Download Word Document In English. (Rs.85/-) Zambia CONVENTION BETWEEN THE GOVERNMENT OF THE REPUBLIC OF INDIA AND THE GOVERNMENT OF THE REPUBLIC OF ZAMBIA FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME (Notification F. No. 11/11/65-FTD dt. 18-1-1986) G.S.R. 39(E).--- Whereas the Government of the Republic of India and the Government of the Republic of Zambia have concluded a Convention as set out in the Annexure hereto, for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income; And whereas all the requirements have been completed in India and Zambia as are necessary to give the said Convention the force of law in India and Zambia respectively, as required by paragraph 1 of Article 29 of the said Convention; And whereas the diplomatic notes to this effective have been exchanged between the said two Governments, as required by paragraph 2 of 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) 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 ZAMBIA FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME CONVENTION BETWEEN THE GOVERNMENT OF THE REPUBLIC OF INDIA AND THE GOVERNMENT OF THE REPUBLIC OF ZAMBIA 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 Zambia. 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: CHAPTER I SCOPE OF CONVENTION 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 the case of India:                       i.        the income-tax including any surcharge thereon imposed under the Income-tax Act, 1961 (43 of 1961); and                      ii.        the surtax imposed under the Companies (Profits) Surtax Act. 1964 (7 of 1964); (hereinafter referred to as " Indian tax ") b.      In the case of Zambia:                       i.        the income-tax;                      ii.        the mineral tax; and                     iii.        the personal levy (hereinafter referred to as " Zambian tax "). 2.     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 1 of this Article. 3.     At the end of each year, the competent authorities of 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 Convention, and furnish copies of relevant enactments and regulations. CHAPTER II DEFINITIONS Article 3 GENERAL DEFINITIONS 1.     In this Convention, unless the context otherwise requires: a.     the terms " a Contracting State " and " the other Contracting State " mean India or Zambia, as the context requires; b.    the term " tax " means Indian tax or Zambian 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; c.     the term " person " includes individuals, companies and all other entities which are treated as taxable units 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 company under the taxation laws in force in the respective Contracting State; e.     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; f.     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 Zambia, the Commissioner of Taxes or his authorised representative; g.    the term " nationals " means:                       i.        in respect of India: all individuals possessing the nationality of India and all legal persons, partnerships and associations deriving their status from the law in force in India;                    ii.          in respect of Zambia: all individuals possessing the nationality of Zambia and all legal persons, partnerships and associations deriving their status as such from the law in force in Zambia. 2. In the application of the provisions of this Convention by one of the Contracting States, 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 taxation therein by reason of his domicile, residence, place of management or any other cirterion of similar nature. 2.     Where by reason of the provisions of paragraph 1, an iidividual is a resident of both Contracting States, then his residential status for the purposes of this Convention 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 with which his personal and economic relations are closer (hereinafter referred to as his " centre of vital interest "); b.    If the Contracting 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 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 States shall settle the question by mutual agreement. 3.     Whereby reason of the provisions of paragraph 1, a person other than an individual is a resident of both of 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 in which the business of the enterprise is wholly or partly carried on. 2.     The term " permanent establishment " shall include: a.     a place of management; b.    a branch; c.     an office; d.    a factory; e.     a workshop; f.     a mine, a quarry, an oil field or other place of extraction of natural resources; g.    a farm, plantation or other place where, agricultural, forestry plantation or related activities are carried on; h.     a building site or construction or assembly project or supervisory activities in connection therewith where such site, project or supervisory activity continues for a period of more than 9 months; i.      a warehouse or other facilities for the maintenance of a stock of goods or merchandise belonging to the enterprise from which orders are filled. 3.     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 he purpose of purchasing goods or merchandise, for 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 or for scientific research, being activities solely of a preparatory or auxiliary character, in the trade or business of the enterprise. 4.     A person acting in a Contracting State for or on behalf of an enterprise of the other Contracting State----other than an agent of an independent status to whom the provisions of paragraph 6 apply----shall be deemed to be a permanent establishment of that enterprise in the first-mentioned State if:                       i.        he has, and habitually exercises in that State, an authority to conclude contracts for or on behalf of the enterprise, unless his activities are limited to the purchase of goods or merchandise for the enterprise; or                      ii.        he has no such authority but the habitually maintains in the first-mentioned Contracting State a stock of goods or merchandise belonging to that enterprise from which he regularly fulfils orders on behalf of the enterprise. 5.     An insurance enteprise 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 an employee or through a representative who is not an agent of independent status within the meaning of paragraph 6. 6.     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 would 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 Contracting State (whether through a permanent establishment or otherwise), shall not, of itself, constitute for either company a permanent establishment of the other. 8.     An enterprise of a Contracting State shall be deemed to have a permanent establishment in the other Contracting State if it carries on a business which consists of providing the services of public entertainers (such as theatre, motion picture, radio or television artistes and musicians) or athletes in that other Contracting State unless the enterprise is directly or indirectly supported wholly or substantially, from the public funds of the Government of the first-mentioned Contracting State in connection with the provision of such services. CHAPTER III TAXATION OF INCOME 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 and usage 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, oilwells, 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 Contracting State unless the enterprise carried 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 to that permanent establishment. 2.     If an enterprise of a Contracting State, which has a permanent establishment in the other Contracting State, sells goods or merchandise of the same or similar kind as those sold by the permanent establishment or renders services of the same or similar kind as those tendered by the permanent establishment, the profits of such activities may be attributed to the permanent establishment unless the enterprise proves that such sales or services are not attributable to the activity of the permanent establishment. 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 the 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. 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 profit of the enterprise to its various parts, nothing in paragraph 3 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. 5.     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, but this does not include any expenses which, under the law of that State, would not be allowed to be deducted by an enterprise of that State. 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 purpose of export to the enterprise of which it is the permanent establishment. 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.     The term " business profits " means income, derived by an enterprise from the carrying on of trade or business; but does not include income in the form of rents, royalties (including rents or royalties in respect of cinematographic films or video tapes for television), fees for technical services, management charges, or remuneration or fees for providing services of technical or other personnel, interest, dividends, capital gains, remuneration for labour or personal (including professional) services or income from the operation of ships or aircraft. Article 8 AIR TRANSPORT 1.     Profits dervied by an enterprise of a Contracting State from the operation of aircraft in international traffic shall be taxable only in the Contracting State in which the place of effective management of the enterprise is situated. 2.     The provisions of paragraph 1 of this Article shall also apply to a share of profits from the operation of aircraft in international traffic derived by an enterprise of a Contracting State through participation in a pooled service, in a joint air transport operation or in an international operating agency. 3.     For the purpose of paragraph 1, interest on funds connected with the operation of aircraft in international traffic shall be regarded as income from the operation of such 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 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 resident of 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 law of that State, but the tax so charged shall not exceed: a.     5 per cent of the gross amount of the dividends if the recipient is a company which owns at least 25 per cent of the shares of the company paying the dividends during the period of six months immediately preceding the date of payment of the dividends; b.    15 per cent of the gross amount of the dividends in all other cases. 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 assimilated to income from shares or any other item which is deemed to be a dividend or distribution of a company by the taxation law 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 recipient of the dividends, being a resident of a Contracting State, has in the other Contracting State, of which the company paying the dividends is a resident, a permanent establishment with which the holding by virtue of which the dividends are paid is effectively connected. In such a case, the provisions of Article 7 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 to persons who are not residents of that other State, or 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 or profits or income arising in that 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 law of that State, but the tax so charged shall not exceed 10 per cent of the gross amount of the interest. 3.     Notwithstanding the provisions of paragraph 2 interest arising in a Contracting State and paid to the Government of the other Contracting State or local Authority thereof, the Central Bank of that other Contracting State, or any agency wholly owned by that Government or local authority shall be exempt from tax of the first mentioned Contracting State. The competent authorities of the Contracting States may determine by mutual agreement any other governmental institution to which this paragraph shall apply. 4.     The term " interest " as used in this Article means income from Government securities, bonds or debentures, whether or not secured by mortgage and whether or not carrying a right to participate in profits, and other debt-claims of every kind as well as all other income assimilated to income from money lent by the taxation law of the Contracting State in which the income arises. 5.     The provisions of paragraphs 1 and 2 shall not apply if the recipient of the interest, being a resident of a Contracting State, has in the other Contracting State in which the interest arises a permanent establishment with which the debt-claim from which the interest arises is effectively connected. In such a case the provisions of Article 7 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 in connection with which the indebtedness on which the interest is paid was incurred, and such interest is borne by that permanent establishment, then such interest shall be deemed to arise in the Contracting State in which the permanent establishment is situated. 7.     Where, owing to a special relationship between the payer and the recipient 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 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 law of that State, but 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 and films or tapes 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 recipient of the royalties, being a resident of a Contracting State, has in the other Contracting State in which the royalties arises a permanent establishment with which the right or property giving rise to the royalties is electively connected. In such a case, the provisions of Article 7 shall apply. 5.     Royalties 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 royalties, whether he is a resident of a Contracting State or not, has in a Contracting State, a permanent establishment in connection with which the liability to pay the royalties was incurred, and such royalties are borne of such permanent establishment, then such royalties shall be deemed to arise in the Contracting State in which the permanent establishment is situated. 6.     Where, owing to a special relationship between the payer and the recipient or between both of them and some other person, the amount of royalties 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 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 from the alienation of immovable property, as defined in paragraph 2 of Article 6, may be taxed in the Contracting State in which such property is situated. 2.     Gains from the alienation of movable property forming part of 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 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 that other State. 3.     Notwithstanding the provisions of paragraph 2, gains derived by an enterprise of a Contracting State from the 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 derived by a resident of a Contracting State from the alienation of any property other than those mentioned in paragraphs 1, 2 and 3 shall be taxable only in that State. 5.     The term " alienation " means the sale, exchange, transfer, or relinquishment of the property or the extinguishment of any rights therein or the compulsory acquisition thereof under any law in force in the respective Contracting States. Article 14 MANAGEMENT AND CONSULTANCY FEES 1.     Management and consultancy fees 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 fees may be taxed in the Contracting State in which they arise and according to the law of the State, but the tax so charged shall not exceed 10 per cent of the gross amount of the fees. 3.     The term " management and consultancy 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 managerial technical or consultancy nature. 4.     The provisions of paragraphs 1 and 2 shall not apply it the recipient of the management and consultancy fees, being a resident of a Contracting State, has in the other Contracting State in which the fees arise a permanent establishment with which the services giving rise to the fees are effectively connected. In such a case, the provisions of Article 7 shall apply. 5.     Management and consultancy fees shall be deemed to rise 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 fees, whether he is a resident of that, State or not. has in a Contracting State a permanent establishment in connection with which the liability to pay the fees was incurred and such fees are borne by such permanent establishment then such fees shall be deemed to arise in the Contracting State in which the permanent establishment is situated. 6.     Where, owing to a special relationship between payer and the recipient or between both of them and some other person, the amount of the management and consultancy fees paid, having regard to the services 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 15 INDEPENDENT PERSONAL SERVICES 1.     Subject to the provisions of Article 16, 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 unless: a.     he has a fixed base regularly available to him in the other Contracting State for the purposes of performing his activities in which case so much of the income may be, taxed in that other State as is attributable to that fixed base; or b.    he is present in the other Contracting State for the purpose of performing his activities for a period or periods exceeding in the aggregate 183 days in relevant " previous year " in the case of India and in the relevant " charge year " in the case of Zambia and in which case so much of the income may be taxed in that other State as is attributable to the activities performed in that other State. c.     his remuneration for his services or activities in the other Contracting State derived from residents of that Contracting State exceeds K 10,000 or its equivalent in Indian currency in the taxable year (not including travel expenses directly related to the services or activities in the other Contracting State), notwithstanding that his stay in that State is for a period or periods amounting to less than 183 days during the taxable year. 2.     The term " professional services " includes independant scientific literary, artistic, educational or teaching activities, as well as the independent activities of physicians, 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 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 not exceeding in the aggregate 183 days 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 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 provisions of paragraphs 1 and 2, remuneration in respect of employment exercised aboard a ship or aircraft in international traffic may be taxed only in the Contracting State in which the place of effective management of the enterprise is situated. 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 Contracting State. Article 18 ARTISTES AND ATHLETES 1.     Notwithstanding the provisions of Articles 15 and 16, income derived by public entertainers (such as theatre, 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: Provided that such income shall not be taxed in the said Contracting State if the visit of the public entertainers or athletes to that State is supported, wholly or substantialy, from the public funds of the Government of the other Contracting State. 2.     For the purposes of this Article, the term,Government' includes a State Government, a political Government, a political sub-division, or a local or statutory authority of either Contracting State. Article 19 GOVERNMENTAL FUNCTIONS 1.     Remuneration paid by or out of funds created by a Contracting State, a political sub-division or a local authority thereof, to a citizen of that State in respect of an employment shall be taxable only in that State. 2.     Any person paid by or out of funds created by a Contracting State a political sub-division, or a local authority thereof, to any individual may be taxed in that Contracting State. 3.     The provisions of paragraph 1 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. 4.     For the purposes of this Article, the term " Government " shall include any State Government or local authority of either Contracting State and in particular the Reserve Bank of India and the Bank of Zambia. Article 20 NON-GOVERNMENT PENSIONS AND ANNUITIES 1.     Any pension (other than a pension referred to in Article 19) or 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 services rendered in the past 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 the 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 RESEARCH PERSONNEL, STUDENTS AND BUSINESS APPRENTICES 1.       a.     An individual who is a resident of one of the Contracting States at the time he becomes temporarily present in the other Contracting State for the primary purpose of---                       i.        studying at a University or other recognised educational institution in that other Contracting State, or                      ii.        securing training required to qualify him to practise a profession or professional speciality, or                     iii.        studying or doing research as a recipient of a grant allowance, or award from a Governmental religious, charitable, scientific, literary, or educational organisation, shall be exempt from tax by that other Contracting State with respect to amounts described in sub-paragraph (b) for a period not exceeding 5 taxable years from the date of his arrival in that other Contracting State. b.    The amounts referred to in sub-paragraph (a) are:                       i.        gifts abroad for the purpose of his maintenance, educational, study, research, or training;                      ii.        the grant, allowance, or award: and                     iii.        income from personal services performed in that other Contracting State in an amount not in excess of 1,500 Zambian Kwacha or its equivalent Indian Rupees for any taxable year. 2.     An individual who is a resident of one of the Contracting States and who is temporarily present in that other Contracting State as on employee of, or under contract with, a resident of the first-mentioned Contracting State, for the primary purpose of--- a.     acquiring technical, professional, or business experience from a person other than that resident of the first-mentioned Contracting State or other than a person, related to such resident, or b.    studying at a University or other recognised educational institution in that other Contracting State, shall by exempt from tax in that other Contracting state for a period not exceeding 1 year with respect to his income from personal services in an aggregate amount not in excess of 2,500 Zambian Kwacha or its equivalent Indian Rupees. 3.     An individual who is a resident of one of the Contracting States and who is temporarily present in that other Contracting State for a period not exceeding 1 year, as a participant in a programme sponsored by the Government of that other Contracting State, for the primary purpose of training, research, or study, shall be exempt from tax in that other Contracting State with respect to his income from personal services in respect of such training, research, or study performed in that other Contracting State in an aggregate amount not in excess of 3,500 Zambian Kwacha or its equivalent Indian Rupees. Article 22 PROFESSORS AND TEACHERS 1.     A professor or teacher 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 for a period not exceeding two years for the purpose of carrying out advanced study or research or for teaching at a university college, school or other educational institution shall be exempt from tax in the first-mentioned State in respect of any remuneration which he receives for such work, provided that such remuneration is derived by him from outside that 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 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 " charge year ", as the case may be, in which he visits the other Contracting State or in the immediately preceding " previous year " or the " charge year ". Article 23 INCOME NOT EXPRESSLY MENTIONED 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 except that if such income arises in the other Contracting State, it may also be taxed in that other State. CHAPTER IV METHOD FOR ELIMINATION OF DOUBLE TAXATION 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 Convention. 2.       a.     The amount of Zambian tax payable, under the laws of Zambia and in accordance with the provisions of this Convention, whether directly or by deduction by a resident of India, in respect of income from sources within Zambia which has been subjected to tax both in India and Zambia, shall be allowed as a credit against the Indian tax payable in respect of such income provided that such credit shall not exceed Indian tax (as computed before allowing any such credit), which is appropriate to the income derived from sources within Zambia; so, however, that where such resident is a company by which surtax is payable in India, the credit aforesaid shall be allowed in the first instance against income-tax payable by the company in India, and as to the balance if any against surtax payable by it in India; b.    For the purpose of the credit referred to in sub-paragraph (a) above, the term " Zambian tax payable " shall be deemed to include any amount which would have been payable as Zambian tax for any year but for any provisions granting an exemption or reduction of tax which the competent authorities of the Contracting States agree to be for the purpose of economic development. 3.     a.     The amount of Indian tax payable, under the laws of India and in accordance with the provisions of this Convention, whether directly or by deduction, by a resident of Zambia in respect of income from sources within India which has been subjected to tax both in India and Zambia shall be allowed as a credit against Zambian tax payable in respect of such income provided that such credit shall not exceed the Zambian tax (as computed before allowing my such credit), which is appropriate to the income derived from sources within India; b.    For the purposes of the credit referred to in sub-paragraph (a) above, the term " Indian tax payable " shall be deemed to include any amount by which Indian tax has been reduced by the special incentive measures set forth in the following sections of the Income-tax Act, 1961.                       i.        Section 10(4)----relating to exemption from tax on interest payable to a non-resident on any security notified by the Government of India.                      ii.        Section 10(4A)----relating to exemption from tax on interest payable to a non-resident on moneys in a Non-resident (External) Account;                     iii.        Section 10(15) (iv)----relating to exemption from tax of (a) a non-resident in respect of moneys lent by him to the Government or local authority in India; (b) an approved foreign financial institution in respect of interest on moneys lent by it to an industrial undertaking in India under a loan agreement; and (c) a non-resident in respect of interest on moneys lent or credit facilities allowed by him to an industrial undertaking in India for the purchase outside India of raw materials or capital plant and machinery or for industrial development in India;                     iv.        Section 32A----relating to investment allowance in respect of ships, aircrafts, machinery or plant;                      v.        Section 33A----relating to development allowance for planting or replanting of tea bushes;                     vi.        Section 35C----relating to the agricultural development allowances;                    vii.        Section 54E----relating to capital gains;                   viii.        Section 80CC----relating to deduction in respect of investment in certain new shares.                     ix.        Section 80HH----relating to deduction in respect of profits and gains from newly established industrial undertakings or hotel business in backward areas;                      x.        Section 80J----relating to deduction in respect of profits and gains from eligible industrial undertakings or ships or hotels;                     xi.        Section 80K----relating to deduction in respect of dividends attributable to profits and gains from eligible industrial undertakings or ships or hotels;                    xii.        any other provisions which may subsequently be enacted granting an exemption or reduction of tax which the competent authorities of the contracting States agree to be for the purposes of economic development. 4.     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. CHAPTER V SPECIAL PROVISIONS 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 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. 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 and reductions 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.     In this Article, the teem " taxation " means taxes which are the subject of this Convention. 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. 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 the avoidance of taxation not in accordance with the Convention. Any agreement reached shall be implemented notwithstanding any time limits in the nationals 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 inter-pretation or application of the Convention. They may also consult each other 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 State. Article 27 EXCHANGE OF INFORMATION 1.     The competent authorities of the Contracting States shall exchange such information or document as is necessary for carrying out the provisions of this Convention or for the prevention of evasion of taxes which are the subject of this Convention. Any information or document so exchanged shall be treated as secret but may be disclosed to persons (including a court or other authorities) concerned with the assessment, collection, enforcement, investigation or prosecution in respect of the taxes which are the subject of this Convention or to persons with respect to whom the information or document relates. 2.     The exchange of information or documents shall be either on a routine basis or on request with reference to particular cases. 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 DIPLOMATIC AND CONSULAR ACTIVITIES 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. CHAPTER VI FINAL PROVISIONS Article 29 ENTRY INTO FORCE 1.     This Convention shall come into force on the date when the last of all such things shall have been done in India and Zambia as necessary to give the Convention the force of law in India and Zambia respectively. 2.     The Contracting States shall notify each other of the completion of the requirements mentioned in paragraph 1 of this Article. The exchange of diplomatic notes certifying that this requirement has been completed shall take place at Lusaka. 3.     Upon the exchange of such diplomatic notes, this Convention shall have effect: a.     In India, in respect of income assessable for any assessment year commencing on or after the 1st day of April, 1979. b.    In Zambia, in respect of income arising for any charge year commencing on or after the 1st day of April. 1979 Article 30 TERMINATION This Convention shall continue in effect identifinitely 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 be effective: a.     in Zambia, in respect of income asessable for the assessment year commencing on the 1st day of April in the second calendar year next following the calendar year in which the notice is given, and subsequent years; b.    in India, in respect of income arising for the year of income next following the calendar year in which the notice of termination is given, and subsequent years. In witness whereof  the

Download Word Document In English. (Rs.70/-) Japan Double Taxation Avoidance Agreements Convention between the Government of the Republic of India and the Government of Japan for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income Notification No. G. S. R. 101(E), dtd. 1st March, 1990. Whereas the annexed Convention between the Government of the Republic of India and the Government of Japan for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income has come into force on the 29th December, 1989, after the exchange of instruments of ratification as required by Paragraph 1 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), 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 JAPAN 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 Japan and the Government of the Republic of India. Desiring to conclude a new 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 This Convention shall apply to persons who are residents of one or both of the Contracting States. Article 2 1.     The taxes which are the subject of this Convention are: a.     In Japan:                       i.        the income-tax; and                      ii.        the corporation-tax; (hereinafter referred to as "Japanese-tax"); b.    In India: the income-tax including any surcharge thereon (hereinafter referred to as "Indian tax"). 2.     This Convention shall also apply 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, those referred to in paragraph 1. The competent authorities of the Contracting States shall notify each other of any substantial changes which have been made in their respective taxation laws within a reasonable period of time after such changes. Article 3 1.     For the purposes of this Convention, unless the context otherwise requires: a.     the term "Japan", when used in a geographical sense, means all the territory of Japan, including its territorial sea, in which the laws relating to Japanese tax are in force, and all the area beyond its territorial sea, including the seabed and subsoil thereof, over which Japan has jurisdiction in accordance with international law and in which the laws relating to Japanese tax are in force; b.    the term "India" means the territory of India including the territorial sea and any other maritime zone in which India has sovereign rights according to the Indian law and in accordance with international law; c.     the terms "a Contracting State" and "the other Contracting State" mean Japan or India, as the context requires; d.    the term "tax" means Japanese tax or Indian tax, as the context requires; e.     the term "person" includes an individual, a company and any other body of persons; f.     the term "company" means any body corporate or any entity which is treated as a 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" nationals" means: 1.     In respect of Japan: all individuals possessing the nationality of Japan and all juridical persons created or organized under the laws of Japan and all organizations without juridical personality treated for the purposes of Japanese tax as juridical persons created or organized under the laws of Japan; 2.     In respect of India:                                           i.    all individuals possessing the nationality of India;                                          ii.    all legal persons, partnerships and associations deriving their status as such from the laws in force in India; i.      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; and j.      the term "competent authority" means:                                       i.        in Japan, the Minister of Finance or his authorized representative;                                      ii.        In India, the Central Government in the Ministry of Finance, Department of Revenue, or their authorized representative. 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 laws of that Contracting State concerning the taxes to which this Convention applies. Article 4 1.     For the purposes of this Convention, 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 head or main office or any other criterion of a similar nature. 2.     Where by reason of the provisions of paragraph 1 a person is a resident of both Contracting States, then the competent authorities of the Contracting States shall determine by mutual agreement the Contracting State of which that person shall be deemed to be a resident for the purposes of this Convention. Article 5 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 other sales outlet; and j.      an installation or structure used for the exploration of natural resources, but only if so used for a period of more than six months, 3.     A building site or construction, installation or assembly project constitutes a permanent establishment only if it lasts for more than six months. 4.     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 carries on supervisory activities in that Contracting State for more than six months in connection with a building site or construction, installation or assembly project which is being undertaken in that Contracting State. 5.     Notwithstanding the provisions of paragraphs 3 and 4 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 that Contracting State for more than six months in connection with the exploration, exploitation or extraction of mineral oils in that Contracting State. 6.     Notwithstanding the provisions of the preceding paragraphs 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. 7.     Notwithstanding the provisions of paragraphs 1 and 2, where a person --other than an agent of an independent status to whom paragraph 8 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 Contracting State an authority to conclude contracts on behalf of the enterprise, unless his activities are limited to those mentioned in paragraph 6 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; b.    he has no such authority, but habitually maintains in the first-mentioned Contracting State a stock of goods or merchandise from which he regularly delivers goods or merchandise on behalf of the enterprise; or c.     he habitually secures orders in the first-mentioned Contracting State, wholly or almost wholly for the enterprise itself or for the enterprise and other enterprises controlling, controlled by, or subject to the same common control as that enterprise. 8.     An enterprise shall not be deemed to have a permanent establishment in a Contracting State merely because it carries on business in that Contracting 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. 9.     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 1.     Income derived by a resident of a Contracting State from immovable property 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 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 immovable 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 1.     The profits of an enterprise of a Contracting State shall be taxable only in that Contracting 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 that other Contracting State but only so much of them as is directly or indirectly 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. 4.     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. 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 provisions of the preceding paragraphs of this article, 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 Convention, then the provisions of those articles shall not be affected by the provisions of this article. Article 8 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 Contracting State. 2.     Profits from the operation of ships in international traffic carried on by an enterprise of a Contracting State shall be taxable only in that Contracting State. 3.     Notwithstanding the provisions of paragraph 2, such profits may be taxed in the other Contracting State from which they are derived during a period of first ten taxable years or "previous years", as the case may be, for which this Convention shall have effect provided that the tax so charged shall not exceed: a.     during the first five years, 50 per cent., b.    during the remaining five years, 25 per cent. of the tax otherwise imposed by the taxation law of that other Contracting State. 4.     The provisions of the preceding paragraphs of this article shall also apply to profits from the participation in a pool, a joint business or an international operating agency. 5.     5.The provisions of this article shall, notwithstanding the provisions of article 2, apply to the enterprise tax in Japan and to any tax similar to the said enterprise tax if and when such a tax is imposed in India. Article 9 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 Contracting State-and taxes accordingly-profits on which an enterprise of the other Contracting State has been charged to tax in that other Contracting State and where the competent authorities of the Contracting States agree, upon consultation, that all or part of the profits so included are profits which would have accrued to the enterprise of the firstmentioned Contracting State if the conditions made between the two enterprises had been those which would have been made between independent enterprises, then that other Contracting State shall make an appropriate adjustment to the amount of the tax charged therein on those agreed profits. In determining such adjustment, due regard shall be had to the other provisions of this Convention. Article 10 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 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 that Contracting 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. The provisions of 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 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 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 Contracting 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 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 that other Contracting State. Article 11 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 Contracting State, but if the recipient is the beneficial owner of the interest, the tax so charged shall not exceed: a.     10 per cent. of the gross amount of the interest if the beneficial owner is a bank; and b.    15 per cent. of the gross amount of the interest in all other cases. 3.     Notwithstanding the provisions of paragraph 2, interest arising in a Contracting State and derived by the Government of the other Contracting State, a political sub-division or a local authority thereof, the Central Bank of that other Contracting State or any financial institution wholly owned by that Government, or by any resident of the other Contracting State with respect to debt-claims guaranteed or indirectly financed by the Government of that other Contracting State, a political sub-division or a local authority thereof, the Central Bank of that other Contracting State or any financial institution wholly owned by that Government shall be exempt from tax in the first-mentioned Contracting State. 4.     For the purposes of paragraph 3, the terms "the Central Bank" and "financial institution wholly owned by the Government" mean: a.     In the case of Japan:                       i.        the Bank of Japan;                      ii.        the Export-Import Bank of Japan;                     iii.        the Overseas Economic Cooperation Fund;                     iv.        the Japan International Co-operation Agency; and                      v.        such other financial institution the capital of which is wholly owned by the Government of Japan as may be agreed upon from time to time between the Governments of the two Contracting States; b.    In the case of India:                       i.        the Reserve Bank of India;                      ii.        the Export-Import Bank of India;                     iii.        such other financial institution the capital of which is wholly owned by the Government of India as may be agreed upon from time to time between the Governments of the two Contracting States. 5.     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. 6.     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 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 14, as the case may be, shall apply. 7.     Interest shall be deemed to arise in a Contracting State when the payer is that Contracting State itself, a political sub-division or a local authority thereof or a resident of that Contracting 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. 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 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 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 Contracting 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 Contracting State, but if the recipient is the beneficial owner of the royalties or fees for technical services, the tax so charged shall not exceed 20 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 or tapes 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 payment of any amount to any person other than payments to an employee of a person making payments and to any individual for independent personal services referred to in article 14, in consideration for the services of a managerial, technical or consultancy nature, including the provisions of services of technical or other personnel. 5.     The provisions of paragraphs I 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 Contracting 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 and fees for technical services 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 Contracting 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 Contracting 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 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 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 any property, other than immovable 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 any property, other. than immovable 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 a fixed base, may be taxed in that other Contracting State. 3.     Unless the provisions of paragraph 2 are applicable, gains derived by a resident of a Contracting State from the alienation of shares of a company which is a resident of the other Contracting State may be taxed in that other Contracting State. 4.     Gains derived by a resident of a Contracting State from the alienation of ships or aircraft operated in international traffic and any property, other than immovable property, pertaining to the operation of such ships or aircraft shall be taxable only in that Contracting State. 5.     Gains derived by a resident of a Contracting State from the alienation of any property other than that referred to in paragraphs 1 to 4, shall be taxable only in that Contracting State. Article 14 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 Contracting State unless he has a fixed base regularly available to him in the other Contracting State for the purpose of performing his activities or he is present in that other Contracting State for a period or periods exceeding in the aggregate 183 days during any taxable year or "previous year", as the case may be. If he has such a fixed base or remains in that other Contracting State for the aforesaid period or periods, the income may be taxed in that other Contracting State but only so much of it as is attributable to that fixed base or is derived in that other Contracting State during the aforesaid period or periods. 2.     The term "professional services" includes especially independent scientific, literary, artistic, educational or teaching activities as well as the independent activities of physicians, surgeons, lawyers, engineers, architects, dentists and accountants. 2.Article 15 1.     Subject to the provisions of articles 16, 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 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 firstmentioned Contracting State, if: a.     the recipient is present in that other Contracting State for a period or periods not exceeding in the aggregate 183 days during any taxable year or "previous 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 that other Contracting State; and c.     the remuneration is not borne by a permanent establishment or a fixed base which the employer has in that other Contracting State. 3.     Notwithstanding the provisions of paragraphs 1 and 2, 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 Contracting State. Article 16 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 17 1.     Notwithstanding the provisions of articles 14 and 15, income derived by an individual who is a resident of a Contracting State as an entertainer such as a theatre, motion picture, radio or television artiste, and a musician, or as an athlete, from his personal activities as such exercised in the other Contracting State, may be taxed in that other Contracting State. Such income shall, however, be exempt from tax in that other Contracting State if such activities are exercised by an individual who is a resident of the first-mentioned Contracting State purusant to a special programme for cultural exchange agreed upon between the Governments of the two Contracting States. 2.     Where income in respect of personal activities exercised in a Contracting State by an entertainer or an athlete in his capacity as such accrues not to the entertainer or athlete himself but to another person who is a resident of the other Contracting State, that income may, notwithstanding the provisions of Articles 7, 14 and 15, be taxed in the firstmentioned Contracting State. Such income shall, however, be exempt from tax in the firstmentioned Contracting State if such activities are exercised pursuant to a special programme for cultural exchange agreed upon between the Governments of the two Contracting States. Article 18 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 Contracting State. Article 19 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 a political sub-division or a 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 Contracting State and the individual is a resident of that other 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 performing the services. 2.     a.     Any pension paid by, or out of funds to which contributions are made 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 a local authority thereof, 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 15, 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 a local authority thereof. Article 20 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 Contracting State solely for the purpose of his education or training receives for the purpose of his maintenance, education or training shall be exempt from tax in the first-mentioned Contracting State, provided that such payments are made to him from outside that first-mentioned Contracting State. Article 21 1.     A professor or teacher who makes a temporary visit to a Contracting State for a period not exceeding two years for the purpose of teaching or conducting research at a university, college, school or other accredited educational institution, and who is, or immediately before such visit was, a resident of the other Contracting State shall be taxable only in that other Contracting State in respect of remuneration for such teaching or research. 2.     The article shall not apply to income from research if such research is undertaken not in the public interest but primarily for the private benefit of a specific person or persons. Article 22 1.     Items of income of a resident of a Contracting State, wherever arising, not dealt with in the foregoing articles of the 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 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 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 be taxed in that other Contracting State. Article 23 1.     The laws in force in either of the Contracting States shall continue to govern the taxation of income in the respective Contracting State except where express provisions to the contrary are made in this Convention. 2.     Double taxation shall be avoided in the case of India as follows: a.     Where a resident of India derives income which, in accordance with the provisions of this Convention, may be taxed in Japan, India shall allow as a deduction from the tax on the income of that resident an amount equal to the Japanese tax paid in Japan, whether directly or by deduction, such deduction in either case shall not, however, exceed that part of the income-tax (as computed before the deduction is given) which is attributable, as the case may be, to the income which may be taxed in Japan. Further, where such resident is a company by which surtax is payable in India, the deduction in respect of income tax paid in Japan shall be allowed in the first instance from income tax payable by the company in India and as to the balance, if any, from surtax payable by it in India. b.    Where a resident of India derives income which, in accordance with the provisions of this Convention, shall be taxable only in Japan, India may include this income in the tax base but shall allow as a deduction from the income tax that part of the income-tax which is attributable, as the case may be, to the income, derived from Japan. 3.     Subject to the laws of Japan regarding the allowance as a credit against Japanese tax of tax payable in any country other than Japan: a.     Where a resident of Japan derives income from India which may be taxed in India in accordance with the provisions of this Convention, the amount of Indian tax payable in respect of that income shall be allowed as a credit against the Japanese tax imposed on that resident. The amount of credit, however, shall not exceed that part of the Japanese tax which is appropriate to that income. b.    Where the income derived from India is a dividend paid by a company which is a resident of India to a company which is a resident of Japan and which owns not less than 25 per cent. either of the voting shares of the company paying the dividend, or of the total shares issued by that company, the credit shall take into account the Indian tax payable by the company paying the dividend in respect of its income. c.     For the purposes of the credit referred to in sub-paragraphs (a) and (b) above, there shall be deemed to have been paid by the taxpayer the amount which would have been paid as Indian tax under the laws of India and in accordance with this Convention if the Indian tax had not been reduced or relieved in accordance with the special incentive measures designed to promote economic development in India, effective on the date of signature of this Convention or which may be introduced in future in the Indian tax laws in modification of or in addition to the existing measures, provided that an agreement is made between the two Governments in respect of the scope of the benefit accorded to the taxpayer by the said measures. Article 24 1.     Nationals of a Contracting State shall 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 Contracting State in the same circumstances are or may be subjected. This provision shall, notwithstanding the provisons 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 Contracting State than the taxation levied on enterprises of that other Contracting 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. 3.     Except where the provisions of article 9, paragraph 8 of article 11, or paragraph 7 of article 12, 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 Contracting 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 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 Contracting State are or may be subjected. 5.     In this article, the term "taxation" means taxes which are the subject of this Convention. Article 25 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 laws of those Contracting 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 not in accordance with the provisions of this Convention. Any agreement reached shall be implemented notwithstanding any time limits in the domestic 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 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 of this article. Article 26 1.     The competent authorities of the Contracting States shall exchange such information 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 in so far as the taxation thereunder is not contrary to the provisions of this Convention, or for the prevention of fiscal evasion or fraud with respect to such taxes. Any information so exchanged shall be treated as secret and shall be disclosed only to persons or authorities, including courts, involved in the assessment or collection of, the enforcement or prosecution in respect of, the taxes covered by this Convention or the determination of appeals in relation thereto. 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 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; or 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 27 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 1.     This Convention shall be ratified and the instruments of ratification shall be exchanged at..... as soon as possible. 2.     This Convention shall enter into force on the thirtieth day after the date of the exchange of instruments of ratification and shall have effect: a.     In Japan: as regards income for any taxable year beginning on or after the first day of January of the calendar year next following that in which this Convention enters into force; and b.    In India: as regards income for any "previous year" beginning on or after the first day of April of the calendar year next following that in which this Convention enters into force. 3.     The Agreement between Japan and India for the avoidance of double taxation in respect of taxes on income signed at New Delhi on

Download Word Document In English. (Rs.35/-) Bangladesh Double Taxation Avoidance Agreement Bangladesh Income-tax Act, 1961: Notification under section 90: Double taxation agreement between India and Bangladesh Notification No. G. S. R. 758(E), dtd. 8.09.1992. Whereas the annexed Convention between the Government of the Republic of India and the Government of the People's Republic of Bangladesh for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income has come into force on the 27th May, 1992, after the exchange of Instruments of Ratification as required by paragraph 1 of article 31 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 PEOPLE'S REPUBLIC OF BANGLADESH 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 People's Republic of Bangladesh, 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: CHAPTER I SCOPE OF THE CONVENTION 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 existing taxes to which this Convention shall apply are-- a.     In the case of Bangladesh: the income-tax, (hereinafter referred to as "Bangladesh tax"); b.    In the case of India:                       i.                the income-tax including any surcharge thereon;                      ii.                the surtax; (hereinafter referred to as "Indian 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 the present Convention 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. CHAPTER II DEFINITIONS Article 3 GENERAL DEFINITIONS 1.     In this Convention, unless the context otherwise requires: a.     the term " Bangladesh " means the People's Republic of Bangladesh; b.    the term "India" means the Republic of India; c.     the terms " a Contracting State " and " the other Contracting State " mean Bangladesh or India as the context requires; d.    the term " tax " means Bangladesh tax or Indian tax, as the context requires; e.     the term " person " includes an individual, a company and any other entity which is treated as a taxable unit under the tax laws in force in the respective Contracting States; f.     the term " company " means any company, body corporate or any other entity which is treated as a company under the tax laws of the respective Contracting States; g.    the terms " resident of a Contracting State " and " resident of the other Contracting State " mean a person who is a resident of Bangladesh or a person who is a resident of India, as the context requires; h.     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; i.      the term "nationals" means all individuals possessing the nationality of the respective Contracting States and also all legal persons, partnerships and associations deriving their status as such from the law in force in the respective Contracting States; j.      the term " competent authority " means in the case of Bangladesh, the National Board of Revenue or their authorised representative and in the case of India, the Central Government in the Ministry of Finance (Department of Revenue) or their authorised representative; k.     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 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 RESIDENT 1.     For the purposes of this Convention, the term " resident of a Contracting State " means any person who, under the law of that State, is liable to taxation 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 case 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 with which his personal and economic relations are the closest (centre of vital interests); 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 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 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 in which the business of the 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 warehouse; g.    a mine, quarry or other place of extraction of natural resources; h.     a building site or construction or assembly project or the like which exists for more than 183 days. 3.     The term " permanent establishment " shall not be deemed to include: a.     the use of facilities solely for the purposes 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 for 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. 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 a general authority to conclude contracts for or on behalf of the enterprise, unless his activities are limited to the purchase of goods or merchandise for the enterprise, or b.    he habitually maintains in the first-mentioned State a stock of goods or merchandise belonging to the enterprise from which that person regularly delivers goods or merchandise for or on behalf of the enterprise, or c.     he habitually secures orders in the first-mentioned State, wholly or almost wholly, for the enterprise itself, or for the enterprise or other enterprises which are controlled by it or have controlling interest in it. 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 and their activities do not fall within the scope of paragraph (4)(c) above. 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 make either company a permanent establishment of the other. 7.     An enterprise of a Contracting State shall be deemed to have a permanent establishment in the other Contracting State if it carries on a business which consists of providing the services of public entertainers (such as stage, motion picture, radio or television artistes and musicians) or athletes in that other Contracting State unless such services are provided within the scope of a cultural or sports exchange programme agreed or by both the Contracting States. CHAPTER III TAXATION OF INCOME Article 6 INCOME FROM IMMOVABLE PROPERTY 1.             Income from immovable property shall be taxable only in the Contracting State in which such property is situated. 2.             The term " immovable property " shall be defined in accordance with the law and usage (having the force of 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, forestry and fishery rights to which the provisions of general law respecting landed property apply, usufruct of immovable property and rights to variable or fixed payments in cash or kind 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, then so much of the profits of the enterprise as is attributable to that permanent establishment shall be taxable only in that other Contracting State. 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. In any case, where the correct amount of profits attributable to a perrmanent establishment is incapable of determination or the ascertainment thereof presents exceptional difficulties, the profits attributable to the permanent establishment may be computed on a reasonable basis. 3.             In the determination of the profits of a permanent establishment, there shall be allowed as deductions expenses which are incurred for the purpose 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, but this does not include any expenses which, under the law of that State, would not be allowed to be deducted by an enterprise 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 laid down 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 purpose 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 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 Contracting State. 2.             The provisions of paragraph (1) shall likewise apply in respect of income derived from participation in pools of any kind by enterprises engaged in air transport. Article 9 SHIPPING 1.             Profits of an enterprise of a Contracting State derived from the other Contracting State from the operation of ships in international traffic may be taxed in that other Contracting State, but the tax chargeable in that other Contracting State on such income shall be reduced by an amount equal to fifty per cent. of such tax. 2.             The provisions of paragraph 1 shall also apply to profits derived from the participation in a pool, a joint business or an international operating agency. Article 10 ASSOCIATED ENTERPRISES Where -- 1.     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 2.     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 a 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 that Contracting 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 holds directly at least 10 per cent. of the capital of the company paying the dividends; b.    15 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, mining shares, founder's 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.

Download Word Document In English. (Rs.75/-) Singapore Double Taxation Avoidance Agreements Income-Tax Act, 1961: Notification under section 90: Agreement between the Government of Republic of the India and the Government of the Republic of Singapore for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income Notification No. G.S.R. 610(E), dtd. 8.8.1994 Whereas the annexed Agreement between the Government of the Republic of India and the Government of the Republic of Singapore for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income has entered into force on 27th May, 1994, on the notification by both the Contracting States to each other of the completion of the procedures required by their respective laws, as required by 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. AGREEMENT BETWEEN THE GOVERNMENT OF THE REPUBLIC OF INDIA AND THE GOVERNMENT OF THE REPUBLIC OF SINGAPORE 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 Singapore. 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: Income-tax including any surcharge thereon (hereinafter referred to as "Indian tax") b.      In Singapore: The income-tax (hereinafter referred to as "Singapore 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. 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; b.    the term "Singapore" means the Republic of Singapore; c.     the terms "a Contracting State" and "the other Contracting State" mean India or Singapore 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 Singapore, the Minister for 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, "previous year" as defined under section 3 of the Income-tax Act, 1961;                      ii.        in the case of Singapore, calendar year; 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 as such 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 Singapore 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 is a resident of a Contracting State in accordance with the taxation laws of that State. 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 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 soliciting and receiving orders; 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 fiscal year. 3.     A building site or construction, installation or assembly project constitutes a permanent establishment only if it continues for a period of more than 183 days in any fiscal year. 4.     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 carries on supervisory activities in that Contracting State for a, period of more than 183 days in any fiscal year in connection with a building site or construction, installation or assembly project which is being undertaken in that Contracting State. 5.     Notwithstanding the provisions of paragraphs 3 and 4, 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 that Contracting State for a period of more than 183 days in any fiscal year in connection with the exploration, exploitation or extraction of mineral oils in that Contracting State. 6.     An enterprise shall be deemed to have a permanent establishment in a Contracting State if it furnishes services, other than services referred to in paragraphs 4 and 5 of this Article and technical services as defined in Article 12, within a Contracting State through employees or other personnel, but only if: a.     activities of that nature continue within that Contracting State for a period or periods aggregating to more than 90 days in any fiscal year; or b.    activities are performed for a related enterprise (within the meaning of Article 9 of this Agreement) for a period or periods aggregating to more than 30 days in any fiscal year. 7.     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; 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 through which the business of the enterprise is wholly or partly carried on. 8.     Notwithstanding the provisions of paragraphs 1 and 2, where a person--other than an agent of an independent status to whom paragraph 9 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; 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; or 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 controlling, controlled by, or subject to the same common control, as that enterprise. 9.     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. 10.  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 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 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 I 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 directly or indirectly 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. 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 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 taxation laws of that State. 4.     In so far as it has been customary in the 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. 8.     For the purpose of paragraph 1, the term "directly or indirectly attributable to the permanent establishment" includes profits arising from transactions in which the permanent establishment has been involved and such profits shall be regarded as attributable to the permanent establishment to the extent appropriate to the part played by the permanent establishment in those transactions, even if those transactions are made or placed directly with the overseas head office of the enterprise rather than with the permanent establishment. Article 8 SHIPPING AND AIR TRANSPORT 1.     Profits derived by an enterprise of a Contracting Slate from the operation of ships or 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 engaged in the operation of ships or aircraft. 3.     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.     For the purposes of this Article, profits from the operation of ships or aircraft in international traffic shall mean profits derived from the transportation by sea or air of passengers, mail, livestock or goods carried on by the owners or lessees or charterers of the ships or aircraft, including profits from: a.     the sale of tickets for such transportation on behalf of other enterprises; b.    the incidental lease of ships or aircraft used in such transportation; c.     the use, maintenance or rental of containers (including trailers and related equipment for the transport of containers) in connection with such transportation; and d.    any other activity directly connected with such transportation. 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. 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.     10 per cent. of the gross amount of the dividends if the beneficial owner is a company which owns at least 25 per cent. of the shares of the company paying the dividends; b.    15 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.     Notwithstanding the provisions of paragraph 2 of this Article, as long as Singapore does not impose a tax on dividends in addition to the tax chargeable on the profits or income of a company, dividends paid by a company which is a resident of Singapore to a resident of India shall be exempt from any tax in Singapore which may be chargeable on dividends in addition to the tax chargeable on the profits or income of the company. 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 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. 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 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. 7.       a.     Dividends shall be deemed to arise in India if they are paid by a company which is a resident of India; b.    Dividends shall be deemed to arise in Singapore:                       i.        if they are paid by a company which is a resident of Singapore; or                      ii.        if they are paid by a company which is a resident of Malaysia out of profits arising in Singapore and qualifying as dividends arising in Singapore under Article VII of the Agreement for the Avoidance of Double Taxation between Singapore and Malaysia signed on 26th December, 1968. 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); b.    15 per cent. of the gross amount of the interest in all other cases. 3.     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. 4.     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. 5.     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, a statutory body 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. 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 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 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 sevices 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.     in the case of royalties referred to in paragraph 3(a) and fees for technical services as defined in this Article (other than services described in sub-paragraph (b) of this paragraph), 15 per cent. of the gross amount of the royalties and fees; b.    in the case of royalties referred to in paragraph 3(b) and fees for technical services as defined in this Article that are ancillary and subsidiary to the enjoyment of property for which royalties under paragraph 3(b) are received, 10 per cent. of the gross amount of the royalties and fees. 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: a.     any copyright of a 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 information concerning industrial, commercial or scientific experience, including gains derived from the alienation of any such right, property or information; b.    any industrial, commercial or scientific equipment, other than payments derived by an enterprise from activities described it! paragraph 4(b) or 4(c) of Article 8. 4.     The term "fees for technical services" as used in this Article means payments of any kind to any person in consideration for services of a managerial, technical or consultancy nature (including the provision of such services through 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, which enables the person acquiring the services to apply the technology contained therein; or c.     consist of the development and transfer of a technical plan or technical design, but excludes any service that does not enable the person acquiring the service to apply the technology contained therein. For the purposes of (b) and (c) above, the person acquiring the service shall be deemed to include an agent, nominee, or transferee of such person. 5.     Notwithstanding paragraph 4, "fees for technical services" does not include payments: 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; 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; f.     for services rendered in connection with an installation or structure used for the exploration or exploitation of natural resources referred to in paragraph 2(j) of Article 5; g.    for services referred to in paragraphs 4 and 5 of Article 5. 6.     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 14, as the case may be, shall apply. 7.     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, a statutory body 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. 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 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. 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 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 principally, directly or indirectly, 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 of this Article and paragraph 3(b) of Article 12 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 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 90 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" 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, 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 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 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.     In the case of a recipient who satisfies all the conditions under sub-paragraphs (a), (b) and (c) of paragraph 2, if his remuneration is deductible as an expense against fees for technical services (dealt with under Article 12) derived by his employer and the employer has no permanent establishment in the other Contracting State, the remuneration may, notwithstanding the provisions of paragraph 2, be taxed in that State. In such case, the tax so charged shall not exceed 15 per cent. of the gross amount of the remuneration. 4.     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 16 DIRECTORS' FEES 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. 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 artiste 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 or in connection with personal activities exercised by an artiste or sportsperson accrues not to the artiste 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 artistes or sportspersons are exercised. 3.     Notwithstanding the provisions of paragraph 1, income derived by an artiste 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 State, if the activities in the other State are supported-wholly or substantially from the public funds of the first-mentioned State, including any of its political sub-divisions, local authorities or statutory bodies. 4.     Notwithstanding the provisions of paragraph 2 and Articles 7, 14 and 15, where income in respect of or in connection with personal activities exercised by an artiste or a sportsperson in a Contracting State accrues not to the artiste 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 State, including any of its political sub-divisions, local authorities or statutory bodies. Article 18 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, a local authority or a statutory body thereof to an individual in respect of services rendered to that State or sub-division or authority or body 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, a local authority or a statutory body thereof to an individual in respect of services rendered to that State or sub-division or authority or body 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 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 or a statutory body thereof. Article 19 NON-GOVERNMENT PENSIONS AND ANNUITIES 1.     Any pension, other than a pension referred to in Article 18, 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 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 20 STUDENTS AND TRAINEES 1.     An individual who is or was a resident of a Contracting State immediately before making a visit to the other Contracting State and is temporarily present in the other State solely:- a.     as a student at a recognised university, college, school or other similar recognised educational institution in that other State; b.    as a business or technical apprentice; or c.     as a recipient of a grant, allowance or award for the primary purpose of study, research or training from the Government of either State or from a scientific, educational, religious or charitable organisation or under a technical assistance programme entered into by the Government of either State;shall be exempt from tax in that other State on:                               i.        all remittances from abroad for the purposes of his maintenance, education, study, research or training;                              ii.        the amount of such grant, allowance or award; and                             iii.        any remuneration not exceeding United States dollars five hundred per month or its equivalent in local currency in respect of services in that other State provided the services are performed in connection with his study, research or training or are necessary 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 21 TEACHERS AND RESEARCHERS 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, visits that other State for a period not exceeding two years solely for the purpose of teaching or research or both at such educational institution shall be exempt from tax in that other State on any remuneration for such teaching or research. 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. Article 22 INCOME OF GOVERNMENT 1.     The Government of a Contracting State shall be exempt from tax in the other Contracting State in respect of income derived by that Government from sources within the other State. 2.     The types of income to which paragraph 1 applies are:- a.     dividends under Article 10; b.    interest under Article 11; and c.     any other income or gains derived from transactions not pursuant to the conduct of commercial activities. 3.     For the purposes of paragraph 1, the term "Government":-- a.       In the case of Singapore means the Government of Singapore and shall include:                       i.        the Monetary Authority of Singapore and the Board of Commissioners of Currency;                      ii.        the Government of Singapore Investment Corporation Pte. Ltd. to the extent it is not engaged in the conduct of commercial activities;                     iii.        a statutory body not engaged in the conduct of commercial activities;                     iv.        any other institution or body as may be agreed from time to time between the competent authorities of the Contracting States; a.       In the case of India means the Government of India and shall include:                       i.        the Government of the States and the Union Territories of India;                      ii.        the Reserve Bank of India or any of its subsidiaries which is not engaged in the conduct of commercial activities;                     iii.        a statutory body not engaged in the conduct of commercial activities;                     iv.        any other institution or body as may be agreed from time to time between the competent authorities of the Contracting States. Article 23 INCOME NOT EXPRESSLY MENTIONED Items of income which are not expressly mentioned in the foregoing Articles of this Agreement may be taxed in accordance with the taxation laws of the respective Contracting States. Article 24 LIMITATION OF RELIEF 1.     Where this Agreement provides (with or without other conditions) that income from sources in a Contracting State shall be exempt from tax, or taxed at a reduced rate in that Contracting State and under the laws in force in the other Contracting State the said income is subject to tax by reference to the amount thereof which is remitted to or received in that other Contracting State and not by reference to the full amount thereof, then the exemption or reduction of tax to be allowed under this Agreement in the first-mentioned Contracting State shall apply to so much of the income as is remitted to or received in that other Contracting State. 2.     However, this limitation does not apply to income derived by the Government of a Contracting State or any person approved by the competent authority of that State for the purpose of this paragraph. The term 'Government" includes its agencies and statutory bodies. Article 25 AVOIDANCE OF DOUBLE TAXATION 1.     The laws in force in either of the Contracting States shall continue to govern the taxation of income in the respective Contracting States except where express provision to the contrary is 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 Singapore, India shall allow as a deduction from the tax on the income of that resident an amount equal to the Singapore tax paid, whether directly or by deduction. Where the income is a dividend paid by a company which is a resident of Singapore to a company which is a resident of India and which owns directly or indirectly not less than 25 per cent. of the share capital of the company paying the dividend, the deduction shall take into account the Singapore tax paid in respect of the profits out of which the dividend is paid. Such deduction in either case shall not, however, exceed that part of the tax (as computed before the deduction is given) which is attributable to the income which may be taxed in Singapore. 3.     For the purposes of paragraph 2 of this Article, "Singapore tax paid" shall be deemed to include any amount of tax which would have been payable but for the reduction or exemption of Singapore tax granted under: a.     the provisions of the Economic Expansion Incentives (Relief from Income Tax) Act and the provisions of sections 13(1)(t), 13(1)(u), 13(1)(v), 13(2),

Download Word Document In English. (Rs.75/-) Sweden Double Taxation Avoidance Agreement Income-tax Act, 1961:Notification under section 90:Convention between the Government of the Kingdom of Sweden and the Government of the Republic of India for avoidance of Double Taxation and prevention of Fiscal Evasion with respect to taxes on income and on capital Notification No. G. S. R. 705(E), dtd. 17.12.1997. Whereas the annexed Convention between the Government of the Kingdom of Sweden 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 and on capital shall come into force, on the twenty-fifth day of the December, 1997, thirty days after the receipt of the letter of the notifications by both the Contracting States to each other 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 under 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. CONVENTION BETWEEN THE GOVERNMENT OF THE REPUBLIC OF INDIA AND THE GOVERNMENT OF THE KINGDOM OF SWEDEN 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 Kingdom of Sweden, 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 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 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 existing taxes to which this Convention shall apply are in particular: a.       In India:                       i.        the income-tax, including any surcharge thereon; and                      ii.        the tax on capital (the wealth-tax); (hereinafter referred to as 'Indian tax'); b.      In Sweden:                       i.        the income-tax, including the national income-tax (den statliga inkomstskatten), including the tax on employees at sea (sjomansskatten) and the withholding tax on dividends (kupongskatten);                      ii.        the income-tax on non-residents (den sarskilda inkomstskatten for utomlands bosatta);                     iii.        the income-tax on non-resident artistes and athletes (den sarskilda inkomstskatten for utomlands bosatta artister m.fl.);                     iv.        the municipal income-tax (den kommunala inkomstskatten);                      v.        the tax on means intended for expansion purposes (expansions-medelsskatt); and                     vi.        the net wealth-tax; (hereinafter referred to as 'Swedish 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 existing 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 '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 U. N. Convention on the Law of the Sea; b.    the term 'Sweden' means the Kingdom of Sweden and, when used in a geographical sense, includes the national territory, the territorial sea of Sweden as well as other maritime areas over which Sweden in accordance with international law exercises sovereign rights or jurisdiction; c.     the terms 'a Contracting State' and 'the other Contracting State' mean India or Sweden, 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 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; 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 laws in force in a Contracting State; i.      the term 'competent authority' means:                       i.        in India: the Central Government in the Ministry of Finance (Department of Revenue) or their authorised representative;                      ii.        in Sweden: the Minister of Finance, his authorised representative or the authority which is designated as a competent authority for the purposes of this Convention; j.      the term 'fiscal year' means:                       i.        in the case of India, 'previous year' as defined under section 3 of the Income-tax Act, 1961;                      ii.        in the case of Sweden, 'beskattningsar' as defined under section 3 of the Kommunalskattelagen, 1928; k.     the term 'tax' means Indian tax or Swedish 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, and also includes that State, a political sub-division, a local authority and any governmental body or agency thereof. In the case of a partnership or estate, the term applies only to the extent that the income derived by such partnership or estate 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. The term 'resident of a Contracting State' 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 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 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 PERMANANT 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 sales outlet; h.     a warehouse in relation to a person providing storage facilities for others; and i.      a farm, plantation or other place where agricultural, forestry, plantation or related activities are carried on. 3.     A building site or a construction, assembly or installation project or supervisory activities in connection therewith constitute a permanent establishment only if such site, project or activities continue for a period of more than six months. 4.     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 for or to be used in the prospecting for, or extraction or exploitation of mineral oils in that State. 5.     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 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. 6.     Notwithstanding the provisions of paragraphs (1) and (2), where a person - other than an agent of an independent status to whom paragraph (8) 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 (5) 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. 7.     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 (8) applies. 8.     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. 9.     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, buildings, 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 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 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.     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.     With respect to profits derived by the Swedish, Danish and Norwegian air transport consortium Scandinavian Airlines System (SAS), the provisions of paragraph (1) shall apply only to such part of the profits as corresponds to the participation held in that consortium by SAS Sverige AB, the Swedish partner of Scandinavian Airlines System (SAS). 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. 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 reason of those conditions, have not so accrued, may be included in the profits of that enterprise and taxed accordingly. Any case resulting in double taxation from the application of this Article may be resolved under the mutual agreement procedure. 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.     Notwithstanding the provisions of paragraph (1), 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. 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 beneficial owner of the interest is a resident of the other Contracting State, the tax so charged shall not exceed 10 per cent of the gross amount of the interest. 3.     Notwithstanding the provisions of paragraph (2), interest arising in a Contracting State shall be exempt from tax in that Contracting State provided it is derived and beneficially owned by, or derived in connection with a loan or credit extended or endorsed by:                       i.        the Government, a political sub-division, a statutory body, or a local authority of the other Contracting State; or                      ii.        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); and in the case of Sweden, the Swedish International Development Authority (SIDA), SWEDECORP (Styrelsen for internationellt naringslivsbistand), Swedfund International AB or The Swedish Export Credits Guarantee Board (Exportkreditnamnden); or                     iii.        any other institution as may be agreed from time to time between the competent authorities of the 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), (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-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 a resident of that State. Where, however, the person paying the interest, whether he is 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 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.     Notwithstanding the provisions of paragraph (1), 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 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, any patent, trade mark, design or model, plan, secret formula or process, 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 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 be taxed in that other State. 2.     Gains from 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 a resident 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. With respect to gains derived by the Swedish, Danish and Norwegian air transport consortium Scandinavian Airlines System (SAS), the provisions of this paragraph shall apply only to such portion of the gains as corresponds to the participation held in that consortium by SAS Sverige AB, the Swedish partner of Scandinavian Airlines System (SAS). 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 the alienator is a resident, provided that such resident is subject to tax thereon in that State. If the resident is not subject to tax thereon, then such gains may be taxed in the other Contracting State. 6.     Notwithstanding the provisions of paragraph (5), gains from the alienation of any property derived by an individual who has been a resident of a Contracting State and who has become a resident of the other Contracting State, may be taxed in the first-mentioned State if the alienation of the property occurs at any time during the four years next following the date on which the individual has ceased to be a resident of the first-mentioned State. 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 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 the other State; or b.    if his stay in the other State is for a period or periods aggregating 183 days or more in any twelve-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. 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 twelve-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. Where a resident of Sweden derives remuneration in respect of an employment exercised aboard an aircraft operated in international traffic by the Swedish, Danish and Norwegian air transport consortium Scandinavian Airlines System (SAS), such remuneration shall be taxable only in Sweden. 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 SPORTSPERSONS 1.     Notwithstanding the provisions of Articles 14 and 15, income derived by a resident of a Contracting State as an artiste, 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 artiste or a sportsperson in his capacity as such accrues not to the artiste 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 artiste 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 artistes or sportspersons if the visit to that State is substantially supported by public funds of the other Contracting State or of a political sub-division or local authority thereof. In such a case, the income shall be taxable only in the Contracting State of which the artiste or sportsperson is a resident. ARTICLE 18 PENSIONS, SOCIAL SECURITRY PAYMENTS AND ANNUITIES 1.     Subject to the provisions of paragraph 2 of Article 19, pensions and other similar remuneration in consideration of past employment, annuities and payments under the Social Security legislation arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in the first-mentioned Contracting 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.     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 Articles 15, 16 and 18 shall apply to 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 AND APPRENTICES 1.     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 shall, besides loans on preferential conditions provided by the Government or any other organisation or institution of the first-mentioned State and tax exempt grants and scholarships, be exempt from tax in the first-mentioned State on: a.     payments made to him by persons residing outside the first-mentioned State for the purpose of his maintenance, education or training; and b.    remuneration from employment in the first-mentioned State, in an amount not exceeding 10,000 (ten thousand) Swedish Kronor 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 and that his stay in the first-mentioned State lasts for six months or more. 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 five consecutive years from the date of his first arrival in the first-mentioned State. ARTICLE 21 PROFESSORS, TEACHERS AND RESEARCH SCHOLARS 1.     A professor, teacher or research scholar who, visits a Contracting State at the invitation of that State or of a university, college, school or other such institution of that State not exceeding three years solely for the purpose of teaching, giving lectures or carrying out research at such institution and who is, or was immediately before that visit, a resident of the other Contracting State shall be exempt from tax in the first-mentioned State, provided that the institution in question receives approval from the competent authority of that Contracting State, on his remuneration for such activity during the period of the first year from the date of his arrival and in the subsequent years, the exemption will be only in respect of remuneration derived by him from outside that 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. 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, 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 paragraph (1), if a resident of a Contracting State derives income from sources within the other Contracting State in the form 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. 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 represented by ships and aircraft operated in international traffic by an enterprise of a Contracting State and by movable property pertaining to the operation of such ships and aircraft, shall be taxable only in that State. With respect to capital owned by the Swedish, Danish and Norwegian air transport consortium Scandinavian Airlines System (SAS), the provisions of this Article shall apply only to such part of the capital as relates to the participation held in that consortium by SAS Sverige AB, the Swedish partner of SAS. ARTICLE 24 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 India, double taxation shall be avoided as follows: a.     Where a resident of India derives income which, in accordance with the provisions of this Convention, may be taxed in Sweden, India shall allow as a deduction from the tax on the income of that resident an amount equal to the income-tax paid in Sweden whether directly or by way of deduction at source. Such amount 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 Sweden. b.    Where a resident of India derives income which, in accordance with the provisions of this Convention, shall be taxable only in Sweden, India may, when determining the graduated rate of Indian tax, take into account the income which shall be taxable only in Sweden. c.     Where a resident of India owns assets which, in accordance with the provisions of this Convention, may be taxed in Sweden, India shall allow as a deduction from tax on such assets an amount equal to the tax on net wealth paid in Sweden in respect of such assets. Such deduction shall not, however, exceed that part of the Indian tax on net wealth as computed before the deduction is given which is appropriate to the assets which may be taxed in Sweden. 3.       In the case of Sweden, double taxation shall be avoided as follows: a.     Where a resident of Sweden derives income which under the laws of India and in accordance with the provisions of this Convention may be taxed in India, Sweden shall allow-subject to the provisions of the laws of Sweden concerning credit for foreign tax (as it may be amended from time to time without changing the general principle hereof)-as a deduction from the tax on such income, an amount equal to the Indian tax paid in respect of such income. b.    Where a resident of Sweden derives income which, in accordance with the provisions of this Convention, shall be taxable only in India, Sweden may, when determining the graduated rate of Swedish tax, take into account the income which shall be taxable only in India. c.     Notwithstanding the provisions of sub-paragraph (a) of this paragraph, dividends paid by a company which is a resident of India to a company which is a resident of Sweden shall be exempt from Swedish tax according to the provisions of Swedish law governing the exemption of tax on dividends paid to Swedish companies by subsidiaries abroad. d.    For the purposes of sub-paragraph (a) of this paragraph, the term 'Indian tax paid' shall be deemed to include the Indian tax which would have been paid but for any exemption or reduction of tax granted under incentive provisions contained in the Indian law designed to promote economic development to the extent that such exemption or reduction is granted for profits from industrial or manufacturing activities or from agriculture, fishing or tourism (including restaurants and hotels) provided that the activities have been carried out within India. For the purpose of sub-paragraph (c) of this paragraph, a tax of 15 per cent calculated on a Swedish tax base shall be considered to have been paid for such activities under those conditions mentioned in the previous sentence. The competent authorities may agree to extend the application of this provision also to other activities. e.     The provisions of paragraph (d) shall apply only for the first ten years during which this Convention is effective. This period may be extended by a mutual agreement between the competent authorities. f.     Where a resident of Sweden owns assets which, in accordance with the provisions of this Convention, may be taxed in India, Sweden shall allow as a deduction from tax on such assets an amount equal to the tax on net wealth paid in India in respect of such assets. Such deduction shall not, however, exceed that part of the Swedish tax on net wealth as computed before the deduction is given which is appropriate to the assets which may be taxed in India. 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. 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

Download Word Document In English. (Rs.75/-) Syria Double Taxation Avoidance Agreement Syria Agreement between the Government of India and the Government of the Syrian Arab Republic for the avoidance of Double Taxation and the prevention of Fiscal evasion with respect to taxes on Income Notification No.G.S.R. 508(E) dtd. 25.6.1985 Whereas the annexed Agreement between the Government of India and the government of the Syrian Arab Republic for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income has entered into force on the notification by both the Contracting States to each other of completion of the procedures required by their respective laws, as required by 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 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. AGREEMENT BETWEEN THE GOVERNMENT OF THE REPUBLIC OF INDIA AND THE GOVERNMENT OF THE SYRIAN ARAB 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 Syrian Arab Republic- 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: CHAPTER I SCOPE OF THE AGREEMENT Article 1 PERSONAL SCOPE This agreement shall apply to persons who are residents of one or both the Contracting states. Article 2 TAXES COVERED 1.     The taxes to which this Agreement shall apply are: a.       In the case of India; 1.     the income-tax including any surcharge thereon imposed under the Income-tax act, 1961 (43 of 1961); 2.     the Surtax imposed under the Companies (Profits) Surtax Act, 1964 (7 of 1964); (hereinafter referred to as " Indian tax "). b.      In the case of the Syrian Arab Republic; The income-tax imposed by the Legislative Decree No. 85 of 1949 and its amendments (hereinafter referred to as " Syrian tax "). 2.     The Agreement shall also apply to any identical or substantially similar taxes which are imposed by either Contracting State the date of signature of the present in addition to, or in place of, the taxes 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 taxation laws. CHAPTER II DEFINITIONS 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 air-space above it as well as any other maritime zone referred to in the Territorial Waters Continental Shelf, Exclusive Economic Zone and other Maritime Zones Act 1976 (Act No. 80 of 1976), in which India has sovereign rights and to the extent that these rights can be exercised therein as if such maritime zone is a part of the territory of India; b.    the term 'Syria' means the territory of Syria and includes the territorial waters adjacent to and the airspace above it; c.     The term " a Contracting State " and " the other Contracting State " mean India or Syria as the context requires; d.    the term " tax " means Indian tax or Syrian 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 anybody corporate or any entity which is treated as a company under the taxation laws in force in the respective Contracting States; 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 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 Syria, the Ministry of Finance or their authorised representative; 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. 2.     In the application of the provisions of this Agreement by a 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 Agreement. Article 4 Fiscal Domicile 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 residential status for the purposes of this agreement 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 with which his personal and economic relations are closer (hereinafter referred to as his " centre of vital interests "); b.    if the Contracting 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 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 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 States shall settle the question by mutual agreement. 3.     Where by reason of the provisions of paragraph 1, a person other than a 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 Establishments 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, a quarry, an oilfield or other place of extraction of natural resources; g.    a farm, plantation or other place where agricultural, forestry, plantation or related activities are carried on; h.     a building site or construction or assembly project or supervisory activities in connection therewith, where such site project or supervisory activity continues for a period of more than twelve months. 3.     Notwithstanding the proceeding provisions of this Article, the term " pemanent 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 advertising; for the supply of information or for scientific research, being activities solely of a preparatory or auxiliary character in the trade or business of the enterprise. 4.     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 exercise, in a Contracting State, an authority to conclude contracts for or on behalf 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 the purchase of goods or merchandise 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, 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. 7.     An enterprise of a Contracting State shall be deemed to have a permanent establishment in the other Contracting State if it carries on a business which consists of providing the services of Public entertainers (such as theatre, motion picture, radio or television artistes and musicians) or athletes in that other Contracting State unless the enterprise is directly or indirectly supported wholly or substantially, from the public funds of the Goverment of the first-mentioned Contracting State in contracting with the provision of such services. CHAPTER III TAXATION OF INCOME 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 accodance with the law and usage of the Contracting Sate in which the property is situated. The term shall in any case include property accessory to immovable property, livestock 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, oil wells, quarries and other places of extraction of natural resources. Ships and airccraft 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 Contracting State. However, if the enterprise carries oil business in the other Contracting State through a permanent establishment situated therein the profits of the enterprise may be taxed in the other Contracting State but only so much of them as is attributable to that permanent establishment. This is without prejudice to the right of taxation of such profits by the first-mentioned Contracting State according to its tax laws. 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 district 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. Where the correct amount of profits attributable to a permanent establishment cannot be determined or the determination thereof presents exceptional difficulties, the profits attributable to the permanent establishment may be estimated on reasonable basis. 3.     In the determination the profits of a permanent establishment, there shall be allowed as deductions reasonable 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. 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 income or 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 the Contracting State in which the place of effective management of the enterprise (that is, the head office) is situated. 2.     The provisions of paragraph shall also apply to a share of profits from the operation of aircraft in international traffic derived by an enterprise of a Contracting State through 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 persons and their luggage, livestock, goods or mail, carried on by the carriers 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 other activity directly connected with such transportation. 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 the Contracting State in which the place of effective management of the enterprise (that is, the head office) is situated. 2.     The provisions of paragraph 1 shall also apply to a share of profits from the operation of ships in international traffic derived by an enterprise of a Contracting State through participation in a Pool, a joint business or an international operating agency. 3.     Paragraph 1 shall not apply to profits arising as a result of coastal traffic. Article 10 Associated Enterprises Where: a.     an enterprise of a Contracting State participates dicectly 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 shall not be taxable in the first-mentioned Contracting State. 2.     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 assimilated to income from shares or any other income which is deemed to be a dividend or distribution of a company by the taxation laws of the Contracting State of which the company making the distribution is a resident. 3.     The provisions of paragraph 1 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 15, as the case may be, shall apply. 4.     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 to persons who are not resident of that other State, or subject the company's undistributed profits to a tax on undistributed profits even if the dividends paid or the distributed profits consists wholly or partly of profits or income arising in that 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 the tax so charged shall not exceed 7.5 per cent of the gross amount of the interest. 3.     Notwithstanding the provisions of paragraph 2, interest arising in a Contracting State and paid to the Government of the other Contracting State or a local authority thereof, the Central Bank of that other Contracting State or any agency wholly owned by that Government or local authority shall be exempt from tax in the first-mentioned Contracting State. The competent authorities of the Contracting State may determine by mutual agreement any other Government institution to which this paragraph shall apply. 4.     The term " interest " as used in this Article means income from Government securities, bonds or debentures, whether or not secured by mortgage and whether or not carrying a right to participate in profits, and other debt-claims of every kind as well as other income assimilated to income from money lent by the taxation laws of the Contracting State in which the income arises. 5.     The provisions of paragraph 1 and 2 shall not apply if the recipient 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 which the payer is the Government of that Contracting State or 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 in connection with which the indebtedness on which the interest is paid was incurred, and such interest is borne by that permanent establishment, then such interest shall be deemed to arise in the Contracting State in which the permanent establishment is situated. 7.     Where, owing to special relationship between the payer and the recipient 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 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 Agreement. 8.     For the purposes of this Article and Article 13, the term " Government " shall include, in the case of India, any State Government. 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 State. 2.     However, such royalties may also be taxed the Contracting State in which they arise and according to the law of that State, but 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 recipient 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 a 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 the Government of that Contracting State or 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 Contracting State in which the permanent establishment or fixed base is situated. 6.     Where, owing to a special relationship between the payer and the recipient or between both of them and some other person, the amount of royalties 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 that case, the excess par 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 1.     Gains from the alienation of immovable property, as defined in paragraph 2 of Article 6, may be taxed in the Contracting State in which such property is situated. 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 a fixed base, may be taxed in that other State. 3.     Notwithstanding the provisions of paragraph 2, gains derived by an enterprise of a Contracting State from the alienation of ships or aircraft which it operates in international traffic and movable property pertaining to the operation of such ships or aircraft shall be taxable only in that State. 4.     Gains derived by a resident of a Contracting State from the alienation of any property other than that mentioned in paragraphs 1, 2 and 3 shall be taxable only in that State. 5.     The term " alienation " means the sale, exchange, transfer, or relinquishment of the property or the extinguishment of any rights therein or the compulsory acquisition thereof under any law in force in the respective Contracting States. 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 unless:--- a.     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 may be taxed in that other State as is attributable to that fixed base; or b.    he is present in the other Contracting State for the purpose of performing his activities for a period or periods 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 may be taxed in that other State as is attributable to the activities performed in that other State. 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 employmen 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 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 in respect of an employment exercised abroad a ship or aircraft operated in international traffic shall be taxable only in the Contracting State in which the place of effective management of the enterprise is situated. 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 Contracting State. Article 18 Artistes and Athletes 1.     Notwithstanding the provisions of Articles 15 and 16, income derived by public entertainers (such as theatre, 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:- Provided that such income shall not be taxed in the said Contracting State 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. 2.     For the purpose of this Article, the term " Government " shall include any local or statutory authority of either Contracting State and, in the case of India, any State Government also. Article 19 Government Functions 1.     Remuneration (not being a pension) paid by the Government of a Contracting State to any individual who is a citizen of that State in respect of services rendered in the discharge of governmental functions in the other Contracting State shall be taxable only in the first-mentioned Contracting State. 2.     Any pension paid by the Government of one of the Contracting States to any individual who is a citizen of either of the two Contracting States shall be taxable only in the Contracting State which is paying the pension. 3.     The provisions of paragraphs 1 and 2 shall not apply to remuneration and pensions 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. 4.     For the purposes of this Article, the term " Government " shall include any local or statutory authority of either Contracting State and in particular the Reserve Bank of India and the Central Bank of Syria. In the case of India, it shall also include any State Government. Article 20 Non-Government Pensions and Annuities 1.     Any pension (other than a pension referred to in Article 19) or 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 services rendered in the past 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 Students and Apprentices 1.     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 Contracting State solely for the purpose of his education or training, shall be exempt from tax in the first-mentioned Contracting State on: a.     payments made to him by persons residing outside that first-mentioned Contracting State for the purposes of his maintenance, education or training; and b.    remuneration from employment in that first-mentioned Contracting State, in an amount not in excess of Rs. 15,000 or its equivalent in Syrian currency during any " previous year " or the " year of income ", 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 Article shall extend only for such period of time as may be reasonable or customarily 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 the first-mentioned Contracting State. Article 22 Professors and Teachers 1.     A professor or teacher who visits a Contracting State for the purpose of teaching or engaging in research, or both, at a university, college, school or other approved institution in that Contracting State and who is, or was immediately before such visit, a resident of the other Contracting State, shall be exempt from tax in the first-mentioned Contracting State on any remuneration for such teaching or research for a period not exceeding 12 months from the date of his arrival in that Contracting State. 2.     This Article shall not apply to income from research if such research is undertaken primarily for the private benefits of a specific person or persons. 3.     For the purposes of this Article and Article 21, an individual shall be deemed to be a resident of 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 the " year of income ". 4.     For purpose 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 Income not Expressly Mentioned 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. CHAPTER IV METHODS FOR ELIMINATION OF DOUBLE TAXATION Article 24 Elimination of Double Taxation 1.     The laws in force in either of the Contracting State, shall continue to govern the taxation of income in the respective Contracting State 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 Syria, India shall allow as a deduction from the tax on the income of that resident, an amount equal to the income-tax paid in Syria, whether directly or by deduction. Such deduction shall not, however, exceed that part of the Indian tax (as computed before the deduction is given) which is attributable to the income which may be taxed in Syria. Further, where such resident is a company by which surtax is payable in India, the deduction aforesaid shall be allowed in the first instance from income-tax payable by the company in India and as to the balance, if any, from surtax payable by it in India. 3.     For the purposes of the deduction referred to in paragraph 2, " income-tax paid in Syria " shall be deemed to include any amount which would have been payable as Syrian tax but for a deduction allowed in computing the taxable income or an exemption or reduction from tax granted for that year under:               i.        the Legislative Decree 103 of 1952 regarding ex-computing the taxable income or an exemption or Law No. 44 of 1959 regarding relief to contractors engaged in development projects during the period of execution, so far as the aforesaid Legislative Decree and Article were in force on, and have not been modified since, the date of the signature of this Agreement, or have been modified only in minor respects so as not to affect their general character; or              ii.        any other provision which may be enacted after the fifth day of March, 1982 granting a deduction in computing the taxable income or an exemption or reduction from tax which the competent authorities of the Contracting States agree to be for the purposes of economic development, if it has not been modified thereafter or has been modified only in minor respects so as not to affect its general character. 4.     Where as resident of Syria derives income which, in accordance with the provisions of this Agreement, may be taxed in India, Syria 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. Such deduction shall not, however, exceed that part of the Syrian tax (as computed before the deduction is given) which is attributable to the income which may be taxed in India. 5.     For the purposes of the deduction referred to in paragraph 4, " income-tax paid in India " shall 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 from tax granted for that year under:               i.        sections 10(4), 10(4A), 10(6)(viia), 10(15)(iv), 10(28), 10A, 32A, 33A, 35P, 54E, 80HH, 80HHA, 80-1, 80L of the Income-tax Act, 1961 (43 of 1961)), so far as they were in force on, and have not been modified since, the date of the signature of this Agreement, or have been modified only in minor respects so as not to affect their general character, or              ii.        any other provision which may be enacted after the fifth day of March, 1982 granting a deduction in computing the taxable income or an exemption or reduction from tax which the competent authorities of the Contracting States agree to be for the purposes of the economic development, if it has not been modified thereafter or has been modified only in minor respects so as not to affect its general character. 6.     Where under this Agreement a resident of a Contracting State is exempt from tax in that Contracting State in respect of income derived from the other Contracting State, then the first-mentioned Contracting State may, in calculating tax on the remaining income of that person, apply the rate of tax which would have been applicable if the income exempted from tax in accordance with this Agreement had not been so exempted. CHAPTER V SPECIAL PROVISIONS Article 25 Non-Discrimination 1.     The nationals of a Contracting State shall not be subjected in the other Contracting State to any taxable 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. 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 and reduction 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.     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 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 this 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 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 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 or document as is necessary for carrying out the provisions of this Agreement or for the prevention of evasion of taxes which are the subject of this Agreement. Any information or document so exchanged shall be treated as secret but may be disclosed to persons (including a court or other authorities) concerned with the assessment, collection, enforcement, investigation or prosecution in respect of the taxes which are the subject of this Agreement, or the persons with respect to whom the information or document relates. 2.     The exchange of information or documents shall be 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 be the provisions of paragraph I 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 disclosed 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 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. CHAPTER VI FINAL PROVISIONS Article 29 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. The Agreement shall enter into force on the date of the latter of these notifications and shall thereupon have effect: a.       In India:               i.        in the case of profits derived from operation of aircraft (referred to in Article 8), as respects such profits as are derived after the first day of April, 1975;              ii.        in the case of any other income, as respects income assessable for any assessment year commencing on or after the first day of April, 1983. b.      In Syria:               i.        in the case of profits derived from operation of aircraft (referred to in Article 8) as respect such profits as are derived after the first day of April, 1975;              ii.        in the case of any other income, as respects income assessable for any assessment year commencing on or after the first day of January, 1983. Article 30 Termination This Agreement shall continue in effect 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 be effective: a.     in India, in respect of income assessable for the assessment year commencing on the 1st day of April in the second calendar year next following the calendar year in which the notice is given, and subsequent years; b.    in Syria, in respect of income assessable for any assessment year commencing on the 1st day of January in the second calendar Year next following the calendar year in which the notice is given, and subsequent years. In witness whereof the undersigned, being duly authorised thereto, have signed the present Agreement. Done on this Sixth day of February one thousand nine hundred and eighty four in New Delhi on two original copies each in the Arabic, Hindi 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. Sd/-- Sd/- PRANAB MUKHERJEE Dr. HAMDI-AL-SAQA For the Government of India For the Government of the Republic of Syria Sd/-- M. S. NARAYANAN, Addl. Secy [F. No. 501/1/75-FTD]

FORM O-7 [See rule 8D] Report of valuation of machinery and plant ALL QUESTION TO BE ANSWERED BY THE REGISTERED VALUER. IF ANY PARTICULAR QUESTION DOES NOT APPLY TO THE PROPERTY UNER VALUATION, HE MAYINDICATE SO. IF THE SPACE PORVIDED NOT SUFFICIENT, DETAILS MAY BE ATTACHED ON SEPARTE SHEETS Name of registered valuer  Registration No. 1. Purpose for which valuation is made  2. Date as on which valuation is made 3. Name of the owner(s) of the machinery/plant, under valuation 4. If the asset is under joint ownership/co-ownership, share of each owner: 5. Description of the machinery/plant and the purpose for which it is utilised  6. Valuation of the machinery/plant [ the valuer should be discuss in details the make of the machubery/plant, name of the manufacturer, original price, price to the owner if he is not the first owner, year of manufacture, present markent price of similar new machinery/plant, and other relevant factors] 7. I hereby declare that----- (a) the information furnished above is true and correct to the best of my knowledge and belief; (b) I have no direct or indirect interest in the machinery/plant valued; (c) I have perosnally inspected the machinery/plant. Date  Place: Signature of registered valuer Download Word Document In English. (Rs.15/-)

Download Word Document In English. (Rs.80/-) Mongolia Notification No. S. O. 635(E), dated 16th September, 1996. Whereas the annexed Agreement between the Government of the Republic of India and the Government of Mongolia 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 29th March, 1996, on 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 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. ANNEXURE AGREEMENT BETWEEN THE GOVERNMENT OF THE REPUBLIC OF INDIA AND THE GOVERNMENT OF MONGOLIA 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 Mongolia, 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: 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 Mongolia:                       i.        the individual income-tax;                      ii.        the corporate income-tax; (hereinafter referred to as "Mongolian tax") b.    in India:                       i.        the income-tax including any surcharge thereon;                      ii.        the wealth-tax; (hereinafter referred to as "Indian tax"). 2.     The present 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 within a reasonable period of time after such change. 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, 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. b.    the term "Mongolia" means when used in a geographical sense, all the territory of Mongolia, the area which the tax law of the Contracting State in force, in so far as the State concerned exercises there in conformity with international law, sovereign rights to exploit its natural resources; c.     the terms "Contracting State" and "the other Contracting State" mean Mongolia or India 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 Mongolia, the Ministry of Finance or his authorised representative and in the case of India, the Central Government in the Ministry of Finance (Department of Revenue) or their 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 enterprise carried on by a resident of the other Contracting State; g.    the term "fiscal year" means:                       i.        in the case of Mongolia, the calendar year from 1 of January to 31 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. h.     the term "international traffic" means any transport by a ship, aircraft or land vehicle operated by an enterprise of a Contracting State except when the ship, aircraft or land vehicle 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 Mongolian 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. 2.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 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 that 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 he shall be deemed to be a resident of the State in which his 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, quarry or any other place of extraction of natural resources; g.    a building site or a construction or an assembly project or supervisory activities in connection therewith; but only where such site, project or activity continues for a period of 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 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 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 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 on behalf 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. 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; 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 agricultural 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, land 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 be taxed in the other State but only so much of them as is attributable to: a.     that permanent establishment; or 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. 3.     In determining 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 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 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, AIR AND LAND TRANSPORT 1.     Profits derived by an enterprise registered and having its headquarters (i.e., effective management) in a Contracting State from operation of ships, aircraft or land vehicles 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 ships, aircraft of land vehicles in international traffic shall be regarded as profits derived from the operation of such ship, aircraft or land vehicles, and the provisions of Article 11 shall not apply in relation to such interest. 4.     The term "operation of aircraft" shall mean business of transportation by air 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 enterprise, the incidental lease of aircraft and any other activity directly connected with such transportation. 5.     The term "operation of ships" shall include: a.     the use, maintenance or rental of containers (including trailers and related equipment for the transport of containers) in connection with the transport of goods or merchandise in international traffic; b.    rental on a full or bareboat basis of ships if operated in international traffic. 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 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 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 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 from 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 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 local authority of the other Contracting State; or                      ii.        the Central Bank of the other Contracting State; or                     iii.        the Trade and Development Bank of Mongolia in the case of Mongolia, and the Industrial Development Bank of India in the case of India. 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 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 in 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 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 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 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 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 14, 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 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 a 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. 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 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 purposes 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 from the alienation of ships, aircraft or land vehicles operated in international traffic or movable property pertaining to the operation of such ships, aircraft or land vehicles shall be taxable only in the Contracting State in which the enterprise is registered and having its headquarters (i.e. effective management). 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 14 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 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" includes especially independent scientific, literary, artistic, educational or teaching activities as well as the independent activities of physicians, surgeons, lawyers, engineers, architects, dentists, accountants and other such professions. 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 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 Contracting State for a period or periods not exceeding in the aggregate of 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 or land vehicle operated in international traffic by an enterprise of a Contracting State shall be taxable only 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 or similar organ of a company, which is a resident of the other Contracting State, may be taxed in that other State. Article 17 INCOME EARNED BY ENTERTAINERS AND SPORTSPERSONS 1.     Notwithstanding the provisions of Articles 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 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 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 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, 14 and 15, 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 State, including any of its political sub-divisions or local authorities. Article 18 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 political sub-division, or a local authority thereof to any individual in respect of services rendered to that State or sub-division or local authority thereof 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 17 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, 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 sub-divisions or local authorities. Article 19 NON-GOVERNMENT PENSIONS AND ANNUITIES 1.     Any pension, other than a pension referred to in Article 18, 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's worth. Article 20 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 State on:--- a.     payments made to him by persons residing outside that other State for the purposes of his maintenance, education or training; b.    grants, scholarships or awards supplied by the Government, or a scientific, educational, cultural or other tax-exempt organisation; and c.     income derived from personal services performed in that Contracting State 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 PAYMENTS RECEIVED BY 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 resident in that 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 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 or property in respect of which the income is 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. 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 Contracting 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 represented by ships, aircraft or land vehicles operated in international traffic and by movable property pertaining to the operation of such ships, aircraft or land vehicles, 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 shall be taxable only in that 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 India derives income or owns capital which, in accordance with the provisions of this Agreement, may be taxed in Mongolia, India shall allow as a deduction from the tax on the income of that resident an amount equal to the income-tax paid in Mongolia, 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 Mongolia. 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 Mongolia. 3.     In the case of Mongolia the double taxation shall be avoided by a method which is identical to that mentioned in paragraph 2. 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 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 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 enterprise 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 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 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.     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 State of which he is a resident. The case must be presented within three years from the date of receipt of the first notice of the action resulting in taxation not in accordance with the provisions of 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 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 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 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. They may disclose the information in public court proceedings in judicial decisions. The competent authorities shall through consultation, develop appropriate conditions, methods and techniques concerning the matter 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 and the 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 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 29 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 1st April, 1994, and in respect of capital which is held at the expiry of any previous year beginning on or after 1st April, 1994. b.    In Mongolia: in respect of income arising in any year of income beginning on or after the 1st January, 1994, and in respect of capital which is held at the expiry of any year of income beginning on or after the 1st January, 1994. Article 30 TERMINATION This Agreement shall remain in force indefinitely but either of the Contracting States may, on or before 30th 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 April next following the calendar year in which the notice is given and 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 Mongolia: 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 the present Agreement. Done in duplicate this 22nd day of February, one thousand nine hundred and ninety four in the Hindi, Mongolian and English languages, all the texts being equally authentic. In case of divergence between any of the texts, the English text shall be the operative one. For the Government of the Republic of India. Manmohan Singh, Minister of Finance. For the Government of Mongolia. T. S. Tsogt, Minister for Trade and Industry. [Notification No. 10190/96-F. No. 503/4/93-FTD.]

Download Word Document In English. (Rs.80/-) Turkey 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 Turkey for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income Notification No. S. O. 74(E), dtd. 3rd February, 1997 Whereas the annexed Agreement between the Government of the Republic of India and the Government of the Republic of Turkey for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income has come into force on the first day of February, 1997, after the notification by the Contracting States to each other of the completion of the procedures required for bringing into force the said Agreement in accordance with paragraph 1 of Article 27 of the said Agreement. 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 Agreement shall be given effect to in the Union of India. ANNEXURE AGREEMENT BETWEEN THE REPUBLIC OF INDIA AND THE REPUBLIC OF TURKEY 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 Turkey, 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 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 to which the Agreement shall apply are in particular: a.       In the case of Turkey:                       i.        the income-tax (gelir vergisi);                      ii.        the corporation tax (kurumlar vergisi);                     iii.        the levy imposed on the income-tax and the corporation tax; (hereinafter referred to as "Turkish tax"); b.      In the case of India:                       i.        the income-tax including any surcharge thereon; (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 the Agreement in addition to or in place of, the existing taxes. 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 Agreement, unless the context otherwise requires: a.                             i.        the term "Turkey" means the territory of the Republic of Turkey including any area in which the laws of Turkey are in force, as well as the maritime zones over which Turkey is entitled to sovereign rights and exercises jurisdiction in accordance with international law and Turkish law;                      ii.        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 terms "a Contracting State" and "the other Contracting State" mean Turkey or India as the context requires; c.     the term "tax" means Indian tax or Turkish tax as the context requires; d.    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: e.     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; f.     the term "registered office" shall have the same meaning which it has under the laws of each Contracting State; g.    the term "national" means any individual possessing the nationality of a Contracting State and any legal person, partnership or association deriving its status as such from the laws in force in a Contracting State; h.     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; i.      the term "competent authority" means:                       i.        in Turkey, the Minister of Finance or his authorised representative;                      ii.        in India, the Central Government in the Ministry of Finance (Department of Revenue) or its authorised representative; j.      the term "international traffic" means any transport by a ship or an 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 laws 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, resident, legal head office (registered 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 Contracting State in which he has a habitual abode; c.     if he has a habitual abode in both Contracting States or in 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 settle the question by mutual agreement in accordance with Article 25 of this 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; g.    an installation or structure used for the exploration or exploitation of natural resources; h.     a warehouse in relation to a person providing storage facilities for others; i.      premises used as a sales outlet or for receiving or soliciting orders; j.                            i.        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 six months; or                      ii.        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: 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 that Contracting State for more than six months 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 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; 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 enterprise 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). 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, 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, or c.     he habitually secures orders in the first-mentioned State, wholly for the enterprise itself or for the enterprise and other enterprises controlling, controlled by, or subject to the same common control, as that 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. 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 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, fishing places of every kind, 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 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 the 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 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. 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.     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 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.     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. 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 reasons 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 by the first-mentioned State claimed to be 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, where 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, in accordance with 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, "jouissance" share or "jouissance" rights, founders' 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, and income derived from an investment fund and investment trust. 4.     Profits of a company of a Contracting State carrying on business in the other Contracting State through a permanent establishment situated therein may, after having been taxed under article 7 be taxed on the remaining amount in the Contracting State in which the permanent establishment is situated and in accordance with paragraph 2 of this article. 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, and the holding in respect of which the dividends are paid is effectively connected with such permanent establishment. In such case the provisions of Article 7 shall apply. 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: a.     10 per cent. of the gross amount, if such interest is paid on any loan of whatever kind granted by a bank or a financial institution; and b.    15 per cent. of the gross amount in all other cases. 3.     Notwithstanding the provisions of paragraph 2, interest arising in a Contracting State shall be exempt from tax in that State, provided that it is derived and beneficially owned by: a.     the Government, a political sub-division or a local authority of the other Contracting State; b.    the Central Bank of the other Contracting State; or c.     the Turkish Export-Import Bank (Eximbank) and the EXIM Bank of India. 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 attaching to such securities, bonds or debentures, and other income assimilated to income from money lent which is treated as interest. 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, and the debt-claim in respect of which the interest is paid is effectively connected with such permanent establishment. In such case, the provisions of Article 7 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 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 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 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 and 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 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 experiment. 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 the 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, and the right or property or contract in respect of which the royalties or fees for technical services are paid is effectively connected with such permanent establishment. In such case the provisions of Article 7 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 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 right or property or contract giving rise to the royalties or fees for technical services 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 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 royalties or fees for technical services paid, having regard to the use, right, information or technical 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 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 a 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 in which the registered office 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 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 to 5 shall be taxable in the Contracting State of which the alienator is a resident. However, the capital gains mentioned in the foregoing sentence and derived from the other Contracting State shall be taxable in the other Contracting State if the time period does not exceed one year between acquisition and alienation. Article 14 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 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 "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 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, 19 and 20, 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 calendar year concerned in the case of Turkey and 183 days in the financial year concerned in the case of India, 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, may be taxed in the Contracting State in which the registered office of the enterprise is situated. 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 1 7 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 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 derived from activities performed in a Contracting State by artistes or sportspersons if the visit to that State is substantially supported directly or indirectly by public funds of the other Contracting State or a political sub-division or a local authority thereof. In such circumstances such income shall be taxable only in the other State. Article 18 NON-GOVERNMENT PENSIONS 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 for his past employment may be taxed only in the first-mentioned Contracting State. This provision shall also apply to life annuities paid to a resident of a Contracting State. 2.     Pensions and life annuities paid, and other periodical or occasional payments made by a Contracting State, or one of its political sub-divisions in respect of insuring personal accidents, may be taxed only in that State. 3.     The term "pension" means a periodic payment made in consideration of past employment or by way of compensation for injuries received in the course of performance of services. 4.     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 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.        not being the national of the first-mentioned State, did not become a resident of that State solely for 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 TEACHERS AND STUDENTS 1.     Payments which a student or business apprentice who is a national of a Contracting State and who is present in the other Contracting 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 other State, provided that such payments arise from sources outside that other State. 2.     Likewise, remuneration received by a teacher or by an instructor who is a national of a Contracting State and who is present in the other Contracting State for the primary purpose of teaching or engaging in scientific research for a period or periods not exceeding two years shall be exempt from tax in that other State on his remuneration from personal services for teaching or research, provided that such payments arise from sources outside that other State. 3.     Remuneration which a student or a trainee who is a national of a Contracting State derives from an employment which he exercises in the other Contracting State for a period or periods not exceeding 183 days in a calendar year in the case of Turkey and 183 days in a financial year in the case of India, in order to obtain practical experience related to his education or training shall not be taxed in that other State. Article 21 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 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, and the right or property in respect of which the income is paid is effectively connected with such permanent establishment. In such case, the provisions of Article 7 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 22 ELIMINATION OF DOUBLE TAXATION 1.     The laws in force in either of the Contracting States shall continue to govern the taxation of income in the respective Contracting States except where express provisions to the contrary are made in this Agreement. 2.       a.     Where a resident of India derives income which, in accordance with the provisions of this Agreement, may be taxed in Turkey, India shall allow as deduction from the tax on the income of that resident an amount equal to the income-tax paid in Turkey, whether directly or by deduction. Such deduction in either case 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 Turkey. b.    Where a resident of India derives income which in accordance with the provisions of this Agreement, shall be taxable only in Turkey, India may include this income in the tax base but shall allow as a deduction from the income-tax that part of the income-tax which is attributable to the income derived from Turkey. 3.     Double taxation for the residents of Turkey shall be eliminated as follows: a.     Where a resident of Turkey derives income covered by sub-paragraph (b) which, in accordance with the provisions of this Agreement, may be taxed in India, Turkey shall 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.    Where a resident of Turkey derives income which in accordance with the provisions of Articles 10, 11, 12 and paragraph 6 of Article 13 of this Agreement, may be taxed in India, Turkey shall allow as a deduction from the tax on the income of that person, an amount equal to the tax paid in India. Such deduction shall not, however, exceed that part of the income-tax computed before the deduction is given, which is appropriate to the income which may be taxed in India. 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. 2.     Subject to the provisions of paragraph 4 of Article 10 the taxation of 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 in conflict with the provisions of paragraph 3 of Article 7 of this Agreement. 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 State to any taxation or any requirement connected herewith 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 in the same circumstances or under the same conditions. 4.     These provisions 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. Article 24 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 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 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 the matters in respect of which such exchange of information shall be made, including where appropriate, exchange of information regarding tax avoidance. 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 the 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 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, 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. 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 or other procedural limitations in the domestic law of the Contracting States, provided that the competent authority of the other Contracting State has received notification that such a case exists within five years from the end of the taxable year to which the case relates. 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 26 DIPLOMATIC AND CONSULAR OFFICIALS 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 27 ENTRY INTO FORCE 1.     Each Contracting State shall notify to the other the completion of the procedure required as far as it is concerned for the bringing into force of this Agreement. This Agreement shall enter into force on the first day of the following month when the latter of those notifications has been received. 2.     Its provisions shall have effect: a.     in Turkey, for taxes with respect to every taxable year beginning on or after the first day of January of the year Nineteen Hundred Ninety-four; b.    in India, for taxes with respect to every previous year beginning on or after the first day of April of the year Nineteen Hundred Ninety-four. Article 28 TERMINATION This Agreement shall remain in force until terminated by a Contracting State. Either Contracting State may terminate the Agreement through diplomatic channels, by giving notice of termination at least six months before the end of any calendar year after expiration of a period of five years from the date of its entry into force.

Download Word Document In English. (Rs.80/-) Finland Double Taxation Avoidance Agreement Convention Between The Republic Of India And The Republic Of Finland For The Avoidance Of Double Taxation With Respect To Taxes On Income And On Capital Notification No.G.S.R. 786(E),dtd. 20.11.1984. Whereas the annexed Convention between the Government of the Republic of India and the Government of the Republic of Finland for avoidance of double taxation with respect to taxes on income and on capital has come into force on the notification by both the Contracting States to each other of the compliance of the constitutional requirements, as required by Paragraph 1 of 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), section 24A of the Companies (Profits) Surtax Act, 1964 (7 of 1964) 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 REPUBLIC OF INDIA AND THE REPUBLIC OF FINLAND FOR THE AVOIDANCE OF DOUBLE TAXATION WITH RESPECT TO TAXES ON INCOME AND ON CAPITAL The Government of the Republic of India and the Government of the Republic of Finland, Desiring to conclude a new Convention for the avoidance of double taxation with respect to taxes on income and on capital, 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 which are the subject of the present Convention are: a.     in Finland:                       i.        the state income and capital tax;                      ii.        the communal tax;                     iii.        the church tax                     iv.        the sailors' tax; and                      v.        the tax withheld at source from non-residents' income; (hereinafter referred to as " Finnish tax "), b.     in India:                            i.        the income-tax including any surcharge thereon;                           ii.        the surtax; and                          iii.        the wealth tax; (hereinafter referred to as " Indian tax ") 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 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 " person " includes an individual a company and any other body of persons; b.    the term " company " means any body corporate or any entity which is treated as a body corporate for tax purposes; c.     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; d.    the term " national " means any individual possessing the nationality of a Contracting State, and any legal person, partnership and association deriving its status as such from the laws in force in a Contracting State; e.     the term " international traffic " means any transport by a ship or aircraft operated by an enterprise a Contracting State, except when the ship or aircraft is operated solely between places in the other Contracting State; f.     the term " competent authority " means:                               i.        in Finland, the Ministry of Finance or its authorised representative;                              ii.        in India, the Ministry of Finance (Deptt of Revenue). 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 laws of that State Concerning the taxes to which the Convention applies. 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 an individual is a resident of both Contracting States then its 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 interest); 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 wholy 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, a quarry or any other place of extraction of natural resources; g.    warehouse; and h.     premises used as a sales outlet or for receiving or soliciting orders. 3. The term " permanent establishment " also includes: 3.       a.     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 six months; b.    a building site, a construction, assembly or installation project or supervisory activity being incidental to the sale of machinery of equipment, where such site, project or activity 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 or equipment. 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 advertising, for the supply of information or for scientific research, being activities solely of a preparatory or auxiliary character in the business of the enterprise. 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 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 mer chandise 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 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 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 on behalf of that enterprise, he shall 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 or 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.       a.     The term " immovable property " shall, subject to the provisions of sub-paragraphs (b) and (c) have the meaning which it has under the law of the Contracting State in which the property in question is situated. b.    The term " immovable property " 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. c.     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.     Where the ownership of shares or other corporate rights in a company entitles the owner of such shares or corporate rights to the enjoyment of immovable property held by the company, the income from the direct use letting, or use in any other form of such right of enjoyment may be taxed in the Contracting State in which the immovable property is situated. 5.     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 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. 3.     In determining the profits of a permanent establishment, there shall be allowed as deduction 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. 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 or other rights, or by way of commission, for specific services performed or for management, or, except in the case of a banking enterprise, by way of interest on money lent to the permanent establishment. Likewise no account shall be taken, in determining 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 or other rights, or by way of, commission for specific services performed or for management or, except in the case of a banking enterprise, by way of interest on money lent to the head office of the enterprise or any of its other offices. 4.     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 appointment 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.     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 and sufficient reason to the contrary. 7.     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.     Income derived by an enterprise of a Contracting State from the operation of aircraft, in international traffic shall be taxable only in that State. 2.     Paragraph 1 shall likewise apply in respect of participations in pools of any kind by enterprise engaged in air transport. 3.     For the purposes of this Article: a.     interest on funds connected with the operation of aircraft in international traffic shall be regarded as income from the operation of such aircraft; and b.    the term " operation of aircraft " shall include transportation by air of persons, livestock, goods or mail, 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 on a charter basis and any other activity directly, connected with such transportation. ARTICLE 9 SHIPPING 1.     1.Income of an enterprise of a Contracting State derived from the other Contracting State from the operation of ships in international traffic may be taxed in that other State, but the tax chargeable in that other State on such income shall be reduced by an amount equal to fifty per cant of such tax. 2.     2.Paragraph 1shall not apply to profits arising as a result of coastal traffic. 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 law of the State, but the tax so charged shall not exceed: a.     15 per cent of the gross amount of the dividends if the recipient is a company (other than a partnership) which holds directly at least 10 per cent of the capital of the company paying the dividends; b.    25 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 provisions of sub-paragraph (a) of paragraph 2 would apply in respect of dividends arising out of investments made after the date of signature of this Convention. 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 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. 5.     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 15, 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 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 shall be taxable only in the first-mentioned State, provided, however, the tax so charged shall not exceed 15 per cent of the gross amount of the interest. 2.     The provisions of paragraph 1 would apply in respect of interest payable arising out of investments made after the date of signature of this Convention. 3.     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 and debentures. Penalty charges for late payment shall not be regarded as interest for the purpose of this Article. 4.     The provisions of paragraph 1 shall not apply if the recipient 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. 5.     Interest shall be deemed to arise in a Contracting State when the payer is that state itself, a political sub-division, a statutory body, 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. 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 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 recipient 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 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; 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 signature of this Convention, the tax so charged shall not exceed 30 per cent of the gross amount of the royalties and fees for technical services. 3.     The term " royalties " as used in this Article means payments of any kind including rentals received as a consideration for the use of, or the right to use: a.     any patent, trademark, design or model, plan, secret formula or process; b.    industrial commercial, or scientific equipment or information concerning industrial, commercial or scientific experience; c.     any copyright of literary, artistic or scientific work, cinematograph films or tapes for radio or television broadcasting; but does not include royalties or other amounts paid in respect of the operation of mines or quarries or of the extraction or removal or natural resources. 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 individuals for independent personal services mentioned in Article 15, 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 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 statutory body, 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 such payments 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 recipient or between both of them and some other person, the amount of the royalties or fees for technical services 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 such a 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 14 CAPITAL GAINS 1.     Gains derived by a resident of a Contracting State from the alienation of immovable property referred to in paragraph 2 of Article 6 and situated in the other Contracting State may be taxed in that other State. 2.     Gains derived by a resident of a Contracting State from the alienation of shares or other corporate rights may be taxed in the Contracting State in which the company is registered. 3.     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. 4.     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 in which the place of effective management of the enterprise is situated. 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 may be taxed in that State. Such income may also be taxed in the other Contracting State if such services are performed in that other State and if: a.     he is present in that other State or a period or periods aggregating 90 days or more in the relevant fiscal year; or b.    he has a fixed base regularly available to him in that other State for the purpose of performing his activities; but in each case only so much of the income as is attributable to those services. 2.     The term " professional services " includes especially 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, 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 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 calendar year concerned, and b.    the remuneration is paid by, or on behalf of, an employer who is not a resident of the other State, an 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, may be taxed in the Contracting State in which the place of effective management of the enterprise is situated. ARTICLE 17 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 any other similar organ 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 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 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.     The provisions of paragraphs 1 and 2 shall not apply if the visit to a Contracting State of the entertainer or the athelete is directly or indirectly supported, wholly or substantially, from the public funds of the other Contracting State, including a political sub-division, of a statutory body or a local authority of that other State. ARTICLE 19 PENSIONS AND SOCIAL SECURITY PAYMENTS Subject to the provisions of paragraph 2 of Article 20 pensions and other similar remuneration in consideration of past employment paid by a resident of, and pensions and other payments made under a public scheme which is part of the social security system of a Contracting State to a resident of the other Contracting State shall be taxable only in the first-mentioned State. ARTICLE 20 GOVERNMENT SERVICE 1.       a.     Remuneration, other than a pension, paid by a Contracting State or a Statutory body or a local authority thereof to an individual in respect of services rendered to that State or body or authority shall be taxable only in that State. b.    However, such remuneration shall be taxable only in the Contracting State of which the individual is a resident if the services are rendered in that State and the individual:                               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 statutory body or a local authority thereof to an individual in respect of services rendered to that State or body or authority shall be taxable only in that State. b.    However, such pension shall be taxable only in the Contracting State of which the individual is a resident if he is 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 it business carried on by a Contracting State or a statutory body or a local authority thereof. ARTICLE 21 STUDENTS AND APPRENTICES 1.     Payments which a student or business, technical agricultural or forestry 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.     A student at a university or other institution for higher education in a Contracting State, or a business, technical, agricultural or forestry apprentice who is or was immediately before visiting the other Contracting State a resident of the first-mentioned State and who is present in the other Contracting State for a period or periods not exceeding in the aggregate 183 days in the calendar year concerned, shall not be taxed in that other State in respect of remuneration for services rendered in that State, provided that the services are in connection with his studies or training and the remuneration constitutes earnings necessary for his maintenance. If he is present in that other State for a period or periods agregating 183 days or more in the calendar year concerned, he shall be entitled to the same exemptions, reliefs or reductions in respect of taxes as are granted to residents of that State. ARTICLE 22 OTHER INCOME 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 except that, if such income is derived from sources in the other Contracting State it may also be taxed in accordance with the law of that other State. ARTICLE 23 CAPITAL 1.     Capital represented by immovable property referred to in paragraph 2 of 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 shares or other corporate rights referred to in paragraph 4 of Article 6 and owned by a resident of a Contracting State may be taxed in the Contracting State in which the immovable property held by the company is situated. 3.     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. 4.     Capital represented by ships and aircraft operated in national traffic, and by movable property pertaining to the operation of such ships and aircraft, shall be taxable only in the Contracting State in which the place of effective management of the enterprise is situated. 5.     Elements of capital of a resident of a Contracting State not dealt with in the foregoing paragraphs of this Article shall be taxable only in that State except that, if such elements are situated in the other Contracting State they may also be taxed in accordance with the law of that other State. ARTICLE 24 ELIMINATION OF DOUBLE TAXATION 1.     .In Finland double taxation shall be eliminated as follows: a.     Where a resident of Finland derives income or owns capital which in accordance with the provisions of this Convention may be taxed in India., Finland shall, subject to the provisions of sub-paragraph (b), allow:                               i.        as a deduction from the tax on income of that person, as amount equal to the tax on income paid in India.                              ii.        as a deduction from the tax on capital of that person, an amount equal to the tax on capital paid in India. Such deduction in either case shall not however, exceed that part of the tax on income or on capital, as computed before the deduction is given, which is attributable, as the case may be, to the income or the capital which may be taxed in India. b.    Dividends paid by a company which is a resident of India to a company which is a resident of Finland shall be exempt from Finnish tax to the extent that the dividends would have been exempt from tax under Finnish taxation law if both companies had been residents of Finland. c.     Notwithstanding any other provision of this Convention, an individual who is a resident of India and under Finnish taxation law with respect to the Finnish taxes referred to in Article 2 also is regarded as a resident of Finland may be taxed in Finland. However, Finland shall allow any Indian tax paid on the income or the capital as a deduction from Finnish tax in accordance with the provisions of sub-paragraph (a). The provisions of ibis sub-paragraph shall apply only to nationals of Finland. d.    Where in accordance with any provisions of the Convention income derived or capital owned by a resident of Finland is exempt from tax in Finland, Finland 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. 2.     For the purposes of paragraph 1, taxes paid in India shall 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(4), 10(4A), 10(6)(viia), 10(15)(iv), 32A, 33A, 35B, 35C, 80HH, 80I, 80J and 80K of the Income-tax Act, 1961 (No. 43 of 1961), so far as they were in force on and have not been modified since the date of signature of this Convention, or have been modified-only in minor respects so as not to affect their general character; or b.    any other provision which may subsequently be enacted granting an exemption or reduction from tax which is agreed by the competent authorities of the two contracting States. 3.     In India double taxation shall be eliminated as follows: a.     The amount of Finish tax payable, under the laws of Finland and in accordance with the provisions of this Convention, whether directly or by deduction, by a resident of India, in respect of income which has been subjected to tax both in India and Finland 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.    For the purposes of the credit referred to in sub-para graph (a) above, where the resident of India is a company by which surtax is payable, the credit to be allowed against the Indian tax shall be allowed in the first instance against the income-tax payable by the company in India and, as to the balance, if any, against the surtax payable by it in India. Provided that income which in accordance with the provisions of this Convention is not to be, subjected to tax may be taken into account in calculating the rate of tax to be imposed. 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 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 preventing a Contracting State from charging profits of a permanent establishment which in 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 in conflict with the provisions of paragraph 3 of Article 7. 3.     Nothing contained in this Article shall be construed as obliging a Contracting State to grant to individuals not resident in that State any personal allowances, reliefs and reductions, for taxation purposes which are by law available only to individuals, who are so resident. 4.     Nothing contained in this Article shall be construed as obliging a Contracting State to compute the shipping profits in the same manner as is done in the case of enterprises of that 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 connected requirements to which other similar enterprises of the first-mentioned State are or may be subjected. 6.     The provisions of this Article shall apply to all taxes which are covered by this Convention. 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 present 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. 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. In particular, they may consult together for the purpose of reaching an agreement on the allocation of income in cases referred to in Article 10. They may also consult together for the elimination of double taxation in cases not provided for in the Convention. 4.     In the event the competent authorities reach an agreement referred to in paragraphs 2 and 3, taxes shall be imposed on such income, and refund or credit of taxes shall be allowed by the Contracting States in accordance with such agreement. It shall be implemented notwithstanding any time limits in the domestic law of the Contracting States. 5.     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 insofar as the taxation thereunder is not contrary to the Convention or for the prevention of fraud or evasion of 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 the State and shall be disclosed only to persons or authorities (including courts and administrative bodies involved in the assessment or collection of the enforcement of 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 of the administrative practice of that or of the other Contracting States; 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 States; 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 the 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 29 ENTRY INTO FORCE 1.     The Government of the Contracting States shall notify each other that the constitutional requirements for the entry into force of this Convention have been complied with. 2.     The Convention shall enter into force thirty days after the date of the later of the notifications referred to in paragraph 1 and its provisions shall have effect: a.     in Finland:                    i.        in respect of taxes withheld at source, to income derived on or after 1 January in the calendar year next following the year in which the Convention enters into force;                   ii.        in respect of other taxes on income, and taxes on capital, to taxes chargeable for any taxable year beginning on or after 1 January, in the calendar year next following the year in which the Convention enters into force; b.    in India, in respect of taxes for assessment years beginning on

Download Word Document In English. (Rs.85/-) Kazakstan Double Taxation Avoidance Agreement Income-tax Act, 1961: Notification under section 90: Convention between the Government of the Republic of India and the Government of the Republic of Kazakstan for the avoidance of double taxation and for the prevention of fiscal evasion with respect to taxes on income and on capital Notification No. G. S. R. No. 633(E), dtd. 31st October, 1997. Whereas the annexed Convention between the Government of the Republic of Kazakstan 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 and on capital will enter into force on the second day of October, 1997, thirty days after the receipt of the latter of notifications 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 Article 30 of the said Convention; Now, therefore, in exercise of the powers conferred under 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. CONVENTION BETWEEN THE GOVERNMENT OF THE REPUBLIC OF INDIA AND THE GOVERNMENT OF THE REPUBLIC OF KAZAKSTAN FOR THE AVOIDANCE OF DOUBLE TAXATION AND FOR 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 Kazakstan desiring to conclude a Convention for the avoidance of double taxation and for the prevention of fiscal evasion with respect to taxes on income and on capital, 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 existing taxes to which the Convention shall apply are in particular: a.     In the Republic of Kazakstan:                       i.        the tax on income of legal persons and individuals;                      ii.        the tax on the property of legal persons and individuals; (hereafter referred to as "Kazakstan tax"); b.    In the Republic of India:                       i.        the income-tax, including any surcharge thereon; and                      ii.        the tax on capital (the wealth-tax); (hereafter 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 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 Convention, unless the context otherwise requires: a.     the terms:                       i.        "Kazakstan" means the Republic of Kazakstan, and when used in a geographical sense, the term "Kazakstan" includes the territorial waters, and also the exclusive economic zone and continental shelf in which Kazakstan, for certain purposes, may exercise sovereign rights and jurisdiction in accordance with international law and in which the laws relating to Kazakstan tax are applicable;                      ii.        "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 U. N. Convention on the Law of the Sea; b.    the term "person" includes an individual, a company, a body of persons or any other entity which is treated as a taxable unit under the taxation laws in force in the respective Contracting States; c.     the term "company" means any body corporate or any entity which is treated as a body corporate for tax purposes; d.    the terms "a Contracting State" and "the other Contracting State" mean Kazakstan or India, as the context requires; 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 which is a resident 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 Kazakstan, the Ministry of Finance or its authorized representative;                      ii.        in India, the Central Government in the Ministry of Finance (Department of Revenue) or their authorized representative; h.     the term "national" means:                       i.        any individual possessing the nationality of a Contracting State;                      ii.        any legal person, partnership or any other 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 India, "previous year" as defined under section 3 of the Income-tax Act, 1961;                      ii.        in the case of Kazakstan, the calendar year; j.      the term "tax" means Indian tax or Kazak 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 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 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, place of incorporation, 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. 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 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 sales outlet; h.     a warehouse in relation to a person providing storage facilities for others and; i.      a farm, plantation or other place where agricultural, forestry, plantation or related activities are carried on. 3.     The term "permanent establishment" also includes: a.     a building site or construction or installation or assembly project, or supervisory activities connected therewith, only if such site, project or activity lasts for more than 12 months, and b.    an installation or structure used for the exploration of natural resources, or supervisory activities connected therewith, or a drilling rig or ship used for the exploration of natural resources, only if such use or activity lasts for more than 12 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 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; or 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 on behalf of an enterprise of the other Contracting State 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.     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 it 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 or has carried 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. The permanent establishment shall not be allowed a deduction for amounts paid to its head office or any of the other offices of the resident by way of royalties, fees or other similar payment in return for the use of patents or other rights, or by way of commission, for specific services performed or for management, or by way of interest on moneys lent to the permanent establishment. 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.     Where profits include items of income or capital gains 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. 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. Article 8 SHIPPING AND AIR TRANSPORT 1.     Profits derived by an enterprise which is a resident 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.     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. The provisions of this paragraph will, however, not apply to interest on fixed deposits with a bank. 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 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 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 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. 6.     Profits of a company of Contracting State carrying on business in the other Contracting State through a permanent establishment situated therein may, after having been taxed under Article 7, be taxed on the remaining amount in the Contracting State in which the permanent establishment is situated at a rate that does not exceed the rate set forth in paragraph 2 of this article. 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 and the beneficial owner of the interest is a resident of the other Contracting State, 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 Governmental bank or financial institution/agency 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 a 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 software, cinematograph films, any patent, trade mark, design or model, plan, secret formula or process, or for information concerning industrial, commercial or scientific experience, and payments for the use of, or the right to use, industrial, commercial, or scientific equipment; 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, 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 a case the provisions of Article 7 or Article 14, as the case may be, shall apply. 5.     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. 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 too 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 a resident of 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 Contracting 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 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 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 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. 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. 2.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, may be taxed in the Contracting State in which the enterprise operating the ship or aircraft is a resident. 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 body 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, 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 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.     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 OTHER PAYMENTS 1.     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 and any annuity paid to such a resident shall be taxable only in that State. 2.     The term "annuity" means a stated sum payable to an individual periodically at stated times during his 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 other 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 other 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 Articles 15, 16 and 18 shall apply to salaries, wages and other 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 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, 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 benefit of this article shall extend only for such period of time as may be reasonably or customarily required to complete the education or training undertaken, but in no event shall any individual have the benefit 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 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 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 institution" means an institution which has been approved in this regard by the competent authority of the concerned State. 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 I 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 paragraph 1, if a resident of a Contracting State derives income from sources within the other Contracting State in the form of lotteries, crossword puzzles, races including horse races, card games and other games or any sort of gambling or betting of any form or nature whatsoever, such income may be taxed in the other Contracting 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 also be taxed in that other State. 3.     Capital represented by ships and aircraft operated in international traffic, and by movable property pertaining to the operation of such ships or aircraft, shall be taxable only in that Contracting State in which the enterprise operating such ships or aircraft is a resident. Article 24 ELIMINATION 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 Convention. 2.     In the case of Kazakstan, double taxation shall be avoided as follows:- a.     Where a resident of Kazakstan derives income or owns capital which, in accordance with the provisions of this Convention, may be taxed in India, Kazakstan shall allow:-                       i.        as a deduction from the tax on the income of that resident, an amount equal to the income-tax paid in India;                      ii.        as a deduction from the tax on capital of that resident, an amount equal to the tax on capital paid in India. The amount of the tax to be deducted pursuant to the above provision shall not exceed the tax which would have been charged on the same income in Kazakstan under the rates applicable thereon. 3.     In the case of India, double taxation shall be avoided as follows:- a.     Where a resident of India derives income or owns capital which, in accordance with the provisions of this Convention, may be taxed in Kazakstan, India shall allow:-                       i.        as a deduction from the tax on the income of that resident, an amount equal to the income-tax paid in Kazakstan;                      ii.        as a deduction from the tax on capital of that resident, an amount equal to the tax on capital paid in Kazakstan. The amount of the tax to be deducted pursuant to the above provision shall not exceed the tax which would have been charged on the same income in India under the rates applicable thereon. 4.     Income or capital 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. 5.     The tax paid in a Contracting State shall be deemed to include the tax which would have been paid but for any exemption or reduction of tax granted under incentive provisions contained in the law of that Contracting State designed to promote economic development to the extent that such exemption or reduction is granted for profits from industrial or manufacturing activities or from agriculture, fishing or tourism (including restaurants and hotels) provided that the activities have been carried out within 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, 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 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 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 Convention. 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 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. 4.     Except where the provisions of Article 9, paragraph 7 of Article 11, or paragraph 6 of Article 12 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. 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 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 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 State 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 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 or administrative practice of that or of the other Contracting State; b.    to supply information or documents 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 28 ASSISTANCE IN COLLECTION 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 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 which are used in the collection of its own taxes or those which would be contrary to its public policy (ordre public). Article 29 MEMBERS OF DIPLOMATIC MISSIONS AND CONSULAR POSTS Nothing in this Convention 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 30 ENTRY INTO FORCE 1.     The Contracting States shall notify each other in writing through diplomatic channels, the completion of the procedure required by the respective laws for the entry into force of this Convention. This Convention shall enter into force thirty days after the receipt of the latter of the notifications. 2.     The provisions of this Convention shall have effect:- a.     in India, in respect of income derived or capital held 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 Kazakstan in respect of income derived or capital held 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 one of the Contracting States. 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 after the expiry 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 on or after the first day of April next following the calendar year in which the notice is given and in respect of capital which is held at the expiry of any previous year beginning on or after the first day of April next following the calendar year in which the notice of termination is given; and b.    in Kazakstan, in respect of income arising in any fiscal year on or after the first day of 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 fiscal year beginning on or after the first day of January next following the calendar year in which the notice of termination is given. In witness whereof, the undersigned, being duly authorized thereto, have signed this Convention. Done in duplicate at New Delhi, this 9th day of December, 1996, in the Hindi, Kazak, Russian and English languages, all texts being equally authentic. In case of divergence between the texts, the English text shall prevail. Sd.) (P. Chidambaram) (Sd.) (A. Esimov) For the Government of the For the Government of the Republic of India

Download Word Document In English. (Rs.80/-) Philippines 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 PHILIPPINES Notification No. 10041 [ F.NO . 501/7/74-FTD], dated 25-3-1996 Whereas the annexed Convention between the Government of the Republic of India and the Government of the Republic of Philippines for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income has entered into force on the 21st March, 1994, 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 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 said Convention shall be given effect to in the Union of India. CONVENTION BETWEEN THE REPUBLIC OF INDIA AND THE REPUBLIC OF THE PHILIPPINES 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 the Philippines, 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.     This 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 taxes to which this Covention shall apply are: a.     in 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): (herein referred to as " Indian tax "). b.    in the Philippines: the income taxes imposed by the Government of the Republic of the Philippines; (herein referred to as " Philippine tax "). 4.     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 1. The competent authorities of the Contracting States shall notify each other of any substantial changes which are made in their respective taxation 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 air space 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/the U.N. Convention on the Law of the Sea; b.    the term " Philippines " means the Republic of the Philippines and when used in a geographical sense means the national territory comprising the Republic of the Philippines; c.     the terms " a Contracting State " and " the other Contracting State " mean India or the Philippines as the context requires; d.    the term " tax " means Indian tax or Philippine 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 " includes an individual, a company and any other 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 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; 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 the Philippines, the Secretary of Finance or his authorized representative; i.      the term " national " means any individual, possessing the citizenship 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 " 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 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. 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. If the place of effective management cannot be determined, then the competent authorities 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 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 place of exploration of natural resources; h.     a building site or construction project or supervisory activities in connection therewith, where such site, project or activity continues for a period of more than six months; i.      a warehouse, in relation to a person providing storage facilities for others. 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.     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.     A person acting in a Contracting State on behalf of an enterprise of the other Contracting State (other than an agent of an independent status to whom paragraph 6 applies) shall be deemed to be 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 those mentioned in paragraph 3 of this Article; or 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; o c.     in so acting, he manufactures or processes in that State for the enterprise goods or merchandise belonging to the enterprise. 5.     An insurance enterprise of a Contracting State shall, except in regard to reinsurance, be deemed to have a permanent establishment in the other State if it collects premiums in the territory of that State or insures risks situated therein through an employee or through a representative who is not agent of an independent status. 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. However, when the activities of such an agent are devoted wholly or almost wholly on behalf of the enterprise, he shall not be considered an agent of an independent status within the meaning of this paragraph if it is shown that the transactions between the agent and the enterprise were not made under arms-length condition. In such a case, the provisions of paragraph 4 shall apply. 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 for 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 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 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. 4.     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. 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 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 in that State. 2.     Notwithstanding the provisions of paragraph 1, profits from sources within a Contracting State derived by an enterprise of the other Contracting State from the operation of aircraft in international traffic may be taxed in the first-mentioned State in accordance with its domestic law, but the tax so charged shall be reduced by forty per cent. In no case, however, shall the tax so charged exceed the lowest rate of Philippine tax that may be imposed on profits of the same kind derived under similar circumstances by a resident of a third State. 3.     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. Article 9 -- SHIPPING: 1.     Profits derived by an enterprise of a Contracting State from the operation of ships in international traffic shall be taxable in that State. 2.     Notwithstanding the provisions of paragraph 1, profits from sources within a Contracting State derived by an enterprise of the other Contracting State from the operation of ships in international traffic may be taxed in the first-mentioned State in accordance with its domestic law, but the tax so charged shall be reduced by forty per cent. In no case, however, shall the tax so charged exceed the lowest rate of Philippine tax that may be imposed on profits of the same kind derived under similar circumstances by a resident of a third State. 3.     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. Article 10 -- 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 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 11 -- 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 owns at least ten per cent of the shares 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 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 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 the recipient is the beneficial owner of the interest the tax so charged shall not exceed: a.     10% of the gross amount of interest if the interest is received by a financial institution (including insurance companies); b.    the Philippines tax on interest paid by a company which is a resident of the Philippines to a resident of India in respect of public issues of bonds, debentures or similar obligations shall not exceed 10 per cent of the gross amount of interest; and c.     15% of the gross amount of interest in all other cases. 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;                     iii.        other lending institutions as may be specified and agreed in letters exchanged between the competent authorities of the Contracting States; 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, including sales on credit of any industrial, commercial or scientific equipment, 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 Convention. 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 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 15 per cent of the gross amount of the royalties provided that such royalties are payable:                       i.        in the case of Philippines, by an enterprise which is registered with the Board of Investment, and                      ii.        in the case of India, by an enterprise in pursuance of any collaboration agreement approved by the Government of India. 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 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 Convention. 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 of 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 a company, the property of which consists principally of immovable property situated in a Contracting State, may be taxed in that State. Gains from the alienation of interest in a partnership or a trust, the property of which consists 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 mentioned in paragraphs 1, 2, 3 and 4 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 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.    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 " in the case of Republic of India or " calendar year " in the case of Republic of the Philippines. 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 (Directors' Fees), 18 (Entertainers and Athletes), 19 (Government Service), 20 (Non-Government Pensions and Annuities), 21 (Students and Trainees) and 22 (Professors and Teachers), 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 " in the case of Republic of India or " Calendar year " in the case of the Republic of the Philippines; 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 -- ENTERTAINERS AND ATHLETES: 1.     Notwithstanding the provisions 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 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.     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 (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. 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 exercised pursuant to a special programme between the Governments of the two Contracting States for cultural exchange and are supported substantially from the public funds of the first-mentioned Contracting State or a political sub-division, or a local authority thereof or from the funds of a statutory body, or a non-profit organisation which is certified as qualifying under this provision by the competent authority of that State. 4.     Notwithstanding the provisions of paragraph 2 and Articles 7 (Business Profits), 15 (Independent Personal Services), and 16 (Dependent Personal Services), 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 such activities are exercised by an entertainer or athlete of that other Contracting State pursuant to a special programme between the Governments of the two Contracting States for cultural exchange and are supported substantially from the public funds of that other State, a political sub-division or a local authority thereof or from the funds of a statutory body, or a non-profit organisation which is certified as qualifying by the competent authority of that other State of which he is a resident. 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: a.     is a national of that State; or b.    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 (Dependent Personal Services), 17 (Directors' Fees) and 20 (Non-Government Pensions and Annuities) 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 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 -- STUDENTS AND TRAINEES: 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 Rs. 15,000 or its equivalent in Philippine currency during any " previous year " in the case of Republic of India or " calendar year " in the case of the Republic of the Philippines, 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. 3.     The amounts referred to in paragraphs 1 and 2 of this Article may be reviewed and agreed upon by the competent authorities of both Contracting States from time to time. Article 22 -- PROFESSORS AND TEACHERS: 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 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 " in the case of Republic of India or " calendar year " in the case of the Republic of the Philippines, in which he visits the other Contracting State or in the immediately preceding " previous year " or the " year of income ". 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 23 -- OTHER INCOME: 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. Article 24 -- ELIMINATION OF DOUBLE TAXATION: 1.     The laws in force in either of the Contracting States shall continue to govern the taxation of income in the respective Contracting States except where provisions to the contrary are made in this Convention. 2.     The amount of Philippine tax payable, under the laws of the Philippines and in accordance with the provisions of this Convention, whether directly or by deduction, by a resident of India, in respect of profits or income arising in the Philippines, which have been subjected to tax both in India and in the Philippines, shall be allowed as a credit against the Indian tax payable in respect of such profits or income provided that such credit shall not exceed the Indian tax (as computed before allowing any such credit) which is appropriate to the profits or income arising in the Philippines. Further, where such resident is a company by which surtax is payable in India, the credit aforesaid shall be allowed in the first instance against income-tax payable by the company in India and as to the balance, if any, against surtax payable by it in India. 3.     The term " Philippine tax payable " shall be deemed to include the amount of Philippine tax which would have been paid if the Philippine tax had not been exempted or reduced in accordance with this Convention and the special incentive laws designed to promote economic development in the Philippines, effective on the date of signature of this Convention, or which may be introduced in the future in the Philippine taxation laws in modification of, or in addition to, the existing laws. 4.     The amount of Indian tax payable under the laws of India and in accordance with the provisions of this Convention, whether directly or by deduction, by a resident of the Philippines, in respect of profits or income arising in India, which has been subjected to tax both in India and the Philippines, shall be allowed as a credit against Philippine tax payable in respect of such profits or income provided that such credit shall not exceed the Philippine tax (as computed before allowing any such credit) which is appropriate to the profits or income arising in India. 5.     For the purposes of the credit referred to in paragraph 4, the term " Indian tax payable " shall be deemed to include any amount which would have been payable as Indian tax for any assessment year but for an exemption or reduction of tax granted for that year or any part thereof by the special incentive measures under the provisions of the Income-tax Act, 1961 (43 of 1961), which are designed to promote economic development, or which may be introduced hereafter in modification of, or in addition to, the existing provisions for promoting economic development in India. 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 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. 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.     Notwithstanding the preceding provisions of this Article, either Contracting State may, in the promotion of necessary industry or business, limit to its nationals the enjoyment of tax incentives granted by it. 6.     In this Article, the term " taxation " means taxes which are the subject of this Convention. 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 laws 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 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 the provisions of this Convention. 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 relating to the taxes which are the subject of 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 omission 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 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 the 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 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 paragraphs 1 and 2 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 -- DIPLOMATIC AGENTS AND CONSULAR OFFICERS: 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 29 -- 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 Philippines, 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 30 -- 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 Philippines, in respect of income arising in any year of income 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 Manila this twelfth day of February one thousand and nine hundred and ninety in Hindi and English languages, both the texts being equally authentic. In case of divergence in interpretation, the English text shall prevail. PROTOCOL 1.     For purposes of Article 1, nothing in this Convention shall be construed as preventing either Contracting State from taxing its citizens, in accordance with its domestic legislation, who may be residing in the other Contracting State. However, no credit shall be given under this Convention for taxes paid/payable in pursuance of such domestic legislation. 2.     For purposes of paragraph 3 of Article 7, the deductions in respect of expenses incurred outside the Contracting State shall be restricted as per the limitation on allowance of such expenses provided in the domestic law of the concerned Contracting State. 3.     For purposes of paragraph 2 of Articles 8 and 9, the rate of tax prescribed therein is understood to include the Branch Profit Remittance Tax as may be leviable by either Contracting State. 4.     With reference to Articles 8 and 9 if at any time after the date of signature of the Convention the Philippines agrees to a lower or nil rate of tax with a third State the Government of the Republic of the Philippines shall without undue delay inform the Government of India through diplomatic channels and the two Governments will undertake to review these Articles with a view to providing such lower or nil rate to profits of the same kind derived under similar circumstances by enterprises of both Contracting States. IN WITNESS WHEREOF  the undersigned, being duly authorised thereto, have signed this Protocol. DONE  in duplicate at Manila this twelfth day of February one thousand nine hundred and ninety six in Hindi and English languages, both the texts being equally authentic. In case of divergence in interpretation, the English text shall prevail