishment or fixed base. In such case the provisions of Article 7 or Article 14, as the case may be, shall apply. 5.     Where a company which is a resident of a Contracting State derives profits or income from the other Contracting State, that other State may not impose any tax on the dividends paid by the company, except in so far as such dividends are paid to a resident of that other State or in so far as the holding in respect of which the dividends are paid is effectively connected with a permanent establishment or a fixed base situated in that other State, nor subject the company's undistributed profits to a tax on the company's undistributed profits, even if the dividends paid or the undistributed profits consist wholly or partly of profits or income arising in such other State. Article 11 INTEREST 1.     Interest arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State. 2.     However, such interest may also be taxed in the Contracting State in which it arises and according to the laws of that State, but if the recipient is the beneficial owner of the interest the tax so charged shall not exceed 10 per cent. of the gross amount of the interest. The competent authorities of the Contracting States shall by mutual agreement settle the mode of application of this limitation. 3.     Notwithstanding the provisions of paragraph 2, interest arising in a Contracting State shall be exempt from tax in that State provided it is derived and beneficially owned by:--               i.        the Government, a political sub-division or a local authority of the other Contracting State; or              ii.        the Central Bank of the other Contracting State, or any other bank that may be mutually agreed upon between the two Contracting States. 4.     The term "interest" as used in this article means income from debt-claims of every kind, whether or not secured by mortgage and whether or not carrying a right to participate in the debtor's profits, and in particular, income from Government securities and income from bonds or debentures, including premiums and prizes attaching to such securities, bonds or debentures. Penalty charges for late payment shall not be regarded as interest for the purpose of this article. 5.     The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the interest, being a resident of a Contracting State, carries on business in the other Contracting State in which the interest arises, through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the debt-claim in respect of which the interest is paid is effectively connected with such permanent establishment or fixed base. In such case the provisions of Article 7 or Article 14, as the case may be, shall apply. 6.     Interest shall be deemed to arise in a Contracting State when the payer is that State itself, a political sub-division, a local authority or a resident of that State. Where, however, the person paying the interest, whether he is a resident of a Contracting State or not, has in a Contracting State a permanent establishment or a fixed base in connection with which the indebtedness on which the interest is paid was incurred, and such interest is borne by such permanent establishment or fixed base, then such interest shall be deemed to arise in the State in which the permanent establishment or fixed base is situated. 7.     Where, by reason of a special relationship between the payer and the beneficial owner or between both of them and some other person, the amount of the interest, having regard to the debt-claim for which it is paid, exceeds the amount which would have been agreed upon by the payer and the beneficial owner in the absence of such relationship, the provisions of this article shall apply only to the last-mentioned amount. In such case, the excess part of the payments shall remain taxable according to the laws of each Contracting State, due regard being had to the other provisions of this Convention. Article 12 ROYALTIES AND FEES FOR TECHNICAL SERVICES 1.     Royalties or fees for technical services arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State. 2.     However, such royalties or fees for technical services may also be taxed in the Contracting State in which they arise and according to the laws of that State, but if the recipient is the beneficial owner of the royalties or fees for technical services the tax so charged shall not exceed 10 per cent. of the gross amount of the royalties or fees for technical services. 3.       a.     The term "royalties" as used in this article means payments of any kind received as a consideration for the use of, or the right to use, any copyright of literary, artistic or scientific work including cinematograph films, or recordings on any means of reproduction for use in connection with radio or television broadcasting, computer software, any patent, trade mark, design or model, plan, secret formula or process, or for the use of, or the right to use, industrial, commercial, or scientific equipment, or for information concerning industrial, commercial or scientific experience; b.    The term "fees for technical services" means payments of any kind in consideration for the rendering of any managerial, technical or consultancy services including the provision of services by technical or other personnel but does not include payments for services mentioned in Articles 14 and 15 of this Convention. 4.     The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the royalties or fees for technical services, being a resident of a Contracting State, carries on business in the other Contracting State in which the royalties or fees for technical services arise, through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the right or property in respect of which the royalties or fees for technical services are paid is effectively connected with such permanent establishment or fixed base. In such case the provisions of Article 7 or Article 14, as the case may be, shall apply. 5.     Royalties or fees for technical services shall be deemed to arise in a Contracting State when the payer is that State itself, a political subdivision, or local authority or a resident of that State. Where, however, the person paying the royalties or fees for technical services, whether he is a resident of a Contracting State or not, has in any State a permanent establishment or a fixed base in connection with which the liability to pay the royalties or fees for technical services was incurred, and such royalties or fees for technical services are borne by such permanent establishment or fixed base, then such royalties or fees for technical services shall be deemed to arise in the State in which the permanent establishment or fixed base is situated. 6.     Where, by reason of a special relationship between the payer and the beneficial owner or between both of them and some other person, the amount of the royalties or fees for technical services, having regard to the use, right or information for which they are paid, exceeds the amount which would have been agreed upon by the payer and the beneficial owner in the absence of such relationship, the provisions of this article shall apply only to the last mentioned amount. In such case, the excess part of the payments shall remain taxable according to the laws of each Contracting State, due regard being had to the other provisions of this Convention. Article 13 CAPITAL GAINS 1.     Gains derived by a resident of a Contracting State from the alienation of immovable property referred to in Article 6 and situated in the other Contracting State may be taxed in that other State. 2.     Gains from the alienation of movable property forming part of the business property of a permanent establishment which an enterprise of a Contracting State has in the other Contracting State or of movable property pertaining to a fixed base available to a resident of a Contracting State in the other Contracting State for the purpose of performing independent personal services, including such gains from the alienation of such a permanent establishment (alone or with the whole enterprise) or of such fixed base, may be taxed in that other State. 3.     Gains derived by an enterprise of a Contracting State from the alienation of ships or aircraft operated in international traffic, or movable property pertaining to the operation of such ships or aircraft shall be taxable only in that State. 4.     Gains from the alienation of shares of the capital stock of a company the property of which consists directly or indirectly principally of immovable property situated in a Contracting State may be taxed in that State. 5.     Gains from the alienation of shares other than those mentioned in paragraph 4 in a company which is a resident of a Contracting State may be taxed in that State. 6.     Gains from the alienation of any property other than that referred to in paragraphs 1, 2, 3, 4 and 5 shall be taxable only in the Contracting State of which the alienator is a resident. Article 14 INDEPENDENT PERSONAL SERVICES 1.     Income derived by a resident of a Contracting State in respect of professional services or other activities of an independent character shall be taxable only in that State except in the following circumstances, when such income may also be taxed in the other Contracting State: a.     if he has a fixed base regularly available to him in the other Contracting State for the purpose of performing his activities; in that case, only so much of the income as is attributable to that fixed base may be taxed in that other State; or b.    if his stay in the other Contracting State is for a period or periods aggregating 183 days or more in any 12-month period commencing or ending in the fiscal year concerned; in that case only so much of the income as is derived from his activities performed in that other State in the year may be taxed in that other State. 2.     The term "professional services" includes especially independent scientific, literary, artistic, educational or teaching activities as well as the independent activities of physicians, lawyers, engineers, architects, surgeons, dentists and accountants. Article 15 DEPENDENT PERSONAL SERVICES 1.     Subject to the provisions of Articles 16, 18 and 19, salaries, wages and other similar remuneration derived by a resident of a Contracting State in respect of an employment shall be taxable only in that State unless the employment is exercised in the other Contracting State. If the employment is so exercised, such remuneration as is derived therefrom may be taxed in that other State. 2.     Notwithstanding the provisions of paragraph 1, remuneration derived by a resident of a Contracting State in respect of an employment exercised in the other Contracting State shall be taxable only in the first-mentioned State if:-- a.     the recipient is present in the other State for a period or periods not exceeding in the aggregate 183 days in any 12-month period commencing or ending in the fiscal year concerned, and b.    the remuneration is paid by, or on behalf of, an employer who is not a resident of the other State, and c.     the remuneration is not borne by a permanent establishment or a fixed base which the employer has in the other State. 3.     Notwithstanding the preceding provisions of this article, remuneration derived in respect of an employment exercised aboard a ship or aircraft operated in international traffic by an enterprise of a Contracting State may be taxed in that State. Article 16 DIRECTORS' FEES Directors' fees and other similar payments derived by a resident of a Contracting State in his capacity as a member of the board of directors of a company which is a resident of the other Contracting State may be taxed in that other State. Article 17 ARTISTES AND SPORTSMEN 1.     Notwithstanding the provisions of Articles 14 and 15, income derived by a resident of a Contracting State as an entertainer, such as a theatre, motion picture, radio or television artiste, or a musician, or as a sportsman, from his personal activities as such exercised in the other Contracting State, may be taxed in that other State. 2.     Where income in respect of personal activities exercised by an entertainer or a sportsman in his capacity as such accrues not to the entertainer or sportsman himself but to another person, that income may, notwithstanding the provisions of Articles 7, 14 and 15, be taxed in the Contracting State in which the activities of the entertainer or sportsman are exercised. 3.     The provisions of paragraphs 1 and 2 shall not apply to income derived from activities performed in a Contracting State by entertainers or sportsmen if the visit to that State is substantially supported by public funds of one or both of the Contracting States or of political sub-divisions or local authorities thereof. In such a case, the income is taxable only in the Contracting State of which the entertainer or sportsman is a resident. Article 18 PENSIONS Subject to the provisions of paragraph 2 of Article 19, pensions and other similar remuneration paid to a resident of a Contracting State in consideration of past employment shall be taxable only in that State. Article 19 GOVERNMENT SERVICE 1.       a.     Remuneration, other than a pension, paid by a Contracting State or a political sub-division or a local authority thereof to an individual in respect of services rendered to that State or sub-division or authority shall be taxable only in that State. b.    However, such remuneration shall be taxable only in the other Contracting State if the services are rendered in that State and the individual is a resident of that State who:--                       i.        is a national of that State; or                      ii.        did not become a resident of that State solely for the purpose of rendering the services. 2.     . a.     Any pension paid by, or out of funds created by, a Contracting State or a political sub-division or a local authority thereof to an individual in respect of services rendered to that State or sub-division or authority shall be taxable only in that State. b.    However, such pension shall be taxable only in the other Contracting State if the individual is a resident of, and a national of, that State. 3.     The provisions of Articles 15, 16 and 18 shall apply to remuneration and pensions in respect of services rendered in connection with a business carried on by a Contracting State or a political sub-division or a local authority thereof. Article 20 STUDENTS AND APPRENTICES 1.     A student or business apprentice who is or was a resident of a Contracting State immediately before visiting the other Contracting State and who is present in that other Contracting State solely for the purpose of his education or training shall be exempt from tax in that other State on: a.     payments made to him by persons residing outside that other State for the purposes of his maintenance, education or training; and b.    remuneration from employment in that other State, in an amount not exceeding US Dollar 500 or its equivalent amount during any fiscal year, as the case may be, provided that such employment is directly related to his studies or is undertaken for the purpose of his maintenance. 2.     The benefits of this article shall extend only for such period of time as may be reasonable or customarily required to complete the education or training undertaken, but in no event shall any individual have the benefits of this article for more than five consecutive years from the date of his first arrival in that other Contracting State. Article 21 PROFESSORS, TEACHERS AND RESEARCH SCHOLARS 1.     A professor or teacher who is or was a resident of the Contracting State immediately before visiting the other Contracting State for the purpose of teaching or engaging in research, or both, at a university, college, school or other approved institution in that other Contracting State shall be exempt from tax in that other State on any remuneration for such teaching or research for a period not exceeding two years from the date of his arrival in that other State. 2.     This article shall not apply to income from research, if such research is undertaken primarily for the private benefit of a specific person or persons. 3.     For the purposes of this article and Article 20, an individual shall be deemed to be a resident of a Contracting State if he is a resident in that State in the fiscal year in which he visits the other Contracting State or in the immediately preceding fiscal year. 4.     For the purposes of paragraph 1 "approved institution" means an institution which has been approved in this regard by the competent authority of the concerned Contracting State. Article 22 OTHER INCOME 1.     Subject to the provisions of paragraph 2, items of income of a resident of a Contracting State, wherever arising, which are not expressly dealt with in the foregoing articles of this Convention, shall be taxable only in that State. 2.     The provisions of paragraph 1 shall not apply to income, other than income from immovable property as defined in paragraph 2 of Article 6, if the recipient of such income, being a resident of a Contracting State, carries on business in the other Contracting State through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the right or property in respect of which the income is paid is effectively connected with such permanent establishment or fixed base. In such case the provisions of Article 7 or Article 14, as the case may be, shall apply. 3.     Notwithstanding the provisions of paragraphs 1 and 2, items of income of a resident of a Contracting State not dealt with in the foregoing articles of this Convention and arising in the other Contracting State may also be taxed in that other State. Article 23 CAPITAL 1.     Capital represented by immovable property referred to in Article 6, owned by a resident of a Contracting State and situated in the other Contracting State, may be taxed in that other State. 2.     Capital represented by movable property, forming part of the business property of a permanent establishment which an enterprise of a Contracting State has in the other Contracting State or by movable property pertaining to a fixed base available to a resident of a Contracting State in the other Contracting State for the purpose of performing independent personal services, may be taxed in that other State. 3.     Capital owned by an enterprise of a Contracting State and represented by ships and aircraft operated in international traffic, and by movable property pertaining to the operation of such ships and aircraft, shall be taxable only in that State. 4.     All other elements of capital of a resident of a Contracting State shall be taxable only in that State. Article 24 ELIMINATION OF DOUBLE TAXATION 1.     The laws in force in either of the Contracting States will continue to govern the taxation of income and capital in the respective Contracting States except where provisions to the contrary are made in this Convention. 2.     Where a resident of India derives income or owns capital which, in accordance with the provisions of this Convention, may be taxed in Turkmenistan, India shall allow as a deduction from the tax on the income of that resident, an amount equal to the income-tax paid in Turkmenistan, whether directly or by deduction; and as a deduction from the tax on the capital of that resident, an amount equal to the capital tax paid in Turkmenistan. Such deduction in either case shall not, however, exceed that part of income-tax or tax on capital (as paid before the deduction is given), which is attributable to the income or the capital which may be taxed in Turkmenistan. 3.     In the case of Turkmenistan, the double taxation shall be avoided by a method which is identical to that mentioned in paragraph 2. 4.     For the purposes of paragraphs 2 and 3 of this article, the tax payable in the Contracting State shall be deemed to include the tax which would have been payable but for the tax incentives according to which such tax is not payable under the laws of the Contracting State and which are designed to promote economic development. 5.     Income which in accordance with the provisions of this Convention, is not to be subjected to tax in a Contracting State, may be taken into account for calculating the rate of tax to be imposed in that Contracting State. Article 25 NON-DISCRIMINATION 1.     Nationals of a Contracting State shall not be subjected in the other Contracting State to any taxation or any requirement connected therewith, which is other or more burdensome than the taxation and connected requirements to which nationals of that other State in the same circumstances, in particular with respect to residence, are or may be subjected. This provision shall, notwithstanding the provisions of Article 1, also apply to persons who are not residents of one or both of the Contracting States. 2.     The taxation on a permanent establishment which an enterprise of a Contracting State has in the other Contracting State shall not be less favourably levied in that other State than the taxation levied on enterprises of that other State carrying on the same activities. This provision shall not be construed as obliging a Contracting State to grant to residents of the other Contracting State any personal allowances, reliefs and reductions for taxation purposes on account of civil status or family responsibilities which it grants to its own residents. This provision shall not be construed as preventing a Contracting State from charging the profits of a permanent establishment which an enterprise of the other Contracting State has in the first-mentioned Contracting State at a rate higher than that imposed on the profits of a similar enterprise of the first-mentioned State, nor as being in conflict with the provisions of paragraph 3 of Article 7 of this Convention. 3.     Except where the provisions of paragraph 1 of Article 9, paragraph 6 of Article 11, or paragraph 6 of Article 12, apply, interest, royalties, fees for technical services and other disbursements paid by an enterprise of a Contracting State to a resident of the other Contracting State shall, for the purpose of determining the taxable profits of such enterprise, be deductible under the same conditions as if they had been paid to a resident of the first-mentioned State. Similarly, any debts of an enterprise of a Contracting State to a resident of the other Contracting State shall, for the purpose of determining the taxable capital of such enterprise, be deductible under the same conditions as if they had been contracted to a resident of the first-mentioned State. 4.     Enterprises of a Contracting State, the capital of which is wholly or partly owned or controlled, directly or indirectly, by one or more residents of the other Contracting State, shall not be subjected in the first-mentioned State to any taxation or any requirement connected therewith which is other or more burdensome than the taxation and connected requirements to which other similar enterprises of the first-mentioned State are or may be subjected. 5.     The provisions of this article shall, notwithstanding the provisions of Article 2, apply to taxes of every kind and description. Article 26 MUTUAL AGREEMENT PROCEDURE 1.     Where a person considers that the actions of one or both of the Contracting States result or will result for him in taxation not in accordance with the provisions of this Convention, he may, irrespective of the remedies provided by the domestic law of those States, present his case to the competent authority of the Contracting State of which he is a resident or, if his case comes under paragraph 1 of Article 25, to that of the Contracting State of which he is a national. The case must be presented within three years from the first notification of the action resulting in taxation not in accordance with the provisions of the Convention. 2.     The competent authority shall endeavour, if the objection appears to it to be justified and if it is not itself able to arrive at a satisfactory solution, to resolve the case by mutual agreement with the competent authority of the other Contracting State, with a view to the avoidance of taxation which is not in accordance with the Convention. Any agreement reached shall be implemented notwithstanding any time limits in the domestic law of the Contracting States. 3.     The competent authorities of the Contracting States shall endeavour to resolve by mutual agreement any difficulties or doubts arising as to the interpretation or application of the Convention. They may also consult together for the elimination of double taxation in cases not provided for in the Convention. 4.     The competent authorities of the Contracting States may communicate with each other directly for the purpose of reaching an agreement in the sense of the preceding paragraphs. When it seems advisable in order to reach agreement to have an oral exchange of opinions, such exchange may take place through a Commission consisting of representatives of the competent authorities of the Contracting States. Article 27 EXCHANGE OF INFORMATION 1.     The competent authorities of the Contracting States shall exchange such information (including documents) as is necessary for carrying out the provisions of this Convention or of the domestic laws of the Contracting States concerning taxes covered by the Convention in so far as the taxation thereunder is not contrary to the Convention. The exchange of information is not restricted by Article 1. Any information received by a Contracting State shall be treated as secret in the same manner as information obtained under the domestic laws of that State and shall be disclosed only to persons or authorities (including courts and administrative bodies) involved in the assessment or collection of, the enforcement or prosecution in respect of, or the determination of appeals in relation to, the taxes covered by the Convention. Such persons or authorities shall use the information only for such purposes. They may disclose the information in public court proceedings or in judicial decisions. 2.     In no case shall the provisions of paragraph 1 be construed so as to impose on a Contracting State the obligation:-- a.     to carry out administrative measures at variance with the laws and administrative practice of that or of the other Contracting State; b.    to supply information or documents which are not obtainable under the laws or in the normal course of the administration of that or of the other Contracting State c.     to supply information which would disclose any trade, business, industrial, commercial or professional secret or trade process, or information, the disclosure of which would be contrary to public policy. Article 28 COLLECTION ASSISTANCE 1.     The Contracting States undertake to lend assistance to each other in the collection of taxes to which this Convention relates, together with interest, costs, and civil penalties relating to such taxes, referred to in this article as a "revenue claim". 2.     Request for assistance by the competent authority of a Contracting State in the collection of a revenue claim shall include a certification by such authority that, under the laws of that State, the revenue claim has been finally determined. For the purposes of this article, a revenue claim is finally determined when a Contracting State has the right under its internal law to collect the revenue claim and the taxpayer has no further rights to restrain collection. 3.     Amounts collected by the competent authority of a Contracting State pursuant to this article shall be forwarded to the competent authority of the other Contracting State. However, the first-mentioned Contracting State shall be entitled to reimbursement of costs, if any, incurred in the course of rendering of such assistance to the extent mutually agreed between the competent authorities of the two States. 4.     Nothing in this article shall be construed as imposing on either Contracting State the obligation to carry out administrative measures of a different nature from those used in the collection of its own taxes or those which would be contrary to its public policy. Article 29 DIPLOMATIC AGENTS AND CONSULAR OFFICERS Nothing in this Convention shall affect the fiscal privileges of diplomatic agents or consular officers under the general rules of international law or under the provisions of special agreements. Article 30 ENTRY INTO FORCE 1.     Each of the Contracting States shall notify to the other the completion of the procedures required by its law for the bringing into force of this Convention. This Convention shall enter into force on the date of the later of these notifications and shall thereupon have effect:-- a.     in India, in respect of income or capital arising in any fiscal year beginning on or after the first day of April next following the calendar year in which the Convention enters into force; and b.    in Turkmenistan, in respect of income or capital arising in any fiscal year beginning on or after the first day of January next following the calendar year in which the Convention enters into force. Article 31 TERMINATION This Convention shall remain in force indefinitely until terminated by a Contracting State. Either Contracting State may terminate the Convention, through diplomatic channels, by giving notice of termination at least six months before the end of any calendar year beginning after the expiration of five years from the date of entry into force of the Convention. In such event, the Convention shall cease to have effect:-- a.     in India, in respect of income arising in any previous year beginning on or after the 1st April next following the calendar year in which the notice is given in respect of capital which is held at the expiry of any previous year beginning on or after the 1st April next following the calendar year in which the notice of termination is given; b.    in Turkmenistan, in respect of income arising in any year of income beginning on or after the 1st January next following the calendar year in which the notice is given and in respect of capital which is held at the expiry of any year of income next following the calendar year in which the notice of termination is given. In witness whereof , the undersigned, being duly authorised thereto, have signed this Convention. Done  in duplicate at New Delhi this 25th day of February, 1997, in the Turkmen, Hindi and English languages, all three texts being equally authentic. In case of divergence between the texts, the English text shall be the operative one. For the Government of the Republic of India (I. K. Gujral) For the Government of Turkmenistan (Shikhiev Ilaman) PROTOCOL At the signing of the Convention between the Government of the Republic of India and the Government of Turkmenistan for the Avoidance of Double Taxation and for the Prevention of Fiscal Evasion with Respect to Taxes on Income and on Capital, the undersigned have agreed that the following shall form an integral part of the Convention. With reference of Article 7: In respect of paragraphs 1 and 2 of Article 7, where an enterprise of one of the Contracting States sells goods or merchandise or carries on business in the other Contracting State through a permanent establishment situated therein, the profits of that permanent establishment shall not be determined on the basis of the total amount received by the enterprise, but shall be determined only on the basis of the remuneration which is attributed to the actual activity of the permanent establishment for such sales or business. For instance, in the case of contracts for the survey, supply, installation or construction of industrial, commercial or scientific equipment or premises, or of public works, when the enterprise has a permanent establishment, the profits of such permanent establishment shall not be determined on the basis of the total amount of the contract, but shall be determined only on the basis of that part of the contract which is effectively carried out by the permanent establishment in the Contracting State where the permanent establishment is situated. In witness whereof  the undersigned, being duly authorised thereto, have signed this Protocol. Done  in duplicate at New Delhi this 25th day of February, 1997 in the

Download Word Document In English. (Rs.85/-) Hungary Double Taxation Avoidance Agreement Convention between the Government of the Republic of India and the Government of the Hungarian People's Republic for the avoidance of double taxation with respect to taxes on Income NOTIFICATION No. G.S.R.282(E),dtd.13.03.1987. Whereas the annexed Convention between the Government of the Republic of India and the Government of the Hungarian People's Republic for the avoidance of double taxation with respect to taxes on income has come into force on the 7th January, 1987 on the Notification by both the Contracting States to each other of the completion of the procedures required by their laws for its bringing into force, in pursuance of Article 28 of the said Convention; Now, therefore, in exercise of the powers conferred by section 90 of the Income-tax Act, 1961 (43 of 1961) and section 24A of the Companies (Profits) Surtax Act, 1964 (7 of 1964), the Central Government hereby directs that all the provisions of the said Convention shall be given effect to in the Union of India. ANNEXURE CONVENTION BETWEEN THE GOVERNMENT OF THE REPUBLIC OF INDIA AND THE GOVERNMENT OF THE HUNGARIAN PEOPLE'S REPUBLIC FOR THE AVOIDANCE OF DOUBLE TAXATION WITH RESPECT TO TAXES ON INCOME The Government of the Republic of India and the Government of the Hungarian People's Republic: Desiring to further expand and facilitate mutual economic relations, have resolved to conclude a Convention for the avoidance of double taxation with respect to taxes on income and Have Agreed as Follows: Article I PERSONAL SCOPE This Convention shall apply to persons who are residents of one or both of the Contracting States. Article 2 TAXES COVERED 1.     This Convention shall apply to taxes on income imposed on behalf of each Contracting State or of its political sub-divisions or local authorities, irrespective of the manner in which they are levied. 2.     The taxes to which this Convention shall apply are: a.     In the case of India: 1.     income-tax including any surcharge thereon; 2.     surtax; (hereinafter referred to as "Indian tax"). b.    In the case of the Hungarian People's Republic : 1.     general income-tax (az a'ltalanos j'o've-dele mado'); 2.     income-tax on household and auxiliary farms (a h'azta'ji e's Kisegi'td gazdasa'gok jo'vedele mao 'ja); 3.     corporation' taxes (a ta'rsulati aoo'es a tarsa'ji aoo); 4.     special corporation tax (a ta'rsulati Kolonacc); 5.     profit tax of state enterprises (az allami vella latok nyereso' gaddja); 6.     town and community contribution (varosi e's ko'zsegi hozzaja'rula's); 7.     levy on dividends and profit distributions of commercial companies (a koreskedelmi ta'rsasa'gok os nyerse'g kifizete'seiuta'ni illete'k); (hereinafter referred to as "Hungarian tax"). 3.     The Convention shall also apply to any identical or substantially similar taxes which are imposed by either Contracting State after the date of signature of the present Convention in addition to, or in place of, the taxes referred to in paragraph 2 of this Article. 4.     At the end of each year, the competent authorities of the Contracting States shall notify to each other any significant changes which have been made in their respective taxation laws which are the subject of this Convention and furnish copies of relevant enactment and regulations. Article 3 GENERAL DEFINITIONS 1.     In this Convention, unless the context otherwise requires: a.     the terms "India" means the territory of India and includes the territorial sea and airspace above it, as well as any other maritime zone in which India has sovereign rights, other rights and jurisdictions, according to the Indian law and in accordance with international law; b.    the term "Hungarian People's Republic" means the territory of the Hungarian People's Republic; c.     the terms "a Contracting State" and "the other Contracting State" mean India or the Hungarian People's Republic; as the context requires; d.    the term "person" comprises an individual, a company and any other body of persons; e.     the term "company" means any body corporate or any entity which is treated as a body corporate for tax purposes; f.     the terms "enterprise of a Contracting State" and " enterprise of the other Contracting State" mean, respectively, an enterprise carried on by a resident of a Contracting State and an enterprise carried on by a resident of the other Contracting State; g.    the term "national" of a Contracting State means:                               i.        any individual possessing the nationality of a Contracting State;                              ii.        any legal person, partnership or association deriving its status as such from the law in force in a Contracting State; h.     the term "international traffic" means any transport by a ship or aircraft operated by an enterprise which has its place of effective management in a Contracting State, except when the ship or aircraft is operated solely between the places in the other Contracting State:                               i.        the term "competent authority" means in the case of India, the Central Government in the Ministry of Finance (Department of Revenue); and in the case of the Hungarian People's Republic, the Ministry of Finance. 2.     In the application of the provisions of this Convention by one of the Contracting State, any term not defined herein shall, unless the context otherwise requires, have the meaning which it has under the laws in force in that State relating to the taxes which are the subject of this Convention. Article 4 FISCAL DOMICILE 1.     For the purposes of this Convention, the term "resident of a Contracting State" means any person who, under the laws of that State, is liable to tax therein by reason of his domicile, residence, place of management or any other criterion of a similar nature. 2.     Where by reason of the provisions of paragraph 1 of this Article an individual is a resident of both Contracting States, then his status shall be determined in accordance with the following rules: a.     he shall be deemed to be a resident of the Contracting State in which he has a permanent home available to him; if he has a permanent home available to him in both Contracting States, he shall be deemed to be a resident of the Contracting State in which the centre of his vital interests is located; b.    if the Contracting State in which he has his centre of vital interests cannot be determined, or if he has not a permanent home available to him in either Contracting State, he shall be deemed to be a resident of the Contracting State in which he has an habitual abode; c.     if he has an habitual abode in both Contracting States or in neither of them he shall be deemed to be a resident of the Contracting State of which he is a national; d.    if he is a national of both Contracting States or of neither of them, the competent authorities of the Contracting State shall settle the question by mutual agreement in accordance with Article 25. 3.     Where by reason of the provisions of paragraph 1, a person other than an individual is a resident of both Contracting States, then it shall be deemed to be a resident of the Contracting State in which its place of effective management is situated. Article 5 PERMANENT ESTABLISHMENT 1.     For the purposes of this Convention, the term "permanent establishment" means a fixed place of business or production through which the activities of an enterprise are wholly or partly carried on. 2.     The term "permanent establishment" shall include especially: a.     a place of management; b.    a branch; c.     an office; d.    a factory; e.     a workshop or a warehouse; f.     a mine, a quarry, an oil field or other place of extraction of natural resources; g.    a building site or construction, installation or assembly project or supervisory activities in connection therewith, where such site, project or supervisory activity continues for a period of more than six months, or where such project or supervisory activity, being incidental to the sale of machinery or equipment, continues for a period not exceeding six months and the charges payable for the project or supervisory activity exceed 10 per cent of the sale price of the machinery and equipment. 3.     Notwithstanding the preceding provisions of this Article, the term "permanent establishment" shall be deemed not to include: a.     the use of facilities solely for the purpose of storage or display of goods or merchandise belonging to the enterprise; b.    the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of storage or display; c.     the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of processing by another enterprise; d.    the maintenance of a fixed place of business solely for the purpose of purchasing goods or merchandise or of collecting information, for the enterprise; e.     the maintenance of a fixed place of business solely for the purpose of carrying on, for the enterprise, any other activity of a preparatory or auxiliary character; f.     the maintenance of a fixed place of business solely for any combination of activities mentioned in sub paragraphs (a) to (e), provided that overall activity of the fixed place of business resulting from this combination is of a preparatory or auxiliary character. 4.     Notwithstanding the provisions of paragraphs 1 and 2, where a person---other than an agent of an independent status to whom paragraph 5 applies---is acting in a Contracting State on behalf of an enterprise of the other Contracting State, that enterprise shall be deemed to have a permanent establishment in the first-mentioned Contracting State in respect of any activities which that person undertakes for the enterprise, if such a person: a.     has and habitually exercises in that State an authority to conclude contracts in the name of the enterprise, unless the activities of such person are limited to those mentioned in paragraph 3 which, if exercised through a fixed place of business, would not make this fixed place of business a permanent establishment under the provisions of that paragraph; or b.    has no such authority, but habitually maintains in the first-mentioned State a stock of goods or merchandise from which he regularly delivers goods or merchandise on behalf of the enterprise. 5.     An enterprise of a Contracting State shall not be deemed to have a permanent establishment in the other Contracting State merely because it carries on business in that other State through a broker, general commission agent or any other agent of an independent status, where such persons are acting in the ordinary course of their business. However, when the activities of such an agent are devoted wholly or almost wholly on behalf of that enterprise, he will not be considered an agent of an independent status within the meaning of this paragraph. 6.     The fact that a company, which is a resident of a Contracting State controls or is controlled by a company which is a resident of the other Contracting State, or which carries on business in that other Contracting State (whether through a permanent establishment or otherwise), shall not, of itself, constitute for either company a permanent establishment of the other. Article 6 INCOME FROM IMMOVABLE PROPERTY 1.     Income from immovable property may be taxed in the Contracting State in which such property is situated. 2.     The term "immovable property" shall be defined in accordance with the law of the Contracting State in which the property is situated. The term shall in any case include property accessory to immovable property, livestock and equipment used in agriculture and forestry, rights to which the provisions of general law respecting landed property apply, usufruct of immovable property and rights to variable or fixed payments as consideration for the working of, or the right to work, mineral deposits, all India, quarries and other places of extraction of natural resources. Ships, boats and aircraft shall not be regarded as immovable property. 3.     The provisions of paragraph 1 shall apply to income derived from the direct use, letting or use in any other form of immovable property. 4.     The provisions of paragraphs 1 and 3 shall also apply to the income from immovable property of an enterprise and to income from immovable property used for the performance of professional services. Article 7 BUSINESS PROFITS 1.     The profits of an enterprise of a Contracting State shall be taxable only in that State unless the enterprise carries on business in the other Contracting State through a permanent establishment situated therein. If the enterprise carries on business as aforesaid, the profits of the enterprise may be taxed in the other State but only so much of them as is attributable to (a) that permanent establishment; (b) sales in that other State of goods or merchandise of the same or similar kind as those sold through that permanent establishment; or (c) other business activities carried on in that other State of the same or similar kind as those effected through that permanent establishment. 2.     Where an enterprise of a Contracting State carries on business in the other Contracting State through a permanent establishment situated therein, there shall in each Contracting State be attributed to that permanent establishment the profits which it might be expected to make if it were a distinct and separate enterprise engaged in the same or similar activities under the same or similar conditions and dealing wholly independently with the enterprise of which it is a permanent establishment. 3.     In so far is it has been customary in a Contracting State to determine the profits to be attributed to a permanent establishment on the basis of an apportionment of the total profits of the enterprise to its various parts, nothing in paragraph 2 shall preclude that Contracting State from determining the profits to be taxed by such an apportionment as may be customary; the method of apportionment adopted shall, however, be such that the result shall be in accordance with the principles laid down in this Article. 4.     In the determination of the profits of a permanent establishment, there shall be allowed as deductions expense which are incurred for the purposes of the business of the permanent establishment including executive and general administrative expenses so incurred, whether in the State in which the permanent establishment is situated or elsewhere as are in accordance with the provisions of and subject to the limitations of the taxation laws of that State. However, no such deduction shall be allowed in respect of amounts, if any, paid (otherwise than towards reimbursement of actual expenses) by the permanent establishment to the head office of the enterprise or any of its other offices, by way of royalties, fees or other similar payments in return for the use of patents, know-how or other rights, or by way of commission or other charges, for specific services performed or for management, or except in the case of a banking enterprise, by way of interest on moneys lent to the permanent establishment. Likewise, no account shall be taken, in the determination of the profits of a permanent establishment, for amounts charged (otherwise than towards reimbursement of actual expenses), by the permanent establishment to the head office of the enterprise or any of its other offices, by way of royalties, fees or other similar payments in return for the use of patents, know-how or other rights, or by way of commission or other charges for specific services performed or for management, or, except in the case of a banking enterprise, by way of interest on moneys lent to the head office of the enterprise or any of its other offices. 5.     No profits shall be attributed to a permanent establishment by reason of the mere purchase by that permanent establishment of goods or merchandise for the purpose of export to the enterprise of which it is the permanent establishment. 6.     For the purposes of the preceding paragraphs, the profits to be attributed to the permanent establishment shall be determined by the same method year by year unless there is good and sufficient reason to the contrary. 7.     Where profits include items which are dealt with separately in other Article of this Convention, then the provisions of those Articles shall not be affected by the provisions of this Article. Article 8 AIR TRANSPORT 1.     Income derived from the operation of aircraft in internations traffic by an enterprise of one of the Contracting States shall not be taxed in the other Contracting State. 2.     Paragraph 1 shall likewise apply in respect of participations in pools of any kind by enterprises engaged in air transport. 3.     The provisions of paragraphs 1 and 2 shall also apply where the enterprise has an office or agency in the other State for the transportation of goods or persons. However, this shall only apply to activities directly connected with the business of aircraft transportation. 4.     Interest on funds connected with the operation of aircraft in international traffic as mentioned in paragraph 1 shall be regarded as income from the operation of such aircraft. Article 9 ASSOCIATED ENTERPRISES 1.     Where a.     an enterprise of a Contracting State participates directly or indirectly in the management, control or capital of an enterprise of the other Contracting State, or b.    the same Persons participate directly or indirectly in the management, control or capital of an enterprise of a Contracting State and an enterprise of the other contracting State. and in either case conditions are made or imposed between the two enterprises in their commercial or financial relations which differ from those which would be made between independent enterprises, then any profits which would, but for those conditions, have accrued to one of the enterprises, but, by reason of those conditions, have not so accrued, may be included in the profits of that enterprise and taxed accordingly. 2.     Where a Contracting State includes in the profits of an enterprise of that State-and taxes accordingly-profits on which an enterprise of the other Contracting State has been charged to tax in that other State and the profits so included are profits which would have accrued to the enterprise of the first-mentioned State if the conditions made between the two enterprises had been those which would have been made between independent enterprises, then that other State shall make an appropriate adjustment to the amount of the tax charged therein on those profits. In determining such adjustment, due regard shall be had to the other provisions of this Convention and the competent authorities of the Contracting States shall, if necessary, consult each other. Article 10 DIVIDENDS 1.     Dividends paid by a company which is a resident of a Contracting State to a resident of the other Contracting State may be taxed in that other State. 2.     However, such dividends may also be taxed in the Contracting State of which the company paying the dividends is a resident, and according to the laws of that State, but if the recipient is the beneficial owner of the dividends and the dividends relate to a new contribution, the tax so charged shall not exceed fifteen per cent of the gross amount of the dividends if the beneficial owner is a company which owns at least ten per cent of the shares of the company paying the dividends. This paragraph shall not affect the taxation of the company in respect of the profits out of which the dividends are paid, 3.     The term "dividends" as used in this Article means income from shares, or other rights, not being debt-claims, participating in profits, as well as income from other corporate rights which is subjected to the same taxation treatment as income from shares by the taxation law of the State of which the company making the distribution is a resident. 4.     The provisions of paragraphs 1 and 2 shall not apply if the recipient of the dividends, being a resident of a Contracting State, carries on business in the other Contracting State of which the company paying the dividends is a resident, through a permanent establishment situated therein, or performs in that other State independent personal services, from a fixed base situated therein, and the holding in respect of which the dividends are paid is effectively connected with such permanent establishment or fixed base. In such a case, the provisions of Article 7 or Article 14, as the case may be, shall apply. 5.     Where a company which is a resident of a Contracting State derives profits or income from the other Contracting State, that other State may not impose any tax on the dividends paid by the company, except in so far as such dividends are paid to a resident of that other State or in so far as the holding in respect of which the dividends are paid is effectively connected with a permanent establishment or a fixed base situated in that other State, nor subject the company's undistributed profits to a tax on the company's undistributed profits even if the dividends paid or the undistributed profit consist wholly or partly of profits or income arising in such, other State. 6.     As used in paragraph 2 of this Article, the term "new contribution" means any share capital, other than bonus shares or shares of a new company formed as a result of the amalgamation of two or more existing companies, issued after the date of entry into force of this Convention by a company which is a resident of a Contracting State, and beneficially owned by a resident of the other Contracting State. Article 11 INTEREST 1.     Interest arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State. 2.     However, such interest may also be taxed in the Contracting State in which it arises, and according to the laws of that State, but if the recipient is the beneficial owner of the interest and the interest is paid in respect of a loan or debt first created after the date of entry into force of this Convention, the tax so charged shall, not exceed 15 per cent of the gross amount of interest. 3.     Notwithstanding the provisions of paragraph 2:- a.     interest arising in a Contracting State shall be exempt from tax in that State provided it is derived and beneficially owned by:                               i.        the Government, a political sub-division or a local authority of the other Contracting State;                              ii.        the Central Bank of the other Contracting State; b.    interest arising in a Contracting State shall be exempt from tax in, that State if it is beneficially owned by a resident of the other Contracting State and is derived in connection with a loan or credit extended or endorsed by:                               i.        in the case of Hungarian People's Republic, the Magyar Kulkereskedelmi Bank Rt., to the extent such interest is attributable to financing of exports and imports only:                              ii.        in the case of India, the Export-Import Bank of India (Exim Bank)., to the extent such interest is attributable to financing of exports and imports only;                             iii.        any institution of a Contracting State in charge of public financing of external trade;                             iv.        any other person provided that the loan or credit is approved by the Government of the first mentioned Contracting State. 4.     The term "interest" as used in this Article means income from debt claims of every kind, whether or not secured by mortgage and whether or not carrying a right to participate in the debtor's profits, and in particular, income from government securities and income from bonds or debentures, including premiums and prizes attaching to such securities, bonds or debentures. Penalty charges for late payment shall not be regarded as interest for the purpose of this Article. 5.     The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the interest, being a resident of a Contracting State, carries on business in the other Contracting State in which the interest arises, through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the debt-claim in respect of which the interest is paid is effectively connected with such permanent establishment or fixed base in such case the provisions of Article 7 or Article 14, as the case may be shall apply. 6.     Interest shall be deemed to arise in a Contracting State when the payer is that State itself, a political sub-division, a local authority or a resident of that State. Where however, the person paying the interest, whether he is a resident of a Contracting State or not, has in a Contracting State a permanent establishment or a fixed base in connection with which the indebtedness on which the interest is paid was incurred, and such interest is borne by such permanent establishment or a fixed base, then such interest shall be deemed to arise in the Contracting State in which the permanent establishment or the fixed base is situated. 7.     Where, owing to a special relationship between the payer and the beneficial owner or between both of them and some other person the amount of the interest paid, having regard to the debt-claim for which it is paid, exceeds the amount which would have been agreed upon by the payer and the recipient in the absence of such relationship, the provisions of this Article shall apply only to the last-mentioned amount. In that case, the excess part of the payments shall remain taxable according to the law of each Contracting State, due regard being had to the other provisions of this Convention. Article 12 ROYALTIES AND FEES FOR TECHNICAL SERVICES 1.     Royalties and fees for technical services arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State. 2.     However, such royalties and fees for technical services may also be taxed in the Contracting State in which they arise and according to the law of that State; provided that where the royalties or fees for technical services are paid to a resident of the other Contracting State who is the beneficial owner thereof and they are paid in respect of a right or property which is first granted, or under a contract which is signed, after the date of entering into force of this Convention, the tax so charged shall not exceed,---- a.     in the case of royalties, 40 per cent of the gross amount thereof; b.    in the case of fees for technical services, 20 per cent of the gross amount thereof. 3.     The term "royalties" as used in this Article means payments of any kind including rentals received as a consideration a.     for the use of, or the right to use, any copyright of literary, artistic or scientific work including cinematograph films, and films or tapes for television or radio broadcasting b.    for the use of, or the right to use, any patent, trade mark, design or model, plan, secret formula or process, or any industrial commercial or scientific equipment; c.     for information concerning industrial, commercial or scientific experience. 4.     The term "fees for technical services" as used in this Article means payments of any kind to any person, other than payments to an employee of the person making the payments and to any individual for independent personal services mentioned in Article 14 (Independent Personal Services), in consideration for services of a managerial, technical or consultancy nature, including the provision of services of technical or other personnel. 5.     The provisions of paragraphs 1 and 2 of this Article shall not apply if the beneficial owner of the royalties or fees for technical services, being a resident of a Contracting State, carries on business in the other Contracting State in which the royalties or fees for technical services arise through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the right, property or contract in respect of which the royalties or fees for technical services are paid is effectively connected with such permanent establishment or fixed base. In such case, the provisions of Article 7 (Business Profits) or Article 14 (Independent Personal Services), as the case may be, shall apply. 6.     Royalties and fees for technical services shall be deemed to arise in a contracting State where the payer is that State itself, a political sub-division, a local authority or a resident of that State. Where, however, the person paying the royalties or fees for technical services, whether he is a resident of a Contracting State or not, has in a Contracting State a permanent establishment or a fixed base in connection with which the obligation to make the payments was incurred and the payments are borne by that permanent establishment or fixed base, then the royalties or fees for technical services shall be deemed to arise in the Contracting State in which the permanent establishment or the fixed base is situated. 7.     Where, owing to a special relationship between the payer and beneficial owner or between both of them and some other person, the amount of the royalties or fees for technical services paid exceeds for whatever reason the amount which would have been paid in the absence of such relationship, the provisions of this Article shall apply only to the last mentioned amount. In that case, the excess part of the payments shall remain taxable according to the law of each Contracting State, due regard being had to the other provisions of this Convention. Article 13 CAPITAL GAINS 1.     Gains derived by a resident of a Contracting State from the alienation of immovable property referred to in Article 6 and situated in the other Contracting State may be taxed in that other State. 2.     Gains from the alienation of movable property forming part of the business property of a permanent establishment which an enterprise of a Contracting State has in the other Contracting State or of movable property pertaining to a fixed base available to a resident of a contracting State in the other Contracting State for the purpose of performing independent personal services, including such gains from the alienation of such a permanent establishment (alone of with the whole enterprise) or of such fixed base, may be taxed in that other State. 3.     Gains arising from a capital asset being ships or aircraft operated in international traffic or movable property pertaining to the operation of such ships or aircraft by an enterprise of a Contracting State shall be taxable only in the Contracting State in which the place of effective management of the enterprise is situated. 4.     Gains from the alienation of shares of the capital stock of a company the property of which consists directly or indirectly principally of immovable property situated in a Contracting State may be taxed in that State. 5.     Gains from the alienation of any property other than that referred to in paragraphs 1, 2, 3 and 4 shall be taxable only in the Contracting State of which he alienator is a resident. Article 14 INDEPENDENT PERSONAL SERVICES 1.     Income derived by an individual who is a resident of a Contracting State from the performance of personal services in an independent capacity shall be taxable only in that State unless such services are performed in the other Contracting State, in which case such income may be taxed in the other Contracting State, if a.     the individual is present in that other State for a period or periods aggregating more than 90 days in the 'previous year' or 'taxable year', as the case may be, or b.    the individual has a fixed base regularly available to him in that other State for the purpose of performing his activities, but only so much of the income as is attributable to that fixed base. 2.     The term "independent personal services" includes independent scientific, literary, artistic, educational or teaching activities as well as the independent activities of physicians, surgeons, lawyers, engineers, architects, dentists and accountants. Article 15 DEPENDENT PERSONAL SERVICES 1.     Subject to the provisions of Articles 16, 17, 18, 19, 20 and 21, salaries, wages and other similar remuneration derived by a resident of a Contracting State in respect of an employment shall be taxable only in that State unless the employment is exercised in the other Contracting State. If the employment is so exercised, such remuneration as is derived therefrom may be taxed in that other Contracting State. 2.     Notwithstanding the provisions of paragraph 1, remuneration derived by a resident of a Contracting State in respect of an employment exercise in the other contracting State shall be taxable only in the first-mentioned State if: a.     the recipient is present in the other State for a period or periods not exceeding in the aggregate 183 days in the relevant 'previous year' or 'taxable year' as the case may be, and b.    the remuneration is paid by, or on behalf of an employer who is not a resident of the other State, and c.     the remuneration is not borne by a permanent establishment or a fixed base which the employer has in the other State 3.     Notwithstanding the preceding provisions of this Article, remuneration in respect of an employment exercise aboard a ship or aircraft operated in international traffic may be taxed in the Contracting State in which the place of effective management of the enterprise is situated. Article 16 DIRECTORS' FEES Directors' fees and similar payments derived by a resident of a Contracting State in his capacity as a member of the Board of Directors or the Supervisory Board or any other similar organ of a company which is a resident of the other Contracting State may be taxed in that other State. Article 17 ARTISTES AND ATHLETES 1.     Notwithstanding the provisions of Articles 14 and 15, income derived by public entertainers (such as stage, motion picture, radio or television artistes and musicians) or athletes, from their personal activities as such may be taxed in the Contracting State in which these activities are exercised. 2.     Where income in respect of personal activities exercised by an entertainer or an athlete in his capacity as such accrues not to the entertainer or athlete himself but to another person, that income, may, notwithstanding the provisions of Articles 7, 14. and 15. be taxed in the Contracting State in which the activities of the entertainer or athlete are exercised. 3.     Nothwithstanding the provisions of paragraphs 1 and 2 of this Article, income derived from such activities shall be exempt from tax in the Contracting State in which these activities are exercised if the visit of the public entertainers or athletes to that State is directly or indirectly supported, wholly or substantially, from the public funds of the Government of the other Contracting State. 4.     For the purpose of this Article, the term "Government" includes a State Government, a political sub-division or a local authority of either Contracting State Article 18 PENSIONS 1.     Subject to the provisions of paragraph 3 of Article 19, pensions and other similar remuneration paid to a resident of a Contracting State in consideration of past employment shall be taxable only in that State. 2.     Notwithstanding the provisions of paragraph 1, pensions paid and other payments made under a public scheme which is part of the social security system of a Contracting State or a political sub-division or a local authority thereof shall be taxable only in that State. Article 19 GOVERNMENT SERVICE 1.     Remuneration (not being a pension) paid by the Government of the Republic of India to any individual who is a citizen of India in respect of services rendered in the discharge of Governmental functions in the Hungarian People's Republic shall be exempt from Hungarian tax. 2.     Remuneration (not being a pension) paid by the Government of the Hungarian People's Republic to any individual who is a citizen of the Hungarian People's Republic in respect of services rendered in the discharge of governmental functions in India shall be exempt from Indian tax. 3.     Any pension paid by the Government of one of the Contracting States to any individual shall be taxable in that Contracting State. 4.     The provisions of paragraphs 1, 2 and 3 of this Article shall not apply to payments in respect of services rendered in connection with any business carried on by the Government of either of the Contracting States for the purposes of profit. 5.     For the purposes of this Article, the term "Government" shall include any State Government, a political sub-division or local authority of either Contracting State and in particular the Reserve Bank of India and the National Bank of Hungary. Article 20 STUDENTS 1.     An individual who is or was immediately before visiting the other Contracting State a resident of a Contracting State and who visits the other Contracting State solely as a student at an approval university, college, school or other similar approved institution in that other Contracting State or as a business or technical apprentice therein, for a period not exceeding five years from the date of his first arrival in that other Contracting State in connection with that visit shall be exempt from tax in that other Contracting State on a.     all remittances from abroad for the purposes of his maintenance education or training; and b.    any remuneration not exceeding Rs.20,000 or 75,000 forints, during any 'previous year' or 'taxable year' as the case may be, for personal services rendered in that other Contracting State with a view to supplementing the resources available to him for such purposes. 2.     An individual who is or was immediately before visiting the other Contracting State a resident of a Contracting State and who visits the other Contracting State for the purposes of study, research or training solely as a recipient of a grant, allowance or award from the Government of either of the Contracting States or from a scientific, educational or charitable organisation or under a technical assistance programme entered into by the Government of either of the Contracting States for a period not exceeding five years from the date of his first arrival in that other Contracting State in connection with that visit shall be exempt from tax in that other Contracting State on a.     the amount of such grant, allowances or award; b.    all remittances from abroad for the purposes of his maintenance, education or training; and c.     any remuneration not exceeding Rs25,000 or 90,000 forints during any 'previous year' or 'taxable year' as the case may be, in respect of services in that other Contracting State if the services are performed in connection with his study research training or are incidental thereto. 3.     For the purposes of paragraph 1, "approved university college, school or institution" means a university college school and an educational or research institution which has been approved in this regard by the competent authority of the concerned Contracting State. Article 21 PROFESSORS, TEACHERS AND RESEARCHERS 1.     An individual who is a resident of one of the Contracting States and who, at the invitation of the Government of the other Contracting State or of a university or other approved institution situated in that other Contracting State, visits that other Contracting State for the primary purpose of teaching or engaging in research or both at a university or other approved institution shall be exempt from tax in that other Contracting State on his income from personal services for teaching or research at the university or the approved institution for a period not exceeding 24 months from the date of his arrival in the latter Contracting State. 2.     This Article shall not apply to income from research if such research is undertaken primarily for the private benefit of a specific person or persons. 3.     For the purposes of paragraph 1, "approved institution" means an educational or research institution which has been approved in this regard by the competent authority of the concerned Contracting State. Article 22 OTHER INCOME 1.     Items of income of a resident of a Contracting State, whereever arising, not dealt with in the foregoing Articles of this Convention shall be taxable only in that State. 2.     The provisions of paragraph 1 shall not apply to income, other than income from immovable property as defined in, paragraph 2 of Article. 6, if the recipient of such income, being a resident of a Contracting State, carries on business in the other Contracting State through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the right or property in respect of which the income is paid is effectively connected with such permanent establishment or fixed base. In such case the provisions of Article 7 or Article 14, as the case may be, shall apply. 3.     Notwithstanding the provisions of paragraphs 1, and 2, items, of income of a resident of a Contracting State not dealt with in the foregoing Articles of this Convention and arising in the other Contracting State may also be taxed in that other State. Article 23 ELIMINATION OF DOUBLE TAXATION 1.     The laws in force either of the Contracting States will continue to govern the assessment and taxation of income in the respective Contracting States except where express provisions to the contrary is made in this Convention. 2.     The income arising within the Hungarian People's Republic which in accordance with this Convention may be subjected to tax in the Hungarian People's Republic either directly or by deduction, subject to the provisions of sub-paragraphs 4 and 5, shall not be subject to Indian tax. 3.     The income arising within India which in accordance with this Convention may be subjected to tax in India either directly or by deduction, subject to the provisions of sub-paragraphs 4 and 5, shall not be subject to Hungarian tax. 4.     Where a resident of a Contracting State derives items of income which in accordance with the provisions of Articles 10, 11 and 12 may be taxed in the other Contracting State, the first mentioned State shall allow as a deduction from the tax on the income of that resident an amount equal to the tax paid in that other State. Such deduction shall not, however, exceed that part of the tax, as computed before the deduction is given, which is attributable to such items of income derived from that other State. 4.5. Notwithstanding the provisions of paragraphs 2 and 3 of this Article, the items of income which under the laws of a Contracting State should be taken into account for calculating the rate of tax to be imposed in that Contracting State, shall continue to be so taken into account. Article 24 NON-DISCRIMINATION 1.     The nationals of a Contracting State shall not be subjected in the other Contracting state to any taxation or any requirement connected therewith which is other or more burdensome than the taxation and connected requirements to which nationals of that other State in the same circumstances and under the same conditions are or may be subjected. 2.     The taxation on a permanent establishment which an enterprise of a Contracting State has in the other Contracting State shall not be less favourably levied in that other State than the taxation levied on enterprises of that other State carrying on the same activities in the same circumstances or under the same conditions. This provision shall not be construed as obliging a Contracting State to grant to residents of the other Contracting State any personal allowances, reliefs and reductions for taxation purposes on account of civil status or family responsibilities which it grants to its own residents. 3.     Enterprises of a Contracting State, the capital of which is wholly or partly owned or controlled, directly or indirectly, by one or more residents of the other Contracting State, shall not be subjected in the first-mentioned Contracting State to any taxation or any requirement connected therewith which is more burdensome than the taxation and connected requirements to which other similar enterprises of that first-mentioned State are or may be subjected in the same circumstances and under the same conditions. 4.     In this Article, the term "taxation" means taxes which are, the subject of this Convention. Article 25 MUTUAL AGREEMENT PROCEDURE 1.     Where a resident of a Contracting State considers that the actions of one or both of the Contracting States result or will result for him in taxation not in accordance with this Convention, he may, notwithstanding the remedies provided by the national laws of those States, present his case to the competent authority of the Contracting State of which he is a resident. The claim must be lodged within three years from the date of the assessment or of the withholding of tax at the source whichever is the later. 2.     The competent authority shall endeavour, if the objection appears to it to be justified and it it is not itself able to arrive at an appropriate solution, to resolve the case by mutual agreement with the competent authority of the other Contracting State, with a view to the avoidance of taxation not in accordance with the convention. Any agreement reached shall be implemented notwithstanding any time limits in the domestic law of the Contracting States. 3.     The competent authorities of the Contracting States shall endeavour to resolve, by mutual agreement any difficulties or doubts arising as to the interpretation or application of the Convention. They may also consult together for the elimination of double taxation in cases not provided for in the Convention. 4.     The competent authorities of the Contracting States may communicate with each other directly for the purpose of reaching an agreement in the sense of the preceding paragraphs. When it seems advisable in order to reach agreement to have an oral exchange of opinions, such exchange may take place through a Commission consisting of representatives of the competent authorities of the Contracting States. Article 26 EXCHANGE OF INFORMATION 1.     The competent authorities of the Contracting States shall exchange such information (being information and documents which are at their disposal under the respective taxation laws and obtained in the normal course of administration) as is necessary for carrying out the provisions of this Convention or for the prevention of fraud or prevention or detection of evasion or evidence of the taxes or the administration of statutory provisions against legal avoidance in relation to the taxes which are the subject of this Convention. Any information or documents so exchanged, shall be treated as secret but may be disposed to persons, (including a court or administrative body) concerned with assessment, collection, enforcement, investigation or prosecution in respect of taxes which are the subject of this Convention or any fraud connected therewith, or to persons with respect to whom the information or documents relates. 2.     The exchange of information or documents shall be either on a routine basis or on request with reference to particular cases or both. The competent authorities of the Contracting States shall agree from time to time on the list of the information or documents which shall be furnished on a routine basis. 3.     In no case shall the provisions of paragraph 1 be construed so as to impose on a Contracting State the obligation: a.     to carry out administrative measures at variance with the laws or administrative practice of that or of the other Contracting State; b.    to supply information or documents which are not obtainable under the laws or in the normal course of the administration of that or of the other Contracting State; c.     to supply information or documents which would disclose any trade, business, industrial, commercial or professional secret or trade process or information, the disclosure of which would be contrary to public policy. Article 27 MEMBERS OF DIPLOMATIC OR CONSULAR MISSIONS Nothing in this Convention shall affect the fiscal privileges of members of diplomatic or consular missions under the general rules of international law or under the provisions of special agreements. Article 28 ENTRY INTO FORCE Each of the Contracting States shall notify to the other the completion of the procedures required by its law for the bringing into force of this Convention. This Convention shall enter into force on the date of the later of these notifications and shall thereupon have effect: a.     In India: In respect of income arising in any previous year beginning on or after the first day of April next following the calendar year in which the later of the notifications is given; b.    In the Hungarian People's Republic: In respect of income arising in any taxable year beginning on or after the first day of January next following the calendar year in which the later of the notifications is given. Article 29 TERMINATION This Convention shall remain in force indefinitely but either of the Contracting States may, on or before the thirtieth day of June in any calendar year beginning after the expiration of a period of five years from the date of its entry into force, give the other Contracting State through diplomatic channels, written notice of termination and in such event, this Convention shall cease to have effect:- a.     In India: In respect of income arising in any previous year beginning on or after the 1st day of April next following the calendar year in which the notice is given; b.    In the Hungarian People's Republic: In respect of income arising in any taxable year beginning on or after the 1st day of January next following the calendar year in which the notice of termination is given. In witness whereof the undersigned, being duly authorised thereto, have signed the present Convention. Done in duplicate at New Delhi this Thirtieth day of October one thousand Nine hundred and eighty six in the English language. Sd/- Sd/- (Vishwanath Pratap Singh) (Dr. Istvan Hetenyi) Finance Minster Finance Minister For the For the Government of the Republic of India. Government of the Hungarian People's Republic. PROTOCOL The Government of the Republic of India and the Government of the Hungarian People's Republic. Having entered into a Convention for the Avoidance of Double Taxation with respect to Taxes on Income. Have agreed, at the time of signing the said Convention, on the following provisions which shall constitute an integral part there of: Concerning Article 5, the term permanent establishment shall be deemed not to include the use of facilities or the maintenance of a stock of goods or of merchandise solely for the purpose of storage, display or delivery of spare parts or components required by way of replacement under any warranty provisions of a contract under which any machinery or equipment is supplied by an enterprise of a Contracting State to an enterprise of the other Contracting Sate. In witness whereof the undersigned, being duly authorised thereto, have signed the present Protocol. Done in duplicate at New Delhi this Thirtieth day of October 1986 in English Language. Sd/- Sd/- (Vishwanath Pratap Singh) (Dr. Istvan Hetenyi) Finance Minster Finance Minister For the For the Government of the Republic of India. Government of the Hungarian People's Republic. (No. 7181/F. No. 501/14/73-FTD) V. D. ERADI, Jt. Secy.

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(Rs.80/-) Canada Double Taxation Avoidance Agreement Income-tax Act, 1961, Notification under section 90: Agreement between the Government of the Republic of India and the Government of the Republic of India and the Government of Canada for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and on capital Notification No. G.S.R. 28(E), dtd. 15.01.1998 Whereas the agreement between the Government of the Republic of India and the Government of Canada stated in the annexure below for the avoidance of double taxation and for the prevention of fiscal evasion with respect to taxes on income and on capital has entered into force on the 6th May, 1997, after the notifications by both the Contracting States of the completion of the procedures required under their laws for bringing into force of the said agreement in accordance with Article 29 of the said agreement; Now, therefore, in exercise of the powers conferred by section 90 of the Income-tax Act, 1961 (43 of 1961), and section 44A of the Wealth-tax Act, 1957 (27 of 1957), the Central Government hereby directs that all the provisions of the said agreement shall be given effect to in the Union of India. AGREEMENT BETWEEN THE GOVERNMENT OF THE REPUBLIC OF INDIA AND THE GOVERNMENT OF CANADA FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME AND ON CAPITAL The Government of the Republic of India and the Government of Canada, desiring to conclude an Agreement for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and on capital, have agreed as follows: I. SCOPE OF AGREEMENT Article 1 PERSONAL SCOPE This Agreement shall apply to persons who are residents of one or both of the Contracting States. Article 2 TAXES COVERED 1.     This Agreement shall apply to taxes on income and on capital imposed on behalf of each Contracting State, irrespective of the manner in which they are levied. 2.     There shall be regarded as taxes on income and on capital all taxes imposed on total income, on total capital, or on elements of income or of capital, including taxes on gains from the alienation of movable or immovable property. 3.     The existing taxes to which the Agreement shall apply are in particular: (a) in the case of Canada: the taxes imposed under the Income Tax Act of Canada (hereinafter referred to as "Canadian tax"); (b) in the case of India: (i) the income-tax including any surcharge thereon imposed under the Income-tax Act; (ii) the wealth-tax imposed under the Wealth-tax Act; (hereinafter referred to as "Indian tax"). 4.     The Agreement shall apply also to any identical or substantially similar taxes which are imposed by either Contracting State after the date of signature of this Agreement in addition to, or in place of, the existing taxes. 5.     At the end of each year, the Contracting States shall notify each other of any significant changes which have been made in their respective taxation laws which are the subject of this Agreement. II. DEFINITIONS Article 3 GENERAL DEFINITIONS 1.     In this Agreement, unless the context otherwise requires: a.     the term "Canada" used in a geographical sense, means the territory of Canada, including any area beyond the territorial seas of Canada which, in accordance with international law and the laws of Canada, is an area within which Canada may exercise rights with respect to the seabed and subsoil and their natural resources; b.    the term "India" used in a geographical sense, means the territory of India, including any area beyond the territorial seas of India which, in accordance with international law and the laws of India, is an area within which India may exercise rights with respect to the seabed and subsoil and their natural resources; c.     the terms "a Contracting State" and "the other Contracting State" mean, as the context requires, Canada or India; d.    the term "person" includes an individual, a partnership, a company and any other entity (including a trust) which is treated as a taxable unit under the taxation laws of a Contracting State; e.     the term "company" means any body corporate or any entity which is treated as a company or a body corporate under the taxation laws of a Contracting State; f.     the terms "enterprise of a Contracting State" and "enterprise of the other Contracting State" mean respectively an enterprise carried on by a resident of a Contracting State and an enterprise carried on by a resident of the other Contracting State; g.    the term "competent authority" means:                               i.        in the case of Canada, the Minister of National Revenue or his authorized representative;                              ii.        in the case of India, the Central Government in the Ministry of Finance (Department of Revenue) or its authorized representative; h.     the term "national" means:                               i.        any individual possessing the nationality of a Contracting State;                              ii.        any legal person, partnership and association deriving its status as such from the law in force in a Contracting State; i.      the term "tax" means Canadian tax or Indian tax, as the context requires, but shall not include any amount payable in respect of any default or omission in relation to the said taxes or which represent a penalty imposed relating to those taxes; j.      the term "international traffic" means any voyage of a ship or aircraft operated by an enterprise of a Contracting State, except where the principal purpose of the voyage is to transport passengers or goods between places in the other Contracting State. 2.     As regards the application of the Agreement by a Contracting State, any term not defined in this Agreement shall, unless the context otherwise requires, have the meaning which it has under the laws of that Contracting State relating to the taxes which are the subject of the Agreement. Article 4 RESIDENCE 1.     For the purposes of this Agreement, the term "resident of a Contracting State" means any person who, under the laws of that State, is liable to tax therein by reason of his domicile, residence, place of management or any other criterion of a similar nature. 2.     Where by reason of the provisions of paragraph 1 an individual is a resident of both Contracting States, then his status shall be determined in accordance with the following rules: a.     he shall be deemed to be a resident of the State in which he has a permanent home available to him; if he has a permanent home available to him in both States, he shall be deemed to be a resident of the State with which his personal and economic relations are closer (hereinafter referred to as his centre of vital interests); b.    if the State in which he has his centre of vital interests cannot be determined, or if he has not a permanent home available to him in either State, he shall be deemed to be a resident of the State in which he has an habitual abode; c.     if he has an habitual abode in both States or in neither of them, he shall be deemed to be a resident of the State of which he is a national; d.    if he is a national of both States or of neither of them, the competent authorities of the Contracting States shall settle the question by mutual agreement. 3.     Where by reason of the provisions of paragraph 1 a person other than an individual is a resident of both Contracting States, the competent authorities of the Contracting States shall by mutual agreement endeavour to settle the question. In the absence of such agreement, such person shall not be considered to be a resident of either Contracting State for the purposes of enjoying benefits under the Agreement. Article 5 PERMANENT ESTABLISHMENT 1.     For the purposes of this Agreement, the term "permanent establishment" means a fixed place of business through which the business of an enterprise is wholly or partly carried on. 2.     The term "permanent establishment" shall include especially: a.     a place of management; b.    a branch; c.     an office; d.    a factory; e.     a workshop; f.     a mine, an oil or gas well, a quarry or any other place of extraction of natural resources; g.    a warehouse, in relation to a person providing storage facilities for others; h.     a farm, plantation or other place where agriculture, forestry, plantation or related activities are carried on; i.      a store or premises used as a sales outlet; j.      an installation or structure used for the exploration or exploitation of natural resources, but only if so used for a period of more than 120 days in any twelve-month period; k.     a building site or construction, installation or assembly project or supervisory activities in connection therewith, where such site, project or activities (together with other such sites, projects or activities, if any) continue for a period of more than 120 days in any twelve-month period; l.      the furnishing of services other than included services as defined in Article 12, within a Contracting State by an enterprise through employees or other personnel; and only if:----                               i.        activities of that nature continue within that State for a period or periods aggregating to more than 90 days within any twelve-month period; or                              ii.        the services are performed within that State for a related enterprise (within the meaning of paragraph 1 of Article 9). 3.     Notwithstanding the preceding provisions of this article, the term "permanent establishment" shall be deemed not to include any one or more of the following: a.     the use of facilities solely for the purpose of storage, display, or occasional delivery of goods or merchandise belonging to the enterprise; b.    the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of storage, display, or occasional delivery; c.     the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of processing by another enterprise; d.    the maintenance of a fixed place of business solely for the purpose of purchasing goods or merchandise or of collecting information, for the enterprise; e.     the maintenance of a fixed place of business solely for the purpose of advertising, for the supply of information, for scientific research or for other activities which have a preparatory or auxiliary character, for the enterprise. 4.     Notwithstanding the provisions of paragraphs 1 and 2, where a person---other than an agent of an independent status to whom paragraph 5 applies---is acting in a Contracting State on behalf of an enterprise of the other Contracting State, that enterprise shall be deemed to have a permanent establishment in the first-mentioned State if: a.     he has and habitually exercises in the first-mentioned State an authority to conclude contracts on behalf of the enterprise, unless his activities are limited to those mentioned in paragraph 3 which, if exercised through a fixed place of business, would not make that fixed place of business a permanent establishment under the provisions of that paragraph; b.    he has no such authority but habitually maintains in the first-mentioned State a stock of goods or merchandise from which he regularly delivers goods or mechandise on behalf of the enterprise, and some additional activities conducted in that State on behalf of the enterprise have contributed to the sale of the goods or merchandise; or c.     he habitually secures orders in the first-mentioned State, wholly or almost wholly for the enterprise. 5.     An enterprise of a Contracting State shall not be deemed to have a permanent establishment in the other Contracting State merely because it carries on business in that other State through a broker, general commission agent, or any other agent of an independent status, provided that such persons are acting in the ordinary course of their business. However, when the activities of such an agent are devoted wholly or almost wholly on behalf of that enterprise and the transactions between the agent and the enterprise are not made under arm's length conditions, he shall not be considered an agent of independent status within the meaning of this paragraph. 6.     The fact that a company which is a resident of a Contracting State controls or is controlled by a company which is a resident of the other Contracting State, or which carries on business in that other State (whether through a permanent establishment or otherwise), shall not of itself constitute either company a permanent establishment of the other. III. TAXATION OF INCOME Article 6 INCOME FROM IMMOVABLE PROPERTY 1.     Income from immovable property (including income from agriculture or forestry) may be taxed in the Contracting State in which such property is situated. 2.     For the purposes of this Agreement, the term "immovable property" shall be defined in accordance with the law and usage of the Contracting State in which the property in question is situated. The term shall in any case include property accessory to immovable property, livestock and equipment used in agriculture and forestry, rights to which the provisions of general law respecting landed property apply, usufruct of immovable property and rights to variable or fixed payments as consideration for the working of, or the right to work, mineral deposits, sources and other natural resources; ships and aircraft shall not be regarded as immovable property. 3.     The provisions of paragraph 1 shall apply to income derived from the direct use, letting, or use in any other form of immovable property. 4.     The provisions of paragraphs 1 and 3 shall also apply to the income from immovable property of an enterprise and to income from immovable property used for the performance of independent personal services. Article 7 BUSINESS PROFITS 1.     The profits of an enterprise of a Contracting State shall be taxable only in that State unless the enterprise carries on business in the other Contracting State through a permanent establishment situated therein. If the enterprise carries on or has carried on business as aforesaid, the profits of the enterprise may be taxed in the other State but only so much of them as is attributable to: a.     that permanent establishment; and b.    sales of goods and merchandise of the same or similar kind as those sold, or from other business activities of the same or similar kind as those effected, through that permanent establishment. 2.     Subject to the provisions of paragraph 3, where an enterprise of a Contracting State carries on business in the other Contracting State through a permanent establishment situated therein, there shall in each Contracting State be attributed to that permanent establishment the profits which it might be expected to make if it were a distinct and separate enterprise engaged in the same or similar activities under the same or similar conditions and dealing wholly independently with the enterprise of which it is a permanent establishment. In any case, where the correct amount of profits attributable to a permanent establishment is incapable of determination or the ascertainment thereof presents exceptional difficulties, the profits attributable to the permanent establishment may be estimated on a reasonable basis provided that the result shall be in accordance with the principles laid down in this article. 3.     In the determination of the profits of a permanent establishment, there shall be allowed those deductible expenses which are incurred for the purposes of the business of the permanent establishment including executive and general administrative expenses, whether incurred in the State in which the permanent establishment is situated or elsewhere as are in accordance with the provisions of and subject to the limitations of the taxation laws of that State. However, no such deduction shall be allowed in respect of amounts, if any, paid (otherwise than as a reimbursement of actual expenses) by the permanent establishment to the head office of the enterprise or any of its other offices, by way of royalties, fees or other similar payments in return for the use of patents, know-how or other rights, of by way of commission or other charges, for specific services performed or for management, or, except in the case of a banking enterprise, by way of interest on moneys lent to the permanent establishment. Likewise, no account shall be taken in the determination of the profits of a permanent establishment, for amounts charged (otherwise than towards reimbursement of actual expenses), by the permanent establishment to the head office of the enterprise or any of its other offices, by way of royalties, fees or other similar payments in return for the use of patents, know-how or other rights, or by way of commission or other charges for specific services performed or for management, or, except in the case of a banking enterprise, by way of interest on moneys lent to the head office of the enterprise or any of its other offices. 4.     Subject to the provisions of paragraph 3, in so far as it has been customary in a Contracting State to determine the profits to be attributed to a permanent establishment on the basis of an apportionment of the total profits of the enterprise to its various parts, nothing in paragraph 2 shall preclude that Contracting State from determining the profits to be taxed by such an apportionment as may be customary; the method of apportionment adopted shall, however, be such that the result shall be in accordance with the principles contained in this article. 5.     No profits shall be attributed to a permanent establishment by reason of the mere purchase by that permanent establishment of goods or merchandise for the enterprise. 6.     For the purposes of the preceding paragraphs, the profits to be attributed to the permanent establishment shall be determined by the same method year by year unless there is good and sufficient reason to the contrary. 7.     Where profits include items of income which are dealt with separately in other articles of this Agreement, then the provisions of those articles shall not be affected by the provisions of this article. Article 8 SHIPPING AND AIR TRANSPORT 1.     Profits derived by an enterprise of a Contracting State from the operation by that enterprise of ships or aircraft in international traffic shall be taxable only in that State. 2.     Notwithstanding the provisions of paragraph 1 and of Article 7, profits derived by an enterprise of a Contracting State from a voyage of a ship or aircraft where the principal purpose of the voyage is to transport passengers or property between places in the other Contracting State may be taxed in that other State. 3.     For the purposes of this article, profits from the operation of ships or aircraft in international traffic shall mean profits derived by an enterprise described in paragraph 1 from the transportation by sea or air respectively of passengers, mail, livestock or goods carried on by owners or lessees or charterers of ships or aircraft including: a.     the sale of tickets for such transportation on behalf of other enterprises; b.    other activity directly connected with such transportation; and c.     the rental of ships or aircraft incidental to any activity directly connected with such transportation. 4.     Profits of an enterprise of a Contracting State described in paragraph 1 from the use, maintenance, or rental of containers (including trailers, barges, and related equipment for the transport of containers) used in connection with the operation of ships or aircraft in international traffic shall be taxable only in that State. 5.     The provisions of paragraphs 1 and 4 shall also apply to profits from participation in a pool, a joint business, or an international operating agency. 6.     For the purposes of this article, interest on funds connected with the operation of ships or aircraft in international traffic shall be regarded as profits derived from the operation of such ships or aircraft, and the provisions of Article 11 shall not apply in relation to such interest. 7.     The provisions of this article shall not apply to a drilling rig or any vessel the principal function of which is the performance of activities other than the transportation of goods or passengers. Article 9 ASSOCIATED ENTERPRISES 1.     Where---- a.     an enterprise of a Contracting State participates directly or indirectly in the management, control or capital of an enterprise of the other Contracting State, or b.    the same persons participate directly or indirectly in the management, control or capital of an enterprise of a Contracting State and an enterprise of the other Contracting State, and in either case conditions are made or imposed between the two enterprises in their commercial or financial relations which differ from those which would be made between independent enterprises, then any income which would, but for those conditions, have accrued to one of the enterprises, but, by reason of those conditions, have not so accrued, may be included in the income of that enterprise and taxed accordingly. 2.     Where a Contracting State includes in the income of an enterprise of that State---and taxes accordingly----income on which an enterprise of the other Contracting State has been charged to tax in that other State and the income so included is income which would have accrued to the enterprise of the first-mentioned State if the conditions made between the two enterprises had been those which would have been made between independent enterprises, then that other State shall make an appropriate adjustment to the amount of the tax charged therein on that income. In determining such adjustment, due regard shall be had to the other provisions of this agreement and the competent authorities of the Contracting States shall if necessary consult each other. 3.     A Contracting State shall not charge the income of an enterprise in the circumstances referred to in paragraph 1 after the expiry of the time limits provided in its national laws and, in any case, after five years from the end of the year in which the income which would be subject to such charge would, but for the conditions referred to in paragraph 1, have accrued to that enterprise. 4.     The provisions of paragraphs 2 and 3 shall not apply in the case of fraud, wilful default or neglect. Article 10 DIVIDENDS 1.     Dividends paid by a company which is a resident of a Contracting State to a resident of the other Contracting State may be taxed in that other State. 2.     However, such dividends may also be taxed in the Contracting State of which the company paying the dividends is a resident, and according to the laws of that State, but if the recipient is the beneficial owner of the dividends the tax so charged shall not exceed:--- a.     15 per cent. of the gross amount of the dividends if the beneficial owner is a company which controls directly or indirectly at least 10 per cent. of the voting power in the company paying the dividends; b.    25 per cent. of the gross amount of the dividends in all other cases. 3.     The provisions of paragraphs 1 and 2 shall not affect the taxation of the company on the profits out of which the dividends are paid. 4.     The term "dividends" as used in this article means income from shares or other rights, not being debt-claims, participating in profits, as well as income assimilated to income from shares by the taxation law of the State of which the company making the distribution is a resident. 5.     The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the dividends, being a resident of a Contracting State, carries on business in the other Contracting State of which the company paying the dividends is a resident, through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the holding in respect of which the dividends are paid is effectively connected with such permanent establishment or fixed base. In such case the provisions of Article 7 or Article 14, as the case may be, shall apply. 6.     Where a company which is a resident of a Contracting State derives profits or income from the other Contracting State, that other State may not impose any tax on the dividends paid by the company, except in so far as such dividends are paid to a resident of that other State or in so far as the holding in respect of which the dividends are paid is effectively connected with a permanent establishment or a fixed base situated in that other State, nor subject the company's undistributed profits to a tax on the company's undistributed profits, even if the dividends paid or the undistributed profits consist wholly or partly of profits or income arising in such other State. Article 11 INTEREST 1.     Interest arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State. 2.     However, such interest may also be taxed in the Contracting State in which it arises and according to the laws of that State, but if the recipient is the beneficial owner of the interest, the tax so charged shall not exceed 15 per cent. of the gross amount of the interest. 3.     Notwithstanding the provisions of paragraph 2:- a.     interest arising in a Contracting State and paid to a resident of the other Contracting State shall be exempt from tax in the first mentioned State if:--                               i.                the payer of the interest is the Government of that Contracting State or of a political sub-division or local authority thereof                              ii.                the beneficial owner of the interest is the central bank of the other Contracting State; or                             iii.                the interest is paid to an agency or instrumentality (including a financial institution) which may be agreed upon in letters exchanged between the competent authorities of the Contracting States. b.                                            i.                interest arising in India and paid to a resident of Canada shall be taxable only in Canada if it is paid in respect of a loan made, guaranteed or insured, or a credit extended, guaranteed or insured by the Export Development Corporation; or                              ii.                interest arising in Canada and paid to a resident of India shall be taxable only in India if it is paid in respect of a loan made, guaranteed or insured, or a credit extended, guaranteed or insured by the Export Import Bank of India (Exim Bank). 4.     The term "interest" as used in this article means the income from debt-claims of every kind, whether or not secured by mortgage, and in particular, income from Government securities and income from bonds or debentures, including premiums and prizes attaching to such securities, bonds or debentures, as well as income assimilated to income from money lent by the taxation law of the State in which the income arises. However, the term "interest" does not include income dealt with in Article 8 or in Article 10. 5.     The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the interest, being a resident of a Contracting State, carries on business in the other Contracting State in which the interest arises, through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the debt-claim in respect of which the interest is paid is effectively connected with such permanent establishment or fixed base. In such case the provisions of Article 7 or Article 14, as the case may be, shall apply. 6.     Interest shall be deemed to arise in a Contracting State when the payer is that State itself, a political sub-division, a local authority or a resident of that State. Where, however, the person paying the interest, whether he is a resident of a Contracting State or not, has in a Contracting State a permanent establishment or a fixed base in connection with which the indebtedness on which the interest is paid was incurred, and such interest is borne by such permanent establishment or fixed base, then such interest shall be deemed to arise in the State in which the permanent establishment or fixed base is situated. 7.     Where, by reason of a special relationship between the payer and the beneficial owner or between both of them and some other person, the amount of the interest, having regard to the debt-claim for which it is paid, exceeds the amount which would have been agreed upon by the payer and the beneficial owner in the absence of such relationship, the provisions of this article shall apply only to the last-mentioned amount. In such case, the excess part of the payments shall remain taxable according to the law of each Contracting State, due regard being had to the other provisions of this Agreement. Article 12 ROYALTIES AND FEES FOR INCLUDED SERVICES 1.     Royalties and fees for included services arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State. 2.     However, such royalties and fees for included services may also be taxed in the Contracting State in which they arise and according to the laws of that State; but if the beneficial owner of the royalties or fees for included services is a resident of the other Contracting State, the tax so charged shall not exceed: a.     in the case of royalties referred to in sub-paragraph (a) of paragraph 3 and fees for included services as defined in this article (other than services described in sub-paragraph (b) of this paragraph):                                               i.        during the first five taxable years for which this Agreement has effect,---- A.    15 per cent. of the gross amount of the royalties or fees for included services as defined in this article, where the payer of the royalties or fees is the Government of that Contracting State, a political sub-division or a public sector company; and B.    20 per cent. of the gross amount of the royalties or fees for included services in all other cases; and                                              ii.        during the subsequent years, 15 per cent. of the gross amount of the royalties or fees for included services; and b.    in the case of royalties referred to in sub-paragraph (b) of paragraph 3 and fees for included services as defined in this article that are ancillary and subsidiary to the enjoyment of the property for which payment is received under paragraph 3(b) of this article, 10 per cent. of the gross amount of the royalties or fees for included services. 3.     The term "royalties" as used in this article means:-- a.     payment of any kind received as a consideration for the use of, or the right to use, any copyright of a literary, artistic, or scientific work, including cinematograph films or work on film tape or other means of reproduction for use in connection with radio or television broadcasting, any patent, trademark, design or model, plan, secret formula or process, or for information concerning industrial, commercial or scientific experience, including gains derived from the alienation of any such right or property which are contingent on the productivity, use, or disposition thereof; and b.    payments of any kind received as consideration for the use of, or the right to use, any industrial, commercial, or scientific equipment, other than payments derived by an enterprise described in paragraph 1 or Article 8 from activities described in paragraph 3(c) or 4 of Article 8. 4.     For the purposes of this article, "fees for included services" means payments of any kind to any person in consideration for the rendering of any technical or consultancy services (including through the provision of services of technical or other personnel) if such services a.     are ancillary and subsidiary to the application or enjoyment of the right, property or information for which a payment described in paragraph 3 is received; or b.    make available technical knowledge, experience, skill, know-how, or processes or consist of the development and transfer of a technical plan or technical design. 5.     Notwithstanding paragraph 4, "fees for included services" does not include amounts paid: --- a.     for services that are ancillary and subsidiary, as well as inextricably and essentially linked, to the sale of property other than a sale described in paragraph 3(a); b.    for services that are ancillary and subsidiary to the rental of ships, aircraft, containers or other equipment used in connection with the operation of ships or aircraft in international traffic; c.     for teaching in or by educational institutions; d.    for services for the personal use of the individual or individuals making the payment; or e.     to an employee of the person making the payments or to any individual or firm of individuals (other than a company) for professional services as defined in Article 14. 6.     The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the royalties or fees for included services, being a resident of a Contracting State, carries on business in the other Contracting State in which the royalties or the fees for included services arise, through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the right, property or contract in respect of which the royalties or fees for included services are paid is effectively connected with such permanent establishment or fixed base. In such a case the provisions of Article 7 or Article 14, as the case may be, shall apply. 7.     Royalties and fees for included services shall be deemed to arise in a Contracting State when the payer is that State itself, a political sub-division, a local authority or a resident of that State. Where, however, the person paying the royalties or the fees for included services, whether he is a resident of a Contracting State or not, has in a Contracting State a permanent establishment or a fixed base in connection with which the obligation to pay the royalties or the fees for included services was incurred, and such royalties or fees for included services are borne by that permanent establishment or fixed base, then such royalties or fees for included services shall be deemed to arise in the Contracting State in which the permanent establishment or fixed base is situated. 8.     Where, by reason of a special relationship between the payer and the beneficial owner or between both of them and some other person, the amount of the royalties or fees for included services, having regard to the use, right, information or services for which they are paid, exceeds the amount which would have been agreed upon by the payer and the beneficial owner in the absence of such relationship, the provisions of this article shall apply only to the last mentioned amount. In that case, the excess part of the payments shall remain taxable according to the law of each Contracting State, due regard being had to the other provisions of this agreement. Article 13 CAPITAL GAINS 1.     Gains from the alienation of ships or aircraft operated in inter national traffic by an enterprise of a Contracting State and movable property pertaining to the operation of such ships or aircraft, shall be taxable only in that State. 2.     Gains from the alienation of any property, other than those referred to in paragraph 1 may be taxed in both Contracting States. Article 14 INDEPENDENT PERSONAL SERVICES 1.     Income derived by an individual or a firm of individuals (other than a company) who is a resident of a Contracting State in respect of professional services or other independent activities of a similar character shall be taxable only in that State. However, in the following circumstances such income may be taxed in the other Contracting State, that is to say: a.     if he has or had a fixed base regularly available to him in the other Contracting State for the purpose of performing his activities; in that case only so much of the income as is attributable to that fixed base may be taxed in that other Contracting State; or b.    if his stay in the other Contracting State is for a period or periods amounting to or exceeding in the aggregate 183 days in the relevant fiscal year; or c.     if the remuneration for the services in the other Contracting State is either derived from residents of that other Contracting State or is borne by a permanent establishment which a person not resident in that other Contracting State has in that other Contracting State and such remuneration exceeds two thousand five hundred Canadian dollars ($2,500) or its equivalent in Indian currency in the relevant fiscal year. 2.     The term "professional services" includes independent scientific, literary, artistic, educational or teaching activities as well as the independent activities of physicians, surgeons, lawyers, engineers, architects, dentists and accountants. Article 15 DEPENDENT PERSONAL SERVICES 1.     Subject to the provisions of Articles 16, 18 and 19 salaries, wages and other similar remuneration derived by a resident of a Contracting State in respect of an employment shall be taxable only in that State unless the employment is exercised in the other Contracting State. If the employment is so exercised, such remuneration as is derived therefrom may be taxed in that other State. 2.     Notwithstanding the provisions of paragraph 1, remuneration derived by a resident of a Contracting State in respect of an employment exercised in the other Contracting State shall be taxable only in the firstmentioned State if: a.     the recipient is present in the other Contracting State for a period or periods not exceeding in the aggregate 183 days in the relevant fiscal year; b.    the remuneration is paid by, or on behalf of, an employer who is not a resident of the other State; and c.     the remuneration is not borne by a permanent establishment or a fixed base which the employer has in the other State. 3.     Notwithstanding the preceding provisions of this article, remuneration in respect of an employment exercised aboard a ship or aircraft operated in international traffic by an enterprise of a Contracting State, may be taxed in that State. Article 16 DIRECTORS' FEES Directors' fees and other similar payments derived by a resident of a Contracting State in his capacity as a member of the board of directors or a similar organ of a company which is a resident of the other Contracting State may be taxed in that other State. Article 17 ARTISTES AND ATHLETES 1.     Notwithstanding the provisions of Articles 7, 14 and 15, the income derived by a resident of a Contracting State as an entertainer, such as a theatre, motion picture, radio or television artiste or a musician, or an athlete, from his personal activities as such exercised in the other Contracting State, may be taxed in that other State. 2.     Where income in respect of personal activities exercised in a Contracting State by an entertainer or an athlete accrues not to the entertainer or athlete himself but to another person which provides the activities in that State, that income may, notwithstanding the provisions of Articles 7, 14 and 15, be taxed in that Contracting State unless the entertainer, athlete, or other person establishes that neither the entertainer or athlete nor persons related thereto participate directly or indirectly in the profits of that other person in any manner, including the receipt of deferred remuneration, bonuses, fees, dividends, partnership distributions, or other distributions. 3.     The provisions of paragraphs 1 and 2 shall not apply if the visit to a Contracting State of the entertainer or the athlete is directly or indirectly supported, wholly or substantially, from the public funds of the other Contracting State, including any political sub-division, local authority or statutory body of that other State. Article 18 PENSIONS 1.     Pensions arising in a Contracting State shall be taxable only in that State. 2.     Pensions shall be deemed to arise in a Contracting State when the payer is that State itself, a political sub-division, a local authority or a resident of that State. Article 19 GOVERNMENT SERVICE 1.       a.     Salaries, wages and similar remuneration, other than a pension, paid by a Contracting State or a political sub-division or a local authority thereof to an individual in respect of services rendered to that State or sub-division or authority, in any other State (including the other Contracting State) shall be taxable only in the first-mentioned State. b.    However, such salaries, wages or similar remuneration shall be taxable only in the other Contracting State if the services are rendered in that other State and the individual is a resident of that other State who:                                       i.        is a national of that other State; or                                      ii.        did not become a resident of that other State solely for the purpose of rendering the services. 2.     The provisions of paragraph 1 shall not apply to salaries, wages and similar remuneration in respect of services rendered in connection with a business carried on by a Contracting State or a political sub-division or a local authority thereof. Article 20 STUDENTS AND APPRENTICES Payments which a student, apprentice or business trainee who is, or was immediately before visiting a Contracting State, a resident of the other Contracting State and who is present in the first-mentioned State solely for the purpose of his education or training receives for the purpose of his maintenance, education or training shall not be taxed in the first mentioned State, provided that such payments are made to him from sources outside that State. Article 21 OTHER INCOME 1.     Items of income of a resident of a Contracting State, wherever arising, not dealt with in the foregoing articles of this agreement shall be taxable only in that State. 2.     The provisions of paragraph 1 shall not apply to income, other than income from immovable property as defined in paragraph 2 of Article 6, if the recipient of such income, being a resident of a Contracting State, carries on business in the other Contracting State through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the right or property in respect of which the income is paid is effectively connected with such permanent establishment or fixed base. In such case the provisions of Article 7 or Article 14, as the case may be, shall apply. 3.     Notwithstanding the provisions of paragraphs 1 and 2, items of income of a resident of a Contracting State not dealt with in the foregoing articles, and arising in the other Contracting State, may be taxed in that other State. However, in the case of income derived from an estate or a trust (other than a trust to which contributions were deductible for tax purposes), the tax so charged shall, provided that the income is taxable in the Contracting State in which the beneficiary is a resident, not exceed 15 per cent. of the gross amount of the income. IV. TAXATION OF CAPITAL Article 22 CAPITAL 1.     Capital represented by ships and aircraft operated by a resident of a Contracting State in international traffic and by movable property pertaining to the operation of such ships and aircraft, shall be taxable only in that State. 2.     All other elements of capital of a resident of a Contracting State may be taxed in both Contracting States. V. METHODS FOR PREVENTION OF DOUBLE TAXATION Article 23 ELIMINATION OF DOUBLE TAXATION 1.     The laws in force in either of the Contracting States will continue to govern the taxation of income in the respective Contracting States except where provisions to the contrary are made in this agreement. 2.     In the case of Canada, double taxation shall be avoided as follows: a.     Subject to the existing provisions of the law of Canada regarding the deduction from tax payable in Canada of tax paid in a territory outside Canada and to any subsequent modification of those provisions---which shall not affect the general principle hereof---and unless a greater deduction or relief is provided under the laws of Canada, tax payable in India on profits, income or gains arising in India shall be deducted from any Canadian tax payable in respect of such profits, income or gains. b.    Subject to the existing provisions of the law of Canada regarding the determination of the exempt surplus of a foreign affiliate and to any subsequent modification of those provisions----which shall not affect the general principle hereof---for the purpose of computing Canadian tax, a company which is a resident of Canada shall be allowed to deduct in computing its taxable income any dividend received by it out of the exempt surplus of a foreign affiliate which is a resident of India. c.     Where a resident of Canada owns capital which, in accordance with the provisions of the agreement may be taxed in India, Canada shall allow as a deduction from the tax on capital of that resident an amount equal to the capital tax paid in India. Such deduction shall not, however, exceed that part of the capital tax (as computed before the deduction is given) which is attributable to the capital which may be taxed in India. d.    Where in accordance with any provision of the agreement income derived or capital owned by a resident of Canada is exempt from tax in Canada, Canada may nevertheless, in calculating the amount of tax on the remaining income or capital of such resident, take into account the exempted income or capital. 3.     In the case of India, double taxation shall be avoided as follows: --- a.     The amount of Canadian tax paid, under the laws of and in accordance with the provisions of the agreement, whether directly or by deduction, by a resident of India, in respect of income from sources within Canada which has been subjected to tax both in India and Canada shall be allowed as a credit against the Indian tax payable in respect of such income but in an amount not exceeding that proportion of Indian tax which such income bears to the entire income chargeable to Indian tax. b.    Where a resident of India owns capital, which, in accordance with the provisions of the agreement, may be taxed in Canada, India shall allow as a deduction from the tax on the capital of that resident an amount equal to the capital tax paid in Canada. Such deduction shall not, however, exceed that part of the capital tax (as computed before the deduction is given) which is attributable to the capital which may be taxed in Canada: Provided that income which in accordance with the provisions of the agreement is not to be subjected to tax may be taken into account in calculating the rate of tax imposed. 4.     For the purposes of paragraph 2(a), the term "tax payable in India" shall, with respect to a company which is a resident of Canada, be deemed to include any amount which would have been payable as Indian tax but for a deduction allowed in computing the taxable income or an exemption or reduction of tax granted for that year under: a.     sections 10(15)(iv), 10A, 32A (but not the part dealing with ships and aircraft), 80HH, 80HHD and 80-IA (but not the part dealing with ships) of the Income-tax Act, 1961, as amended, so far as they were in force on and have not been modified since the date of signature of the agreement, or have been modified only in minor respects so as not to affect their general character. b.    any other provision which may subsequently be made granting an exemption or reduction from tax which is agreed by the competent authorities of the Contracting State to be of a substantially similar character, if it has not been modified thereafter or has been modified only in minor respects so as not to affect its general character: Provided that relief from Canadian tax shall not be given by virtue of this paragraph in respect of income from any source if the income relates to a period starting more than ten fiscal years after the exemption from, or reduction of, Indian tax is first granted to the resident of Canada, in respect of that source. 5.     For the purposes of this article, profits, income or gains of a resident of a Contracting State which are taxed in the other Contracting State in accordance with the agreement shall be deemed to arise from sources in that other State. VI. SPECIAL PROVISIONS Article 24 NON-DISCRIMINATION 1.     Nationals of a Contracting State shall not be subjected in the other Contracting State to any taxation or any requirement connected therewith, which is other or more burdensome than the taxation and connected requirements to which nationals of that other State in the same circumstances are or may be subjected. 2.     The taxation on a permanent establishment which an enterprise of a Contracting State has in the other Contracting State shall not be less favourably levied in that other State than the taxation levied on enterprises of that other State carrying on the same activities. 3.     Nothing in this article shall be construed as obliging a Contracting State to grant to residents of the other Contracting State any personal allowances, reliefs and reductions for taxation purposes on account of civil status or family responsibilities which it grants to its own residents. 4.       a.     Nothing in this agreement shall be construed as preventing Canada from imposing on the earnings of a company, which is a resident of India, attributable to a permanent establishment in Canada, a tax in addition to the tax which would be chargeable on the earnings of a company which is a national of Canada, provided that any additional tax so imposed shall not exceed the rate specified in sub-paragraph 2(a) of Article 10 of the amount of such earnings which have not been subjected to such additional tax in previous taxation years. For the purpose of this provision, the term "earnings" means the profits attributable to a permanent establishment in Canada in a year and previous years after deducting therefrom all taxes, other than the additional tax referred to herein, imposed on such profits by Canada. The provisions of this sub-paragraph shall also apply with respect to earnings from the disposition of immovable property situated in Canada by a company carrying on a trade in immovable property without a permanent establishment in Canada but only in so far as these earnings may be taxed in Canada under the provisions of Article 6 or paragraph 2 of Article 13. b.    A company which is a resident of Canada may be subject to tax in India at a rate higher than that applicable to Indian domestic companies. The difference in tax rate shall not, however, exceed 15 percentage points. 5.     Enterprises of a Contracting State, the capital of which is wholly or partly owned or controlled, directly or indirectly, by one or more residents of the other Contracting State, shall not be subjected in the first mentioned State to any taxation or any requirement connected therewith which is other or more burdensome than the taxation and connected requirements to which other similar enterprises of the first-mentioned State, the capital of which is wholly or partly owned or controlled, directly or indirectly, by one or more residents of a third State, are or may be subjected. 6.     In this article, the term "taxation" means taxes which are the subject of this agreement. Article 25 MUTUAL AGREEMENT PROCEDURE 1.     Where a resident of a Contracting State considers that the actions of one or both of the Contracting States result or will result for him in taxation not in accordance with the provisions of this agreement, he may, irrespective of the remedies provided by the domestic law of those States, present his case in writing to the competent authority of the Contracting State of which he is a resident. The case

Download Word Document In English. (Rs.75/-) Oman Double Taxation Avoidance Agreement Income-Tax Act, 1961: Notification under section 90: Agreement Between the Republic of the India and the Sultanate of Oman for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income Notification No. G. S. R. No. 563(E), dated 23rd September, 1997. NOTIFICATION No. 10415 Whereas the annexed agreement between the Government of the Sultanate of Oman and the Government of the Republic of India for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income has entered into force on the 3rd June, 1997, after the notification by both the Contracting States to each other of the completion of the proceedings required by their laws for bringing into force of the said agreement in accordance with paragraph 1 of Article 29 of the said agreement; Now, therefore, in exercise of the powers conferred by section 90 of the Income-tax Act, 1961 (43 of 1961), the Central Government hereby directs that all the provisions of the said agreement shall be given effect to throughout the territory of India. ANNEXURE AGREEMENT BETWEEN THE REPUBLIC OF INDIA AND THE SULTANATE OF OMAN FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME The Government of the Republic of India and the Government of the Sultanate of Oman, Desiring to conclude an Agreement for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income; Have agreed as follows: Article 1 PERSONAL SCOPE This Agreement shall apply to persons who are residents of one or both of the Contracting States. Article 2 TAXES COVERED 1.     The taxes to which this agreement shall apply are: a.     In India,   the income-tax including any surcharge thereon; (hereinafter referred to as "Indian tax") b.    In the Sultanate of Oman                       i.        the company income tax;                      ii.        the profit tax on commercial and industrial establishments; (hereinafter referred to as "Omani tax") 2.     This agreement shall also apply to any identical or substantially similar taxes which are imposed by either Contracting State after the date of signature of this Agreement in addition to, or in place of, the taxes referred to in paragraph 1. The competent authorities of the Contracting States shall notify each other of any substantial changes which are made in their respective taxation laws within one year from the date of such changes. Article 3 GENERAL DEFINITIONS 1.     In this Agreement, unless the context otherwise requires: a.     the term "India" means the territory of India and includes the territorial sea and airspace above it, as well as any other maritime zone in which India has sovereign rights, other rights and jurisdictions, according to the Indian law and in accordance with international law and the U. N. Convention on the Law of the Sea; b.    the term "the Sultanate of Oman" means the territory of the Sultanate of Oman and the islands belonging thereto, including the territorial waters and any area outside the territorial waters over which the Sultanate of Oman may, in accordance with international law, exercise sovereign rights with respect to the exploration and exploitation of the natural resources of the sea bed and the sub-soil and the above-lying waters. c.     the terms "a Contracting State" and "the other Contracting State" mean India or the Sultanate of Oman as the context requires; d.    the term "company" means any body corporate or any entity which is treated as a company or body corporate under the taxation laws in force in the respective Contracting States; e.     the term "competent authority" means in the case of India, the Central Government in the Ministry of Finance (Department of Revenue), or their authorised representative; and in the case of Sultanate of Oman, the Ministry of National Economy and Supervisor of the Ministry of Finance or his authorised representative; f.     the terms "enterprise of a Contracting State" and "enterprise of the other Contracting State" mean respectively an enterprise carried on by a resident of a Contracting State and an enterprise carried on by a resident of the other Contracting State; g.    the term "fiscal year" means:                       i.        in the case of India, the "previous year" as defined under section 5 of the Income-tax Act, 1961;                      ii.        in the case of the Sultanate of Oman, the "taxable year" as defined in the Company Income Tax Law, 1981; h.     the term "international traffic" means any transport by a ship or aircraft operated by an enterprise of a Contracting State, except when the ship or aircraft is operated solely between places in the other Contracting State; i.      the term "national" means any individual possessing the nationality of a Contracting State, and any legal person, partnership or association deriving its status from the laws in force in the Contracting State; j.      the term "person" includes an individual, a company, a body of persons and any other entity which is treated as a taxable unit under the taxation laws in force in the respective Contracting States; k.     the term "tax" means Indian tax or Omani tax, as the context requires, but shall not include any amount which is payable in respect of any default or omission in relation to the taxes to which this Agreement applies or which represents a penalty imposed relating to those taxes. 2.     As regards the application of this Agreement by a Contracting State, any term not defined therein shall, unless the context otherwise requires, have the meaning which it has under the law of that Contracting State concerning the taxes to which this Agreement applies. Article 4 RESIDENT 1.     For the purposes of this Agreement, the term "resident of a Contracting State" means any person who, under the laws of that Contracting State, is liable to tax therein by reason of his domicile, residence, place of management or any other criterion of a similar nature. 2.     Where by reason of the provisions of paragraph 1, an individual is a resident of both Contracting States, then his status shall be determined as follows: a.     he shall be deemed to be a resident of the State in which he has a permanent home available to him; if he has a permanent home available to him in both States, he shall be deemed to be a resident of the State with which his personal and economic relations are closer (centre of vital interests); b.    if the State in which he has his centre of vital interests cannot be determined, or if he has not a permanent home available to him in either State, he shall be deemed to be a resident of the State in which he has an habitual abode; c.     if he has an habitual abode in both States or in neither of them, he shall be deemed to be a resident of the State of which he is a national; d.    if he is a national of both States or of neither of them, the competent authorities of the Contracting States shall settle the question by mutual agreement. 3.     Where by reason of the provisions of paragraph 1, a person other than an individual is a resident of both Contracting States, then it shall be deemed to be a resident of the State in which its place of effective management is situated. Article 5 PERMANENT ESTABLISHMENT 1.     For the purposes of this Agreement, the term "permanent establishment" means a fixed place of business through which the business of the enterprise is wholly or partly carried on. 2.     The term "permanent establishment" includes especially: a.     a place of management; b.    a branch; c.     an office; d.    a factory; e.     a workshop; f.     a mine, an oil or gas well, a quarry or any other place of extraction of natural resources; g.    a building site or construction or assembly project or supervisory activities in connection therewith; but only where such site, project or activity continues for a period of more than 6 months. 3.     Notwithstanding the preceding provisions of this article, the term "permanent establishment" shall be deemed not to include: a.     the use of facilities solely for the purpose of storage, display or delivery of goods or merchandise belonging to the enterprise; b.    the maintenance of a stock of goods or merchandise belonging to the enterprise, solely for the purpose of storage, display or delivery; c.     the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of processing by another enterprise; d.    the maintenance of a fixed place of business solely for the purpose of purchasing goods or merchandise, or of collecting information, for the enterprise; e.     the maintenance of a fixed place of business solely for the purpose of carrying on, for the enterprise, any activity of a preparatory or auxiliary character. 3.     Notwithstanding the provisions of paragraphs 1 and 2, where a person (other than an agent of independent status to whom paragraph 5 applies) is acting on behalf of an enterprise and has, and habitually exercises, in a Contracting State an authority to conclude contracts in the name of the enterprise, that enterprise shall be deemed to have a permanent establishment in that State in respect of any activities which that person undertakes for the enterprise, unless the activities of such person are limited to those mentioned in paragraph 3 of this Article which, if exercised through a fixed place of business, would not make this fixed place of business a permanent establishment under the provisions of that paragraph. 4.     An enterprise of a Contracting State shall not be deemed to have a permanent establishment in the other Contracting State merely because it carries on business in that other State through a broker, general commission agent or any other agent of an independent status, provided that such persons are acting in the ordinary course of their business. 5.     The fact that a company which is a resident of a Contracting State controls or is controlled by a company which is a resident of the other Contracting State, or which carries on business in that other Contracting State (whether through a permanent establishment or otherwise), shall not of itself constitute either company a permanent establishment of the other. Article 6 INCOME FROM IMMOVABLE PROPERTY 1.     Income derived by a resident of a Contracting State from immovable property (including income from agriculture or forestry) situated in the other Contracting State may be taxed in that other Contracting State. 2.     The term "immovable property" shall have the meaning which it has under the law of the Contracting State in which the property in question is situated. The term shall in any case include property accessory to immovable property, livestock and equipment used in agriculture and forestry, rights to which the provisions of general law respecting landed property apply, usufruct of immovable property and rights to variable or fixed payments as consideration for the working of, or the right to work, mineral deposits, sources and other natural resources. Ships, boats and aircraft shall not be regarded as immovable property. 3.     The provisions of paragraph 1 shall also apply to income derived from the direct use, letting, or use in any other form of immovable property. 4.     The provisions of paragraphs 1 and 3 shall also apply to the income from immovable property of an enterprise and to income from immovable property used for the performance of independent personal services. Article 7 BUSINESS PROFITS 1.     The profits of an enterprise of a Contracting State shall be taxable only in that State unless the enterprise carries on business in the other Contracting State through a permanent establishment situated therein. If the enterprise carries on business as aforesaid, the profits of the enterprise may be taxed in the other Contracting State but only so much of them as is attributable directly or indirectly to that permanent establishment. The words "directly or indirectly" mean, for the purposes of this article, that where a permanent establishment takes an active part in negotiating, concluding or fulfilling contracts entered into by the enterprise, then notwithstanding that other parts of the enterprise have also participated in those transactions, there shall be attributed to the permanent establishment that proportion of profits of the enterprise arising out of those contracts as the contribution of the permanent establishment to those transactions bears to that of the enterprise as a whole. 2.     Subject to the provisions of paragraph 3, where an enterprise of a Contracting State carries on business in the other Contracting State through a permanent establishment situated therein, there shall in each Contracting State be attributed to that permanent establishment the profits which it might be expected to make if it were a distinct and separate enterprise engaged in the same or similar activities under the same or similar conditions and dealing wholly independently with the enterprise of which it is a permanent establishment. 3.     In determining the profits of a permanent establishment, there shall be allowed as deductions expenses which are incurred for the purposes of the business of the permanent establishment including executive and general administrative expenses so incurred, whether in the State in which the permanent establishment is situated or elsewhere in accordance with the provisions of and subject to the limitations of the tax laws of that State. 4.     In so far as it has been customary in a Contracting State to determine the profits to be attributed to a permanent establishment on the basis of an apportionment of the total profits of the enterprise to its various parts, nothing in paragraph 2 shall preclude that Contracting State from determining the profits to be taxed by such an apportionment as may be customary; the method of apportionment adopted shall, however, be such that the result shall be in accordance with the principles contained in this Article. 5.     No profits shall be attributed to a permanent establishment by reasons of the mere purchase by that permanent establishment of goods or merchandise for the enterprise. 6.     For the purposes of the preceding paragraphs, the profits to be attributed to the permanent establishment shall be determined by the same method year by year unless there is good and sufficient reason to the contrary. 7.     Where profits include items of income which are dealt with separately in other Articles of this Agreement, then the provisions of those Articles shall not be affected by the provisions of this Article. Article 8 AIR TRANSPORT 1.     Profits derived by an enterprise of a Contracting State from the operation of aircraft in international traffic shall be taxable only in that Contracting State. 2.     The provisions of paragraph 1 shall also apply to profits from the participation in a pool, a joint business or an international operating agency. 3.     For the purposes of this Article, interest on funds directly connected with the operation of aircraft in international traffic shall be regarded as income or profits derived from the operation of such aircraft, and the provisions of Article 12 shall not apply in relation to such interest. 4.     The term "operation of aircraft" means business of transportation by air of passengers, mail, livestock or goods carried on by the owners or lessees or charterers of aircraft, including the sale of tickets for such transportation on behalf of other enterprises, the incidental lease of aircraft and any other activity directly connected with such transportation. 5.     For the purposes of this Article and notwithstanding the provisions of paragraph 1(f) of Article 3, the term "enterprise of a Contracting State" means:               i.        in case of the Sultanate of Oman, Gulf Air, Oman Aviation Services Company (SAOG) and any other enterprise carried on by a resident of the Sultanate of Oman;              ii.        in case of India, Air India, Indian Airlines and any other enterprise carried on by a resident of India. Article 9 SHIPPING 1.     Profits derived by an enterprise of a Contracting State from the operation of ships in international traffic shall be taxable only in that Contracting State. 2.     The provisions of paragraph 1 shall also apply to profits from the participation in a pool, a joint business or an international operating agency. 3.     For the purposes of this Article, interest on funds directly connected with the operation of ships in international traffic shall be regarded as income or profits from the operation of such ships and the provisions of Article 12 shall not apply in relation to such interest. 4.     The term "operation of ships" means business of transportation by sea of passengers, mail, livestock or goods carried on by the owners or lessees or charterers of ships, including the sale of tickets for such transportation on behalf of other enterprises, the incidental lease of ships and any other activity directly connected with such transportation. Article 10 ASSOCIATED ENTERPRISES Where: a.     an enterprise of a Contracting State participates directly or indirectly in the management, control or capital of an enterprise of the other Contracting State, or b.    the same persons participate directly or indirectly in the management, control or capital of an enterprise of a Contracting State and an enterprise of the other Contracting State, and in either case, conditions are made or imposed between the two enterprises in their commercial or financial relations which differ from those which would be made between independent enterprises, then any profits which would, but for those conditions, have accrued to one of the enterprises, but, by reason of those conditions, have not so accrued, may be included in the profits of that enterprise and taxed accordingly. Article 11 DIVIDENDS 1.     Dividends paid by a company which is resident of a Contracting State to a resident of the other Contracting State may be taxed in that other Contracting State. 2.     However, such dividends may also be taxed in the Contracting State of which the company paying the dividends is a resident and according to the laws of the State, but if the recipient is the beneficial owner of the dividends, the tax so charged shall not exceed: a.     10 per cent. of the gross amount of the dividends if the beneficial owner is a company which owns at least 10 per cent. of the shares of the company paying the dividends; b.    12 1/2 per cent. of the gross amount of the dividends in all other cases. This paragraph shall not affect the taxation of the company in respect of the profits out of which the dividends are paid. 3.     The term "dividends" as used in this Article means income from shares or other rights, not being debt-claims, participating in profits, as well as income from other corporate rights which is subjected to the same taxation treatment as income from shares by the laws of the Contracting State of which the company making the distribution is a resident. 4.     The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the dividends, being a resident of a Contracting State, carries on business in the other Contracting State of which the company paying the dividends is a resident, through a permanent establishment situated therein or performs in that other Contracting State independent personal services from a fixed base situated therein, and the holding in respect of which the dividends are paid is effectively connected with such permanent establishment or fixed base. In such case, the provisions of Article 7 or Article 16, as the case may be, shall apply. 5.     Where a company which is a resident of a Contracting State derives profits or income from the other Contracting State, that other Contracting State may not impose any tax on the dividends paid by the company except in so far as such dividends are paid to a resident of that other Contracting State or in so far as the holding in respect of which the dividends are paid is effectively connected with a permanent establishment or a fixed base situated in that other Contracting State, nor subject the company's undistributed profits to a tax on the company's undistributed profits, even if the dividends paid or the undistributed profits consist wholly or partly of profits or income arising in such other Contracting State. Article 12 INTEREST 1.     Interest arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other Contracting State. 2.     However, such interest may also be taxed in the Contracting State in which it arises and according to the laws of that State, but if the recipient is the beneficial owner of the interest the tax so charged shall not exceed 10 per cent. of the gross amount of the interest. 3.     Notwithstanding the provisions of paragraph 2, a.     interest arising in a Contracting State shall be exempt from tax in that State provided it is derived and beneficially owned by:                       i.        the Government, a political sub-division or a local authority of the other Contracting State; or                      ii.        the Central Bank of the other Contracting State; b.    interest arising in a Contracting State shall be exempt from tax in that Contracting State to the extent approved by the Government of that Contracting State if it is derived and beneficially owned by any person other than a person referred to in sub-paragraph (a) who is a resident of the other Contracting State provided that the transaction giving rise to the debt-claim has been approved in this regard by the Government of the first-mentioned Contracting State. 4.     The term "interest" as used in this Article means income from debt-claims of every kind, whether or not secured by mortgage and whether or not carrying a right to participate in the debtor's profits, and in particular, income from government securities and income from bonds or debentures, including premiums and prizes attaching to such securities, bonds or debentures. Penalty charges for late payment shall not be regarded as interest for the purpose of this Article. 5.     The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the interest, being a resident of a Contracting State, carries on business in the other Contracting State in which the interest arises, through a permanent establishment situated therein, or performs in that other Contracting State independent personal services from a fixed base situated therein, and the debt-claim in respect of which the interest is paid is effectively connected with such permanent establishment or fixed base. In such case, the provisions of Article 7 or Article 16, as the case may be, shall apply. 6.     Interest shall be deemed to arise in a Contracting State when the payer is that Contracting State itself, a political sub-division, a local authority or a resident of that Contracting State. However, where the person paying the interest, whether he is a resident of a Contracting State or not, has in that Contracting State a permanent establishment or a fixed base in connection with which the indebtedness on which the interest is paid was incurred, and such interest is borne by such permanent establishment or fixed base, then such interest shall be deemed to arise in the Contracting State in which the permanent establishment or fixed base is situated. 7.     Where, by reason of a special relationship between the payer and the beneficial owner or between both of them and some other person, the amount of the interest, having regard to the debt-claim for which it is paid, exceeds the amount which would have been agreed upon by the payer and the beneficial owner in the absence of such relationship, the provisions of this Article shall apply only to the last mentioned amount. In such case, the excess part of the payments shall remain taxable according to the laws of each Contracting State, due regard being had to the other provisions of this Agreement. Article 13 ROYALTIES 1.     Royalties arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other Contracting State. 2.     However, such royalties may also be taxed in that Contracting State in which they arise and according to the laws of that Contracting State, but if the recipient is the beneficial owner of the royalties, the tax so charged shall not exceed 15 per cent. of the gross amount of the royalties. 3.     The term "royalties" as used in this Article means payments of any kind received as a consideration for the use of, or the right to use, any copyright of literary, artistic or scientific work, including cinematograph films, or films or tapes used for radio or television broadcasting, any patent, trade mark, design or model, plan, secret formula or process, or for the use of, or the right to use, industrial, commercial or scientific equipment, or for information concerning industrial, commercial or scientific experience. 4.     The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the royalties, being a resident of a Contracting State, carries on business in the other Contracting State in which the royalties arise, through a permanent establishment situated therein, or performs in that other Contracting State independent personal services from a fixed base situated therein, and the right or property in respect of which the royalties are paid is effectively connected with such permanent establishment or fixed base. In such case, the provisions of Article 7 or Article 16, as the case may be, shall apply. 5.     Royalties shall be deemed to arise in a Contracting State where the payer is that Contracting State itself, a political sub-division, a local authority or a resident of that Contracting State. However, where the person paying the royalties, whether he is a resident of a Contracting State or not, has in that Contracting State a permanent establishment or a fixed base in connection with which the liability to pay the royalties was incurred, and such royalties are borne by such permanent establishment or fixed base, then the royalties shall be deemed to arise in the Contracting State in which the permanent establishment or fixed base is situated. 6.     Where by reason of special relationship between the payer and the beneficial owner or between both of them and some other person, the amount of royalties, having regard to the use, right or information for which they are paid, exceeds the amount which would have been agreed upon by the payer and the beneficial owner in the absence of such relationship, the provisions of this article shall apply only to the last mentioned amount. In such case, the excess part of the payments shall remain taxable according to the laws of each Contracting State, due regard being had to the other provisions of this Agreement. Article 14 TECHNICAL FEES 1.     Technical fees arising in a Contracting State which are derived by a resident of the other Contracting State may be taxed in that other Contracting State. 2.     However, such technical fees may also be taxed in the Contracting State in which they arise, and according to the laws of that Contracting State; but if the recipient is the beneficial owner of the technical fees, the tax so charged shall not exceed 15 per cent. of the gross amount of the technical fees. 3.     The term "technical fees" as used in this article means payments of any kind to any person, other than to an employee of the person making the payments, in consideration for any services of a technical, managerial or consultancy nature. 4.     The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the technical fees, being a resident of a Contracting State carries on business in the other Contracting State in which the technical fees arise through a permanent establishment situated therein, or performs in that other Contracting State independent personal services from a fixed base situated therein and the technical fees are effectively connected with such permanent establishment or fixed base. In such case, the provisions of Article 7 or Article 16, as the case may be, shall apply. 5.     Technical fees shall be deemed to arise in a Contracting State when the payer is that Contracting State itself, a political sub-division, a local authority, or a resident of that Contracting State. However, where the person paying the technical fees, whether he is a resident of that Contracting State or not, has in that Contracting State a permanent establishment or a fixed base in connection with which the liability to pay the technical fees was incurred, and such technical fees are borne by such permanent establishment or fixed base then the technical fees shall be deemed to arise in the Contracting State in which the permanent establishment or fixed base is situated. 6.     Where, by reason of a special relationship between the payer and the beneficial owner or between both of them and some other person, the amount of the technical fees paid exceeds, for whatever reason, the amount which would have been agreed upon by the payer and the beneficial owner in the absence of such relationship, the provisions of the article shall apply only to the last mentioned amount. In such case, the excess part of the payments shall remain taxable according to the laws of each Contracting State, due regard being had to the other provisions of this Agreement. Article 15 CAPITAL GAINS 1.     Gains derived by a resident of a Contracting State from the alienation of immovable property referred to in Article 6, and situated in the other Contracting State may be taxed in that other Contracting State. 2.     Gains from the alienation of movable property forming part of the business property of a permanent establishment which an enterprise of a Contracting State has in the other Contracting State or of movable property pertaining to a fixed base available to a resident of a Contracting State in the other Contracting State for the purpose of performing independent personal services, including such gains from the alienation of such a permanent establishment (alone or together with the whole enterprise) or of such fixed base, may be taxed in that other Contracting State. 3.     Gains from the alienation of ships or aircraft operated in international traffic or movable property pertaining to the operation of such ships or aircraft or both shall be taxable only in the Contracting State of which the alienator is a resident. 4.     Gains from the alienation of shares of the capital stock of a company the property of which consists directly or indirectly principally of immovable property situated in a Contracting State may be taxed in that Contracting State. 5.     Gains from the alienation of shares other than those mentioned in paragraph 4 in a company which is a resident of a Contracting State may be taxed in that Contracting State. 6.     Gains from the alienation of any property other than that mentioned in paragraphs 1, 2, 3, 4 and 5 shall be taxable only in the Contracting State of which the alienator is a resident. Article 16 INDEPENDENT PERSONAL SERVICES 1.     Income derived by a resident of a Contracting State in respect of professional services or other independent activities of a similar character shall be taxable only in that Contracting State except in the following circumstances when such income may also be taxed in the other Contracting State:- a.     if he has a fixed base regularly available to him in the other Contracting State for the purpose of performing his activities; in that case, only so much of the income as is attributable to that fixed base may be taxed in that other Contracting State; or b.    if his stay in the other Contracting State is for a period or periods amounting to or exceeding in the aggregate 183 days in the relevant fiscal year; in that case, only so much of the income as is derived from his activities performed in that other State may be taxed in that other State. 2.     The term "professional services" include independent scientific, literary, artistic, educational or teaching activities, as well as the independent activities of physicians, surgeons, lawyers, engineers, architects, dentists and accountants. Article 17 DEPENDENT PERSONAL SERVICES 1.     Subject to the provisions of Articles 18, 19, 20, 21, 22 and 23, salaries, wages and other similar remuneration derived by a resident of a Contracting State in respect of an employment shall be taxable only in that Contracting State unless the employment is exercised in the other Contracting State. If the employment is so exercised, such remuneration as is derived therefrom may be taxed in that other Contracting State. 2.     Notwithstanding the provisions of paragraph 1, remuneration derived by a resident of a Contracting State in respect of an employment exercised in the other Contracting State shall be taxable only in the first mentioned Contracting State if: a.     the recipient is present in the other Contracting State for a period or periods not exceeding in the aggregate 183 days in the relevant fiscal year, and b.    the remuneration is paid by, or on behalf of an employer who is not a resident of the other Contracting State, and c.     the remuneration is not borne by a permanent establishment or a fixed base which the employer has in the other Contracting State. 3.     Notwithstanding the preceding provisions of this article, remuneration derived in respect of an employment exercised aboard a ship or aircraft operated in international traffic by an enterprise of a Contracting State shall be taxable only in that Contracting State. In case of aircraft, the term "enterprise of a Contracting State" shall have the same meaning as defined in paragraph 5 of Article 8 of this Agreement. Article 18 DIRECTORS' FEES Directors' fees and other similar payments derived by a resident of a Contracting State in his capacity as a member of the board of directors of a company which is a resident of the other Contracting State may be taxed in that other Contracting State. Article 19 INCOME EARNED BY ENTERTAINERS AND SPORTSPERSONS 1.     Notwithstanding the provisions of Articles 16 and 17, income derived by a resident of a Contracting State as an entertainer such as a theatre, motion picture, radio or television artiste, or a musician or as a sportsperson, from his personal activities as such exercised in the other Contracting State, may be taxed in that other Contracting State. 2.     Where income in respect of personal activities exercised by an entertainer or a sportsperson in his capacity as such accrues not to the entertainer or sportsperson himself but to another person, that income may, notwithstanding the provisions of Articles 7, 16 and 17, be taxed in the Contracting State in which the activities of the entertainer or sportsperson are exercised. 3.     Notwithstanding the provisions of paragraph 1, income derived by an entertainer or a sportsperson who is a resident of a Contracting State from his personal activities as such exercised in the other Contracting State, shall be taxable only in the-first-mentioned Contracting State, if the activities in the other Contracting State are supported wholly or substantially from the public funds of the first mentioned Contracting State, including any of its political sub-divisions or local authorities. 4.     Notwithstanding the provisions of paragraph 2 and Articles 7, 16 and 17, where income in respect of personal activities exercised by an entertainer or a sportsperson in his capacity as such in a Contracting State accrues not to the entertainer or sportsperson himself but to another person, that income shall be taxable only in the other Contracting State, if that other person is supported wholly or substantially from the public funds of that other Contracting State, including any of its political subdivisions or local authorities. Article 20 REMUNERATION AND PENSIONS IN RESPECT OF GOVERNMENT SERVICE 1.       a.     Remuneration, other than a pension, paid by a Contracting State or a political sub-division or a local authority thereof to an individual in respect of services rendered to that Contracting State or subdivision or authority shall be taxable only in that Contracting State. b.    However, such remuneration shall be taxable only in the other Contracting State if the services are rendered in that other Contracting State and the individual is a resident of that Contracting State who                       i.        is a national of that other Contracting State; or                      ii.        did not become a resident of that other Contracting State solely for the purpose of rendering the services. 2.       a.     Any pension paid by, or out of funds created by a Contracting State or a political sub-division or a local authority thereof to an individual in respect of services rendered to that Contracting State or subdivision or authority shall be taxable only in that Contracting State. b.    However, such pension shall be taxable only in the other Contracting State if the individual is a resident of, and a national of that other Contracting State. 3.     The provisions of Articles 17, 18 and 21 shall apply to remuneration and pensions in respect of services rendered in connection with a business carried on by a Contracting State or a political sub-division or a local authority thereof. Article 21 NON-GOVERNMENT PENSIONS AND ANNUITIES 1.     Any pension, other than a pension referred to in Article 20, or any annuity derived by a resident of a Contracting State from sources within the other Contracting State may be taxed only in the first mentioned Contracting State. 2.     The term "pension" means a periodic payment made in consideration of past services or by way of compensation for injuries received in the course of performance of services. 3.     The term "annuity" means a stated sum payable periodically at stated times during life or during a specified or ascertainable period of time, under an obligation to make the payments in return for adequate and full consideration in money or money's worth. Article 22 PAYMENTS RECEIVED BY STUDENTS AND APPRENTICES 1.     A student or business apprentice who is or was a resident of a Contracting State immediately before visiting the other Contracting State and who is present in that other Contracting State solely for the purpose of his education or training, shall be exempt from tax in that other Contracting State on:- a.     payments made to him by persons residing outside that other Contracting State for the purposes of his maintenance, education or training; or b.    remuneration from employment in that other Contracting State, in an amount not exceeding US dollars 2000 or its equivalent amount during any fiscal year, provided that such employment is directly related to his studies or is undertaken for the purpose of his maintenance. 2.     The benefits of this article shall extend only for such period of time as may be reasonable or customarily required to complete the education or training undertaken, but in no event shall any individual have the benefits of this article for more than three consecutive years from the date of his first arrival in that other Contracting State. Article 23 PAYMENTS RECEIVED BY PROFESSORS, TEACHERS AND RESEARCH SCHOLARS 1.     A professor or teacher who is or was a resident of a Contracting State immediately before visiting the other Contracting State for the purpose of teaching or engaging in research, or both, at a university, college, school or other approved institution in that other Contracting State shall be exempt from tax in that other Contracting State on any remuneration for such teaching or research for a period not exceeding two years from the date of his arrival in that other Contracting State. 2.     This article shall not apply to income from research if such research is undertaken primarily for the private benefit of a specific person or persons. 3.     For the purposes of this article and Article 22, an individual shall be deemed to be a resident of a Contracting State if he is a resident in that Contracting State in the fiscal year in which he visits the other Contracting State or in the immediately preceding fiscal year. 4.     For the purposes of paragraph 1, "approved institution" means an institution which has been approved in this regard by the competent authority of the concerned Contracting State. Article 24 OTHER INCOME 1.     Subject to the provisions of paragraph 2 of this article, items of income of a resident of a Contracting State, wherever arising, which are not expressly dealt with in the foregoing articles of this Agreement, shall be taxable only in that Contracting State. 2.     The provisions of paragraph 1 of this article shall not apply to income, other than income from immovable property as defined in paragraph 2 of Article 6, if the recipient of such income, being a resident of a Contracting State, carries on business in the other Contracting State through a permanent establishment situated therein, or performs in that other Contracting State independent personal services from a fixed base situated therein, and the right or property in respect of which the income is paid is effectively connected with such permanent establishment or fixed base. In such case, the provisions of Article 7 or 16, as the case may be, shall apply. 3.     Notwithstanding the provisions of paragraphs 1 and 2, items of income of a resident of a Contracting State not dealt with in the foregoing Articles of this Agreement and arising in the other Contracting State may also be taxed in that other State. Article 25 AVOIDANCE OF DOUBLE TAXATION 1.     The law in force in either of the Contracting States will continue to govern the taxation of income in the respective Contracting States except where provisions to the contrary are made in this Agreement. 2.     Where a resident of India derives income which, in accordance with the provisions of this Agreement, may be taxed in the Sultanate of Oman, India shall allow as a deduction from the tax on the income of that resident an amount equal to the income-tax paid in the Sultanate of Oman, whether directly or by deduction. Such deduction shall not, however, exceed that part of the income-tax (as computed before the deduction is given) which is attributable to the income which may be taxed in the Sultanate of Oman. 3.     Where a resident of the Sultanate of Oman derives income which, in accordance with the provisions of this Agreement, may be taxed in India, the Sultanate of Oman shall allow as a deduction from the tax on the income of the resident an amount equal to the income-tax paid in India, whether directly or by deduction. Such deduction shall not, however, exceed that part of the income-tax (as computed before the deduction is given) which is attributable to the income which may be taxed in India. 4.     The tax payable in a Contracting State mentioned in paragraph 2 and paragraph 3 of this article shall be deemed to include the tax which would have been payable but for the tax incentives granted under the laws of the Contracting State and which are designed to promote economic development. 5.     Income which, in accordance with the provisions of this Agreement, is not to be subjected to tax in a Contracting State, may be taken into account for calculating the rate of tax to be imposed in that Contracting State. Article 26 MUTUAL AGREEMENT PROCEDURE 1.     Where a person of a Contracting State considers that the actions of one or both of the Contracting States result or will result for him in taxation not in accordance with this Agreement, he may, notwithstanding the remedies provided by the national laws of those States, present his case to the competent authority of the Contracting State of which he is a resident. This case must be presented within three years of the date of receipt of notice of the action which gives rise to taxation not in accordance with the Agreement. 2.     The competent authority shall endeavour, if the objection appears to it to be justified and if it is not itself able to arrive at an appropriate solution, to resolve the case by mutual agreement with the competent authority of the other Contracting State, with a view to the avoidance of taxation not in accordance with the Agreement. Any agreement reached shall be implemented notwithstanding any time limits in the domestic laws of the Contracting State. 3.     The competent authorities of the Contracting States shall endeavour to resolve by mutual agreement any difficulties or doubts arising as to the interpretation or application of this Agreement. They may also consult together for the elimination of double taxation in cases not provided for in this Agreement. 4.     The competent authorities of the Contracting States may communicate with each other directly for the purpose of reaching an agreement in the sense of the preceding paragraphs. When it seems advisable in order to reach agreement to have an oral exchange of opinions, such exchange may take place through a Commission consisting of representatives of the competent authorities of the Contracting States. Article 27 EXCHANGE OF INFORMATION 1.     The competent authorities of the Contracting States shall exchange such information (including documents) as is necessary for carrying out the provisions of this Agreement or of the domestic laws of the Contracting States concerning taxes covered by this Agreement, in so far as the taxation thereunder is not contrary to this Agreement, in particular for the prevention of fraud or evasion of such taxes. Any information received by a Contracting State shall be treated as secret in the same manner as information obtained under the domestic laws of that Contracting State. However, if the information is originally regarded as secret in the transmitting State, it shall be disclosed only to persons or authorities (including courts and administrative bodies) involved in the assessment or collection of, the enforcement or prosecution in respect of, or the determination of objections and appeals in relation