Download Word Document In English. (Rs.90/-) Netherland CONVENTION BETWEEN THE REPUBLIC OF INDIA AND THE KINGDOM OF THE NETHERLANDS FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME AND ON CAPITAL Notification No. G.S.R. 382(E), dated 27th March, 1989. Whereas the annexed Convention between the Government of the Republic of India and the Kingdom of the Netherlands for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and on capital has come into force on 21st day of January, 1989, after the notification by both the Contracting States to each other of the completion of procedures required under their laws for bringing into force of the said Convention in accordance with 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 KINGDOM OF THE NETHERLANDS 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 the Netherlands. 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: 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 States. Article 2 TAXES COVERED 1.     This Convention shall apply to taxes on income and on capital imposed on behalf of one of the States 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 Netherlands: --de inkomstenbelasting (income-tax), --de loonbelasting (wages tax), --de vennootschapsbelasting (company tax) including the Government share in the net profits of the exploitation of natural resources levied pursuant to the Mining Act of 1810 (Mijnwet 1810) with respect to concessions issued from 1967, or pursuant to the Netherlands Continental Shelf Mining Act of 1965 (Mijnwet Continental Plat, 1965), --de dividendbelasting (dividend tax), --de vermogensbelasting (capital tax), (hereinafter referred to as the " Netherlands tax "); b.    in India: --the income-tax including any surcharge thereon, --the surtax, --the wealth-tax, (hereinafter referred to as the " 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 States shall notify to each other any substantial changes which have been made in their respective taxation laws. CHAPTER II DEFINITIONS Article 3 GENERAL DEFINITIONS 1.     For the purposes of this Convention, unless the context otherwise requires: a.     the term " State " means the Netherlands or India, as the context requires, the term " States " means the Netherlands and India; b.    the term " the Netherlands " means the part of the Kingdom of the Netherlands that is situated in Europe and the part of the sea-bed and the sub-soil under the North Sea, to the extent that that area in accordance with international law has been or may hereafter be designated under the Netherlands laws as an area within which the Netherlands may exercise certain rights with respect to the exploration and exploitation of the natural resources of the sea-bed or its sub-soil; c.     the term " India " means the territory of India and includes the territorial sea and the air space 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; d.    the term " tax " means the Indian tax or the Netherlands 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, any other body of persons and any other entity which is treated as a taxable unit, under the taxation laws in force in the respective States; f.     the term " company " means any body corporate or any entity which is treated as a company or a body corporate under the taxation laws in force in the respective States; g.    the terms " enterprise of one of the States " and " enterprise of the other State " mean respectively an enterprise carried on by a resident of a one of the States and an enterprise carried on by a resident of the other State; h.     the term " international traffic " means any transport by a ship or aircraft operated by an enterprise which has its place of effective management in one of the States, except when the ship or aircraft is operated solely between places in the other State. i.      the term " nationals " means: 1.     all individuals, possessing the nationality of one of the States; 2.     all legal persons, partnerships and associations deriving their status as such from the laws in force in one of the States; j.      the term " competent authority " means: 1.     in the Netherlands, the Minister of Finance or his authorised representative; 2.     in India, the Central Government in the Ministry of Finance (Department of Revenue) or their authorised representatives. 2.     As regards the application of the Convention by one of the States any term not defined herein 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 one of the States " 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 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 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 States, then it shall be deemed to be a resident of the State in which its place of effective management is situated. Article 5 PERMANENT ESTABLISHMENT 1.     For the purposes of this Convention, the term " permanent establishment " means a fixed place of business through which the business of the enterprise is wholly or partly carried on. 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 premises used as a sales outlet; (i) an installation or structure used for the exploration of natural resources provided that the activities continue for more than 183 days. 3.     A building site or construction, installation or assembly project constitutes a permanent establishment only where such site or project continues for a period of more than six months. 4.     Notwithstanding the preceding provisions of this Article, the term " permanent establishment " shall be deemed not to include: a.     the use of facilities solely for the purpose of storage or display of goods or merchandise belonging to the enterprise; b.    the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of storage or display; c.     the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of processing by another enterprise; d.    the maintenance of a fixed place of business solely for the purpose of purchasing goods or merchandise, or of collecting information for the enterprise; e.     the maintenance of a fixed place of business solely for the purpose of advertising, for the supply of information for scientific research, or for other activities which had a preparatory or auxiliary character, for the enterprise; 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. 2.     Notwithstanding the provisions of paragraphs 1 and 2, where a person --other than an agent of an independent status to whom paragraph 6 applies--is acting in one of the States on behalf of an enterprise of the other State, that enterprise shall be deemed to have a permanent establishment in the first mentioned State, if-- a.     he has and habitually exercises in that State an authority to conclude contracts on behalf of the enterprise, unless his activities are limited to the purchase of goods or merchandise for the enterprise; or b.    he has no such authority, but habitually maintains in the first-mentioned State a stock of goods or merchandise from which he regularly delivers goods or merchandise on behalf of the enterprise. 3.     An enterprise of one of the States shall not be deemed to have a permanent establishment in the other State merely because it carries on business in that other State through a broker, a general commission agent or any other agent of an independent status, provided that such persons are acting in the ordinary course of their business. 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 if it is shown that the transactions between the agent and the enterprise were not made under at arm's-length conditions. 4.     The fact that a company which is a resident of one of the States controls or is controlled by a company which is a resident of the other 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. CHAPTER III TAXATION OF INCOME Article 6 INCOME FROM IMMOVABLE PROPERTY 1.     Income derived by a resident of one of the States from immovable property (including income from agriculture or forestry) situated in the other 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 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 one of the States shall be taxable only in that State unless the enterprise carries on business in the other 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 one of the States carries on business in the other State through a permanent establishment situated therein, there shall in each 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 the basis of an apportionment of the total profits of the enterprise to its various parts, provided, however, that the result shall be in accordance with the principles contained in this Article. 3.       a.     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 taxation laws of that State. Provided that where the law of the State in which the permanent establishment is situated imposes a restriction on the amount of the executive and general administrative expenses which may be allowed, and that restriction is relaxed or overridden by any Convention between that State and a third State which enters into force after the date of entry into force of this Convention, the competent authority of that State shall notify the competent authority of the other State of the terms of the corresponding paragraph in the Convention with that third State immediately after the entry into force of that Convention and, if the competent authority of the other State so requests, the provisions of this sub-paragraph shall be amended by protocol to reflect such terms. b.    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 monies lent to the permanent establishment. Likewise, no account shall be taken in the determination of the profits of a permanent establishment, for amounts charged (otherwise than towards reimbursement of actual expenses) by the permanent establishment to the head office of the enterprise or any of its other offices, by way of royalties, fees, or other similar payments in return for the use of patents 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 monies lent to the head office of the enterprise or any of its other offices. 4.     No profits shall be attributed to a permanent establishment by reason of the mere purchase by that permanent establishment of goods or merchandise for the enterprise. 5.     For the purposes of the preceding paragraphs, the profits to be attributed to the permanent establishment shall be determined by the same method year by year unless there is good and sufficient reason to the contrary. 6.     Where profits include items of income which are dealt with separately in other articles of this Convention, then the provisions of those articles shall not be affected by the provisions of this article. Article 8 AIR TRANSPORT 1.     Profits from the operation of aircraft in international traffic shall be taxable only in the State in which the place of effective management of the enterprise is situated. 2.     For the purposes of this Article: a.     profits from the operation in international traffic of aircraft include profits derived from the rental on a bareboat basis of aircraft if operated in international traffic if such rental profits are incidental to the profits described in paragraph 1; b.    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 11 shall not apply in relation to such interest. 3.     The provisions of paragraph 1 shall also apply to profits from the participation in a pool, a joint business or an international operating agency. Article 8A SHIPPING 1.     Profits from the operation of ships in international traffic shall be taxable only in the State in which the place of effective management of the enterprise is situated. 2.     However, if the operation of a ship in the other State is more than casual, such profits may also be taxed in that other State and according to the laws of that State, but only so much of them as is derived from that other State and provided that the profits are in respect of any one or more of the first ten fiscal years for which the Convention has effect. For the purposes of this paragraph: a.     profits derived from the other State means profits from the carriage of passengers or freight embarked in that other State; b.    the amount of such profits shall not exceed 5 per cent. of the sums receivable in respect of such carriage; c.     the rate of tax chargeable on such profits shall be 50 per cent. of the rate of tax on those profits which would have been chargeable in the absence of this Convention. 3.     If the place of effective management of a shipping enterprise is aboard a ship, then it shall be deemed to be situated in the State in which the home harbour of the ship is situated, or, if there is no such home harbour, in the State of which the operator of the ships is a resident. 4.     For the purposes of this Article: a.     interest on funds connected with the operation of ships in international traffic shall be regarded as profits from the operation of such ships and the provisions of Article 11 shall not apply in relation to such interest; and b.    profits from the operation of ships include:                       i.        profits derived from 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;                      ii.        profits from the rental on a full or bareboat basis of ships if operated in international traffic. Provided that such profits are incidental to the profits described in paragraph 1. 5.     The provisions of this Article shall also apply to profits from the participation in a pool, a joint business or an international operating agency. Article 9 ASSOCIATED ENTERPRISES 1.     Where: a.     an enterprise of one of the States participates directly or indirectly in the management, control or capital of an enterprise of the other State, or b.    the same persons participate directly or indirectly in the management, control or capital of an enterprise of one of the States, and an enterprise of the other 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 one of the States includes in the profits of an enterprise of that State--and taxes accordingly--profits on which an enterprise of the other State has been charged to tax in that other State and the profits so included are profits which would have accrued to the enterprise of the first-mentioned State if the conditions made between the two enterprises had been those which would have been made between independent enterprises, then that other State shall make an appropriate adjustment to the amount of the tax charged therein on those profits. In determining such adjustment, due regard shall be had to the other provisions of this Convention and the competent authorities of the States shall if necessary consult each other. Article 10 DIVIDENDS 1.     Dividends paid by a company which is resident of one of the States to a resident of the other State may be taxed in that other State. 2.     However, such dividends may also be taxed in the 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. 3.     The competent authorities of the States shall by mutual agreement settle the mode of application of paragraph 2. 4.     The provisions of paragraph 2 shall not affect the taxation of the company in respect of the profits out of which the dividends are paid. 5.     The term " dividends " as used in this Article means income from shares, " jouissance " shares or " jouissance " rights, mining shares, founders' shares or other rights participating in profits, as well as income from debt-claims participating in profits and 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. 6.     The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the dividends, being a resident of one of the States, carries on business in the other 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. 7.     Where a company which is a resident of one of the States derives profits or income from the other 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 one of the States and paid to a resident of the other State may be taxed in that other State. 2.     However, such interest may also be taxed in the 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 of the interest on loans made or guaranteed by a bank or other financial institution carrying on bona fide banking or financing business or by an enterprise which holds directly or indirectly at least 10 per cent. of the capital of the company paying the interest; b.    15 per cent. of the gross amount of the interest in all other cases. 3.     Notwithstanding the provisions of paragraph 2: a.     the Government of one of the States shall be exempt from tax in the other State in respect of interest derived directly or indirectly by that Government from that other State; b.    interest arising in one of the States and paid in respect of a loan guaranteed or insured by the Government of the other State shall be exempt from tax in the first-mentioned State. 4.     For the purposes of paragraph 3, the term " Government " means: a.     in the case of the Netherlands, the Government of the Kingdom of the Netherlands and shall include: --the local authorities; --the Netherlands Bank (Central Bank); --Such institutions, the capital of which is wholly owned by the Government of the Kingdom of the Netherlands or the local authorities; --the Netherlands Financierings Maatshappji voor Ontwikkelingslanden N. V. (Netherlands finance company for developing countries) and the Netherlands Investerings bank voor Ontwikkelingslanden N. V. (Netherlands investment bank for developing countries); --all other institutions as may be agreed from time to time between the competent authorities of the States; b.    in the case of India, the Government of India and shall include: --a political sub-division; --a local authority; --the Reserve Bank of India (Central Bank); --the Export-Import Bank of India; --such institutions, the capital of which is wholly owned by the Government of India or a political sub-division or a local authority; --all other institutions as may be agreed from time to time between the competent authorities of the States. 5.     The competent authorities of the States shall by mutual agreement settle the mode of application of paragraph 2. 6.     The term " interest " as used in this Article means income from debt-claims of every kind, whether or not secured by mortgage, but 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. 7.     The provisions of paragraphs 1, 2 and 3 shall not apply if the beneficial owner of the interest, being a resident of one of the States, carries on business in the other State in which the interest arises, through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the debt-claim in respect of which the interest is paid is effectively connected with such permanent establishment or fixed base. In such a case, the provisions of Article 7 or Article 14, as the case may be, shall apply. 8.     Interest shall be deemed to arise in one of the States 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 one of the States or not, has in one of the States 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. 9.     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 State, due regard being had to the other provisions of this Convention. Article 12 ROYALTIES, FEES FOR TECHNICAL SERVICES AND PAYMENTS FOR THE USE OF EQUIPMENT 1.     Royalties, fees for technical services and payments for the use of equipment arising in one of the States and paid to a resident of the other State may be taxed in that other State. 2.     However, such royalties, fees and payments may also be taxed in the State in which they arise and according to the laws of that State, but if the recipient is the beneficial owner of these categories of income, the tax so charged shall not exceed 20 per cent. of the gross amount of the royalties, of the fees and payments. 3.     The competent authorities of the States shall by mutual agreement settle the mode of application of paragraph 2. 4.     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 motion picture films and works on film or video tape for use in connection with television, any patent, trade mark, design or model, plan, secret formula or process, or for information concerning industrial, commercial or scientific experience. 5.     The term " fees for technical services " as used in this Article means payments of any kind to any person, other than payments to an employee of the person making the payments and to any individual for independent personal services mentioned in Article 14, in consideration for services of a managerial, technical or consultancy nature. 6.     The term " payments for the use of equipment " as used in this Article means payments of any kind received as a consideration for the use of, or the right to use industrial, commercial or scientific equipment. 7.     The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the royalties, fees for technical services or the payments for the use of equipment, being a resident of one of the States, carries on business in the other State in which the royalties, fees for technical services or the payments for the use of equipment arise, through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the royalties, fees for technical services or the payments for the use of equipment are effectively connected with such permanent establishment or fixed base. In such case, the provisions of arrticle 7 or article 14, as the case may be, shall apply. 8.     Royalties, fees for technical services or payments for the use of equipment shall be deemed to arise in one of the States 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, fees for technical services or the payments for the use of equipment, whether he is a resident of one of the States or not, has in one of the States a permanent establishment or a fixed base in connection with which the contract under which the royalties, fees for technical services or the payments for the use of equipment are paid was concluded, and such royalties, fees for technical services or payments for the use of equipment are borne by such permanent establishment or fixed base, then such royalties, fees for technical services or payments for the use of equipment shall be deemed to arise in the State in which the permanent establishment or fixed base is situated. 9.     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, fees for technical services or the payments for the use of equipment, having regard to the royalties, technical services or the use of equipment, 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 payment shall remain taxable according to the laws of each State, due regard being had to the other provisions of this Convention. Article 13 CAPITAL GAINS 1.     Gains derived by a resident of one of the States from the alienation of immovable property referred to in Article 6 and situated in the other 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 one of the States has in the other State or of movable property pertaining to a fixed base available to a resident of one of the States in the other State for the purpose of performing independent personal services, including such gains from the alienation of such 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 or aircraft operated in international traffic or movable property pertaining to the operation of such ships or aircraft, shall be taxable only in the State in which the place of effective management of the enterprise is situated. For the purposes of this paragraph, the provisions of paragraph 3 of Article 8A shall apply. 4.     Gains derived by a resident of one of the States from the alienation of shares (other than shares quoted on an approved stock exchange) forming part of a substantial interest in the capital stock of a company which is a resident of the other State, the value of which shares is derived principally from immovable property situated in that other State other than property in which the business of the company was carried on, may be taxed in that other State. A substantial interest exists when the resident owns 25 per cent. or more of the shares of the capital stock of a company. 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 State of which the alienator is a resident. However, gains from the alienation of shares issued by a company resident in the other State which shares form part of at least a 10 per cent. interest in the capital stock of that company, may be taxed in that other State if the alienation takes place to a resident of that other State. However, such gains shall remain taxable only in the State of which the alienator is a resident if such gains are realized in the course of a corporate organization, re-organization, amalgamation, division or similar transaction, and the buyer of the seller owns at least 10 per cent. of the capital of the other. 6.     The provisions of paragraph 3 shall not affect the right of each of the States to levy according to its own law a tax on gains from the alienation of the shares or " jouissance " rights in a company, the capital of which is wholly or partly divided into shares and which under the laws of that State is a resident of that State, derived by an individual who is a resident of the other State and has been a resident of the first-mentioned State in the course of the last five years preceding the alienation of the shares or " jouissance " rights. Article 14 INDEPENDENT PERSONAL SERVICES 1.     Income derived by a resident of one of the States 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 State: a.     if he has a fixed base regularly available to him in the other 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 amounting to or exceeding in the aggregate 183 days 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, 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 one of the States in respect of an employment shall be taxable only in that State unless the employment is exercised in the other 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 one of the States in respect of an employment exercised in the other 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 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 by a resident of one of the States in respect of an employment exercised aboard a ship or aircraft operated in international traffic shall be taxable only in that State. Article 16 DIRECTORS' FEES Directors' fees or other remuneration derived by a resident of one of the States in his capacity as a member of the Board of Directors, a " best ruder " or a " commissaries " of a company which is a resident of the other States may be taxed in that other State. Article 17 ARTISTES AND ATHLETES 1.     Notwithstanding the provisions of Articles 14 and 15, income derived by a resident of a one of the States 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 State, may be taxed in that other State. 2.     Where income in respect of personal activities exercised by in entertainer or an athlete in his capacity as such accrues not to the entertainer or athlete himself but to another person, that income may, notwithstanding the provisions of Articles 7, 14 and 15, be taxed in the State in which the activities of the entertainer or athlete are exercised. 3.     Notwithstanding the provisions of paragraphs 1 and 2, income derived by an entertainer or an athlete who is a resident of one of the States from his personal activities as such exercised in the other 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 or local authorities, and such activities are exercised under the terms of a bilateral cultural Agreement between the two States. Article 18 PENSIONS AND ANNUITIES 1.     Subject to the provisions of paragraph 2 of Article 19, pensions and other similar remuneration paid to a resident of one of the States in consideration of past employment as well as any annuity paid to such a resident shall be taxable only in that State. 2.     However, where such remuneration is not of a periodical nature and it is paid in consideration of past employment in the other State, it may be taxed in that other State. 3.     Any pension paid out under the provisions of a social security system of one of the States to a resident of the other State may be taxed in the first- mentioned State. 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 GOVERNMENT SERVICE 1.       a.     Remuneration, other than a pension, paid by one of the States 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 may be taxed in that State. b.    However, such remuneration shall be taxable only in the other 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, one of the States 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 may be taxed in that State. b.    However, such pension shall be taxable only in the other State if the individual is a resident of, and a national of, that State. 3.     The provisions of Articles 15, 16 and 18 shall apply to remuneration and pensions in respect of services rendered in connection with a business carried on by one of the States or a political sub-division or a local authority thereof. Article 20 PROFESSORS, TEACHERS AND RESEARCH SCHOLARS 1.     A professor or teacher who is or was a resident of one of the States immediately before visiting the other State for the purpose of teaching or engaging in research, or both, at a university, college, school or other approved institution in that other State shall be taxable only in the first-mentioned State on any remuneration for such teaching or research for a period not exceeding two years from the date of his arrival in that other State. 2.     This Article shall not apply to income from research if such research is undertaken primarily for the private benefit of a specific person or persons. 3.     For the purposes of paragraph 1, " approved institution " means an institution which has been approved in this regard by the competent authority of the State concerned. Article 21 STUDENTS AND APPRENTICES 1.     A student or business apprentice who is or was a resident of one of the States immediately before visiting the other 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. 5,000 guilders or its equivalent in Indian currency during any fiscal year, provided that such employment is directly related to his studies or is undertaken for the purpose of his maintenance. 2.     The benefits of this Article shall extend only for such period of time as may be reasonable or customarily required to complete the education or training undertaken, but in no event shall any individual have the benefits of this Article, for more than five consecutive years from the date of his first arrival in that other State. CHAPTER IV TAXATION ON CAPITAL Article 22 CAPITAL 1.     Capital represented by immovable property referred to in Article 6, owned by a resident of one of the States and situated in the other 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 one of the States has in the other State or by movable property pertaining to a fixed base available to a resident of one of the States in the other 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 and movable property pertaining to the operation of such ships and aircraft shall be taxable only in the State in which the place of effective management of the enterprise is situated. For the purposes of this paragraph, the provisions of paragraph 3 of Article 8A shall apply. 4.     All other elements of capital of a resident of one of the States shall be taxable only in that State. CHAPTER V ELIMINATION OF DOUBLE TAXATION Article 23 ELIMINATION OF DOUBLE TAXATION 1.     The Netherlands, when imposing tax on its residents, may include in the basis upon which such taxes are imposed the items of income or capital which, according to the provisions of this Convention, may be taxed in India. 2.     However, where a resident of the Netherlands derives items of income or owns items of capital which, according to Article 6, Article 7, paragraph 6 of Article 10, paragraph 7 of Article 11, paragraph 7 of Article 12, paragraphs 1, 2, 4 and 5 of Article 13, Article 14, paragraph 1 of Article 15, Article 16, paragraph 3 of Article 18, Article 19 and paragraphs 1 and 2 of Article 22 of this Convention may be taxed in India and are included in the basis referred to in paragraph 1, the Netherlands shall exempt such items of income or capital by allowing a reduction in its tax. These reductions shall be computed in conformity with the provisions of the Netherlands law for the avoidance of double taxation. For that purpose, the said items of income or capital shall be deemed to be included in the total amount of the items of income or capital which are exempted from the Netherlands tax under those provisions. 3.     Further, the Netherlands shall allow a deduction from the Netherlands tax so computed for items of income which, according to paragraph 2 of Article 8A, paragraph 2 of Article 10, paragraph 2 of Article 11, paragraph 2 of Article 12, Article 17 and paragraph 2 of Article 18 of this Convention may be taxed in India to the extent that these items are included in the basis referred to in paragraph 1. The amount of this deduction shall be equal to the tax paid in India on these items of income, but shall not exceed the amount of the reduction which would be allowed if the items of income so included were the sole items of income which are exempted from the Netherlands tax under the provisions of the Netherlands tax for the avoidance of double taxation. Where, by reason of special relief given under the provisions of Indian law for the purpose of encouraging investment in India, the Indian tax actually levied on interest arising in India is lower than the tax India may levy according to sub-paragraphs (a) and (b) of paragraph 2 of Article 11, then the amount of the tax paid in India on such interest shall be deemed to have been paid at the rates of tax mentioned in the said provisions. However, if the general tax rates under the Indian law applicable to the aforementioned interest are reduced below those mentioned in the foregoing sentence, these lower rates shall apply for the purposes of that sentence. The provisions of the two foregoing sentences shall apply only for a period of ten years after the date on which the Convention became effective. This period may be extended by mutual agreement between the competent authorities. 4.     In India, double taxation shall be eliminated as follows: Where a resident of India derives income or owns capital which, in accordance with the provisions of this Convention, may be taxed in the Netherlands, India shall allow as a deduction from the tax on the income of that resident an amount equal to the income-tax paid in the Netherlands, 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 the Netherlands. Such deduction in either case shall not, however, exceed that part of the income-tax or capital tax (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 the Netherlands. Further, where such resident is a company by which surtax is payable in India, the deduction in respect of income-tax paid in the Netherlands 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: 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. For the purposes of this paragraph in determining the taxes on income paid to the Netherlands, the investment premiums and bonuses and disinvestment payments as meant in the Netherlands Investment Account Law (" Wet investeringsrekening ") shall not be taken into account. For the purposes of this paragraph, the taxes referred to in paragraphs 3 (a) and 4 of Article 2, other than the capital tax, shall be considered as taxes on income. 5.     Where a resident of one of the States derives gains which may be taxed in the other State in accordance with paragraph 6 of Article 13, that other State shall allow a deduction from its tax on such gains to an amount equal to the tax levied in the first-mentioned State on the said gains. CHAPTER VI SPECIAL PROVISIONS Article 24 NON-DISCRIMINATION 1.     Nationals of one of the States shall not be subjected in the other 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. These provisions shall, notwithstanding the provisions of Article 1, also apply to persons who are not residents of one or both of the States. 2.     Except where the provisions of paragraph 3 of Article 7 apply, the taxation on a permanent establishment which an enterprise of one of the States has in the other State shall not be less favourably levied in that other State than the taxation levied on enterprises of that other State carrying on the same activities. 3.     The provisions of paragraph 2 shall not be construed as obliging one of the States to grant to residents of the other State any personal allowances, reliefs and reductions for taxation purposes on account of civil status or family responsibilities which it grants to its own residents. 4.     Except where the provisions of paragraph 1 of Article 9, paragraph 9 of Article 11, or paragraph 9 of Article 12, apply, interest, royalties and other disbursements paid by an enterprise of one of the States to a resident of the other 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 one of the States to a resident of the other 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.     Enterprises of one of the States, the capital of which is wholly or partly owned or controlled, directly or indirectly, by one or more residents of the other 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. Article 25 MUTUAL AGREEMENT PROCEDURE 1.     Where a person considers that the actions of one or both of the 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 State of which he is a resident or if his case comes under paragraph 1 of Article 24, to that of the 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 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 States. 3.     The competent authorities of the 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 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 two States. Article 26 EXCHANGE OF INFORMATION 1.     The competent authorities of the States shall exchange such information as is necessary for carrying out the provisions of the Convention or of the domestic laws of the States concerning taxes covered by the Convention, in so far as the taxation thereunder is not contrary to the Convention, in particular for the prevention of fraud or evasion of such taxes. Any information received by one of the States 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 courts or bodies) involved in the assessment or collection of, the enforcement 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. 2.     In no case shall the provisions of paragraph 1 be construed so as to impose on one of the States the obligation: a.     to carry out administrative measures at variance with the laws and administrative practices of that or of the other 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 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 27 DIPLOMATIC AGENTS AND CONSULAR OFFICERS 1.     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. 2.     For the purposes of the Convention an individual, who is a member of a diplomatic or consular mission of one of the States in the other State or in a third State and who is a national of the sending State, shall be deemed to be a resident of the sending State if he is subjected therein to the same obligations in respect of taxes on income or on capital as are residents of that State. 3.     International organisations, organs and officials thereof and members of a diplomatic or consular mission of a third State, being present in one of the States, are not entitled, in the other State, to the reductions or exemptions from tax provided for in Articles 10, 11 and 12 in respect of the items of income dealt with in these Articles and arising in that other State, if such items of income are not subject to a tax on income in the first-mentioned State. Article 28 TERRITORIAL EXTENSION 1.     This Convention may be extended, either in its entirety or with any necessary modifications, to either or both of the countries of Aruba or the Netherlands Antilles, if the country concerned imposes taxes substantially similar in character

Download Word Document In English. (Rs.80/-) United Arab Republic Double Taxation Avoidance Agreement CONVENTION BETWEEN THE GOVERNMENT OF INDIA AND THE GOVERNMENT OF THE UNITED ARAB REPUBLIC FOR THE AVOIDANCE OF DOUBLE TAXATION WITH RESPECT TO TAXES ON INCOME Notification No. G.S.R. 2363, dtd. 30.9.1969. Whereas the annexe Convention between the Government of India and the Government of the United Arab Republic for the avoidance of double taxation with respect to taxes on income has been ratified and the instruments of ratification exchanged, as required by 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 in to the Union of India. ANNEXURE CONVENTION BETWEEN THE GOVERNMENT OF INDIA AND THE GOVERNMENT OF THE UNITED ARAB REPUBLIC FOR THE AVOIDANCE OF DOUBLE TAXATION WITH RESPECT TO TAXES ON INCOME The Government of India and the Government of the United Arab Republic, Desiring to conclude a Convention for the avoidance of double taxation 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.     This Convention shall apply to taxes on income imposed on behalf of each Contracting State or of its political sub-divisions or local authorities, where, they have the authority, 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 all elements of income including taxes on gains from the sale, exchange or transfer of movable or immovable property and taxes on the total amounts of wages or salaries paid by enterprises. 3.     The existing taxes to which the Convention shall apply, are, in particular: a.       In the case of India: 1.     the income-tax, including super tax and the surcharge imposed under the Income-tax Act, 1961 (43 of 1961); and 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 United Arab Republic: 1.     tax on income derived from immovable property (including the land tax, the buildings tax and the ghaffir tax); 2.     tax on income from movable capital; 3.     tax on commercial and industrial profits; 4.     tax on wages, salaries, indemnities and pensions (as mentioned in book III of Law (14 of 1939); 5.     tax on profits from liberal professions and all non-commercial professions; 6.     general income-tax; 7.     defence tax (imposed on income); 8.     national security tax (imposed on income); and 9.     supplementary taxes imposed as percentage of taxes mentioned above; (hereinafter referred to as " United Arab Republic tax "). 1.     The Convention shall also apply to any identical or substantially similar taxes which are subsequently imposed in addition to, or in the place of, the existing taxes. 2.     At the end of each year, the competent authority of the Contracting States shall notify to each other any singnificant changes which have been 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 " India " shall have the meaning assigned to it in Article 1 of the Constitution of India; b.    the term " United Arab Republic " means Egypt; c.     the terms " a Contracting state " and " the other Contracting state " mean India or the United Arab Republic, as the context requires; d.    the term " tax " means Indian tax or United Arab republic tax, the context requires; e.     the term " person " includes individuals, companies and all other entities which are treated as taxable units under the tax laws in force in either Contracting state; f.     the term " company " for tax purposes means any entity which is treated as a company under the Indian tax law or any entity which is treated as a body corporate under the United Arab Republic tax law; g.    the terms " enterprise of a Contracting State " and " enterprise of the other Contracting State ", mean, respectively, an enterprise carried on by a resident of a Contracting State and an enterprise carried on by a resident of the other Contracting State; h.     the term " competent authority " means in the case of India the Central Government in the Ministry of Finance (Department of Revenue and Insurance); and in the case of the United Arab Republic, the Minister of Treasury or his authorised representative. 2.     In the application of the provisions of this Convention by one of the Contracting States any term not otherwise defined 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 Connvention. Article 4 Fiscal Domicile 1.     For the purposes of this Convention the term " resident of a Contracting State " means any person who under the law of the State, is resident of that State for the purposes of taxation therein by reason of his domicile, residence, place of management or any other criterion applied under the tax 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 case shall be determined in accordance with the followiing 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 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 closest (Centre of vital interest): 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 if 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: a.     a place of management; b.    a branch; c.     an office; d.    a factory; e.     a workshop or a warehouse; f.     a mine, a quarry, an oilfield or other place of extraction of natural resources; g.    a permanent sales exhibition; h.     a building site or construction or assembly project which exists for more than ninety days. 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 fixed place of business solely for the purpose of purchasing goods or merchandise or for collecting information, for the enterprise; and d.    the maintenance of a fixed place of business solely for the purpose of advertising or for scientific research, for the enterprise. 4.     A person acting in one of the Contracting States for or on behalf of an enterprise of the other Contracting State, shall be deemed to be a permanent establishment of that enterprise, or in the first mentioned State if:                       i.        he has and habitually exercises in that State a general authority to negotiate and enter into contracts for or on behalf of the enterprise, unless the activities of the person are limited to the purchase of goods or merchandise for the enterprise, or                      ii.        he habitually maintains in the first-mentioned Contracting State a stock of goods or merchandise belonging to the enterprise from which the person regularly delivers goods or merchandise for or on behalf of the enterprise, or                     iii.        he habitually secures orders in the first-mentioned Contracting State exclusively or almost exclusively, for the enterprise itself or for the enterprise and other enterprises whcih are controlled by it or have a 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 of a genuinely independent status. 6.     The fact that a company, which is a resident of one of the Contracting states, has a subsidiary company which either is a resident of the other Contracting State or carries on a trade or business in that other Contracting State (whether through a permanent establishment or otherwise) shall not, of itself, constitute that subsidiary company a permanent establishment of its parent company. 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 of the Contracting state in which the property in question is situated. The term shall in any case include property accessory to immovable property, live-stock and equipment used in agriculture and foresrty, 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 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 professional services. ARTICLE 7 BUSINESS PROFITS 1.     The profits of an enterprise of a Contracting State shall be taxable only in that 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.     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 attributted to that permanent establishment that 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 independent with the enterprise of which it is a permanent establishment. 3.     In the determination of the profits of a permanent establishment, there shall be allowed as deductions expenses which are incurred for the purposes of the permanent establishment including executive and general administrative expense 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 vairous 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 attributable to a permanent establishment by reason of the mere purchase by that permanent establishment of goods or merchandise for the purpose of export to the enterprise of which it is the permanent establishment. 6.     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 the present Article. ARTICLE 8 Air Transport 1.     Income derived from the operation of aircraft by an enterprise of one of the Contracting States shall not be taxed in the other Contracting State unless the aircraft is operated wholly or mainly between places within that other Contracting State. 2.     Paragraph 1 shall likewise apply in respect of participations in pools of any kind by enterprises engaged in air-transport. Article 9 Shipping Income derived from the operation of ships by an enterprise of one of the Contracting States shall not be taxed in the other Contracting State unless the ships are operated wholly or mainly between places within that other Contracting State. 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.     If the information available to the taxation authority concerned is inadequate to determine, for the purposes of paragraph 1 of this Article, the profits which might be expected to accrue to an enterprise, nothing in that paragraph shall affect the application of the law of either Contracting State in relation to the liability of that enterprise to pay tax on an amount determined by the exercise of a discretion or the making of an estimate by the taxation authority of that State. Provided that such discretion shall be exercised or such estimate shall be made, so far as the information available to the taxation authority permits, in accordance with the principle stated in that paragaph. Provided further that the amount so determined or the estimate so made may be amended or revised when adequate information is furnished to the taxation authority concerned. Article 11 Dividends 1.     Dividends paid by a company which is a resident of the to a resident of the United Arab Republic may be taxed in India. 2.     Dividends paid by a company which is a resident of the United Arab Republic to a resident of India may be taxed in the United Arab Republic. But such dividends shall only be subject to the tax on income derived from movable capital, the defence tax, the national security tax and the supplementary taxes (which taxes shall be deducted at the source). If paid to a natural person, the general income-tax levied on the net total income may also be imposed. Dividends paid shall be deducted from the amount of the distributing company's taxable income or profits subject to the tax chargeable in respect of its industrial and commercial profits if such dividends are distributed out of the taxable profits of the same taxable year but not distributed out of accumulated reserves or other assets. 3.     Dividends paid by a company which is a resident of India whose activities lie solely or mainly in the United Arab Republic shall, in the United Arab Republic, be treated as mentioned in paragraph 2 of this Article when such dividends are distributed in the United Arab Republic. 4.     Dividends paid by a company which is a resident of the United Arab Republic whose activities lie solely or mainly in India shall, in India, be treated as mentioned in paragraph 1 of this Article when such dividends are distributed in India. 5.     Dividends, deemed under Article 11 of United Arab Republic Law 14 of 1939 to be paid out of the yearly profits of a permanent establishment maintained in the United Arab Republic by an Indian company whose activities extend to countries other than the United Arab Republic shall, in the United Arab Republic, be treated as mentioned in paragraph of this Article. The permanent establishment shall be considered to have distributed as dividends in the United Arab Republic within 60 days from the closing of its financial year, an amount equivalent to 90 per cent of its total net profits liable to the tax on industrial and commercial profits without applying the provisions of Article 36 of Law 14 of 1939, provided that the remaining 10 per cent of the net profits shall be set aside to form a special reserve which shall be entered in the local balance-sheet submitted annually to the United Arab Repubic tax authorities. Such amount shall only be subject to the tax on commercial and industrial profits. All amounts deducted from the aforesaid 10 Per cent set aside to form the special reserve for purposes other than the redemption of losses incurred in the trade or business carried on by that permanent establishment situated in the United Arab Republic shall be deemed to have been distributed in the United Arab Republic and shall be taxed accordingly. 6.     The provisions of paragraphs 1 and 4 of this Article, in the case of the United Arab Republic, shall not affect application of Article 4 of Law 14 of 1939, but the provisions of those paragraphs will be applied for the purpose of elimination of double taxation in accordance with provisions of paragraph 2 of Article 24 of this Convention. Article 12 Interest 1.     Interest paid by a resident of India to a resident of the United Arab Republic may be taxed in India. 2.     Interest paid by a resident of the United Arab Republic to a resident of India may be taxed in the United Arab Republic. But such interest shall only be subject to the tax on income derived from movable capital, the defence tax, the national security tax and the supplementary taxes (which taxes shall be deducted at the source. If paid to a natural person, the general income-tax levied on the net total income may also be imposed. 3.     The term " interest " as used in this Article includes income from Government securities, bonds or debentures (exclusive of interest on debts secured by mortgages on real estate, in which case Article 6 shall apply) and whether or not carrying a right to participate in profits, and debt-claims of every kind as well as all other income assimilated to income from money lent by the taxation law of the State in which the income arises. 4.     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 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 such permanent establishment then such interest shall be deemed to arise in the Contracting State in which the permanent establishment is situated. 5.     The provisions of paragraph 1 of this Article in the case of the United Arab Republic shall not affect the application of Article 4 of Law 14 of 1939, but the provisions of that paragraph will be applied for the purpose of elimination of double taxation in accordance with provisions of paragraph 2 of Article 24 of this Convention. Article 13 Royalties 1.     Royalties arising in a Contracting State and paid to a resident of the other Contracting State shall be taxable only in the first-mentioned State. 2.     The term " royalties " is 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 scientfic work, 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 but does not include any royalty or other like amount in respect of the operation of mines, quarries or any other place of extraction of natural resources. 3.     Rents and royalties arising in a Contracting State in respect of cinematographic films and paid to a resident of the other Contracting State shall be taxable only in the first mentioned State according to the tax laws of that State. 4.     The provisions of this Article shall not apply where founders' shares are issued in the United Arab Republic as a consideration for the rights mentioned in paragraph 2 of this Article and taxed in accordance with the provisions of Article 1 of Law 4 of 1939. In such event Article 11 of this Convention shall be applicable. 5.     Royalty shall be deemed to arise in a Contracting State when the payer is that State itself, a political sub-division, a local authority or a resident of that State. ARTICLE 14 Capital gains 1.     Subject to the provisions of paragraph 3, gains from the sale, exchange or transfer of a capital asset being immovable property, as defined in paragraph 2 of Article 6, or movable property shall be taxable only in the Contracting State in which such property is situated. 2.     For the purpose of this Article the situs of the shares of a company shall be deemed to be in the Contracting State where the company is incorporated. 3.     Capital gains derived from the sale, exchange or transfer of a capital asset being a ship or aircraft shall be taxable only in the Contracting State in which such ship or aircraft is registered. ARTICLE 15 Independent personal services 1.     Income derived by a resident of the United Arab Republic in respect of professional services rendered or other independent activities of a similar character performed in India may be taxed in India only if he is present in India for a period or periods exceeding in the aggregate 183 days during the relevant " previous year " and only to the extent the income is attributable to such services or activities in India. 2.     Income derived by a resident of India in respect of professional services rendered or other independent activities of a similar character performed in the United Arab Republic may be taxed in the United Arab Republic only if he is present in the United Arab Republic for a period or periods excceding in the aggregate 183 days during the relevant " fiscal year ", and only to the extent the income is attributable to such services or activities in the United Arab Republic. 3.     The term "professional services" includes independent 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, 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 the United Arab Republic in respect of an employment exercised in India shall not be taxed in India if: a.     he is present in India for a period or periods not exceeding in the aggregate 183 days during the relevant " previous year ", and b.    the remuneration is paid by, or on behalf of an employer who is not resident of lndia; c.     the remuneration is subject to United Arab Republic tax, and d.    the remuneration is not deducted in computuing profits of an enterprise chargeable to Indian tax. 3.     Notwithstanding the provisions of paragraph 1, remuneration derived by a resident of India in respect of an employment exercised in the United Arab Republic shall not be taxed in the United Arab Republic if: a.     he is present in the United Arab Republic for a period or periods not exceeding in the aggregate 183 days during the relevant " fiscal year ", and b.    the remuneration is paid by, or on behalf of an employer who is not resident of the United Arab Republic, and c.     the remuneration is subject to Indian tax, and d.    the remuneration is not deducted in computing profits of an enterprise chargeable to United Arab Republic tax. 4.     Notwithstanding the preceding provisions of this Article, remuneration in respect of an employment exercised aboard a ship or aircraft 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 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 Artistes and Athletes 1.     Notwithstanding anything contained in Articles 15 and 16 income derived by public entertainers, such as theatre, motion picture, radio or television artistes, and musicians; and by athletes from their personal activities as such may be taxed in the Contracting State in which these activities are exercised. 2.     The provisions of paragraph 1 shall apply only if the personal activities are exercised in the Contracting State for a period or periods in the aggregate exceeding 15 days during the relevant " previous year " or, as the case may be, " fiscal year ", and only in respect of the income attributable to the personal activities exercised in that State. ARTICLE 19 Pensions Subject to the provisions of paragraph 1 of Article 20, pensions and other similar remuneration paid to a resident of a Contracting State in consideration of past employment shall be taxable only in that State. ARTICLE 20 Government functions 1.     Remuneration, including pensions, paid by, or out of funds created by, a Contracting State or a 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 in the discharge of functions of a governmental nature may be taxed in that State. 2.     The provisions of paragraph 1 of this Article shall also apply to remuneration including pensions, paid by the Central Bank, the Post, Railways, Telephone and telegraph, Radio and Television organisations of the United Arab Republic and by the Reserve Bank of India, Postal Administration, the Public Railway Authorities and the All India Radio Organisation of India. 3.     The provisions of Articles 16, 17 and 19 shall apply to remuneration or pensions in respect of services rendered in connection with any trade or business other than those mentioned in paragraph 2 carried on by any of the legal entities mentioned in this Article. ARTICLE 21 Students An individual of one of the Contracting States, who is temporarily present in the other Contracting State solely: - a.     as a student at a university, college or school in the other Contracting State, b.    as a business or technical apprentice, or c.     as the recipient of a grant, allowance or award for the primary purpose of study or research from a religious, charitable, scientific or educational organisation. shall not be taxed in the other Contracting State in respect of remittances from abroad for the purposes of his maintenance, education or training or in respect of a scholarship grant. The same shall apply to any amount representing remuneration for services rendered in that other State, provided that such services are in connection with his studies or practical training or are necessary for the purpose of his maintenance. ARTICLE 22 Professors, Teachers and Researchers A professor or a teacher from one of the Contracting States who receives remuneration for teaching or scientific research, during a period of temporary residence not exceeding two years, at a university, college, technical school or other institution for higher education in the other Contracting State, shall not be taxed in that other Contracting State in respect of that remuneration. ARTICLE 23 Income not expressly mentioned The laws in force in either of the Contracting States will continue to govern assessment and taxation of income in the respective Contracting States except where express provision to the contrary is made in this Convention. CHAPTER IV METHOD FOR ELIMINATION OF DOUBLE TAXATION ARTICLE 24 Exemption and credit methods 1.     Where a person being a resident of a Contracting State derives income from the other Contracting State and that income, in accordance with the provisions, of this Convention, shall be taxable only in that other Contracting State, or may be taxed in that other Contracting State, the first-mentioned State shall, subject to the provisions of paragraph 2, 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. 2.     Where a person being a resident of a Contracting State derives income from the other Contracting State and that income, in accordance with the provisions of Articles 11 and 12 may be taxed in that other Contracting State, the first-mentioned State shall allow as a deduction from the tax on the income of that person on amount equal to the tax paid in that other Contracting State. Such deduction shall not, however, exceed that part of the tax, as computed before the deduction is given, which is appropriate to the income derived from that other Contracting State. CHAPTER X 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 and under the same conditions are or may be subjected. 2.     The term " nationals " means: a.     all individuals possessing the nationality of a Contracting State; b.    all legal persons, partnerships and associations deriving their status as such from the law in force in a Contracting State. 3.     The taxation on a permanent establishment which an enterprise of a Contracting State has in the other Contracting State shall not be less favourably levied in that other State than the taxation levied on enterprises of that other State carrying on the same activities. 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. 4.     Enterprises of a Contracting State, the capital of which is wholly or partly owned or controlled, directly or indirectly, by one or more residents of the other Contracting State, shall not be subjected in the first-mentioned Contracting State to any taxation or any requirement connected therewith which is other or more burdensome than the taxation and connected requirements to which other similar enterprises of that first-mentioned State are or may be subjected in the same circumstances and under the same conditions. 5.     The provisions of this Article shall not be construed as affecting the application in the United Arab Republic of the exemptions conferred in the United Arab Republic by Articles 5 and 6 of Law 14 of 1939. 6.     In this Article the term " taxation " means taxes of every kind as specified in 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. 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. 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. The 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 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 as is necessary for the carrying out of this Convention and of the domestic laws of the Contracting States concerning taxes covered by this Convention in so far as the taxation thereunder is in accordance with this Convention. Any information so exchanged shall be treated as secret and shall not be disclosed to any persons or authorities other than those concerned with the assessment including judicial determination, or collection of the taxes which are the subject of this convention. 2.     In no case shall the provisions of paragraph be construed so as to impose on one of the Contracting States the obligation: a.     to carry out administrative measures at variance with the laws or the administrative practice of that or of the other Contracting State; b.    to supply particulars 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 (order public). ARTICLE 28 Diplomatic and Consular Privileges 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 be ratified and the instruments of ratification shall be exchanged at New Delhi as soon as possible. 2.     This Convention shall enter into force on the date of the exchange of the instruments of ratification and its provisions shall have effect: a.       In India:                       i.        in the case of income derived from operation of aircraft (referred to in Article 8), as respects such income derived during any " previous year " beginning on or after the first day of January, 1961;                      ii.        in the case of any other income, as respects income derived during any " previous year " beginning on or after the first day of January of the calendar year in which the exchange of the instruments of ratification takes place. a.       In the United Arab Republic:                       i.        in the case of income from operation of aircraft (referred to in Article 8), as respects such income derived during any accounting period ending on or after the first day of January, 1961;                      ii.        in the case of any other income,- 1.     as respects tax on income from movable capital and tax on wages, salaries, indemnities, and pensions, which taxes are due on or after the date on which the exchange of the instruments of ratification takes place; 2.     as respects tax on commercial and industrial profits for any accounting period ending on or after the date on which the exchange of the instruments of ratification takes place; 3.     as respects tax on income derived from immovable property (including the land tax, the building tax and the ghaffir tax), tax on profits from liberal professions and all other non-commerical professions and the general income-tax for the calendar year in which the exchange of the instalments of ratification takes place. The rules in sub-paragraph (b) of this paragraph shall be correspondingly applicable respectively to the defence tax, national security tax and to the supplementary taxes. ARTICLE 30 Termination 1.     Either of the Contracting States may terminate this Convention after a period of five years from the date on which this Convention enters into force, by giving to other Contracting State, through the diplomatic channels, written notice of termination, provided that such notice shall be given only on or before the thirtieth day of June in any calendar year, and in such event, this Convention shall cease to be effective: a.       In India: As respects income derived during any " previous year " beginning on or after the first day of January of the calendar year next following that in which the notice is given. b.      In the United Arab Republic: a.     as respects tax on income from movable capital and tax on wages, salaries, indemnities and pensions, which taxes are due on or after the first day of July in the calendar year next following that in which the notice is given; b.    as respects tax on commercial and industrial profits for any accounting period ending on or after the first day of July in the calendar year next following that in which the notice is given. c.     is respects tax on income derived from immovable property (including the land tax, the buildings tax and ghaffir tax), tax on profits from liberal professions and all other non-commercial professions and the general income-tax for the calendar year next following that in which the notice is given. The rules in sub-paragraph (b) of this paragraph shall be respondingly applicable respectively to the defence tax, national security tax and to the supplementary taxes. IN WITNESS WHEREOF  the undersigned, being duly authorised thereto, have signed this Convention. Done in duplicate at Cairo this Twentieth day of February, 1969 in the English language. Sd./- APA B. PANT, Sd/- AHMED EL. SAYED SHABAN, For the Government of India: For the Government of United Arab Republic Cairo, the 20th February, 1969. Dear Sir, The Convention between the Government of India and the Government of United Arab Republic for the avoidance of double taxation with respect to taxes on income being signed today, I have the honour on behalf of the Government of India, to inform you that the two Contracting States have agreed as follows: The provisions of Article 8 (Air transport) of the said Convention being operative under the terms of Article 29 (Entry into force) of the Convention, in the case of India, as respects income derived from operation of aircraft during any " previous year " beginning on or after the first day of January, 1961, and in the case of the United Arab Republic, as respects such income derived during any accounting period ending on or after the first day of January, 1961: Where any taxes covered by this Convention have been paid or are payble in one of the Contracting States by a designated airline of the other Contracting State as respects such income derived by it during any " previous year " or accounting period aforesaid, the first mentioned Contracting State shall refund such taxes to or, as the case may be, refrain from charging such taxes from the designated airline. The designated airline aforesaid shall, in the case of India, be the Air India, and in the case of the United Arab Republic, be the United Arab Airlines. 2.     I should be grateful if you confirm your agreement to the above understanding of the provisions of Article 8 read with Article 29 of the said Convention, and that in such case, this note and your reply thereto shall be deemed to be part of the Convention. 3.     Please accept, Your Excellency, the assurances of my highest, consideration. Sd./- Apa B. Pant His Excellency Mr. Ahmed El Sayed Shaban, Under Secretary for the Taxation Department, Ministry of Treasury, Government of the United Arab Republic, Cairo. Cairo, the 20th February, 1969. Dear Sir, With reference to the Convention signed to-day between the Government of the United Arab Republic and the Government of India for the avoidance of double taxation with respect to taxes on income, you, on behalf of the Government of India, informed me of the following: The convention between the Government of lndia and the Government of the United Arab Republic for the avoidance of double taxation with respect to taxes on income being signed to-day, I have the honour, on behalf of the Government of India, to inform you that the two Contracting States have agreed as follows: The provisions of Article 8 (Air Transport) of the said Convention being operative under the terms of Article 29 (Entry into force) of the Convention, in the case of India, as respects income derived from operation of aircraft during any " previous year " beginning on or after the first day of January, 1961, and in the case of the United Arab Republic, as respects such income derived during any accounting period ending on or after the first day of January, 1961: Where any taxes covered by this Convention have been paid or are payable in one of the Contracting States by a designated airline of the other Contracting State as respects such income derived by it during any " previous year " or accounting period aforesaid, the first-mentioned Contracting State shall refund such taxes to or, as the case may be, refrain from charging such taxes from the designed airline. The designated airline aforesaid shall, in the case of India, be the Air India, and in the case of the United Arab Republic, be the United Arab Airlines. 1.     I should be grateful if you confirm your agreements to the above understading of the provisions of Article 8 read with Article 29 of the said Convention, and that in such case, this note and your reply thereto shall be deemed to be part of the Convention. " 2.     I have the honour to confirm that the above-mentioned proposal meets with the approval of the Government of the United Arab Republic. Your Note of today's date and my reply thereto shall, therefore be part of the Convention. 3.     Please accept, your Excellency, the assurances of my highest consideration. Sd/-- His Excellency Mr. Apa B. Pant, AHMED EL SAYED SHABAN Ambassador of India, Cairo

Download Word Document In English. (Rs.45/-) Libya SOCIALIST PEOPLES LIBYAN ARAB JAMAHIRIYA CONVENTION BETWEEN THE SOCIALIST PEOPLES LIBYAN ARAB JAMAHIRIYA AND THE GOVERNMENT OF REPUBLIC OF INDIA FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME. Notification F. No. 501/17/73-FTD, dated 1-7-1982. G.S.R. 484(E).--Whereas the annexed Convention between the Socialist Peoples Libyan Arab Jamahiriya and the Government of the Republic of India for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income has been ratified and the instruments of ratification exchanged as required by Article 25 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 SOCIALIST PEOPLES LIBYAN ARAB JAMAHIRIYA. AND THE GOVERNMENT OF REPUBLIC OF INDIA FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME CHAPTER I SCOPE OF THE CONVENTION ARTICLE I Taxes Covered 1.     This Convention shall apply to taxes on income imposed on behalf of each Contracting State or local authorities, irrespective of the manner in which they are levied. 2.     They shall be regarded as taxes on income all taxes imposed on total income, or on elements of income. 3.     The existing taxes to which this Convention shall apply are: A With regard to the Socialist Peoples Libyan Arab Jamahiriya                       i.        Real Estate Revenue Tax.                      ii.        Agricultural Revenue Tax.                     iii.        Taxes on Commercial, Industrial and Professional profits, which comprise--- a.     taxes on profits realised from commercial, industrial and professional activities; b.    taxes on Companies.                     iv.        Taxes on profits realised by practising Fee Professions.                      v.        Taxes on wages, salaries and the like.                     vi.        Taxes on Income realised abroad.                    vii.        General Tax on Income.                   viii.        Al-Jihad Tax (Defence Tax).                     ix.        Income arising from depositing money in banks and savings accounts. c.     With regard to the Republic of India.                               i.        The Income-tax including any surcharge thereon imposed under the Income-tax Act, 1961 (43 of 1961);                              ii.        The surtax imposed under the Companies (Profits) Surtax Act, 1964 (7 of 1964). 2.     The Convention shall also apply to any identical or substantially similar taxes which are subsequently imposed in addition to, or in place of, the existing taxes. At the end of each year, the competent authorities of the Contracting States shall notify to each other any changes which have been made in their respective taxation laws. CHAPTER II DEFINITIONS ARTICLE II General Definitions 1.     In this Convention, unless the context otherwise requires: a.     the term " a contracting State " and " the other Contracting State " mean ' India ' or ' Libya ', as the context requires; b.    the term " person " comprises an individual, a company and any other body of persons; c.     the term " Company " means any body corporate or any entity which is treated as a body corporate for tax purposes; d.    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 by a resident of the other contracting state; e.     the term " competent authority " with respect to the Socialist Peoples Libyan Arab Jamahiriya means the Ministry of Treasury, and with respect to India means the Ministry of Finance (Department of Revenue). 2.     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, resident, place of management or any other criterion of a similar nature; 3.     As regards the application of the 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 the Convention. ARTICLE III The Tax Home Without prejudice to the provisions of this Convention, the Tax Home of any income shall be deemed to be the Contracting State in which the income arises. ARTICLE IV 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 mine, quarry or other place of extraction of natural resource. (g) a building or building site which continues for a period of more than three months; The term " permanent establishment " shall not be deemed to include: a.     the use of facilities solely for the purpose of storage and 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 and display; c.     the maintenance of stock of goods or merchandise belonging to the enterprise solely for the purpose, of processing by any other enterprise; d.    the maintenance, of a fixed place of business solely for the purpose of purchasing goods or merchandise, of 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. 3.     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 5 applies--shall be deemed to be a permanent establishment in the first-men tioned State if he has and habitually exercises in that State, an authority to conclude contracts in the name of the enterprise, unless his activities are limited to the purchase of goods or merchandise for the enterprise. 4.     An enterprise of a Contracting State shall not be deemed to have a permanent establishment in the other Contracting State merely because it carries on business in that other State through a broker, general commission agent or any other agent of an independent status, where such persons are acting independently in the ordinary course of their business. 5.     The fact that 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 itself constitute for either company a permanent establishment of the other. CHAPTER III TAXATION OF INCOME ARTICLE V Income from Immovable Property 1.     Income from immovable property may be taxed in the Contracting State in which such property is situated. 2.     The term " immovable property " shall be defined in accordance with the law of the Contracting State in which the property in question is situated. ARTICLE VI Business Profits 1.     The profits of an enterprise of a Contracting State shall be taxable in the State where the enterprise is situated and also in the State where it has a permanent establishment, in which case, the tax shall be limited to the profits attributable to the permanent establishment. 2.     Where an enterprise of a Contracting State carries on business in the other Contracting State through a permanent establishment situated therein, there shall in each Contracting State be attributed to 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 condition and dealing wholly independently with the enterprise of which it is a permanent establishment. 3.     In the determination of the profits of a permanent establishment, there shall be allowed as deduction expenses which are incurred for the purpose of the permanent establishment whether such expenses have been incurred in the State in which the permanent establishment is situated or elsewhere in accordance with regulations of the State in which the income is taxable. 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 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. 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 VII Shipping and Air Transport Profits from the operation of ships or aircraft in international traffic shall be taxable only in the Contracting State in which the place of effective management of the enterpriser is situated. ARTICLE VIII 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 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 enterprise, 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. It is to be understood that the procedures available in the respective laws of each Contracting State in this regard shall be applied. ARTICLE IX Dividends 1.     Dividends paid by a Company which is registered in one of the Contracting States may be taxed in that State. 2.     The term " dividends " shall be defined in accordance with the law of the Contracting State in which the company in question is registered. ARTICLE X Interest 1.     Interest arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in the Contracting State where it arises. 2.     The provisions of paragraph 1 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 6 shall apply. 3.     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. ARTICLE XI Royalties 1.     Royalties arising in a Contracting State may be taxable in that State. 2.     The term " royalties " as used in this Article means payments of any kind as a consideration for the use of, or the right to use, any copyright of literary, artistic or scientific work, any patent, trade mark, design or model, plan secret formula or process of for the use of the right to use, industrial, commercial, or scientific equipment, or for information concern inindustrial, commercial or scientific experience. 3.     The term " royalties " as used in this Article shall exclude rentals and other income in respect of cinematographic films. Such rentals, and income shall, for the purpose of this Convention, be considered the profits from business. ARTICLE XII 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 he has a fixed base regularly available to him in the other Contracting State for the purpose of performing his activities. If he has such a fixed base, the income may be taxed in the other Contracting State brat only so much of it as is attributable to that fixed base. 2.     The term " professional services " means independent activities according to the laws and regulations in force in each Contracting State. ARTICLE XIII Dependent Personal Services Salaries, wages and similar emoluments arising in one of the Contracting States may be taxable in the State where the services giving rise to that income are performed but if such income is realised from work carried out on a ship or aircraft operating in the field of international transport, it shall only be taxable in the State where the place of effective management of the enterprise is situated. ARTICLE XIV 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 XV Artistes and Athletes Notwithstanding the provisions of Articles 12 and 13, income derived by public entertainers, such as theatre, motion picture, radio or television artistes and musicians, and by athletes, from their personal activities as such may be taxed in the Contracting State in which these activities are exercised. ARTICLE XVI Pensions Pensions and other similar income paid to a resident of Contracting State in cosideration of past employment shall be taxable only in that State. ARTICLE XVII Government Functions/Civil Service 1.     Remuneration paid by the Government of one of the Contracting States to any individual for services rendered to that Government in the discharge of governmental functions shall be exempt from tax in other State if the individual is not resident in that other State or is resident in other State solely for the purpose of rendering those services, so provided however, that such an individual has the nationality of that Contracting State. 2.     The provision of this Article shall not apply to payments in respect of services rendered in connection with any trade or business carried on by either of the Government for purposes of profit. 3.     In this Article, " Government " shall be deemed to include public corporation and any other similar parastatal bodies. ARTICLE XVIII Students 1.     Payments which a student or business apprentice who is or was formerly a resident 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 are made to him from sources outside that other State. 2.     The provision of this Article shall also apply to the income which the student or business apprentice may derive from an employment in the other Contracting State; provided that such employment is related to his study or training and/ or that the income deriving therefrom is required by the student or trainee to meet his living expenses. ARTICLE XIX Professors, Teachers and Researchers A professor, teacher or research worker from one of the Contracting States who receives remuneration for teaching or carrying out research work during a period of temporary residence not exceeding three months at a university, college or/other institute of higher education or scientific research in the other Contracting State shall be exempt from tax in that other State, in respect of that remuneration, provided that the period of three months may be extended by similar periods. CHAPTER IV ELIMINATION OF DOUBLE TAXATION ARTICLE XX Tax Credits 1.     When a resident of a Contracting State derives income which has also suffered tax in the other Contracting State, the first-mentioned State shall allow a deduction from its tax on the income of that person equal to the tax in the other Contracting State; provided that the deduction shall not exceed that part of the tax, as computed before the deduction is given which is applicable to the income taxed in the other Contracting State. 2.     Nothing in this Article contained shall prevent the granting of such further relief as may be appropriate under the provisions of the law of either Contracting State in respect of any amount by which the tax in case of the States exceeds the credit allowed on its account in the other State in accordance with the provisions of this Article. CHAPTER V SPECIAL PROVISIONS ARTICLE XXI 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 term " national " means: a.     all individuals possessing the nationality of a Contracting State; b.    all legal persons, partnerships and associations deriving their status as such from the law in force in a Contracting State. 3.     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. The 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. 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 requirements 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. ARTICLE XXII Mutual Agreement Procedure 1.     Were a resident of a Contracting State considers that the actions of one or both of the Contracting State 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. 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. 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 XXIII Exchange of Information 1.     The competent authorities of the Contracting States shall exchange such information as is necessary for the carrying out of this Convention and of the domestic laws of the Contracting States concerning taxes covered by this Convention in so far as the taxation thereunder is in accordance with this Convention. Information shall also be exchanged as is necessary for the prevention of fiscal evasion of taxes which are the subject of this Convention. Any information so exchanged shall be treated as secret and shall not be disclosed to any persons or authorities other than these concerned with the assessment of collection of the taxes which are the subject of the Convention. 2.     In no case shall the provisions of paragraph I be constituted so as to impose on one of the Contracting States the obligation: a.     to carry out administrative measures at variance with the laws or the administrative practice of that or of the other Contracting State; b.    to supply particulars 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 XXIV Diplomatic and Consular Officials Nothing in this Convention shall affect the fiscal privileges of diplomatic or consular officials under the general rules of international law or under the provisions of special agreements. CHAPTER VI FINAL PROVISIONS ARTICLE XXV Entry into Force The Convention shall enter into force upon the exchange of instruments of ratification and its provisions shall have effect from the tax year commencing after the said ratification. Any agreement reached shall be implemented notwithstanding any time limits in the national laws of the Contracting State. ARTICLE XXVI Termination This Convention remains in force until denounced by one, of the Contracting States. Either Contracting State may denounce the Convention through diplomatic channels by giving notice of termination at least 6 months before the end of any calendar year beginning 5 years after the agreement enters into force. In such event the Convention shall cease to have effect after the end of the calendar year during which notice of the denouncing of the Convention is given by one Contracting State to the other. In witness of the agreement reached as above, the signatories have today signed this Convention in virtue of the authority delegated to them for this purpose by their respective Governments. Done in duplicate at THIPOLI, on 2nd March 1981 corresponding to 25 Rabiul Akhar 1390 P.D. in the English, Hindi and Arabic languages, all texts being equally authoritative except in the case of doubt, the English text shall prevail. Sd/ NARENDRA SINGH, Ambassador of India. Sd/ AMMAR SASI ATIYA. Director General Taxation Socialist People Libyan Arab Jamahiriya

China 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 People's Republic of China for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income Download Word Document In English. (Rs.80/-) Notification No. 9747 [F. NO. 503/5/93-FTD], DATED 5-4-1995 Whereas the annexed Agreement between the Government of the Republic of India and the Government of the People's Republic of China for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income has come into force on the 21st day of November, 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 Agreement in accordance with Article 28 of the said Agreement; Now, therefore, in exercise of the powers conferred by section 90 of the Income-tax Act, 1961 (43 of 1961), the Central Government hereby directs that all the provisions of the said Agreement shall be given effect to in the Union of India. ANNEXURE AGREEMENT BETWEEN THE GOVERNMENT OF THE REPUBLIC OF INDIA AND THE GOVERNMENT OF THE PEOPLE'S REPUBLIC OF CHINA 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 China. Desiring to conclude an Agreement for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income. Have agreed as follows: Article 1 PERSONAL SCOPE This Agreement shall apply to persons who are residents of one or both of the Contracting States. Article 2 TAXES COVERED 1.     This Agreement shall apply to taxes on income imposed on behalf of a Contracting State or of its political sub-divisions or local authorities, irrespective of the manner in which they are levied. 2.     There shall be regarded as taxes on income, all taxes imposed on total income, or on elements of income, including taxes on gains from the alienation of movable or immovable property, as well as taxes on capital appreciation. 3.     The existing taxes to which the Agreement shall apply are: a.      In China:                               i.                the individual income-tax;                              ii.                the income-tax for enterprises with foreign investment and foreign enterprises;                             iii.                the local income-tax; (hereinafter referred to as " Chinese Tax "). b.    In India: The income-tax including any surcharge thereon; (hereinafter referred to as " Indian Tax "). 4.     This Agreement shall also apply to any identical or substantially similar taxes which are imposed after the date of signature of this Agreement in addition to, or in place of, the existing taxes 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 within a reasonable period of time after such changes. Article 3 GENERAL DEFINITIONS 1.     For the purposes of this Agreement, unless the context otherwise requires: a.     the term " China " means the People's Republic of China; when used in geographical sense, means all the territory of the People's Republic of China, including its territorial sea, in which the Chinese laws relating to taxation apply, and any area beyond its territorial sea, within which the People's Republic of China has sovereign rights of exploration for any exploitation of resources of the sea-bed and its sub-soil and superjacent water resources in accordance with inter-national law; b.    the term " India " means the territory of the Republic 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; c.     the terms " a Contracting State " and " the other Contracting State " mean China or India as the context requires; d.    the term " tax " means Chinese 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 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 body corporate for tax purposes; g.    the terms " enterprise of a Contracting State " and " enterprise of the other Contracting State " mean, respectively, and 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 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: i.      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 orcraft is operated solely between places in the other Contracting State; j.      the term " competent authority " means, in the case of China, the State Administration of Taxation or its authorized representative, and in the case of India, the Central Government in the Ministry of Finance (Department of Revenue) or their authorized representative. 2.     As regards the application of this Agreement by a Contracting State, any term not defined therein shall, unless the context otherwise requires, have the meaning which it has under the laws of that Contracting State concerning the taxes to which this Agreement applies. Article 4 RESIDENT 1.     For the purposes of this Agreement, the term " resident of a Contracting State " means any person who, under the laws of that Contracting State, is liable to tax therein by reason of his domicile, residence, place of head office 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 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 (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 Contracting 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 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 head office 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 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.      an installation or structure used for the exploration or exploitation of natural resources, but only if so used for a period of more than 183 days; j.      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 183 days; k.     the furnishing of services other than technical services as defined in Article 12 (Royalties and Fees for Technical Services), by an enterprise of a Contracting State through employees or other personnel in the other Contracting State, but only if activities of that nature continue within that other Contracting State for a period or periods aggregating more than 183 days. 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 an independent status to whom the provisions of paragraph 5 apply--is acting in a Contracting State on behalf of an enterprise of the other Contracting State, has and habitually exercises an authority to conclude contracts in the name of the enterprise, 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, unless the activities of such person are limited to those mentioned in paragraph 3 which, if exercised through a fixed place of business, would not make this fixed place of business a permanent establishment under the provisions of that paragraph. 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 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. However, when the activities of such an agent are devoted wholly or almost wholly on behalf of that enterprise, he will not be considered an agent of an independent status within the meaning of this paragraph. 6.     The fact that a company which is a resident of a Contracting State controls or is controlled by a company which is a resident of the other Contracting State, or which carries on business in that other State (whether through a permanent establishment or otherwise), shall not of itself constitute either company a permanent establishment of the other. Article 6 INCOME FROM IMMOVABLE PROPERTY 1.     Income derived by a resident of a Contracting State from immovable property situated in the other Contracting State may be taxed in that other Contracting State. 2.     The term "immovable property " shall have the meaning which it has under the law of the Contracting State in which the property in question is situated. The term shall in any case include property accessory to immovable property, livestock and equipment used in agriculture and forestry, rights to which the provisions of general law respecting landed property apply, usufruct of immovable property and rights to variable or fixed payments as consideration for the working of, or the right to work, mineral deposits, sources and other natural resources. Ships 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 Contracting State unless the enterprise carries 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 directly or indirectly attributable to that permanent establishment. The provisions of this paragraph shall, however, not apply if the enterprise proves that the above activities could not have been undertaken by the permanent establishment or have no relation with the 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.     Insofar as the tax law of a Contracting State provides with respect to a specific business activity that the profits to be attributed to a permanent establishment are to be determined on the basis of a deemed profit, nothing in paragraph 2 shall preclude that Contracting State from applying those provisions of its law, provided that the result is in accordance with the principles contained in this Article. 4.     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 Contracting State in which the permanent establishment is situated or elsewhere in accordance with the provisions of tax law of that Contracting State. 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 paragraphs 1 to 5, the profits to be attributed to the permanent establishment shall be determined by the same method year by year unless there is good and sufficient reason to the contrary. 7.     Where profits include items of income which are dealt with separately in other Articles of this Agreement, then the provisions of those Articles shall not be affected by the provisions of this Article. Article 8 SHIPPING AND AIR TRANSPORT 1.     Profits derived by an enterprise which is a resident of a Contracting State from the operation by that enterprise of ships or aircraft in international traffic shall be taxable only in that Contracting 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; b.    the rental of ships or aircraft connected with such transportation; and c.     income from use, maintenance, or rental of containers (including traders barges, and related equipment for the transport of containers) operated in international traffic. 3.     For the purposes of this Article, interest on funds directly connected with the operation of ships or aircraft in international traffic shall be regarded as profits described in this Article, and the provisions of Article 11 (interest) shall not apply in relation to such interest. 4.     The provisions of paragraph 1 shall also apply to profits from the participation in a pool, a joint business or an international operating agency. Article 9 ASSOCIATED ENTERPRISES 1.     Where- a.     an enterprise of a Contracting State participates directly or indirectly in the management, control or capital of an enterprise of the other Contracting State, or b.    the same persons participate directly or indirectly in the management, control or capital of an enterprise of a Contracting State and an enterprise of the other Contracting State, and in either case conditions are made or imposed between the two enterprises in their commercial or financial relations which differ from those which would be made between independent enterprises, then any profits which would, but for those conditions, have accrued to one of the enterprises, but, by reason of those conditions, have not so accrued, may be included in the profits of that enterprise and taxed accordingly. 2.     Where a Contracting State includes in the profits of an enterprise of that 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 the profits so included are profits which would have accrued to the enterprise of the first-mentioned Contracting 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 tax charged therein on those profits. In determining such adjustment, due regard shall be had to the other provisions of this Agreement and the competent authorities, of the Contracting States shall, if necessary, consult each other. 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, Contracting State may be taxed in that other Contracting State. 2.     However, such dividends may also be taxed in the Contracting State owner of the dividends the tax so charged shall not exceed 10 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 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 either 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 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 Contracting State, nor subject the company's undistributed profits to a tax on the company's undistributed profits, even if the dividends paid or the undistributed profits consist wholly or partly of profits or income arising in such other Contracting State. Article 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 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 10 per cent of the gross amount of the interest. 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, a local authority and the Central Bank thereof or any financial institution wholly owned by that Government, or by any other resident of that other Contracting State with respect to debt claims indirectly financed by the Government of that other Contracting State, a political sub-division, a local authority, and the Central Bank thereof or any financial institution wholly owned by that Government shall be exempt from tax in the first-mentioned Contracting State. 4.     The term "interest" as used in this Article means income from debtclaims of every kind, whether or not secured by mortgage and whether or not carrying a right to participate in the debtor's profits, and in particular, income from Government securities and income from bonds or debentures, including premiums and prizes attaching to such securities, bonds or debentures. Penalty charges for late payment shall not be regarded as interest for the purpose of this Article. 5.     The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the interest, being a resident of a Contracting State, carries on business in the other Contracting State in which the interest arises, through a permanent establishment situated therein, or performs in that other 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. 6.     Interest shall be deemed to arise in a Contracting State when the payer is the Government of that Contracting State, a political sub-division, 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. 7.     Where, by reason of a special relationship between the payer and the beneficial owner or between both of them and some other person, the amount of the interest, having regard to the debt-claim for which it is paid, exceeds the amount which would have been agreed upon by the payer and the beneficial owner in the absence of such relationship, the provisions of this Article shall apply only to the last-mentioned amount. In such case, the excess part of the payments shall remain taxable according to the laws of each Contracting State, due regard being had to the other provisions of this Agreement. Article 12 ROYALTIES AND FEES FOR TECHNICAL SERVICES 1.     Royalties or fees for technical services arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other Contracting 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 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 10 per cent of the gross amount of the royalties or fees for technical services. 3.     The term " royalties " as used in this Article means payment 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 any payment for the provision of services of managerial, technical or consultancy nature by a resident of a Contracting State in the other Contracting State, but does not include payment for activities mentioned in paragraph 2(k) of Article 5 and Article 15 of the Agreement. 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 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 or fees for technical services shall be deemed to arise in a Contracting State when the payer is the Government of that Contracting State, 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 based 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, having regard to the use, right or information for which they are paid, exceeds the amount which would have been agreed upon by the payer and the beneficial owner in the absence of such relationship, the provisions of this Article shall apply only to the last-mentioned amount. In such case, the excess part of the payments shall remain taxable according to the laws of each Contracting State, due regard being had to the other provisions of this Agreement. Article 13 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 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 Contracting State. 3.     Gains from the alienation of ships or aircraft operated in international traffic or movable property pertaining to the operation of such ships or aircraft shall be taxable only in the Contracting State of which the alienator is a resident. 4.     Gains from the alienation of shares of the capital stock of a company the property of which consists directly or indirectly principally of immovable property situated in a Contracting State may be taxed in that Contracting State. 5.     Gains from the alienation of any property other than that referred to in the preceding paragraphs of this Article, arising in a Contracting State, may be taxed in that Contracting 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 Contracting State except in one of 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; b.    if his stay in the other Contracting State is for a period or periods exceeding in the aggregate 183 days in the taxable year concerned; in that case, only so much of the income as is derived from his activities performed in that other Contracting State may be taxed in that other Contracting 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, 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 State if: a.     the recipient is present in the other Contracting State for a period or periods not exceeding in the aggregate 183 days in the taxable year concerned; 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 of this Article, remuneration derived in respect of an employment exercised aboard a ship or aircraft operated by an enterprise which is a resident of a Contracting State in international traffic shall be taxable only in that Contracting State. Article 16 DIRECTORS' FEES Directors' fees and other similar payments derived by a resident of a Contracting State in his capacity as member of the Board of Directors of a company which is resident of the other Contracting State may be taxed in that other Contracting State. Article 17 ARTISTES AND SPORTSPERSONS 1.     Notwithstanding the provisions of Articles 14 and 15, income derived by a resident of a Contracting State as an entertainer, such as a theatre, motion picture, radio or television artiste, or a musician, or as a sportsperson, from his personal activities as such exercised in the other Contracting State, may be taxed in that other Contracting State. 2.     Where income in respect of personal activities exercised by an entertainer or a sportsperson in his capacity as such accrues not to the entertainer or sportsperson himself but to another person, that income may, notwithstanding the provisions of Articles 7, 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 paragraphs 1 and 2, income derived by entertainers or sportspersons who are residents of a Contracting State from the activities exercised in the other Contracting State either as a part of cultural exchange between the Contracting States or supported wholly or substantially from the public funds in either of the Contracting States or political sub-divisions or local authorities thereof, shall be exempt from tax in that other Contracting State. Article 18 PENSIONS 1.     Subject to the provisions of paragraph 2 of Article 19, pensions, annuity 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. 2.     Notwithstanding the provisions of paragraph 1, pensions, annuity paid and other similar payments made by the Government of a Contracting State or a political sub-division or a local authority thereof under a public welfare scheme of the social security system of that Contracting State shall be taxable only in that Contracting State. Article 19 REMUNERATION AND PENSIONS IN RESPECT OF GOVERNMENT SERVICES 1.       a.     Remuneration, other than pension, paid by the Government of a Contracting State or a political sub-division or a local authority thereof to an individual in respect of services rendered to the Government of 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;                                          ii.    did not become a resident of that other Contracting State solely for the purpose of rendering the services. 2.       a.     Any pension paid by, or out of funds to which contributions are made by the Government of a Contracting State or a political sub-division or a local authority thereof to an individual in respect of services rendered to the Government of 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 the Government of a Contracting State or a political sub-division or a local authority thereof. Article 20 PAYMENTS RECEIVED BY PROFESSORS, TEACHERS AND RESEARCH SCHOLARS 1.     An individual who is, or immediately before visiting a Contracting State was, a resident of the other Contracting State and is present in the first-mentioned Contracting State for the primary purpose of teaching, giving lectures or conducting research at a university, college, school or educational institution or scientific research institution approved by the Government of the first-mentioned Contracting State shall be exempt from tax in the first-mentioned Contracting State, for a period of three years from the date of his first arrival in the first-mentioned Contracting State, in respect of remuneration for such teaching, lectures 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 21 PAYMENTS RECEIVED BY STUDENTS, TRAINEES AND APPRENTICES 1.     A student, business apprentice or trainee who is or was immediately before visiting a Contracting State a resident of the other Contracting State and who is present in the first-mentioned State solely for the purpose of his education, training shall be exempt from tax in that first-mentioned State on the following payments or income received or derived by him for the purpose of his maintenance, education or training: a.     payments derived from sources outside that Contracting State for the purpose of his maintenance, education, study, research or training; b.    grants, scholarships or awards supplied by the Government, or a scientific, educational, cultural or other tax-exempt organization; and c.     income derived from personal services performed in that Contracting State for the purpose of 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 Contracting 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 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 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 Agreement and arising in the other Contracting State may be taxed in that other Contracting State. Article 23 METHODS FOR THE ELIMINATION OF DOUBLE TAXATION 1.     In China, double taxation shall be eliminated as follows: a.     Where a resident of China derives income from India the amount of tax on that income payable in India in accordance with the provisions of this Agreement, may be credited against the Chinese tax imposed on that resident. The amount of credit, however, shall not exceed the amount of the Chinese tax on that income computed in accordance with the taxation laws and regulations of China. 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 China and which owns not less than 10 per cent of the shares of the company paying the dividend, the credit shall take into account the tax paid to India by the company paying the dividend in respect of its income. 2.     In India, double taxation shall be eliminated as follows: Where a resident of India derives income which, in accordance with the provisions of this Agreement, may be taxed in China, India shall allow as a deduction from the tax on the income of that resident an amount equal to the income-tax paid in China whether directly or by deduction. Such deduction shall not, however, exceed that part of the income-tax (as computed before the deduction is given) which is attributable, as the case may be, to the income which may be taxed in China. 3.     The tax paid in a Contracting State mentioned in paragraphs 1 and 2 of this Article shall be deemed to include the tax which would have been payable but for the legal provisions concerning tax reduction, exemption or other tax incentives of the Contracting States for the promotion of economic development. Article 24 NON-DISCRIMINATION 1.     Nationals of a Contracting State shall not be subjected in the other Contracting State to any taxation or any requirement connected therewith, which is other or more burdensome than the taxation and connected requirements to which nationals of that other Contracting 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 Contracting State than the taxation levied on enterprises of that other Contracting State carrying on the same activities in the same circumstances or under the same conditions. 3.     Where a Contracting State charges the profits of a permanent establishment which an enterprise of the other Contracting State has in the first-mentioned Contracting State at a rate of tax which is different from that imposed on the profits of a similar enterprise of the first-mentioned Contracting State, it shall not be construed as discrimination under this Article. 4.     Nothing contained in this Article shall be construed as obliging a Contracting State to grant to residents of the other Contracting State any personal allowances, reliefs and deductions for taxation purposes on account of civil status or family responsibilities which it grants to its own residents. 5.     Except where the provisions of paragraph 1 of Article 9, paragraph 7 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 State subject to the provisions of domestic laws of that Contracting State. 6.     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 in the same circumstances and under the same conditions. 7.     In this Article, the term "taxation" means taxes which are the subject of this Agreement. Article 25 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 Agreement, he may, irrespective of the remedies provided by the domestic law of those States, present his case to the competent authority of the Contracting State of which he is a resident or, if his case comes under paragraph 1 of Article 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 the Agreement. 2.     The competent authority shall endeavour, if the objection appears to it to be justified and if it is not itself able to arrive at a satisfactory solution, to resolve the case by mutual agreement with the competent authority of the other Contracting State, with a view to the avoidance of taxation which is not in accordance with the provisions of this Agreement. Any agreement reached shall be implemented notwithstanding any time limits in the domestic law of the Contracting States. 3.     The competent authorities of the Contracting States shall endeavour to resolve by mutual agreement any difficulties or doubts arising as to the interpretation or application of the Agreement. They may also consult together for the elimination of double taxation in cases not provided for in this Agreement. 4.     The competent authorities of the Contracting States may communicate with each other directly for the purpose of reaching an agreement in the sense of paragraphs 2 and 3. When it seems advisable for reaching agreement, representatives of the competent authorities of the Contracting States may meet together for an oral exchange of opinions. Article 26 EXCHANGE OF INFORMATION 1.     The competent authorities of the Contracting States shall exchange such information (including documents) as is necessary for carrying out the provisions of this 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 this Agreement, in particular for the prevention of 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 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 Agreement. Such persons or authorities shall use the information only for such purposes. They may disclose the information in public court proceedings or in judicial decisions. 2.     In no case shall the provisions of paragraph 1 be construed so as to impose on a Contracting State the obligation: a.     to carry out administrative measures at variance with the laws and 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; and 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 (order public). Article 27 DIPLOMATIC AGENTS AND CONSULARS OFFICERS Nothing in this Agreement 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 ENTRY INTO FORCE This Agreement shall enter into force on the thirtieth day after the date on which diplomatic notes indicating the completion of internal legal procedures necessary in each country for the entry into force of this Agreement have been exchanged. This Agreement shall have effect: a.     in China, in respect of income arising in any taxable year beginning on or after the first day of January next following the calendar year in which this Agreement enters into force; b.    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 this Agreement enters into force. Article 29 TERMINATION This Agreement shall remain in force indefinitely but either of the Contracting States may, on or before the thirtieth day of June in any calendar year beginning after the expiration of a period of five years from the date of its entry into force, give written notice of termination to the other Contracting State through the diplomatic channels. In such event this Agreement shall cease to have effect: a.     in China, in respect of income arising in any taxable year beginning on or after the first day of January next following the calendar year in which the notice of termination is given; b.    in India, in respect of income arising in any previous year beginning on or after the first day of April next following the calendar year in which the notice is given. In witness whereof, the undersigned, being duly authorized thereto, have signed the present Agreement. Done in duplicate at New Delhi on this eighteenth day of July one thousand nine hundred and ninety-four in the Hindi, Chinese and English languages, all three texts being equally authentic. In case of any divergence, the English text shall prevail. -Sd- -Sd- For the Government of the For the Government of the Republic of India People's Republic of China PROTOCOL At the signing of the Agreement between the Government of the Republic of India and the Government of the People's Republic of China for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income (hereinafter referred to as " The Agreement ") both sides have agreed upon the following provisions which form an integral part of the Agreement: 1.     With reference to paragraph (1d) of Article 3: It is understood that the term "tax" should not include any penalty imposed for non-compliance of the laws and regulations relating to the taxes to which this Agreement applies. 2.     With reference to Article 8, the exemption shall also include:                       i.        In China, the business tax;                      ii.        In India, any tax similar to the business tax in China which may be imposed in

Uzbekistan INCOME-TAX ACT, 1961: NOTIFICATION UNDER SECTION 90: AGREEMENT BETWEEN THE GOVERNMENT OF THE REPUBLIC OF INDIA AND THE GOVERNMENT OF THE REPUBLIC OF UZBEKISTAN FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME AND ON CAPITAL Download Word Document In English. (Rs.80/-) Notification No. S. O. 790(E), dated 13th November, 1996. Whereas the annexed Agreement between the Government of the Republic of India and the Government of the Republic of Uzbekistan 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 25th January, 1994, 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 30 of the said Agreement. Now, therefore, in exercise of the powers conferred by section 90 of the Income-tax Act, 1961 (43 of 1961), and section 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 THE REPUBLIC OF UZBEKISTAN FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME AND ON CAPITAL The Government of the Republic of India and the Government of the Republic of Uzbekistan. 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 Uzbekistan ;                       i.        the taxes on profit;                      ii.        the wealth-tax;                     iii.        the income-tax on legal persons as well as individuals; (hereinafter referred to as "Uzbekistan tax"); b.      In India :                       i.        the income-tax, including any surcharge thereon; and                      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. 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, 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 "Uzbekistan" means in a geographical sense land, territorial waters, and other zones in which Uzbekistan has sovereign rights, and jurisdictions, according to the international law and tax laws of the Republic of Uzbekistan; c.     the terms "Contracting State" and "the other Contracting State" means Uzbekistan 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 Uzbekistan, the Central State Taxation Board; 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 an enterprise carried on by a resident of the other Contracting State; g.    the term "fiscal year" means:                       i.        in the case of Uzbekistan, the calendar year from 1st of January to 31st of December of the year under review;                      ii.        in the case of India, "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 motor vehicles operated by an enterprise of a Contracting State except when the ship, aircraft or motor 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 Uzbekistan tax, as the context requires, but shall not include any amount which is payable in respect of any default or omission in relation to the taxes to which this Agreement applies or which represents a penalty imposed relating to those taxes. 2.     As regards the application of the Agreement by a Contracting State, any term not defined therein shall, unless the context otherwise requires, have the meaning which it has under the law of that State concerning the taxes to which the Agreement applies. Article 4 RESIDENT 1.     For the purposes of this Agreement, the term "resident of a Contracting State" means any person who, under the laws of that State, is liable to tax therein by reason of his domicile, residence, place of management 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 the 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 the 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 the 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 the 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 twelve 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 agriculture or forestry) situated in the other Contracting State may be taxed in that other State. 2.     The term "immovable property" shall have the meaning which it has under the law of the Contracting State in which the property in question is situated. The term shall in any case include property accessory to immovable property, livestock and equipment used in agriculture and forestry, rights to which the provisions of general law respecting landed property apply, usufruct of immovable property and rights to variable or fixed payments as consideration for the working of, or the right to work, mineral deposits, sources and other natural resources. Ships, boats and aircraft shall not be regarded as immovable property. 3.     The provisions of paragraph 1 shall apply to income derived from the direct use, letting, or use in any other form of immovable property. 4.     The provisions of paragraphs 1 and 3 shall also apply to the income from immovable property of an enterprise and to income from immovable property used for the performance of independent personal services. Article 7 BUSINESS PROFITS 1.     The profits of an enterprise of a Contracting State shall be taxable only in that State unless the enterprise carries on business in the other Contracting State through a permanent establishment situated therein. If the enterprise carries on business as aforesaid, the profits of the enterprise may also be taxed in the other State but only so much of them as is attributable directly or indirectly to that permanent establishment. The words "directly or indirectly" mean, for the purposes of this article, that where a permanent establishment takes an active part in negotiating, concluding or fulfilling contracts entered into by the enterprise, then notwithstanding that other parts of the enterprise have also participated in those transactions, there shall be attributed to the permanent establishment that proportion of profits of the enterprise arising out of those contracts as the contribution of the permanent establishment to those transactions bears to that of the enterprise as a whole. 2.     Subject to the provisions of paragraph 3, where an enterprise of a Contracting State carries on business in the other Contracting State through a permanent establishment situated therein, there shall in each Contracting State be attributed to that permanent establishment the profits which it might be expected to make if it were a distinct and separate enterprise engaged in the same or similar activities under the same or similar conditions and dealing wholly independently with the enterprise of which it is a permanent establishment. 3.     In determining the profits of a permanent establishment, there shall be allowed as 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 MOTOR TRANSPORT 1.     Profits derived by an enterprise of a Contracting State derived from operation of aircraft or motor 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 aircraft or motor vehicles in international traffic shall be regarded as profits derived from the operation of such aircraft or motor 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 of passengers, mail, livestock or goods carried on by the owners or lessees or charterers of aircraft, including the sale of tickets for such transportation on behalf of other enterprises, the incidental lease of aircraft and any other activity directly connected with such transportation. 5.     Profits derived by an enterprise from operation of ships shall be taxable in the Contracting States in accordance with their domestic laws. 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 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 the 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 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 a local authority of the other Contracting State; or                      ii.        the Central Bank of the other Contracting State; b.    interest arising in a Contracting State shall be exempt from tax in that Contracting State to the extent approved by the Government of that State if it is derived and beneficially owned by any person other than a person referred to in sub-paragraph (a) who is a resident of the other Contracting State provided that the transaction giving rise to the debt-claim has been approved in this regard by the Government of the first-mentioned Contracting State. 4.     The term "interest" as used in this article means income from debt-claims of every kind, whether or not secured by mortgage and whether or not carrying a right to participate in the debtor's profits, and in particular, income from Government securities and income from bonds or debentures, including premiums and prizes attaching to such securities, bonds or debentures. Penalty charges for late payment shall not be regarded as interest for the purpose of this article. 5.     The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the interest, being a resident of a Contracting State, carries on business in the other Contracting State in which the interest arises, through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the debt-claim in respect of which the interest is paid 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 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 the interest, having regard to the debt-claim for which it is paid, exceeds the amount which would have been agreed upon by the payer and the beneficial owner, in the absence of such relationship, the provisions of this article shall apply only to the last-mentioned amount. In such case, the excess part of the payments shall remain taxable according to the laws of each Contracting State, due regard being had to the other provisions of this Agreement. Article 12 ROYALTIES 1.     Royalties arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State. 2.     However, such royalties may also be taxed in the Contracting State in which they arise, and according to the laws of that State, but if the recipient is the beneficial owner of the royalties the tax so charged shall not exceed 15 per cent. of the gross amount of 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, article 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 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 that State itself, a political sub-division, a local authority or a resident of that State. Where, however, the person paying the royalties whether he is a resident of a Contracting State or not has in a Contracting State a permanent establishment or a fixed base in connection with which the liability to pay the royalties was incurred and such royalties are borne by such permanent establishment or fixed base, then such royalties shall be deemed to arise in the State in which the permanent establishment or fixed base is situated. 6.     where, by reason of a special relationship between 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 payment shall remain taxable according to the laws of each Contracting State, due regard being had to the other provisions of this Agreement. Article 13 TECHNICAL FEES 1.     Technical fees arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State. 2.     However, such technical fees may also be taxed in the Contracting State in which they arise, and according to the laws of that State; but if the recipient is the beneficial owner of the technical fees, the tax so charged shall not exceed 15 per cent. of the gross amount of the technical fees. 3.     The term "technical fees" as used in this article means payments of any kind to any person other than to an employee of the person making the payments, in consideration for any services of a technical, managerial or consultancy nature. 4.     The provisions of paragraphs 1 and 2 shall not apply, if the beneficial owner of the technical fees being a resident of a Contracting State carries on business in the other Contracting State in which the technical fees arise through a permanent establishment situated therein, or performs in that other State independent personal services and the technical fees are effectively connected with such permanent establishment or such services. In such case the provisions of Article 7 or Article 15, as the case may be, shall apply. 5.     Technical fees shall be deemed to arise in a Contracting State when the payer is that State itself, a political sub-division, a local authority or a statutory body thereof, or a resident of that State. Where, however, the person paying the technical fees whether he is a resident of a Contracting State or not, has in a resident of a Contracting State a permanent establishment or a fixed base in connection with which the obligation to pay the technical fees was incurred and such technical fees are borne by that permanent establishment or fixed base then such technical fees shall be deemed to arise in the Contracting State in which such permanent establishment 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 persons the amount of the technical fees paid, exceeds for whatever reasons, the amount which would have been agreed upon by the payer and the beneficial owner in the absence of such relationship, the provisions of this article shall apply only to the last-mentioned amount. In such case, the excess part of the payment shall remain taxable according to the laws of each Contracting State, due regard being had to the other provisions of this Agreement. Article 14 CAPITAL GAINS 1.     Gains derived by a resident of a Contracting State from the alienation of immovable property, referred to in Article 6 and situated in the other Contracting State may be taxed in that other 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) of such fixed base, may be taxed in that other State. 3.     Gains from the alienation of ships or aircraft operated in international traffic or movable property pertaining to the operation of such ships or aircraft, shall be taxable only in the Contracting State of which the alienator is a resident. 4.     Gains from the alienation of shares of the capital stock of a company the property of which consists directly or indirectly principally of immovables property situated in a Contracting State may be taxed in that State. 5.     Gains from the alienation of shares, other than those mentioned in paragraph 4, in a company which is a resident of a Contracting State may be taxed in that State. 6.     Gains from the alienation of any property, other than that mentioned in paragraphs 1, 2, 3, 4 and 5 shall be taxable only in the Contracting State of which the alienator is a resident. Article 15 INDEPENDENT PERSONAL SERVICES 1.     Income derived by a resident of a Contracting State in respect of professional services or other independent activities of a similar character shall be taxable only in that State except in the following circumstances when such income may also be taxed in the other Contracting State:-- a.     if he has a fixed base regularly available to him in the other Contracting State for the purpose of performing 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 16 DEPENDENT PERSONAL SERVICES 1.     Subject to the provisions of Articles 17, 18 19, 20, 21, and 22, salaries, wages and other similar remuneration, derived by a resident of a Contracting State in respect of an employment shall be taxable only in that State unless the employment is exercised in the other Contracting State. If the employment is so exercised, such remuneration as is derived therefrom may be taxed in that other State. 2.     Notwithstanding the provisions of paragraph 2, 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 183 days in the relevant fiscal year; and b.    the remuneration is paid by, or on behalf of an employer who is not a resident of the other Contracting State; and c.     the remuneration is not borne by a permanent establishment or a fixed base which the employer has in the other Contracting State. 3.     Notwithstanding the preceding provisions of this article, remuneration derived in respect of an employment exercised aboard a ship or aircraft operated in international traffic by an enterprise of a Contracting State shall be taxable only in that State. Article 17 DIRECTORS' FEES Directors' fees and similar payments, derived by a resident of a Contracting State in his capacity as a member of the board of directors of a company, which is a resident of the other Contracting State, may be taxed in that other State. Article 18 INCOME EARNED BY ENTERTAINERS AND SPORTSPERSONS 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 a sportsperson, from the 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, 15 and 16, 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 Article 7, 15 and 16, where income in respect of personal activities exercised by an entertainer or a sports person in his capacity as such in a Contracting State accrues not to the entertainer or sports person 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 19 REMUNERATION AND PENSIONS IN RESPECT OF GOVERNMENT SERVICE 1.       a.     Remuneration, other than a pension, paid by a Contracting State or a political sub-division, or a local authority thereof to an individual in respect of services rendered to that State or sub-division or authority shall be taxable only in that State. b.    However, such remuneration shall be taxable only in the other Contracting State if the services are rendered in that other State and the individual is a resident of that State who:--                       i.        is a national of that State; or                      ii.        did not become a resident of that State solely for the purpose of rendering the services. 2.     a.     Any pension paid by, or out of funds created by, a Contracting State or 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 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. 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 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's worth. Article 21 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; and b.    remuneration from employment in that other State, in an amount not exceeding US dollar 700 or its equivalent amount during any fiscal year, as that case may be, provided that such employment is directly related to his studies or is undertaken for the purpose of his maintenance. 2.     The benefits of this article shall extend only for such period of time as may be reasonable or customarily required to complete the education or training undertaken, but in no event shall any individual have the benefits of this article for more than three consecutive years from the date of his first arrival in that other Contracting State. Article 22 PAYMENTS RECEIVED BY PROFESSORS, TEACHERS AND RESEARCH SCHOLARS 1.     A professor or teacher is or was a resident of the Contracting State immediately 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 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 23 OTHER INCOME 1.     Subject to the provisions of paragraph 2, items of income of a resident of a Contracting State, wherever arising, which are not expressly dealt with in the foregoing articles of this Agreement, shall be taxable only in that Contracting State. 2.     The provisions of paragraph 1 shall not apply to 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 herein, or performs in that other State independent personal services from a fixed base situated therein, and the right of property in respect of which the income is paid is effectively connected with such permanent establishment or fixed base. In such a case the provisions of Article 7 or Article 15, as the case may be, shall apply. 3.     Notwithstanding the provisions of paragraphs 1 and 2, items of income of a resident of a Contracting State not dealt with in the foregoing article of this Agreement and arising in the other Contracting State may also be taxed in that other Contracting State. Article 24 CAPITAL 1.     Capital represented by immovable property referred to in Article 6, owned by a resident of a Contracting State and situated in the other Contracting State, may be taxed in that other State. 2.     Capital represented by movable property, forming part of the business property of a permanent establishment, which an enterprise of a Contracting State has in the other Contracting State or by movable property pertaining to a fixed based 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 motor vehicle operated in international traffic and by movable property pertaining to the operation of such ships, aircraft or motor 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 25 AVOIDANCE 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 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 Uzbekistan, India shall allow as a deduction from the tax on the income of that resident an amount equal to the income-tax paid in Uzbekistan, 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 Uzbekistan. 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 Uzbekistan. 3.     In the case of Uzbekistan 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 26 NON-DISCRIMINATION 1.     The national 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 an 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 27 MUTUAL AGREEMENT PROCEDURE 1.     Where a resident of a Contracting State considers that the actions of one or both of the Contracting States result or will result for him in taxation not in accordance with this 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 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 a commission consisting of representatives of the competent authorities of the Contracting States. Article 28 EXCHANGE OF INFORMATION 1.     The competent authorities of the Contracting States shall exchange such information (including documents) as is necessary for carrying out the provisions of the 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. 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 29 DIPLOMATIC AND CONSULAR ACTIVITIES Nothing in this Agreement shall affect the fiscal privileges of diplomatic or consular officials under the general rules of international law or under the provisions of special agreements. Article 30 ENTRY INTO FORCE Each of the Contracting States shall notify to the other the completion of the procedures required by it 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, 1993, and in respect of capital which is held at the expiry of any previous year beginning on or after 1st April, 1993; b.    In Uzbekistan: in respect of income arising in any year of income beginning on or after the 1st January, 1993, and in respect of capital which is held at the expiry of any year of income beginning on or after 1st January, 1993. Article 31 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 of 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 1st April next following the calendar year in which the notice of termination is given; b.    in Uzbekistan: 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 income next following the calendar year in which the notice of termination is given. In witness thereof  the undersigned, being duly authorised thereto, have signed the present Agreement. Done  at New Delhi in duplicate this 29th day of July, One thousand nine hundred and ninety-three in the Hindi, Uzbek 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. (Sd.)............ For the Government of the Republic of India (Sd.)............ For the Government of the Republic of Uzbekistan. [Notification No. 10222/96/F. No. 501/8/92-FTD]

Jordan AGREEMENT BETWEEN INDIA AND JORDAN. Download Word Document In English. (Rs.80/-) Whereas the annexed Convention between the Government of the Republic of India and the Government of the Hashemite Kingdom of Jordan for the avoidance of double taxation and the prevention of fiscal evasion with respect tot taxes on income, has entered into force on the 16th day of October, 1999, in accordance with article 29 of the said Convention, thirty days after the receipt of the later of the notifications by both the Contracting States to each other of the completion of the procedures required by their respective laws for bringing into force 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 HASHEMITE KINGDOM OF JORDAN FOR THE ACOIDANCE 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 HASHEMITE KINGDOM OF JORDAN Desiring to conclude a Convention for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and with a view to promoting economic co-operation between the two countries have agreed as follows: Article 1 PERSONAL SCOPE This Convention shall apply to persons who are residents of one or both of the Contracting States. Article 2 TAXES COVERED 1.     This Convention shall apply to taxes on income imposed on behalf of a Contracting State or of its political sub-divisions or local authorities irrespective of the manner in which they are levied. 2.     There shall be regarded as taxes on income all taxes imposed on total income or on element of income including taxes on gains from the alienation of movable or immovable property and taxes on the total amounts of wages or salaries paid by enterprises. 3.     The existing taxes to which the Convention shall apply are in particular: a.     in India; the income-tax, including any surcharge thereon (hereinafter referred to as "Indian tax"). b.    In Jordan:                       I.        the income tax;                      II.        the distribution tax; and                     III.        the social service tax (hereinafter referred to as "Jordanian 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 State shall notify each other of significant changes which have been made in their respective taxation laws. Article 3 GENERAL DEFINITIONS 1.     For the purpose 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 "Jordan" means the territories of the Hashemite Kingdom of Jordan, the territorial waters of Jordan and airspace above it, and the seabed and sub-soil of the territorial waters, and includes any area extending beyond the limits of the territorial waters of Jordan, and the Seabed and sub-soil of any such area, which has been or may hereafter be designated, under the laws of Jordan, and in accordance with international law as an area over which Jordan has sovereign rights for the purposes of exploring and exploiting the natural resources, whether living or non-living; c.     the term "person" includes an individual, a company, a body of persons and any other entity which is treated a s a taxable unit under the taxation laws in force in the respective Contracting States; d.    the term "company means any body corporate or any entity which is treated as a body corporate for tax purposes; e.     the terms "enterprise of a Contracting State" and "enterprise of the other Contracting State" mean respectively an enterprise carried on by a resident of a Contracting State and an enterprise carried on by a resident of the other Contracting State f.     the term "international traffic" means any transport by a ship or aircraft operated by an enterprise 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 India: the Central Government in the Ministry of Finance (Department of Revenue) or their authorized representative;                      ii.        in Jordan: the Minister of Finance or his authorized representative; h.     the term "national" means:                       i.        any individual possessing the nationality of a Contracting State;                      ii.        any legal person, partnership or association deriving its status as such from the laws in force in a Contracting State; i.      the term "fiscal year" means;                       i.        in the case of India, " previous year" as defined under section 3 of the Income-tax Act, 1961;                      ii.        in the case of Jordan, "the year" as defined in article 2 of the Income-tax Law (57 of 1985); j.      the term "tax" means Indian tax or Jordanian tax, as the context requires, but shall not include any amount which is payable in respect of any default or omission in relation to the taxes to which this Convention applies or which represents a penalty or fine imposed relating to those taxes. k.     The terms " a Contracting State" and " the other Contracting State" mean the Republic of India or the Hashemite Kingdom of Jordan as the context requires. 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 ("center of vital interests"); b.    if the State in which he has his center 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, quarry or any other place of exploration, exploitation or 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 construction or assembly project or installation project or supervisory activities in connection therewith constitute a permanent establishment only if such site, project or activity lasts 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 on behalf of an enterprise and has, and habitually exercises, in a Contracting State an authority to conclude contracts in the name of the enterprise, that enterprise shall be deemed to have a permanent establishment in that State in respect of any activities which that person undertakes for the enterprise, unless the activities of such person are limited to those mentioned inn 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. 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 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 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, boats, aircraft and motor vehicles 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 and3 shall apply to the income from immovable property of an enterprise and to income from immovable property used for the performance of independent personal services. Article 7 BUSINESS PROFITS 1.     The profits of an enterprise of a Contracting State shall be taxable only in that State unless the enterprise carries on business in the other Contracting State through a permanent establishment situated therein. If the enterprise carries on business as aforesaid, the profits of the enterprise may also be taxed in the other State but only so much of them as is attributable to that permanent establishment. 2.     Subject to the provisions of paragraph 3, where an enterprise of a Contracting State carries on business in the other Contracting State through a permanent establishment situated therein, there shall in each Contracting State be attributed to that permanent establishment the profits which it might be expected to make if it were a distinct and separate enterprise engaged in the same or similar activities under the same or similar conditions and dealing wholly independently with the enterprise of which it is a permanent establishment. 3.     In determining the profits of a permanent establishment, there shall be allowed a deductions expenses which are incurred for the purposes of the permanent establishment, including executive and general administrative expenses so incurred, whether in the State in which the permanent establishment is situated or elsewhere, in accordance with the provisions of and subject to the limitations of the tax laws of that State. 4.     No profits shall be attributed to a permanent establishment by reason of the mere purchase by that permanent establishment of goods or merchandise for the enterprise. 5.     For the purposes of the preceding paragraphs, the profits to be attributed to the permanent establishment shall be determined by the same method year by year, unless there is good and sufficient reason to the contrary. 6.     Where profits include items of income which are dealt with separately in other articles of this Convention, then the provisions of those articles shall not be affected by the provisions of this article. Article 8 SHIPPING AND AIR TRANSPORT 1.     Profits derived by an enterprise of a Contracting State from the operation by that enterprise of ships or aircraft in international traffic shall be taxable only in that State. 2.     For the purposes of this article, profits from the operation of ships or aircraft in international traffic shall mean profits derived by an enterprise described in paragraph 1 from the transportation by sea or air respectively of passengers mail, livestock or goods carried on by the owners or lessees or charterers of ships or aircraft including- a.     the sale of tickets for such transportation on behalf of other enterprises; b.    other activity directly connected with such transportation; and c.     the rental of ships or aircraft incidental to any activity directly connected with such transportation. 3.     Profits of an enterprise of a Contracting State described in paragraph 1 from the use, maintenance, or rental of containers (including trailers, barges and related equipment for the transport of containers) used in connection with the operation of ships or aircraft in international traffic shall be taxable only in that State. 4.     The provisions of paragraphs 1 and 3 shall also apply to profits from participation in a pool, a joint business or code sharing, or an international operating agency. 5.     For the purposes of this article, interest on funds connected with the operation of ships or aircraft in international traffic shall be regarded as profits derived from the operation of such ships or aircraft, and the provisions of article 11 (interest) shall not apply in relation to such interest. 6.     Gains derived by an enterprise of a Contracting State described in paragraph 1 from the alienation of ships, aircraft or containers owned and operated by the enterprise, the income from which is taxable only in that State, shall be taxed only in that State. 7.     Notwithstanding the preceding provisions of this article, income derived by an enterprise of a Contracting State from the operation of ships between the ports of the other Contracting State and the ports of third countries may be taxed in that other Contracting State, but the tax imposed in that other State shall be reduced by an amount equal to 50 per cent. Thereof. Article 9 ASSOCIATED ENTERPRISES 1.     Where: a.     an enterprise of a Contacting State participates directly or indirectly in the management, control or capital of an enterprise of the other Contracting State; or b.    the same persons participate directly or indirectly in the management, control or capital of an enterprise of a Contracting State and an enterprise of the other Contracting State, and in either case conditions are made or imposed between the two enterprises in their commercial or financial relations which differ from those which would be made between independent enterprises, then any profits which would, but for those conditions, have accrued to one of the enterprises, but, by reason of those conditions have not so accrued, may be included in the profits of that enterprise and taxed accordingly. 2.     Where a Contracting State includes in the profits of an enterprise of that State And taxes accordingly-profits on which an enterprise of the other Contracting State has been charged to tax in that other State and the profits so included are profits which would have accrued to the enterprise of the first mentioned State if the conditions made between the two enterprises had been those which would have been made between independent enterprises, then that other State shall make an appropriate adjustment to the amount of the tax charged therein on those profits. In determining such adjustment, due regard shall be had to the other provisions of this Convention and the competent authorities of the Contracting States shall, if necessary, consult each other. Article 10 DIVIDENDS 1.     Dividends paid by a company which is a resident of a Contracting State to a resident of the other Contracting State may be taxed in that other State. 2.     However, such dividends may also be taxed in the Contracting State of which the company paying the dividends is a resident and according to the laws of that State, but if the recipient is the beneficial owner of the dividends the tax so charged shall not exceed 10 per cent. Of the gross amount of the dividends. This paragraph shall not affect the taxation of the company in respect of the profits out of which the dividends are paid. 3.     The term "dividends" as used in this article means income from shares or other rights, not being debt-claims, participating in profits, as well as income from other corporate rights which is subjected to the same taxation treatment as income from shares by the laws of the State of which the company making the distribution is a resident. 4.     The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the dividends, being a resident of a Contracting State, carries on business in the other Contracting State of which the company paying the dividends is a resident, through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the holding in respect of which the dividends are paid is effectively connected with such permanent establishment or fixed base. In such case the provisions of article 7 or article 14, as the case may be, shall apply. 5.     Where a company which is a resident of a Contracting State derives profits or income from the other Contracting State, that other State may not impose any tax on the dividends paid by the company, except in so far as such dividends are paid to a resident of that other State or in so far as the holding in respect of which the dividends are paid is effectively connected with a permanent establishment or a fixed base situated in that other State, nor subject the company's undistributed profits to a tax on the company's undistributed profits, even if the dividends paid or the undistributed profits consist wholly or partly of profits or income arising in such other State. Article 11 INTEREST 1.     Interest arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State. 2.     However, such interest may also be taxed in the Contracting State in which it arises, and according to the laws of that State, but if the recipient is the beneficial owner of the interest the tax so charged shall not exceed 10 per cent. of the gross amount of the interest. The competent authorities of the Contracting States shall by mutual agreement settle the mode of application of this limitation. 3.     Notwithstanding the provisions of paragraph 2, interest arising in a Contracting State shall be exempt from tax in that State provided it is derived and beneficially owned by-               i.        the Government, a political sub-division or a local authority of the other Contracting State; or              ii.        the Central Bank of the other Contracting State, or any other bank or governmental financial institutions/agencies 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 debenture. Penalty charges for late payment shall not be regarded as interest for the purposes of this article. 5.     The provisions of paragraphs 1and 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 Contracting State in which the permanent establishment or fixed base is situated. 7.     Where, by reason of a special relationship between the prayer and the beneficial owner or between both of them and some other person, the amount of the interest having regard to the debt-claim for which it is paid exceeds the amount which would have been agreed upon by the payer and the beneficial owner in the absence of such relationship, the provisions of this article shall apply only to the last mentioned amount. In such case, the excess part of the payments shall remain taxable according to the laws of each Contracting State, due regard being had to the other provisions of this Convention. Article 12 ROYALTIES AND FEES FOR TECHNICAL SERVICES 1.     Royalties or fees for technical services arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State. 2.     However, such royalties or fees for technical services may also be taxed in the Contracting State in which they arise and according to the laws of that State, but if the recipient is the beneficial owner of the royalties or fees for technical services the tax so charged shall not exceed 20 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 and films or tapes or any other means of reproduction for television or radio broadcasting, any patent, trade mark, design or model, plan, secret formula or process, any industrial, commercial or scientific equipment or for information concerning industrial, commercial or scientific experience; b.    The term "fees for technical services" means payment of any kind in consideration for the rendering of any managerial, technical or consultancy services including the provision of services by technical or other personnel but does not include payments for services mentioned in articles14 and 15 of this Convention. 4.     The provisions of paragraphs 1 and 2 shall apply if the beneficial owner of the royalties or fees for technical services being a resident of a Contracting State, carries on business in the other Contracting State, in which the royalties or fees for technical services arise, through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the right or property in respect of which the royalties or fees for technical services are paid is effectively connected with such permanent establishment or fixed base. In such case the provisions of article 7 or article 14, as the case may be, shall apply. 5.     Royalties or fees for technical services shall be deemed to arise in a Contracting State when the payer is that State itself, a political sub-division, a local authority or a resident of that State. Where, however, the person paying the royalties or fees for technical services, whether he is a resident of a Contracting State or not, has in a Contracting State a permanent establishment or a fixed base in connection with which the liability to pay the royalties or fees for technical services 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 amount of the royalties or fees for technical services having regard to the use, right or information for which they are paid, exceeds the amount which would have been agreed upon by the payer and the beneficial owner in the absence of such relationship, the provisions of this article shall apply only to the last mentioned amount. In such case, the excess part of the payments shall remain taxable according to the laws of each Contracting State, due regard being had to the other provisions of this Convention. Article 13 CAPITAL GAINS 1.     Gains derived by a resident of a Contracting State from the alienation of immovable property referred to in article 6 and situated in the other Contracting State may also be taxed in that other State. 2.     Gains from the alienation of movable property forming part of the business property of a permanent establishment which an enterprise of a Contracting State has in the other Contracting State or of movable property pertaining to a fixed base available to a resident of a Contracting State in the other Contracting State for the purpose of performing independent personal services, including such gains from the alienation of such a permanent establishment (alone or with the whole enterprise) or of such fixed base, may also be taxed in that other State. 3.     Gains derived by an enterprise of a Contracting State from the alienation of ships or aircraft operated in international traffic or movable property pertaining to the operation of such ships or aircraft shall be taxable only in that State. 4.     Gains from the alienation of shares of the capital stock of a company the property of which consists directly or indirectly principally of immovable property situated in a Contracting State may be taxed in that State. 5.     Gains from the alienation of 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. Article 14 INDEPENDENT PERSONAL SERVICES 1.     Income derived by a resident of a Contracting State in respect of professional services or other activities of an independent character shall be taxable only in that State except in the following circumstances, when such income may also be taxed in the other Contracting State: a.     If he has a fixed base regularly available to him in the other Contracting State for the purpose of performing his activities; in that case, only so much of the income as is attributable to that fixed base may be taxed in that other State; or b.    If his stay in the other State is for a period or periods aggregating 183 days or more in any 12-month period commencing or ending in the fiscal year concerned; in that case, only so much of the income as is derived from his activities performed in that other State may be taxed in that other State; or c.     If the remuneration for his activities in the other Contracting State is paid by a resident of that Contracting State or is borne by a permanent establishment or a fixed bas situated in that Contracting State and exceeds in the fiscal year the equivalent of US $ 2000. 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:               i.        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              ii.        The remuneration is paid by, or on behalf of, an employer who is not a resident of the other State; and             iii.        If 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 by an enterprise which is a resident of a Contracting State in international traffic shall be taxable only in that Contracting State. Article 16 DIRECTOR'S 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 also be taxed in that other State. Article 17 ARTISTES AND SPORTMEN 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 a sportsman, from his personal activities as such exercised in the other Contracting State, may be taxed in that other State. 2.     Where income in respect of personal activities exercised by an entertainer or a sportsman in his capacity as such accrues not to the entertainer or sportsman himself but to another person, that income may, notwithstanding the provisions of articles 7,14, and 15, be taxed in the Contracting State in which the activities of the entertainer or sportsman are exercised. 3.     The provisions of paragraphs 1 and 2, shall not apply to income from the visit to that State is substantially supported by public funds of one or both of the Contracting States or of political sub-divisions or local authorities thereof. In such a case, the income is taxable only in the Contracting State of which the entertainer or sportsman is a resident. Article 18 PENSIONS 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 shall be taxable only in that State. 2.     Notwithstanding the provisions of paragraph 1, pensions paid and other payments made under a public scheme which is part of the social security system of a Contracting State or a political sub-division or a local authority thereof shall be taxable only in that State. Article 19 GOVERNMENT SERVICE 1.       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 b taxable only in that State. a. b.    However, such remuneration shall be taxable only in the other Contracting State if the services are rendered in that 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 th services. 2.     a.     Any pension paid by, or out of funds created by, a Contracting State or a political sub-division or a local authority thereof to an individual in respect of services rendered to that State or sub-division or authority shall be taxable only in that State. b.    However, such pension shall be taxable only in the other Contracting State if the individual is a resident of, and a national of, that State. 3.     The provisions of articles 15, 16 and 18 shall apply to remuneration and pensions in respect of services rendered in connection with a business carried on by a Contracting State or a political sub-division or a local authority thereof. Article20 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 slowly for the purpose of his education or training shall be exempt from tax in that other State on:               i.        Payments made to him by persons residing outside that other State for the purposes of this maintenance, education or training; and              ii.        Remuneration from employment in that other State in an amount not exceeding US $ 500 or its equivalent amount during any fiscal year, as the case may be, provided that such employment is directly related to his studies or is undertaken for the purpose of his maintenance. 2.     The 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 benefit of this article for more than five consecutive years from the date of his first arrival in that other Contracting State. Article 21 PROFESSORS, TEACHERS AND RESEARCH SCHOLARS 1.     A professor or teacher who is or was a resident of the Contracting State immediately before visiting the other Contracting State for the purpose of teaching or engaging in research, or both, at a university, college, school or other approved institution in that other Contracting State shall be exempt from tax in that other State on any remuneration for such teaching or research for a period not exceeding one year from the date of his arrival in that other State. 2.     This article shall not apply to income from research, if such research, if such research is undertaken primarily for the private benefit of a specific person or persons. 3.     For the purposes of this article and article 20, an individual shall be deemed to be a resident of a Contracting State if he is resident in that State in the fiscal year in which he visits the other Contracting State or in the immediately preceding fiscal year. 4.     For the purposes of paragraph 1 "approved institutions" means an institution which has been approved in this regard by the competent authority of the 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 1 shall not apply to income, other than income from immovable property a 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 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 eliminated as follows: Where a resident of India derives income which, in accordance with the provisions of this Convention, may be taxed in Jordan, India shall allow as a deduction from the tax on the income of that resident a deduction oat source. Such amount shall not, however, exceed that part of the income- tax as compute before the deduction is given, which is attributable to the income which may be taxed in Jordan. 3.     In the case of Jordan, double taxation shall be eliminated as follows: Where a resident of Jordan derives income which, in accordance with the provisions of this Convention, may be taxed in India, Jordan shall allow as a deduction from the tax on the income of that resident an amount equal to the income-tax paid in India. Such deduction shall not, however, exceed that part of the income- tax, as computed before the deduction is given, which is attributable to the income which may be taxed in India. 4.     The tax payable in 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 is accordance with the provisions of this Convention, is not to be subjected to tax in a Contracting State, may be taken into account for calculating the rate of tax to be imposed in that Contracting State. Article 24 NON-DISCRIMINATION 1.     Nationals of a Contracting State shall not be subjected in the other Contracting State to any taxation or any requirement connected therewith, which is other or more burdensome than the taxation and connected requirements to which nationals of that other State in the same circumstances in particular with respect to residence are or may be subjected. This provision shall, notwithstanding the provisions of article 1, also apply to persons who are not residents of one or both of the Contracting States. 2.     The taxation on a permanent establishment which an enterprise of a Contracting State has in the other Contracting State shall not be les 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 granting to residents of the other Contracting State any personal allowances reliefs and reductions for taxation purposes on account of civil status or family responsibility which it grants to his own residents. 3.     Enterprises of a Contracting State, the capital of which is wholly or partly owed 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.     Expect 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 a if they had been paid 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 an description which are the subject of this Convention. Article 25 MUTUAL AGREEMENT PROCEDURE 1.     Where a person considers that the actions of one or both the Contracting State result or will result for him in taxation not in accordance with the provisions of this Convention, he may, irrespective of the remedies provided by the domestic law of those States, present his case to the competent authority of the Contracting State of which he is a resident or, if his case comes under paragraph 1 of article 24, to that of the Contracting State of which he is a national. The case must be presented within three years from the first notification of the action resulting in taxation not in accordance with the provisions of the Convention. 2.     The competent authority shall endeavour if the objection appears to it to be justified ad if it is not itself able to arrive at a satisfactory solution, to resolve the case by mutual agreement with the competent authority of the other contracting State with a view to the avoidance of taxation which is not in accordance with the Convention. Any agreement reached shall be implemented notwithstanding any time limits in the domestic law of the Contracting States. 3.     The competent authorities of the Contracting States shall endeavour to resolve by mutual agreement any difficulties or doubts arising ass to the interpretation or application of the Convention. They may also consult together for the elimination of double taxation in cases not provided for in the Convention. 4.     The competent authorities of the Contracting States may communicate with each other directly for the purpose of reaching an agreement in the sense of the preceding paragraphs. When it seems advisable in order to reach agreement to have an oral exchange of opinions, such exchange may take place through a Commission consisting of representatives of the competent authorities of the Contracting States. Article 26 EXCHANGE OF INFORMATION 1.     The competent authorities of the Contracting States shall exchange such information (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 there under 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:               i.        To carry out administrative measures at variance with the laws and administrative practice of that or of the other Contracting State;              ii.        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;             iii.        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 COLLECTION ASSISTANCE 1.     The Contracting States undertake to lend assistance to each other in the collection of taxes to which this Convention relates, together with interest, costs, and civil penalties relating to such taxes, referred to in this article as a "revenue claim". 2.     Requests for assistance by the competent authority of a Contracting State in the collection of 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 inn the course of rendering such assistance to the extent mutually agreed between the competent authorities of the two States. 4.     Nothing in this article shall be construed as imposing on either Contracting State the obligation to carry out administrative measures of a different nature from those used in the collection of its own taxes or those which would be contrary to its public policy. Article28 DIPLOMATIC AGENTS AND CONSULAR OFFICERS Nothing in this Convention shall affect the fiscal privileges of diplomatic agents or consular officers under the general rules of international law or under the provisions of special agreements. Article 29 ENTRY INTO FORCE 1.     The Contracting States shall notify each other in writing, through diplomatic channels, of the procedures required by the respective laws for the entry into force of this Convention. 2.     This Convention shall enter into force thirty days after the receipt of the later of the notifications referred to in paragraph 1 of this article. 3.     The provisions of this Convention shall have effect: a.     n India, in respect of income arising in any fiscal year beginning on or after the first day of April next following the calendar year in which the Convention enters into force, and b.    in Jordan, in respect of income arising in any fiscal year beginning on or after the first day of January next following the calendar year in which the Convention enters into force. Article 30 TERMINATION This Convention shall remain in force indefinitely until terminated by a Contracting State. Either Contracting State may terminate this Convention, through diplomatic channels, by giving notice of termination at least six months before the end of any calendar year beginning after the expiration of five years from the date for entry into force of the Convention. In such event, this 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 of termination is given; b.    in Jordan, in respect of income arising in any previous year 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 the twentieth day of April 1999, in the Arabic, Hindi and English languages, all three texts being equally authentic. In case of divergence between the texts, the English text shall be the operative one. For the Government of the Republic of India........................................ For the Government of Hashemite Kingdom of Jordan. .......................................

Ukraine Notification No. G. S. R.... (E), dated 11th January, 2002. Download Word Document In English. (Rs.85/-) Whereas the annexed Convention between the Government of the Republic of India and the Government of Ukraine for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and on capital, shall enter into force, on the 31st October, 2001, on the date of the later of notifications by each of the Contracting States to each other, of the completion of the procedures required under their respective laws, as required by article 30 of the said Convention; Now, therefore, in exercise of the powers conferred by section 90 of the Income-tax Act, 1961 (43 of 1961), the Central Government hereby directs that all the provisions of the said Convention shall be given effect to in the Union of India. ANNEXURE CONVENTION BETWEEN THE GOVERNMENT OF THE REPUBLIC OF INDIA AND THE GOVERNMENT OF UKRAINE 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 UKRAINE 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 confirming their aspiration for the development and strengthening of bilateral relations 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 and 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 Ukraine:                       i.        the profits tax of enterprises;                      ii.        the individual income-tax;                     iii.        tax on property of enterprises;                     iv.        tax on immovable property of citizens; (hereinafter referred to as "Ukrainian tax"). b.      in India:                       i.        the income-tax, including any surcharge thereon;                      ii.        the wealth-tax; (hereinafter referred to as "Indian tax"). 4.     This Convention shall also apply to any identical or substantially similar taxes which are imposed by either Contracting State after the date of signature of this Convention in addition to, or in place of, the existing taxes. 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.     For the purposes of this Convention, unless the context otherwise requires: a.     the term "Ukraine" means the territory of Ukraine, its continental shelf and its exclusive economic (maritime) Zone, including any territory outside the territorial sea of Ukraine which, according to international law, is specified or may be specified, in line with the Ukrainian law, as the territory within which the rights of Ukraine relating to seabed and natural resources are effective; b.    the term "India" means the territory of India and includes the territorial sea and airspace above it, as well as any other maritime zone in which India has sovereign rights, other rights and jurisdictions, according to the Indian law and in accordance with international law/U. N. Convention on the law of the sea; c.     the terms 'a Contracting State" and "the other Contracting State" mean Ukraine or India as the context requires; d.    the term "tax" means Ukrainian or Indian tax, as the context requires, but shall not include any amount which is payable 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 entity which is treated as.-a taxable unit under the taxation laws in force in the respective Contracting State; f.     the term 'company" means any body corporate or any entity which is treated as a body corporate for tax purposes under the taxation laws in force in the respective Contracting States; g.    the terms "enterprise of a Contracting State" and 'enterprise of the other Contracting State" means 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 Ukraine-the State Tax Administration of, Ukraine or its authorised representative; and in the case of India-the Ministry of Finance (Department of Revenue) or its authorised representative i.      the term 'national' means: a.     any individual possessing the citizenship of a Contracting State; b.    an), legal person, partnership or association deriving its status as such from the laws in force in a Contracting State. j.      the term 'international traffic" means any transport by a ship or aircraft operated by an enterprise which has its place of effective management in a Contracting State, except when the ship or aircraft is operated solely between places in the other Contracting State; k.     The term 'fiscal year" means:                       i.        in the case of Ukraine, the calendar year from the first of January to the 31st of December of the year under review;                      ii.        in the case of India, the "previous year" as defined under section 3 of the Income-tax Act, 1961. 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, place of registration 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 or capital situated in the Contracting 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 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 State with which his personal and economic relations are closer (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 the other 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 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 State in which its place of effective management is situated. Article 5 PERMANENT ESTABLISHMENT 1.     For the purposes of this Convention, the term "permanent establishment" means a fixed place of business through which the business of an enterprise is wholly or partly carried on. 2.     The term 'permanent establishment" includes especially: a.     a place of management; b.    a branch; c.     an office; d.    a factory; e.     a workshop; f.     a mine, an oil or gas well, a quarry or any other place of extraction of natural resources; g.    a warehouse in relation to a person providing storage facilities for others; h.     a premises or warehouse used as a sales outlet or for receiving or soliciting orders; i.      an installation or structure used for the exploration or exploitation of natural resources; j.      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. 3.     An enterprise shall be deemed to have a permanent establishment in a State and to carry on business through that permanent establishment if it provides services or facilities in connection with, or supplies plant and machinery on hire used or to be used in, the prospecting for, extraction or production of mineral oils or in connection with such extraction or production of mineral oils in the State. 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 unloading of goods or merchandise belonging to the enterprise; b.    the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of storage or display; c.     the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of processing by another enterprise; d.    the maintenance of a fixed place of business solely for the purpose of purchasing goods or merchandise or of collecting information, for the enterprise; e.     the maintenance of a fixed place of business solely for the purpose of advertising, for the supply of information, for scientific research or for similar activities which have a preparatory or auxiliary character, for the enterprise. However, the provisions of sub-paragraphs (a) to (e) shall not be applicable where the enterprise maintains only other fixed place of business in the other Contracting State for any purposes other than the purposes specified in the said sub-paragraphs. 5.     Notwithstanding the provisions of paragraphs 1 and 2 where a person being a resident of a Contracting State-other than an agent of an independent status to whom paragraph 6 applies, is acting 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 the activities of such person 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 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; d.    in so acting, he manufactures or processes in that State for the enterprise goods or merchandise belonging to the enterprise. 5.     An enterprise of a Contracting State shall not be deemed to have a permanent establishment in the 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 itself or on behalf of the enterprise and other enterprises controlling, controlled by, or subject to the same common control, as that of the enterprise, he will not be considered an agent of an independent status within the meaning of this paragraph. 6.     The fact that a company which is a resident of a Contracting State controls or is controlled by a company which is a resident of the other Contracting State, or which carries on business in that other State (whether through a permanent establishment, or otherwise), shall not of itself constitute either company a permanent establishment of the other. Article 6 INCOME FROM IMMOVABLE PROPERTY 1.     Income derived by a resident of a Contracting State from immovable property (including income from agriculture or forestry) situated in the other Contracting State may be taxed in that other State. 2.     The term "immovable property" shall have the meaning which it has under the law of the Contracting State in which the property in question is situated. The term shall in any case include property accessory to immovable property, livestock and equipment used in agriculture and forestry, rights to which the provisions of general law respecting landed property apply, usufruct of immovable property and rights to variable or fixed payments as consideration for the working of, or the right to work, mineral deposits, sources and other natural resources. Ships, boats and aircraft shall not be regarded as immovable property. 3.     The provisions of paragraph 1 shall also apply to income derived from the direct use, letting, or use in any other form of immovable property. 4.     The provisions of paragraphs 1 and 3 shall also apply to the income from immovable property of an enterprise and to income from immovable property used for the performance of independent 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 directly or indirectly to that permanent establishment. The words "directly or indirectly" mean, for the purposes of this article, that where a permanent establishment takes an active part in negotiating, concluding or fulfilling contracts entered into by the enterprise, then notwithstanding that other parts of the enterprise have also participated in those transactions, there shall be attributed to the permanent establishment that proportion of profits of the enterprise arising out of those contracts as the contribution of the permanent establishment to those transactions bears to that of the enterprise as a whole. 2.     Subject to the provisions of paragraph 3, where an enterprise of a Contracting State carries on business in the other Contracting State through a permanent establishment situated therein, there shall in each Contracting State be attributed to that permanent establishment the profits which it might be expected to make if it were a distinct and separate enterprise engaged in the same or similar activities under the same or similar conditions and dealing wholly independently with the enterprise of which it is a permanent establishment. 3.     In determining the profits of a permanent establishment, there shall be allowed as deductions expenses which are incurred for the purposes of the business of the permanent establishment, including executive and general administrative expenses so incurred, whether in the State in which the permanent establishment is situated or elsewhere, in accordance with the provisions of and subject to the limitations of the tax laws of that State. 4.     In so far as it has been customary in a Contracting State to determine the profits to be attributed to a permanent establishment on the basis of an apportionment of the total profits of the enterprise to its various parts, nothing in paragraph 2 shall preclude that Contracting State from determining the profits to be taxed by such an apportionment as may be customary, the method of apportionment adopted shall however, be such that the result shall be in accordance with the principles contained in this article. 5.     No profits shall be attributed to a permanent establishment by 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 SHIPPING AND AIR TRANSPORT 1.     Profits derived by an enterprise of a Contracting State from operation of aircraft or ships 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 aircraft or ships. 3.     For the purposes of this article, interest on amounts connected with the operation of aircraft or ships in international traffic shall be regarded as profits derived from the operation of such aircraft or ships; and the provisions of article 11 (interest) shall not apply in relation to such interest. 4.     For the purposes of this article, profits from the operation of aircraft or ships in international traffic shall mean profits derived by an enterprise from transportation by air or sea respectively of passengers, mail, livestock, goods or cargoes of every description carried on by the owners or lessees or charterers of aircraft or ships. This will also include profit from a.     the sale of tickets for such transportation on behalf of other enterprises; b.    the rental on a bareboat ship or aircraft; c.     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 merchandises in international traffic. 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 (other than a partnership) which holds directly at least 25 per cent. of the share 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 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 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 beneficial owner of the interest the tax so charged shall not exceed 10 per cent. of the gross amount of the interest. The competent authorities of the Contracting State shall by mutual agreement settle the mode of application of this limitation. 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. 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 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. 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 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. 7.     The provisions of this article shall not apply if it is the main purpose or one of the main purposes of any persons concerned with the creation or assignment of the debt-claim in respect of which the interest is paid to take advantage of this article by means of that creation or assignment. 8.     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: a.     the Government, a political sub-division or a local authority of the other Contracting State; or the Central Bank of the other Contracting State; b.    interest arising in a Contracting State shall be exempt from tax in that Contracting State if it is derived and beneficially owned by any person (other than a person referred to in sub-paragraph (a)) who is a resident of the other Contracting State provided that the transaction giving rise to the debt-claim, has been approved in this regard by the Government of the first-mentioned Contracting State. 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 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 10 per cent. of the gross amount of the royalties or fees for technical services. 3.     The term "royalties" as used in this article means payments of any kind received as a consideration for the use of, or the right to use, any copyright of literary, artistic or scientific work including cinematograph films 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 payment 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 consultative 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 the State itself, a political sub-division, a local authority or a resident of that State. Where, however, the person paying the royalties or fees for technical services, whether he is a resident of a Contracting State or not, has in a Contracting State a permanent establishment or a fixed base in connection with which the liability to pay the royalties or fees for technical services was incurred, and such royalties or fees for technical services are borne by such permanent establishment or fixed base, then such royalties or fees for technical services shall be deemed to arise in the State in which the permanent establishment or fixed base is situated. 7.     Where, by reason of 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, exceeds the amount which would have been paid in the absence of such relationship, the provision 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. 8.     The provisions of this article shall not apply if it is the main purpose or one of the main purposes of person concerned with the creation or transfer of the rights or rendering of services in respect of which the royalties or fees are paid to take advantage of this article by means of that creation or assignment. Article 13 CAPITAL GAINS 1.     Gains derived by a resident of a Contracting State from the alienation of immovable property, referred to in article 6 and situated in the other Contracting State may be taxed in that other State. 2.     Gains from the alienation of movable property forming part of the business property of a permanent establishment which an enterprise of a Contracting State has in the other Contracting State or of movable property pertaining to a fixed base available to a resident of a Contracting State in the other Contracting State for the purpose of performing independent personal services, including such gains from the alienation of such a permanent establishment (alone or with the whole enterprise) or of such fixed base, may be taxed in that other State. 3.     Gains from the alienation of ships or aircraft operated in international traffic by an enterprise of a Contracting State 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 of immovable property and of an interest in a partnership the assets of which consists principally of immovable property situated in a Contracting State may be taxed in that State. 5.     Gains from the alienation of shares of a company and an interest in a partnership other than those mentioned in paragraph 4, may be taxed in the Contracting State of which the company or partnership is resident. 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 provided that those gains are subject to tax in that Contracting State. 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 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, 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 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 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, or aboard a boat engaged in inland waterways transport, may be taxed in the Contracting State of 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 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 entertainer, such as a theatre, motion picture, radio or television artiste, or a musician, or as a sportsperson, from the personal activities as such exercised in the other Contracting State may be taxed in that other State. 2.     Where income in respect of personal activities exercised by an entertainer or a sportsperson in his capacity as such accrues not to the entertainer or sportsperson himself but to another person, that income may, notwithstanding the provisions of articles 7, 14 and 15 be taxed in the Contracting State in which the activities of the entertainer or sportsperson are exercised. 3.     Notwithstanding the provisions of paragraphs 1 and 2, income mentioned in this article, will be exempt from taxation in the State in which the activity of an actor or sportsperson is financed from the public funds of this and other State, or if such activity is carried out according to the agreement on cultural co-operation concluded between the Contracting States. 4.     Notwithstanding the provisions of paragraph 2 and articles 7, 14 and 15, where income in respect of personal activities exercised by an actor or sportsperson in his capacity as such in a Contracting State accrues not to the actor 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 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.     The provisions of articles 15 and 16 shall apply to remuneration and pensions in respect of services rendered in connection with a business carried on by a Contracting State or political subdivision or local authority thereof. Article 19 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 time 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; and b.    remuneration from employment in that other State in an amount not exceeding US $500 or its equivalent amount in Ukrainian and Indian currency during any fiscal year, as the case may be, provided that such employment is directly related to his studies or is undertaken for the purpose of his maintenance. 2.     The benefits of this article shall extend only for such period of time as may be reasonable or customarily required to complete the education or training undertaken, but in no event shall any individual have the benefits of this article, for more than five consecutive years from the date of his first arrival in that other Contracting State. Article 21 PAYMENTS RECEIVED BY PROFESSORS, TEACHERS AND RESEARCH SCHOLARS 1.     A professor or a 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 in the fiscal year in which he visits the other Contracting State or in the immediately preceding fiscal year. 4.     For the purposes of paragraph 1 "approved institution" means an institution which has been approved in this regard by the competent authority of the concerned Contracting State. Article 22 OTHER INCOME 1.     Subject to the provisions of paragraph 2, items of income of a resident of a Contracting State, wherever arising, which are not expressly dealt with in the foregoing articles of this Convention, shall be taxable only in that Contracting State. 2.     The provisions of paragraph 1 shall not apply to income, other than income from immovable property as defined in paragraph 2 of article 6, if the recipient of such income, being a resident of a Contracting State, carries on business in the other Contracting State through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the right of property in respect of which the income is paid is effectively connected with such permanent establishment or fixed base. In such case the provisions of article 7 or article 15, as the case may be, shall apply. 3.     Notwithstanding the provisions of paragraphs 1 and 2, items of income of a resident of a Contracting State not dealt with in the foregoing articles of this Convention, and arising in the other Contracting State may 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 the 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 motor vehicle operated in international traffic and by movable property pertaining to the operation of such ships, aircraft or motor vehicle, 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 and capital in the respective Contracting States except where provisions to the contrary are made in this Convention. 2.     Where a resident of India derives income or owns capital which, in accordance with the provisions of this Convention, may be taxed in Ukraine, India shall allow as a deduction from the tax on the income of that resident an amount equal to the income-tax paid in Ukraine, 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 Ukraine. 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 Ukraine. 3.     Taking into account the Ukrainian law on exemption from tax paid outside Ukraine (not being contrary to the provisions of this article), the Indian tax paid pursuant to the Indian law and this Convention either directly or by deduction from profit, income, or capital, would be allowed as credit against Ukrainian tax in respect of profit, income, or capital imposed under Ukrainian law. In any such case, the credit shall not exceed that part of Ukrainian tax (as was determined before the deduction) which pertains to the profit, income, or capital which may be taxed in India. 4.     The tax payable in the Contracting State mentioned in paragraphs 2 and 3 of this article shall be deemed to include the tax which would have been payable but for the tax incentives granted under the laws of the Contracting State and which are designed to promote economic development. 5.     Income which in accordance with the provisions of this Convention, is not to be subjected to tax in a Contracting State may be taken into account for calculating the rate of tax to be imposed in that Contracting State. Article 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 or 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 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 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 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 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 Convention. 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 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. 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, 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. 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. 3.     In no case shall 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 and administrative practice of that or of the other Contracting State; b.    to supply information or documents which are not obtainable under the laws or in the normal course of the administration of that or of the other Contracting State; c.     to supply information or documents which would disclose any trade, business, industrial, commercial or professional secret or trade process, or information, the disclosure of which would be contrary to public policy. Article 28 ASSISTANCE IN COLLECTION 1.     The Contracting States undertake to lend assistance and support to each other, in the collection of taxes to which this Convention relates, in the cases where the taxes are definitely due according to the laws of the State making the request. 2.     In the case of a request for enforcement of collection, tax claims of either of the Contracting States which have been finally determined will be accepted for enforcement by the other Contracting State to which the request is made and collected in that State in accordance with the laws applicable to the enforcement and collection of its taxes. 3.     In the case of Indian tax, the request will be sent by the Central Board of Direct Taxes, Department of Revenue to the State Tax Administration of Ukraine and will be accompanied by such certificate as is required by the laws of India to establish that the taxes have been finally determined and are due from the taxpayer. 4.     In the case of Ukrainian tax, the request will be sent by the State Tax Administration of Ukraine to the Central Board of Direct Taxes, Department of Revenue, in India and will be accompanied by such certificate as is required by the laws of Ukraine to establish that the taxes have been finally determined and are due from the taxpayer. 5.     Where the tax claim has not become final by reason of its being subject to appeal or any other proceeding, a Contracting State may, in order to protect its revenues, request the other Contracting State to take such interim measures in this behalf as are lawful under the laws of that other Contracting State. 6.     A request for assistance in collection of taxes due from a taxpayer shall be made only if adequate assets of that taxpayer are not available for recovering the taxes from him in the Contracting State making the request. 7.     The Contracting State in which tax is recovered in pursuance of paragraphs 1, 2 and 5 of this article shall immediately thereafter remit the amount so recovered to the Contracting State which made the request but it 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 Contracting States. Article 29 DIPLOMATIC AND CONSULAR OFFICIALS Nothing in this Convention shall affect the fiscal privileges of diplomatic or consular officials under the general rules of international law or under the provisions of special agreements. Article 30 ENTRY INTO FORCE 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 Convention enters into form and in respect of capital which is held at the expiry of the previous year following that in which the Convention enters into force or subsequent years. b.    in Ukraine:

France Double Taxation Avoidance Agreement Download Word Document In English. (Rs.80/-) Income-Tax Act,1961:Notification under section 90:Convention between the Government of the Republic of India and the Government of the French Republic for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and on capital Notification No. G.S.R.681(E),dtd.07.09.1994 1.     Whereas the annexed Convention between the Government of the Republic of India and the Government of the French Republic for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and on capital has come into force on the 1st day of August, 1994, on the notification by both the Contracting States to each other of the completion of the procedures required under their law for bringing into force of the said Convention in accordance with paragraph 1 of article 30 of the said Convention; 2.     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 44A of the Wealth-tax Act, 1957 (27 of 1957), the Central Government hereby directs that all the provisions of the said Convention shall be given effect to in the Union of India. ANNEXURE CONVENTION BETWEEN THE GOVERNMENT OF THE REPUBLIC OF INDIA AND THE GOVERNMENT OF THE FRENCH REPUBLIC 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 French Republic, 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; Have agreed as follows: Article 1 PERSONAL SCOPE This Convention shall apply to persons who are residents of one or both of the Contracting States. Article 2 TAXES COVERED 1.     The taxes to which this Convention shall apply are: a.     In India:                               i.        the income-tax including any surcharge thereon;                              ii.        the surtax; and                             iii.        the wealth-tax, (hereinafter referred to as "Indian tax"); b.    In France:                       i.        the income-tax (1'impot sur le revene' including any withholding tax, pre-payment (precompte) or advance payment with respect thereto;                      ii.        the corporation tax (1'impot sur les soietes) including any withholding tax pre-payment (precompte) or advance payment with respect thereto; and                     iii.        the wealth-tax (1'impot de solidarite sur la fortune). (hereinafter referred to as "French 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. 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 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, according to the Indian law, has sovereign rights, other rights and jurisdictions in accordance with international law; b.    the term "France" means the European and overseas departments of the French Republic including the territorial sea and the air space above it as well as the areas within which, in accordance with International law, the French Republic has sovereign rights for the purpose of exploring and exploiting the natural resources of the sea-bed and its sub-soil and of the superjacent waters c.     the terms "a Contracting State" and "the other Contracting State" mean India or France as the context requires; d.    (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 terms "enterprise of a Contracting State" and "enterprise of the other Contracting State" mean respectively an enterprise carried on by a resident of a Contracting State and an enterprise carried on by a resident of the other Contracting State; g.    the term "competent authority" means, 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 France, the Minister in charge of the Budget or his authorised representative; h.     (h)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 that Contracting State; 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; j.      (j)the term "fiscal year" in relation to Indian tax means "previous year" as defined in the Income-tax Act, 1961 (43 of 1961) and in relation to French income-tax means calendar year; k.     (k) the term "tax" means Indian tax or French tax as the context requires. 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 Contracting State concerning the taxes to which the Convention applies. Article 4 RESIDENT 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 management or any other criterion of a similar nature. 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 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 (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 hall 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. 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 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 premises used as a sales outlet; i.      an installation or structure used for the exploration of natural resources provided that the activities continue for more than 183 days. 3.     A building site or construction, installation or assembly project constitutes a permanent establishment only where such site or project continues for a period of more than six months. 4.     Notwithstanding the preceding provisions of this Article, the term "permanent establishment" shall be deemed not to include: a.     the use of facilities solely for the purpose of storage or display of goods or merchandise belonging to the enterprise; b.    the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of storage or display; c.     the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of processing by another enterprise; d.    the maintenance of a fixed place of business solely for the purpose of purchasing goods or merchandise or of collecting information, for the enterprise; e.     the maintenance of a fixed place of business solely for the purpose of advertising for the supply of information, for scientific research, or for other activities which have a preparation or auxiliary character, for the enterprise; 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 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 6 applies is acting in one of the Contracting States 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 the purchase of goods or merchandise for the enterprise; or 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. 6.     An enterprise of one of the Contracting States shall not be deemed to have a permanent establishment in the other Contracting State merely because it carries on business in that other 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. 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 if it is shown that the transactions between the agent and the enterprise were not made under at arm's length conditions. 7.     The fact that a company which is a resident of one of the Contracting States controls or is controlled by a company, which is a resident of the other Contracting State, or which carries on business in that other Contracting State (whether through a permanent establishment or otherwise), shall not of itself constitute either company a permanent establishment of the other. Article 6 INCOME FROM IMMOVABLE PROPERTY 1.     Income derived by a resident of a Contracting State from immovable property (including income from agriculture or forestry) situated in the other Contracting State may be taxed in that other Contracting State. 2.     The term "immovable property" shall have the meaning which it has under the law of the Contracting State in which the property in question is situated. The term shall in any case include property accessory to immovable property, 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 one of the Contracting States 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 the other Contracting 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 one of the Contracting States carries on business in the other Contracting State through a permanent establishment situated therein, there shall in each Contracting State be attributed 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 the basis of an apportionment of the total profits of the enterprise to its various parts, provided, however, that the result shall be in accordance with the principles contained in this Article. 3.       a.     In determining the profits of a permanent establishment, there shall be allowed as deductions expenses which are incurred for the purposes of the permanent establishment, including executive and general administrative expenses so incurred, whether in the Contracting State in which the permanent establishment is situated or elsewhere, in accordance with the provisions of and subject to the limitations of the taxation laws of that Contracting State. Provided that where the law of the Contracting State in which the permanent establishment is situated imposes a restriction on the amount of the executive and general administrative expenses which may be allowed, and that restriction is relaxed or overridden by any Convention, Agreement or Protocol signed after 1st January, 1990, between that Contracting State and a third State which is a member of the OECD, the competent authority of that Contracting State shall notify the competent authority of the other Contracting State of the terms of the corresponding paragraph in the Convention, Agreement or Protocol with that third State immediately after the entry into force of that Convention, Agreement or Protocol and, if the competent authority of the other Contracting State so requests, the provisions of that paragraph shall apply under this Convention from that entry into force. b.    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 moneys lent to the permanent establishment. Likewise, no account shall be taken, in the determination of the profits of a permanent establishment, for amounts charged (otherwise than towards reimbursement of actual expenses), by the permanent establishment to the head office of the enterprise or any of its other offices, by way of royalties, fees or other similar payments in return for the use of patents 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 moneys lent to the head office of the enterprise or any of its other offices. 4.     No profits shall be attributed to a permanent establishment by reason of the mere purchase by that permanent establishment of goods or merchandise for the enterprise. 5.     For the 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. 6.     Where profits include items of income which are dealt with separately in other Articles of this convention, then the provisions of those Articles shall not be affected by the provisions of this Article. Article 8 AIR TRANSPORT 1.     Profits derived by an enterprise of a Contracting State from the operation of aircraft in international traffic shall be taxable only in that Contracting State. 2.     The provisions of paragraph 1 shall also apply to profits from the participation in a pool, a joint business or an international operating agency. 3.     For the purpose of this article, interest on funds connected with the operation of aircraft in international traffic shall be regarded as profits derived from the operation of such aircraft, and the provisions of article 12 shall not apply in relation to such interest. 4.     The term "operation of aircraft" shall mean business of transportation by air of passengers, mail, livestock or goods carried on by the owners or lessees or charterers of aircraft, including the sale of tickets for such transportation on behalf of other enterprises, the incidental lease of aircraft and any other activity directly connected with such transportation. Article 9 SHIPPING 1.     Profits derived by an enterprise of a Contracting State from the operation of ships in international traffic shall be taxable only in that Contracting State. 2.     Notwithstanding the provisions of paragraph 1, such profits may be taxed in the other Contracting State from which they are derived provided that the tax so charged shall not exceed: a.     during the first five fiscal years after the entry into force of this Convention, 50 per cent., and b.    during the subsequent five fiscal years, 25 per cent.,of the tax otherwise imposed by the internal law of that Contracting State. Subsequently, only the provisions of paragraph 1 shall be applicable. 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 engaged in the operation of ships. 4.     For the purposes of this article interest arising on funds connected with the operation of ships in international traffic shall be regarded as profits derived from the operation of such ships, and the provisions of Article 12 shall not apply in relation to such interest. Article 10 ASSOCIATED ENTERPRISES Where: a.     an enterprise of a Contracting State participates directly or indirectly in the management, control or capital of an enterprise of the other Contracting State, or b.    the same persons participate directly or indirectly in the management, control or capital of an enterprise of a Contracting State and an enterprise of the other Contracting State, and in either case conditions are made or imposed between the two enterprises in their commercial or financial relations which differ from those which would be made between independent enterprises, then any profits which would, but for those conditions, have accrued to one of the enterprises, but, by reason of those conditions have not so accrued, may be included in the profits of that enterprise and taxed accordingly. Article 11 DIVIDENDS 1.     Dividends paid by a company which is resident of a Contracting State to a resident of the other Contracting State may be taxed in that other Contracting State. 2.     However, such dividends may also be taxed in the Contracting State of which the company paying the dividends is a resident and according to the laws of 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. This paragraph shall not affect the taxation of the company in respect of the profits out of which the dividends are paid. 3.       a.     A resident of India who receives dividends from a company which is a resident of France which, if received by a resident of France, would entitle such resident to a tax credit (avoir fiscal), shall be entitled from the French Treasury to a payment equal to such tax credit (avoir fiscal) subject to the deduction of tax as provided for under paragraph 2 of this Article. b.    The provisions of sub-paragraph (a) of this paragraph shall apply only to a resident of India who is                               i.          an individual; or                              ii.          a company which holds directly or indirectly less than 10 per cent. of the capital of the French company paying the dividends. c.     The provisions of sub-paragraph (a) of this paragraph shall not apply if the recipient of the payment from the French Treasury provided for in sub-paragraph (a) of this paragraph is not subject to Indian tax in respect of the payment. d.    Payments from the French Treasury provided for under sub-paragraph (a) of this paragraph shall be deemed to be dividend for the purpose of this Convention. 4.     When the prepayment (pre-compute) is levied in respect of dividends paid by a company which is a resident of France to a resident of India who is not entitled to the payment from the French Treasury referred to in paragraph 3 of this article with respect to such dividends, such resident shall be entitled to the refund of that prepayment, subject to the deduction of the withholding tax with respect to the refunded amount in accordance with paragraph 2 of this Article. 5.     As used in this Article the term "dividends" means income from shares or other rights, not being debt-claims participating in profits, as well as income from other corporate rights treated in the same manner as income from shares by the taxation laws of the Contracting State of which the company making the distribution is a resident and any other item (other than interest which falls within the provisions of Article 12) treated as a dividend or distribution under that law. 6.     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 15, as the case may be, shall apply. 7.     Where a company which is a resident of a Contracting State derives profits or income from the other Contracting State, that other Contracting State may not impose any tax on the dividends paid by the company except in so far as such dividends are paid to a resident of that other Contracting State or in so far as the holding in respect of which the dividends are paid is effectively connected with a permanent establishment or a fixed base situated in that other Contracting State, nor subject the company's undistributed profits to a tax on the company's undistributed profits, even if the dividends paid or the undistributed profits consist wholly or partly of profits or income arising in such other Contracting State. Article 12 INTEREST 1.     Interest arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other Contracting State. 2.     However, such interest may also be taxed in the Contracting State in which it arises and according to the laws of that State, but if the recipient is the beneficial owner of the interest, the tax so charged shall not exceed: a.     10 per cent. of the gross amount of the interest on loans made or guaranteed by a bank or other financial institution carrying on bona fide banking or financing business or by an enterprise which holds directly or indirectly at least 10 per cent. of the capital of the company paying the interest; b.    15 per cent. of the gross amount of the 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 Contracting 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 "Reserve Bank of India" in the case of India and the 'Banque de France" in the case of France; or                                         iii.    any other institution as may be agreed from time to time between the competent authorities of the Contracting States; a.     interest arising in a Contracting State shall be exempt from tax in that Contracting State if it is beneficially owned by a resident of the other Contracting State and is derived in connection with a loan or credit extended or endorsed by:                                           i.    in the case of France, the Banque Francaise du Commerce Exterieur, or the Compagnie Francaise d'Assurance pour le Commerce Exterieur (COFACE);                                          ii.    in the case of India, the Export-Import Bank of India;                                         iii.    any institution of the other Contracting State in charge of the public financing of external trade. 4.     The term "interest" as used in this Article means income from debt-claims of every kind, whether or not secured by mortgage and whether or not carrying a right to participate in the debtor's profits, and in particular, income from Government securities and income from bonds or debentures, including premiums and prizes attaching to such securities, bonds or debentures. Penalty charges for late payment shall not be regarded as interest for the purpose of this Article. 5.     The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the interest, being a resident of a Contracting State, carries on business in the other Contracting State in which the interest arises, through a permanent establishment situated therein, or performs in that other Contracting State independent personal services from a fixed base situated therein, and the debit-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 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. 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 AND FEES FOR TECHNICAL SERVICES AND PAYMENTS FOR THE USE OF EQUIPMENT 1.     Royalties, fees for technical services and payments for the use of equipment 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, fees and payments 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 these categories of income the tax so charged shall not exceed 20 per cent. of the gross amount of such royalties, fees and payments. 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 information concerning industrial, commercial or scientific experience. 4.     The term "fees for technical services" as used in this Article means payments of any kind to any person, other than payments to an employee of the person making the payments and to any individual for independent personal services mentioned in Article 15, in consideration for services of a managerial, technical or consultancy nature. 5.     The term "payments for the use of equipment" as used in this Article means payments of any kind received as a consideration for the use of, or the right to use, industrial, commercial or scientific equipment. 6.     The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the royalties, fees for technical services or the payments for the use of equipment being a resident of a Contracting State, carries on business in the other Contracting State in which the royalties, fees for the technical services or the payments for the use of equipment 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 royalties, fees for technical services or the payments for the use of equipment are 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. 7.     Royalties, fees for technical services or payments for the use of equipment shall be deemed to arise in a Contracting State when the payer is that Contracting State itself, a political sub-division, a local authority or a resident of that Contracting State. Where however, the person paying the royalties, fees for technical services or the payments for the use of equipment, 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 contract under which the royalties, fees for technical services or the payments for the use of equipment are paid was concluded, and such royalties, fees for technical services or payments for the use of equipment are borne by such permanent establishment or fixed base, then such royalties, fees for technical services or payments for the use of equipment shall be deemed to arise in the Contracting State in which the permanent establishment or fixed base is situated. 8.     Where, by reason of a special relationship between the payer and the beneficial owner or between both of them and some other person, the amount of the royalties, fees for technical services or the payments for the use of equipment, having regard to the royalties, technical services or the use of equipment 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 payment 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 Contracting State. 2.     Gains from the alienation of movable property forming part of the business property of a permanent establishment which an enterprise of a Contracting State has in the other Contracting State or of movable property pertaining to a fixed base available to a resident of a Contracting State in the other Contracting State for the purpose of performing independent personal services, including such gains from the alienation of such a permanent establishment (alone or together with the whole enterprise) or of such fixed, base, may be taxed in that other Contracting State. 3.     Gains, from the alienation of ships or aircraft operated, in international traffic or, movable property pertaining to the operation of such ships or aircraft shall be taxable only in the Contracting State of which the alienator is a resident. 4.     Gains from, the alienation of shares of the capital stock of a company the property of which consists directly or indirectly principally of immovable property situated in a Contracting State may be taxed in that Contracting State. For the purposes of this, provision, immovable property pertaining to the industrial or commercial operation of such company shall not be taken into account. 5.     Gains from the alienation of shares other than those mentioned in paragraph 4 representing a participation of at least 10 per cent. in a company which is a resident of, a Contracting State may be taxed in that Contracting State. 6.     Gains, from the alienation of any property other than that mentioned in paragraphs: 1, 2, 4 and 5 shall be taxable only in the Contracting State of which the alienator is a resident. Article 15 INDEPENDENT PERSONAL SERVICES 1.     Income derived, by an individual or, a partnership of individuals 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 Contracting State except in the following, circumstances when such income may also be taxed in the other Contracting State: a.     if he has a fixed base regularly available to him in the other Contracting State for the purpose of performing his activities; in that case, only so much of the income as is attributable to that fixed base may be taxed in that other Contracting State; or b.    if his stay in the other Contracting State is for a period or periods amounting to or exceeding in the aggregate 183 days in the relevant "fiscal year"; in that case, only so much of the income as is derived from his activities performed in that other Contracting State may be taxed in that other Contracting State. 2.     The term "professional services" includes independent scientific, literary, artistic, educational or teaching activities, as well as the independent activities of physicians, surgeons, lawyers, engineers, architects, dentists and accountants. Article 16 DEPENDENT PERSONAL SERVICES 1.     Subject to the provisions of Articles 17, 18, 19, 20, 21 and 22, salaries, wages and other similar remuneration derived by a resident of a Contracting State in respect of an employment shall be taxable only in that Contracting State unless the employment is exercised in the other Contracting State. If the employment is so exercised, such remuneration as is derived therefrom may be taxed in that other Contracting State. 2.     Notwithstanding the provisions of paragraph 1, remuneration derived by a resident of a Contracting State in respect of an employment exercised in the other Contracting State shall be taxable only in the first mentioned Contracting State if: a.     the recipient is present in the other Contracting State for a period or periods not exceeding in the aggregate 183 days in the relevant "fiscal year"; and b.    the remuneration is paid by, or on behalf of, an employer who is not a resident of the other Contracting State; and c.     the remuneration is not borne by a permanent establishment or a fixed base which the employer has in the other Contracting State. 3.     Notwithstanding the preceding provisions of this Article, remuneration derived in respect of an employment exercised aboard a ship or aircraft operated in international traffic by an enterprise of a Contracting State may be taxed in that Contracting 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 Contracting State. Article 18 INCOME EARNED BY ENTERTAINERS AND ATHLETES 1.     Notwithstanding the provisions of Articles 15 and 16, income derived by a resident of a Contracting State as an entertainer such as a theatre, motion picture, radio or television artiste or a musician or as an athlete, from his personal activities as such exercised in the other Contracting State may be taxed in that other Contracting State. 2.     Where income in respect of personal activities exercised by an entertainer or athlete in his capacity as such accrues not to the entertainer or athlete himself but to another person, that income may, notwithstanding the provisions of Articles 7, 15 and 16, be taxed in the Contracting State in which the activities of the entertainer or athlete are exercised. 3.     Notwithstanding the provisions of paragraph 1, income derived by an entertainer or an athlete who is a resident of a Contracting State from his personal activities as such exercised in the other Contracting State, shall be taxable only in the first-mentioned Contracting State, if the activities in the other Contracting State are supported wholly or substantially from the public funds of the first-mentioned Contracting State, including any of its political sub-divisions or local authorities. 4.     Notwithstanding the provisions of paragraph 2 and Articles 7, 15 and 16, where income in respect of personal activities exercised by an entertainer or an athlete in his capacity as such in a Contracting State accrues not to the entertainer or athlete himself but to another person, that income shall be taxable only in the other Contracting State, if that other person is supported wholly or substantially from the public funds of that other Contracting State, including any of its political sub-divisions or local authorities. Article 19 REMUNERATION AND PENSIONS IN RESPECT OF GOVERNMENT SERVICE 1.       a.     Remuneration, other than a pension, paid by a Contracting State or a political sub-division or a local authority thereof or out of public funds of that Contracting State to an individual in respect of services rendered to that Contracting State or sub-division or authority shall be taxable only in that Contracting State. b.    However, such remuneration shall be taxable only in the other Contracting State if the services are rendered in that other Contracting State and the individual is a resident of that other Contracting State who is a national of that other Contracting State without being a national of the Contracting State to which the services are rendered. 2.     Any pension paid by, or out of funds created by a Contracting State or a political sub-division or a local authority thereof to an individual in respect of services rendered to that Contracting State or subdivision or authority shall be taxable only in that Contracting State. 3.     The provisions of Articles 16, 17 and 20 shall apply to remuneration and pensions in respect of services rendered in connection with a business carried on by a Contracting State or a political sub-division or local authority thereof. Article 20 NON-GOVERNMENT PENSIONS AND ANNUITIES 1.     Any pension, other than a pension referred to in Article 19, or any annuity derived by a resident of a Contracting State from sources within the other Contracting State shall be taxable 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. 4.     Notwithstanding the provisions of paragraph 1, pensions paid and other payments made under a public scheme which is a part of the social security system of a Contracting State or a political sub-division or a local authority thereof shall be taxable only in that Contracting State. Article 21 PAYMENTS RECEIVED BY STUDENTS AND APPRENTICES 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 Contracting State solely for the purpose of his education or training, shall be exempt from tax in that other Contracting State on payments made to him by persons residing outside that other Contracting State for the purposes of his maintenance, education or training. Article 22 PAYMENTS RECEIVED BY PROFESSORS, TEACHERS AND RESEARCH SCHOLARS 1.     A professor, teacher, or a research scholar 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 taxable only in the first-mentioned Contracting State on any remuneration for such teaching or research for a period not exceeding two years from the date of his arrival in that other Contracting State. 2.     This Article shall not apply to income from research if such research is undertaken primarily for the private benefit of a specific person or persons. 3.     For the purposes of this Article and Article 21, an individual shall be deemed to be a resident of a Contracting State if he is resident in that Contracting State in the "fiscal year" in which he visits the other Contracting State or in the immediately preceding "fiscal year". 4.     For the purposes of paragraph 1, "approved institution" means an institution which has been approved as an educational or research institution by the appropriate authority of the concerned Contracting State. Article 23 OTHER INCOME 1.     Subject to the provisions of paragraph 2, items of income of a resident of a Contracting State, wherever arising, which are not expressly dealt with in the foregoing Articles of this 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 15, as the case may be, shall apply. 3.     Notwithstanding the provisions of paragraphs 1 and 2, items of income of a resident of a Contracting State not dealt with in the foregoing Articles of this Convention, and arising in the other Contracting State may be taxed in that other Contracting State. Article 24 CAPITAL 1.     Capital represented by immovable property referred to in article 6 or rights treated as immovable property, owned by a resident of a Contracting State and situated in the other Contracting State, may be taxed in that other Contracting State. 2.     Capital represented by shares of the capital stock of a, company the property of which consists directly or indirectly principally of immovable property situated in a Contracting State may be taxed in that Contracting State. For the purposes of this provision, immovable property pertaining to the industrial or commercial operation of such company shall not be taken into account. 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 Contracting State. 4.     Capital represented by ships and aircraft operated in international traffic and by movable property pertaining to the operation of such ships and aircraft shall be taxable only in the Contracting State in which the place of effective management of the enterprise is situated. 5.     All other elements of capital of a resident of a Contracting State shall be taxable only in that Contracting State. Article 25 ELIMINATION OF DOUBLE TAXATION Double taxation shall be avoided in the following manner: 1.     In the case of India: a.     Where a resident of India derives income or owns capital which, in accordance with the provisions of this Convention, may be taxed in France, India shall allow as a deduction from the tax on the income of that resident an amount equal to the income tax paid in France, 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 France. Such deduction in either case shall not, however, exceed that part of the income tax or capital tax (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 France. Further, where such resident is a company by which surtax is payable in India, the deduction in respect of income tax paid in France 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 France, 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 France. 2.     In the case of France: a.     Profits and other positive income arising in India and which are taxable in that Contracting State in accordance with the provisions of this Convention, are taken into account for the computation of the French tax where such income is received by a resident of France. The Indian tax shall not be deductible from such income. The beneficiary shall be entitled to a tax credit against French tax attributable to such income. Such tax credit shall be equal:                                                   i.    in the case of income referred to in paragraph 2 of Article 9, Articles 11, 12, 13, paragraph 5 of Article 14, paragraph 3 of Article 16, Article 17, paragraphs 1 and 2 of Article 18, and paragraph 3 of article 23, to the amount of tax paid in India in accordance with the provisions of those articles. However, it shall not exceed the amount of French tax attributable to such income;                                                  ii.    in the case of other income, to the amount of French tax attributable to such income, which is thus exempted. This provision shall apply also to the remuneration referred to in Article 19 and in paragraph 4 of Article 20. b.    As regards the application of sub-paragraph (a) to income referred to in articles 12 and 13, where the amount of tax paid in India in accordance with the provisions of these articles exceeds the amount of French tax attributable to such income, the resident of France receiving such income may present his case to the French competent authority. If it appears that such a situation results in taxation which is not comparable to taxation on net income, that competent authority may allow the non credited amount of tax paid in India as a deduction from the French tax levied on other income from foreign sources derived by that resident. The provisions of this sub-paragraph shall not apply where tax is deemed to be paid in India according to the provisions of sub-paragraphs (c) and (d). c.     For the purposes of the tax credit referred to in sub-paragraph (a) (i) the term "tax paid in India" shall be deemed to include any amount which would have been payable as Indian tax under the laws of India, and within the limits provided for by this Convention, for any year but for an exemption from, or reduction of, tax granted for that year under:                                                   i.    Sections 10(4), 10(4B), 10(15)(iv) covering interest section 10(6)(viia) covering salaries and section 80L covering interest and dividends, 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 Convention, or have been modified only in minor respects so as

Nepal AGREEMENT BETWEEN THE REPUBLIC OF INDIA AND THE REPUBLIC OF NEPAL FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME Notification No. 8198 [F. No. 114/4/69--FTD] Download Word Document In English. (Rs.70/-) G.S.R. 1146(E).---Whereas the annexed Agreement between the Government of the Republic of India and His Majesty's Government of Nepal for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income has come into force on 1st November, 1988, on the notification by both the Contracting States to each other, under Article 27 of the said Agreement, of the completion of procedures required under their respective laws for bringing the Agreement into force; Now therefore, in exercise of the powers conferred by section 90 of the Income-tax Act, 1961 (43 of 1961) and section 24A of the Companies (profits) Surtax Act, 1964 (7 of 1964), the Central Government hereby directs that all the provisions of the said agreement shall be given effect to in the Union of India. ANNEXURE AGREEMENT BETWEEN THE GOVERNMENT OF THE REPUBLIC OF INDIA AND HIS MAJESTY'S GOVERNMENT OF NEPAL 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 His Majesty's Government of Nepal. Desiring to conclude an agreement fro 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 of the Contracting States. Article 2 TAXES COVERED 1.     The taxes to which this Agreement shall apply are: a.     in the case of India:                       i.        the income-tax including any surcharge there on imposed under the Income-tax Act, 1961 (43 of 1964);                      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 Nepal:                       i.        income-tax imposed under the Income-Tax Act, 2031 (hereinafter referred to as " Nepal tax "). 2.     The Agreement shall also apply to any identical or substantial similar taxes which are imposed by either Contractying State after the date of signature of the present Agreement 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 Agreement, unless the context otherwise requires: a.     the terms " a Contracting State " and " the other Contracting State " mean Indian or Nepal, as the context requires; b.    the term " tax " means Indian tax or Nepal tax, as the contex requires, but shall not include any amount which 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; c.     the term " person " includes an individual, a company and any other entity is treated as a taxable unit, under the taxation laws in force in the respective Contracting States; d.    the term " company " means any body corporate or any entity which is treated as a company or body corporate under the taxation laws in force in the respective Contracting States; e.     the terms " enterprise of a Contracting State " and " enterprise of the other Contracting State " mean a respectively 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) or their authorised representative; and in the case of Nepal, His Majesty's Government, Ministry of Finance or their authorised representative; g.    the term " national " means by 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; h.     the term " international traffic " means any transport by an aircraft operated by an enterprise of a Contracting State, except when the 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 require, have the meaning which it has under the law of that State concerning the taxes to which the Agreement applies. Article 4 RESIDENT 1.     For the purposes of this Agreement, the term " resident of a Contracting State " means any person who, under the laws of that State, is liable to tax therein by reason of his domicile residence, place of management or any other criterion of a similar nature. 2.     Where by reason of the provisions of paragraph I, 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 in which his economic activities are concentrated; b.    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 in which his economic activities are concentrated; d.    in case of dispute, the competent authorities of the Contracting States shall settle the question by mutual agreement. 3.     Where by reason of the provisions of paragarph I, 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 natural resources; (g) a building site or construction or assembly project, but only Where such site, project or activity continues for a period or periods aggregating more than 183 days in any twelve-month period; (h) the furnishing of services by an enterprise through employees or other personnel, where activities Continue within the country for a period or periods aggregating more than 183 days in any twelve-month period. 3.     Notwithstanding the preceding provisions of the 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 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 places 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, an 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 an 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, a general commission agent or any other agent of an independent status provided that such persons are acting in the ordinary course of their business. However, when the activices 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 satus 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. CHAPTER III TAXATION OF INCOME 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 estabilshment the profits which it might be expected to make if it were a distinct and separate enetrprise engaged in the same or similar activities under the same or similar conditions and dealing wholly independently with the enetrprise of which it is a permanent estabilshment. 3.       a.     In the determination of the profits of a permanent estabilshment, there shall be allowed as deductions, expenses of the enterprise which are incurred for the purpose of the permanent estabilishment including only those executive and general administrative expenses incurred, whether in the State in which the perament estabilshment is situated or elsewhere which are allowed under the provisions of the domestic law of the Contracting State in which the permanent estabilshment is situated. b.    However, no such deduction shall be allowed in respect of amounts, if any, paid (otherwise than towards re-imbursement of actual expenses) by the permanent estabilshment 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 similar payments, in return for the use of patents or other rights, or by way of commission, of specific services performed or for management or except in the case of a banking enterprise, by way of interest on monies lent to the permanent estabilshment. Likewise, no account shall be taken in the determination of the profits of a permanent establishment of amount 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 monies lent to the head office of the enterprise or any of its other offices. 4.     In so far as it has been customary in a Contracting State to determine the profits to be attributed to a permanent estabilshment 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 appportionment 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 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 sufficent reason to the contrary. 7.     Where profits include items of income which are dealt with separately in other Articles of this Agreement then the provisions of those Articles shall not be affected by the provisions of this Article. Article 8 AIR TRANSPORT 1.     Profits derived by an enterprise of a Contracting State from the operation of aircraft in international traffic shall be taxable only in that State. 2.     The provisions of paragraph 1 shall also apply to profits from the participation in 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 income/profits derived from the operation of such aircraft, and the provisions of Article 11 shall not apply in relation to such interest. 4.     The term " operation of aircraft " shall mean business of transporting by air of passengers, mail, livestock or goods carried on by the owners or lessees or charterers of aircraft, including the sale of tickets for such transportation on behalf of other enterprises the incidental lease of aircraft and any other activity directly connected with such transportation. Article 9 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 of 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, 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 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 ten 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.     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 it 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 13, as the case may be, shall apply. 5.     Where a company which is a resident of a Contracting State derives profits or income front 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, not subject the company's undistributed profit 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 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. Provided, however, that where the interest is paid to a bank carrying on bonafide banling business, which is resident of the other Contracting State and is the benefical owner of the interest, the tax charged in the Contracting State in which the interest arises shall not exceed 10 per cent of the gross amount of interest. 3.     Notwithstanding the provisions of paragraph 2, interst 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 Contracting State. 4.     The term " interest " as used in this Article means income from debts-claims of every kind, 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 provisons of paragraphs 1 and 2 shall not apply if the benefical 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 estabilshment of fixed base. In such case, the provisions of Article 7 or Article 13, 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 resident of a Contracting State or not, has in a Contracting State a permanent establishment or a fixed base in connection with which the indebtness on which the interest is paid was incurred, and 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 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 the Agreement. Article 12 ROYALTIES 1.     Royalties arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State. 2.     However, such royalties may also be taxed in the Contracting State in which they arise and according to the laws of that state, but if the recipient is the beneficial owner of the royalties, the tax to charged shall not exceed 15 per cent of the gross amount of the royalties. 3.     The term " royalties " as used in this Article means payments of any kind received as a consideration for the use, or the right to use, any copyright of literary, artistic or scientific work, including cinematograph films, or films or tapes used for the 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 cf Article 7 or Article 13, 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 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 of fixed base, then such royalties shall be deemd 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 recard to the use, right or information for which they are paid, exceeds the amount which would have been agreed upon by the payer and the beneficial owner in the absence of such relationship, the provisions of this Article shall apply only to the last-mentioned amount. In such case, the excess part of the payments shall remain taxable according to the laws of each Contracting State, due regard being had to the other provisions of this Agreement. Article 13 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 hi 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 independent scientific, literary, artistic, educational or teaching activities, as well as the independent activities, of physicians, surgeons, lawyers, engineers, architects, dentists and accountants. Article 14 DEPENDENT PERSONAL SERVICES 1.     Subject to the provisions of Articles 15, 16, 17, 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 be taxed in that other State. 2.     Notwithstanding the provisions of paragraph 1, remuneration derived by a resident of a Contracting State in respect of in employment exercised in the other Contracting State shall be taxable only in the first mentioned State if: a.     the recipient is present in the other State for a period or periods not exceeding in the aggregate 183 days in the relevant " previous year " or " year of income ", as the case may be; and b.    the remuneration is paid by, or on behalf of, an employer who is not a resident of the other State; and c.     the remuneration is not borne by a permanent establishment or a fixed base which the employer has in the other State. 3.     Notwithstanding the preceding provisions of this Article, remuneration derived in respect of an employment exercised abroad an aircraft operated in international traffic by an enterprise of a Contracting State shall be taxeble only in that State. Article 15 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 16 INCOME EARNED BY ENTERTAINERS AND ATHLETES 1.     Notwithstanding the provisions of Articles 13 and 14, income derived by a resident of a Contracting State as an entertainer such as a theatre, motion picture, radio or television artists or a musician or as an athlete, from his personal activities as such exercised in the other Contracting State may be taxed in that other State. 2.     While income in respect of personal activities exercised by an entertainer or an athlete in his capacity as such accrues not to the entertainer or athlete himself but to another person, that income may, notwithstanding the provisions of Articles 7, 13 and 14, be taxed in the Contracting State in which the activities of the entertainer or athlete or exercised. 3.     Notwithstanding the provisions of paragraph 1, income derived by an entertainer or an athlete who is a resident of a Contracting State from his personal activities as such exercised in the other Contracting State, shall be taxable only in the first-mentioned Contracting State, if the activities in the other Contracting State are supported wholly or substantially from the Public funds of the first-mentioned Contracting State, including any of its political sub-divisions or local authorities. 4.     Notwithstanding the provisions of paragraph 2 and Articles 7, 13 and 14, where income in respect of personal activities exercised by an entertainer or an athlete in his capacity as such in a Contracting State accrues, not to the entertainer or athlete himself but to another person, that income shall be taxable only in the other Contracting State, if that other person is Supported wholly or substantially from the public funds of that other State, including any of its political Sub-divisions or local authorities. Article 17 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 authorities 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 put-pose 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 resident of, and a national of that other State. 3.     The provisions of Articles 14, 15 and 16 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 18 NON-GOVERNMENT PENSIONS AND ANNUITIES 1.     Any pension, other than a pension referred to in Article 17, 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 paybale 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 PAYMENTS RECEIVED BY STUDENTS AND APPRENTICES 1.     A student or business apprentice who is or was a resident of one of the Contracting States immediately before visiting the other Contracting State and who is present in that other State solely for the purpose of his education or training, shall be exempt from tax in that other State on: a.     payments made to him by persons residing outside that other State for the purposes of his maintenance, education or training; and b.    remuneration from employment in that other State, in an amount not exceeding Rs. 18,000 (Indian currency), or its equivalent in Nepalese 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 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 consequtive years from the date of his first arrival in that other Contracting State. Article 20 PAYMENTS RECEIVED BY PROFESSORS, TEACHERS AND RESEARCH SCHOLARS 1.     A professor or teacher who is or was a resident of one 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 reserch 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 19, an individual shall be deemed to be a resident of a Contracting State if he is resident in that Contracting State in the " previous year " or the " year of income", as the case may be, in which he visits the other Contracting State or in the immediately preceding " previous year " or the " year of income ". 4.     For the purposes of pragraph 1, " approved institution " means an institution which has been approved in this by the competent authority of the concerned Contracting 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 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 13, as the case may be, shall apply. CHAPTER IV METHODS OF ELIMINATION OF DOUBLE TAXATION Article 22 ELIMINATION OF DOUBLE TAXATION 1.     The laws in force in either cf 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 Agreement. Where income is subject to tax in both Contracting States relief from double taxation shall be given in accordance with this Article. 2.     Subject to the provisions of the law of Nepal regarding the allowance as a credit against Nepal's tax of tax payable in a territory outside Nepal (which shall not affected the general principle hereof) Indian tax payable under the law of India and in accordance with the provisions of this Agreement whether or by deduction, on income from sources within India shall be allowed as a credit against any Nepal tax computed by reference to the same items of income by reference to which the Indian tax is computed. 3.     For the purpose of the credit referred to in paragraph (2), the term " Indian tax payable " shall be deemed to include any amount by which tax has been reduced by the special incentive measures under---               i.        Sections 10(4), 10(4A), 10(6) (viia), 10( 15) (iv), 10(28), 10A, 32A, 33A, 80HH, 80HHA, 80-I and 80-L of the Indian Income-tax Act, 1961 (43 of 1969); and              ii.        any other provision which may subsequently be enacted granting a deduction of tax which the competent authorities of the Contracting States agree to be for the purposes of economic development. 4.     Subject to the provisions of the law of India regarding the allowance as a credit against Indian tax of tax payable in a territory outside India (which shall not affect the general principle hereof) Nepal tax payable under the law of Nepal and in accordance with the provisions of this Agreement whether directly or by deduction, on income from sources within Nepal shall be allowed as a credit against any Indian tax computed by reference to the same items of income by reference to which Nepal tax is computed. 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 Nepal, 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. 5.     For the purpose of paragraph (4) of this Article the term " Nepal tax payable " shall be deemed to include any amount which would have been payable as Nepal tax for any year but for an exemption or reduction of tax granted for that year or any part thereof under: a.     sub-section (2) of section 42 of the Nepal Income-tax Act, 2031 (1974), 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 b.    any other provisions which may subsequently be made granting an exemption or reduction of tax which is agreed by the competent authorities to be of a substantially similar character, if it has not been modified thereafter or has been modified only in minor respects so as not to affect its general character. 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 the Agreement had not been so exempted. CHAPTER V SPECIAL PROVISIONS Article 23 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.     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 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 24 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 notices 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 its able to arrive at an appropriate solution, to resolve the case by mutual agreement with the competent authority of the other Contracting State, with a view to the avoidance of taxation not in accordance with the Agreement. Any agreement reached shall be implemented notwithstanding any time limits in the national laws of the Contracting States. 3.     The competent authorities of the Contracting State 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 25 EXCHANGE OF INFORMATION 1.     The competent authorities of the Contracting States shall exchange such information (including documents) as is necessary for carrying out the provisions of 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 law 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 he matters in respect of which such exchange of information shall be made, including where appropriate, exchange of information regarding tax avoidance. 2.     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 tbe provisions of paragraph 1 be construed so to impose on 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 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 26 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 agreement. CHAPTER VI FINAL PROVISIONS Article 27 ENTRY INTO FORCE Each of the Contracting States shall notify to the other completion of the procedure required by its law for the bringing into force of this Agreement. This Agreement shall enter into force on the date of the later of these notifications and shall thereupon have effect: a.     in India, in respect of income arising in any previous year beginning on or after the first day of April next following the calendar year in which the later of the notifications is given; b.    in Nepal, in respect of income arising in any year of income beginning on or after the first day of Nepalese fiscal year next following the calendar year in which the later of the notification is given. Article 28 TERMINATION This Agreement shall remain in force indefinitely but either of the Contracting States may, on or before the thirtieth day of June in any calendar year beginning after the expiration of a period of five years from the date of its entry into force, the other Contracting State through diplomatic channel, written notice of termination and, in such event, this agreement shall cease to have effect: a.     in India in respect of income arising in any previous year beginning on or after the 1st day of April next following the calendar year in which the notice of termination is given; b.    in Nepal, in respect of income arising in any year of income begining on or after the 1st day of Nepalese fiscal year 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 at Kathmandu on this eighteenth day of January, ONE THOUSAND NINE HUNDRED AND EIGHTYSEVEN A.D. in Hindi, Nepali and English languages all the texts being equally authentic. In ease of divergence in interpretation the English text shall prevail. FOR THE GOVERNMENT OF THE REPUBLIC OF INDIA. (NARRAYAN DATT TIWARI) MINISTER OF EXTERNAL AFFAIRS AND LAND REFORMS GOVERNMENT OF INDIA FOR THE GOVERNMENT OF NEPAL FOR HIS MAJESTY'S MINISTER OF FOREIGN AFFAIRS (SHAILENDRA KUMAR UPADHYAYA) [No. 8198/F. No. 11/4/69FTD]

French Republic Notification No. S. O. 650(E), dated 10th July, 2000. Whereas the Convention between the Republic of India and the French Republic for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and on capital came into force on the 1st day of August, 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 the said Convention. And whereas the Central Government 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 1969) and section 44A of the Wealth-tax Act, 1957 (27 of 1957), had directed that all the provisions of the said Convention annexed to the notification of the Government of India in the Ministry of Finance (Department of Revenue) (Foreign Tax Department) No. G.S.R. 681(E), dated 7th September, 1994, shall be given effect to in the Union of India. And whereas paragraph 7 of the Protocol dated 29th September, 1992, to the aforesaid Convention provides that if after 1st day of September, 1989, under any Convention Agreement or Protocol concluded between India and a third State which is a member of the Organisation for Economic Co-operation and Development, India should limit its taxation at source on dividends, interest, royalties, fees for technical services or payments for the use of equipment to a rate lower or a scope more restricted than the rate or scope provided for in this Convention on the said items of income, then, as from the date on which the Convention between India and France or the relevant India Convention, Agreement or Protocol enters into force, whichever enters into force later, the same rate or scope as provided for in that Convention, Agreement or Protocol on the said items of incomes shall also apply under this Convention; And whereas in the Convention between India and Germany which entered into force on 26th October, 1996, and the Convention between India and the United States of America which entered into force on 18th December, 1990, which States are members of the Organisation for Economic Co-operation and Development, the Government of India has limited the taxation at source on dividends, interest, royalties, fees for technical services and payments for the use of equipment to a rate lower or a scope more restricted than that provided in the Convention between India and France on the said items of income; 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 the following modifications shall be made in the Convention notified by the said notification which are necessary for implementing the aforesaid Convention between India and France, namely: I.      With effect from 1st April, 1997, for the existing paragraph 2 of article 11 relating to "Dividends", the following paragraph shall be read; "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 10 per cent. of the gross amount of the dividends." II.     With effect from 1st April, 1995, for the existing paragraph 2 of article 12 relating to "Interest", the following paragraph shall be read: "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 of the interest on loans made or guaranteed by a bank or other financial institution carrying on bona fide banking or financial business or an insurance company or by an enterprise which holds directly or indirectly at least 10 per cent. of the capital of the company paying interest; b.    15 per cent. of the gross amount of the interest in all other case." III.    With effect from 1st April, 1997, for paragraph 2 of article 12 relating to "Interest", referred to in paragraph II above, the following paragraph shall be read: " However, such interest may also be taxed in the Contracting State in which it arises, and according to the laws of that State, but if the recipient is the beneficial owner of the interest, the tax so charged shall not exceed 10 per cent. of the gross amount of the interest." IV.   With effect from 1st April, 1995, for the existing paragraph 2 of article 13 relating to "Royalties and fees for technical services and payments for the use of equipment", the following paragraph shall be read: "However, such royalties and fees payments 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 these categories of income, the tax so charged shall not exceed--- a.     in the case of royalties and fees 20 per cent. of the gross amount of such royalties or fees; and b.    in the case of payments referred to in paragraph 5 of this article, 10 per cent. of the gross amount of such payments." V.    With effect from 1st April, 1997, for paragraph 2 of article 13 relating to "Royalties and fees for technical services and payments for the use of equipment", referred to in paragraph IV above, the following paragraph shall be read: "However, such royalties and fees payments 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 these categories of income, the tax so charged shall not exceed 10 per cent. of the gross amount of such royalties, fees and payments." [Notification No. 11438/F. No. 501/16/80-FTD Download Word Document In English. (Rs.20/-)

Denmark Double Taxation Avoidance Agreement Convention between the Republic of India and the Kingdom of Denmark for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and on capital Notification No. G.S.R. 853(E), dtd. 25.09,1989. Download Word Document In English. (Rs.85/-) Whereas the annexed Convention between the Government of the Republic of India and the Government of the Kingdom of Denmark for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and on capital has come into force on the 13th day of June, 1989, on the notification by both the Contracting States to each other of the completion of the constitutional requirements, as required by paragraph 1 of Article 30 of the said Convention; Now, therefore, in exercise of the powers conferred by section 90 of the Income-tax Act, 1961 (43 of 1961), 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 KINGDOM OF DENMARK FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASIONWITH RESPECT TO TAXES ON INCOME AND ON CAPITAL The Government of the Republic of India and the Government of the Kingdom of Denmark; 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: Have agreed as follows: Article 1 PERSONAL SCOPE This Convention shall apply to persons who are residents of one or both of the Contracting States. Article 2 TAXES COVERED 1.     The taxes to which this Convention shall apply are: a.     in India:                    i.        the income-tax including any surcharge thereon imposed under the Income-tax Act, 1961 (43 of 1961);                   ii.        the surtax imposed under the Companies (Profits) Surtax Act,1964 ( 7 of 1964);                  iii.        the wealth-tax imposed under the Wealth-tax Act, 1957 (24 of 1957): (hereinafter referred to as "Indian tax"). b.    in Denmark:                    i.        the income-tax to the State (ind komstskatten til staten);                   ii.        the municipal income-tax (den kommunale indkomstskat);                  iii.        the income-tax to the country municipalities (den amtskommunale indkomstskat);                  iv.        the old age pension contribution(folkepensionsbidreget);                   v.        the seamen's tax(smandsskatten);                  vi.        the special income-tax(den saerlige indkomstskat);                 vii.        the curch tax(kitkeskatten);                viii.        the contribution to the sickness "per diem" fund (bidrag til dagpengefonden);                  ix.        the hydrocarbon tax (kulbrinteskatten);                   x.        the capital tax to the State (formueskatten til staten);                  xi.        (hereinafter referred to as "Danish 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. 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 territorial sea and the air space above it, as well as any other maritime zone in which India has sovereign rights, other rights and jurisdictions, accordance with international law; b.    the term "Denmark" means the territory of the Kingdom of Denmark and including the territorial sea of Denmark and the air space above it, as well as any other maritime area to the extent that that area in accordance with international law has been or may hereafter be designated under Danish laws as an area within which Denmark may exercise sovereign rights for the purpose of exploring an exploiting the natural resources of the seabed or its sub-soil and the superjacent waters and with regard to other activities for the economic exploitation and exploration of the area; the term does not comprise the Faroe Islands and Greenland; c.     the term "a Contracting State" and "the other Contracting State" mean India or Denmark as the context requires; d.    the term "tax" means Indian tax or Danish 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 otherentity which is treated as a taxable unit under the taxation laws in force in the respective Contracting States; f.     the term "company" means any body corporate or any entity which is treated as a company or body corporate under the taxation laws in force in the respective Contracting States; g.    the terms "enterprise of a Contracting State" and "enterprise of the other Contracting State" mean respectively an enterprise carried on by a resident of a Contracting State and an enterprise carried on by a resident of the other Contracting State; h.     the term "competent authority" means in the case of India, the Central Government in the Ministry of Finance(Department of Revenue) or their authorised representative; and in the case of Denmark, the Minister for Inland Revenue, Customs and Excise or his authorised representative; i.      the term "national" means any individual possessing the nationality of a Contracting State and any legal person, partnership or association deriving its status from the laws in force in a Contracting State; j.      the term "international traffic" means any transport by a ship or aircraft operated by an enterprise of a Contracting State, except when the ship or aircraft is operated solely between places 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 purpose of this Convention, the term "resident of a Contracting State" means any person who, under the laws of that State, is liable to tax therein by reason of his domicile, residence, place of management or any other criterion of a similar nature. But this term does not include any person who is liable to tax in that State in respect only of income from sources in that State or capital situated therein. 2.     Where by reason of the provisions of paragraph 1, an individual is a resident of both Contracting States, then his status shall be determined as follows; a.     he shall be deemed to be a resident of the State in which he has a permanent home available to him; if he has a permanent home available to him in both States, he shall be deemed to be a resident of the State with which his personal and economic relations are closer (centre of vital interests); b.    if the State in which he has his centre of vital interests cannot be determined, or if he has not a permanent home available to him in either State, he shall be deemed to be a resident of the State in which he has an habitual abode; c.     if he has an habitual abode in both States or in neither of them,. He shall be deemed to be a resident of the State of which he is a national; d.    if he is a national of both States or of neither of them, the competent authorities of the Contracting States shall settle the question by mutual agreement. 3.     Where by reason of the provisions of paragraph 1, a person other than an individual is a resident of both Contracting States, then it shall be deemed to be a resident of the State in which its place of effective management is situated. Article 5 PERMANENT ESTABLISHMENT 1.     For the purposes of this Convention, the term "permanent establishment" means a fixed place of business through which the business of 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.      a premises used as a sales outlet or for receiving or soliciting orders; j.      an installation or structure used for the exploration of natural resources provided that the activities are carried on for a period or periods of 183 days or more in any twelve-month period. k.     a building site or construction, installation or assembly project or supervisory activities in connection therewith, where such site, project or activities (together with other such sires, projects or activities, if any) continue for a period of 183 days or more. 3.     Notwithstanding the preceding provisions of this Article, the term "permanent establishment" shall be deemed not to include; a.     the use of facilities solely for the purpose of storage or display of goods or merchandise belonging to the enterprise; b.    the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of storage or display; c.     the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of processing by another enterprise; d.    the maintenance of a fixed place of business solely for the purpose of purchasing goods or merchandise, or of collecting information, for the enterprise; e.     the maintenance of a fixed place of business solely for the purpose of advertising, for the supply of information, for scientific research, or for other activities which have a preparatory or auxiliary character, for the enterprise. 4.     Notwithstanding the provisions of paragraphs 1 and 2, where a person - other than an agent of an independent status to whom paragraph 5 applies - is acting in a Contracting State on behalf of an enterprise of the other Contracting State, that enterprise shall be deemed to have a permanent establishment in the first-mentioned State, if a.     he has and habitually exercises in that State an authority to conclude contracts on behalf of the enterprise, unless his activities are limited to the purchase of goods or merchandise on behalf of the enterprise; or b.    he habitually secures orders in the first-mentioned State, wholly or almost wholly for the enterprise itself or for the enterprise and other enterprise 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. However, when the activities of such an agent are devoted wholly or almost wholly on behalf of that enterprise itself or on behalf of that enterprise and other enterprises controlling, controlled by, or subject to the same common control, as that enterprise he will not be considered an agent of an independent status within the meaning of this paragraph. 6.     The fact that a company which is a resident of a Contracting State controls or is controlled by a company which is a resident of the other Contracting State, or which carries on business in that other Contracting State (whether through a permanent establishment or otherwise), shall not of itself constitute either company a permanent establishment of the other. Article 6 INCOME FROM IMMOVABLE PROPERTY 1.     Income derived by a resident of a Contracting State from immovable property 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 right 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 (a) that permanent establishment; (b) sales in that other State of goods or merchandise of the same or similar kind as these sold through that permanent establishment; or (c) other business activities carried on in that other State of the same or similar kind as those effected through that permanent establishment. 2.     Subject to the provisions of paragraph 3, where an enterprise of a Contracting State carries on business in the other Contracting State through a permanent establishment situated therein, there shall in each Contracting State be attributed to that permanent establishment the profits which it might be expected to make if it were a distinct and separate enterprise engaged in the same or similar activities under the same or similar conditions and dealing wholly independently with the enterprise of which it is a permanent establishment. In any case where the correct amount of profits attributable to a permanent establishment is incapable of determination or the determination thereof presents exceptional difficulties, the profits attributable to the permanent establishment may be estimated on a reasonable basis. 3.     In the determination of the profits of a permanent establishment, there shall be allowed as 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 an subject to the limitations of the taxation laws of that State. However, no such deduction shall be allowed in respect of amounts, If any, paid (otherwise than towards reimbursement of actual expenses) by the permanent establishment to the head office purposes of the business of the permanent establishment including executive and general administrative expenses so incurred, whether in the State in which the permanent establishment is situated or elsewhere, in accordance with the provisions of and subject to the limitations of the taxation laws of that State. However, no such deduction shall be allowed in respect of amounts, if any, paid (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 rights, or buy way of commission or other charges for specific services performed or for management or, except in the case of a banking enterprise, by way of interest on moneys lent to the head office of the enterprise or any of its other offices. 4.     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 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 State. 2.     The provisions of paragraph 1 shall also apply to profits from the participation in a pool, a joint business or an international operating agency. 3.     the provisions of paragraph 1 and 2 shall apply to profits derived by the Danish, Norwegian and Swedish air transport consortium, known as the Scandinavian Airlines System (SAS), but only to such part of the profit as corresponds to the shareholding in the consortium held by Det Danske Luftfartsselskab (DDL), the Danish partner of Scandinavian Airlines System (SAS). 4.     For the purposes of this Article, interest on funds connected with the operation of aircraft in international traffic shall be regarded as profits derived from the operation of such aircraft, and the provisions of Article 12 shall not apply in relation to such interest. 5.     The term "operation of aircraft" shall mean business of transportation by air of passengers, mail, livestock or goods carried on by the owners or lessees of charters of aircraft including the sale of tickets for such transportation on behalf of other enterprises, the incidental lease of aircraft and any other activity directly connected with such transportation. Article 9 SHIPPING 1.     Profits derived from the operation of ships in international traffic shall be taxable only in the Contracting State in which the place of effective management of the enterprise is situated. 2.     Notwithstanding the provisions of paragraph 1, such profits may be taxed in the other Contracting State from which they are derived provided that the tax so charged shall not exceed: a.     during the first five fiscal years after the entry into force of this Convention, 50 per cent., and b.    during the subsequent five fiscal years, 25 per cent., of the tax otherwise imposed by the internal law of that State. Subsequently, only the provisions of paragraph 1 shall be applicable. 3.     The provisions of paragraph 1 shall also apply to profits from the participation in a pool, a joint business or an international operating agency engaged in the operation of ships. 4.     For the purposes of this Article: a.     interest on funds connected with the operation of ships in international traffic shall be regarded as income from the operation of such ships and the provisions of Article 12 shall not apply in relation to such interest and b.    profits from the operation of ships includes profits derived from the use, maintenance of 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. 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 in the profits of an enterprise of that State and taxes accordingly profits on which an enterprise of the other Contracting State has been charged to tax in that other State and the profits so included are profits which would have accrued to the enterprise of the first mentioned State if the conditions made between the two enterprises had been those which would have been made between independent enterprises, then that other State shall make an appropriate adjustment to the amount of the tax charged therein on those profits. In determining such adjustment due regard shall be had to the other provisions of this convention and the competent authorities of the Contracting State 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 is the beneficial owner of the dividends, the tax so charged shall not exceed: a.     15 percent. Of the gross amount of the dividends if the beneficial owner is a company which owns at least 25 percent. Of the shares of the company paying the dividends; b.    25 per cent. Of the gross amount of the dividends in all other cases. The competent authorities of the Contracting States shall by mutual agreement settle the mode of application of these limitations. 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 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 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 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.     Subject to the provisions of paragraph 4 of Article 8 and paragraph 4(a) of Article 9, 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 on interest payable in respect of a loan given or debt created after the date of entry into force of this Convention, 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, and b.    15 per cent of the gross amount in all other cases. 3.     Notwithstanding the provisions of paragraph 2 of this Article, interest arising in a Contracting State and derived by the Government of the other contracting State, a political sub-division or local authority thereof, the Central Bank of that other Contracting State or any agency of that Government, or by any other resident of that other Contracting State with respect to debt claims of that resident which are financed, guaranteed or insured by the Government of that other Contracting State, a political subdivision or local authority thereof, the Central Bank of that other Contracting State or any agency of that Government, shall be exempt from tax in 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 paragraph 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 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 13 ROYALTIES AND FEES FOR TECHNICAL SERVICES 1.     Royalties and fees for technical services arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State. 2.     However, such royalties and fees for technical services may also be taxed in the contracting State in which they arise and according to the laws of that State, but if the recipient is the beneficial owner of the royalties or fees for technical services the tax so charged shall not exceed 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 cinematography 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 the person making payments, in consideration for the 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 subdivision, a local authority or a resident of that State. Where, however, the person paying the royalties or fees for technical services, whether he is a resident of a Contracting State or not, has in a Contracting State a permanent establishment or a fixed base in connection with which the liability to pay the royalties or fees for technical services are borne by such establishment or fixed base, then such royalties or fees for technical services shall be deemed to arise in the state in which the permanent establishment or fixed base is situated. 7.     Where, by reason of special relationship between the payer and the beneficial owner or between both of them and some other person, the amount of royalties or fees for technical services paid exceeds the amount which would have been paid in the absence of such relationship, the provisions of this Article shall apply to 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 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. With respect to gains derived by the Danish, Swedish and Norwegian air transport consortium Scandinavian Airlines System (SAS), the provisions of this paragraph shall apply only to such proportion of the gains as corresponds to the participation held in that consortium by Det Danske Luftfartsslskab (DDB), the Danish 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 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 provided that such shares represent at least 10 per cent. Of the share capital of that company. 6.     Gains from the alienation of any property other than that mentioned in paragraphs 1, 2, 3, 4 and 5 shall be taxable only in the Contracting State of which the alienator is a resident. Article 15 INDEPENDENT PERSONAL SERVICES 1.     Income derived by an individual who is a resident of a Contracting State from the performance of professional services or other independent activities of a similar character shall be taxable only in that State except in the following circumstances, when such income may also be taxed in the other Contracting State: a.     if he has a fixed base regularly available to him in the other Contracting State for the purpose of performing his activities, in that case, only so much of the income as is attributable to that fixed base may be taxed in that other State; or b.    if his stay in the other Contracting State is for a period or periods amounting to or exceeding in the aggregate 183 days in the fiscal year of that other State, only so much of the income as is derived from his activities performed in that other State may be taxed in that other State. 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, 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 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 fiscal year of that other State; 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 air craft operated in international traffic by an enterprise of a Contracting State may be taxed in that State. 4.     Where a resident of Denmark derives remuneration in respect of an employment exercised aboard an aircraft operated in international traffic by the Scandinavian Airlines System (SAS) consortium, such remuneration shall be taxable only in Denmark. Article 17 DIRECTORS' FEE AND REMUNERATION OF TOP LEVEL MANAGERIAL OFFICIALS 1.     Directors' fees and similar payments derived by a resident of a Contracting State in his capacity as a member of the board of directors of a company which is a resident of the other Contracting State may be taxed in that other State. 2.     Salaries, wages and other similar remuneration derived by a resident of a Contracting State in his capacity as an official in a top-level managerial position of a company which is a resident of the other State. Article 18 ENTERTAINERS AND ATHLETES 1.     Not withstanding the provisions of Articles 15 and 16, income derived by a resident of a Contracting State as an entertainer, such as a theatre, motion picture, radio or television artiste or a musician, or as an athlete, from his personal activities as such exercised in the other contracting state may be taxed in that other State. 2.     Where income in respect of personal activities exercised by an entertainer or athlete in his capacity as such accrues not to the entertainer or athlete himself but to another person, that income may, notwithstanding the provisions of Articles 7, 15 and 16, be taxed in the Contracting State in which the activities of the entertainer or athlete are exercised. 3.     Notwithstanding the provisions of paragraph 1, income derived by an entertainer or an athlete who is a resident of a Contracting State from his personal activities as such exercised in the other Contracting State, shall be taxable only in the first-mentioned Contracting State, if the activities in the other Contracting State are supported wholly or substantially from the public funds of the first-mentioned Contracting State, including any of its political sub-divisions or local authorities. 4.     Notwithstanding the provisions of paragraph 2 and articles 7, 15 and 16, where income in respect of personal activities exercised by an entertainer or an athlete in his capacity as cuh in a Contracting State accrues not to the entertainer or athlete himself but to another person, that income shall be taxable only in the other Contracting State, if that other person is supported wholly or substantially from the public funds of that other State, including any of its political sub-divisions or local authorities. Article 19 REMUNERATION AND PENSIONS IN RESPECT OF GOVERNMENT SERVICE 1.       a.     Remuneration, other than a pension, paid by a Contracting State or a political sub-division or a local authority thereof to an individual in respect of services rendered to that State or 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.     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 taxable only in that State. 3.     The provisions of Articles 16 and 17 shall apply to remuneration in respect of services rendered in connection with a business carried on by a Contracting State or a political sub-division or local authority thereof. Article 20 STUDENTS AND APPRENTICES 1.     A student or business apprentice who is or was a resident of one of the Contracting States immediately before visiting the other Contracting State and who is present in that other State solely for the purpose of his education or training, shall be exempt from tax in that other State on: a.     payments made to him by persons residing outside that other State for the purposes of his maintenance, education or training; and b.    remuneration from employment in that other state not exceeding 20,000 Danish Crowns or its equivalent in Indian currency during any fiscal year of that State provided that such employment is directly related to his studies or is necessary 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 OTHER INCOME 1.     Subject to the provisions of paragraph 2, items of income of a resident of a Contracting State, wherever arising, which are not expressly dealt with in the foregoing articles of this Convention, shall be taxable only in that Contracting State. 2.     the provisions of paragraph 1 shall not apply to income, other than income from immovable property as defined in paragraph 2 of Article 6, if the recipient of such income, being a resident of a Contracting State, carries on business in the other Contracting State through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the right or property in respect of which the income is paid is effectively connected with such permanent establishment or fixed base. In such case, the provisions of Article 7 or Article 15, as the case may be, shall apply. 3.     Notwithstanding the provisions of paragraphs 1 and 2, items of income of a resident of a Contracting State not dealt with in the foregoing Articles of this Convention, and arising in the other Contracting State may be taxed in that other State. Article 22 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 and situated in the other Contracting State, may be taxed in that other State. 2.     Capital represented by movable property forming part if 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. ARTICLE 23 AVOIDANCE OF DOUBLE TAXATION 1.     The laws in force in either of the Contracting States shall continue to govern the taxation of income and capital in the respective Contracting State except where express provision to the contrary is 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 or owns capital which, in accordance with the provisions of this Convention, may be taxed in Denmark, shall allow as a deduction from the tax on the income of that resident an amount equal to the income-tax paid in Denmark, 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 Denmark. Such deduction in either case shall not, however, exceed that part of the income tax or capital tax (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 Denmark. Further, where such resident is a company by which surtax is payable in India, the deduction in respect of income-tax paid in Denmark 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 or owns capital which, in accordance with the provisions of this Convention, shall be taxable only in Denmark, India may include this income or capital in the tax base but shall allow as a deduction from the income-tax or capital tax that part of the income-tax or capital tax which is attributable, as the case may be, to the income derived from or the capital owned in Denmark; 3.     Double taxation shall be avoided in the case of Denmark as follows: a.     Subject to the provisions of sub-paragraph (c), where a resident of Denmark derives income or owns capital which, in accordance with the provisions of this convention, may be taxed in India, Denmark 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 the capital of that resident, an amount equal to the capital tax paid in India; b.    such deduction in either case shall not, however, exceed that part of the income-tax or capital tax, 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. c.     Where a resident of Denmark derives income or owns capital which, in accordance with the provisions of this Convention shall be taxable only in India, Denmark may include this income or capital in the tax base, but shall allow as a deduction from the income-tax or capital tax that part of the income-tax or capital tax which is attributable, as the case may be, to the income derived from or the capital owned in India; d.    for the purposes of the deduction referred to in sub-paragraph (a), the Term "income-tax paid in India" shall be deemed to include any amount which would have been payable as Indian tax under the laws of India and in accordance with this Convention for any year but for an exemption from, or reduction of, tax granted for that year under:                                  i.        any other provisions which may be enacted hereafter granting a education in computing the taxable income or an exemption or reduction in computing the taxable income or an exemption or reduction from tax which the competent authorities of the Contracting State agree to be for the purposes of the economic development of India, if it has not been modified thereafter or has been modified only in minor respects so as not to affect its general character; e.     For the purposes of deduction referred to in sub-paragraph (a), Indian tax on interest and royalties and fees for technical services shall in no case be considered as having been paid at a rate of less than,                               i.        in the case of interest- a. 10 per cent. In the case of banks; and b.15 per cent. In other cases; and                              ii.        20 percent. In the case of royalties and fees for technical services. Article 24 NON-DISCRIMINATION 1.     The nationals of a Contracting State shall not be subjected in the other Contracting State to any taxation or any requirement connected therewith which is other or more burdensome than the taxation and connected requirements to which nationals of that other State in the same circumstances and under the same conditions are or may be subjected. 2.     The taxation 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 and under the same conditions. 3.     Nothing contained in this Article shall be considered as obliging a Contracting State to grant to persons not resident in that State any personal allowances, relief's, reductions and deductions for taxation purposes which are by law available only to persons who are so resident. 4.     Except where the provisions of paragraph 1 of Article 10, paragraph 7 of Article 12, or paragraph 7 of Article 13, apply, interest royalties and other disbursements paid by an enterprise of a Contracting State to a resident of the other Contracting State shall, for the purpose of determining the taxable profits of such enterprises, be deductible under the same 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.     Enterprises of a Contracting State, the capital of which is wholly or partly owned or controlled, directly or indirectly, by one or more residents of the other Contracting State, shall not be subjected in the first-mentioned Contracting State to any taxation or any requirement connected therewith which is other or more burdensome than the taxation and connected requirements to which other similar enterprises of that first-mentioned State are or may be subjected in the same circumstances and under the same conditions. 6.     In this Article, the term "taxation" means taxes which are the subject of this Convention. Article 25 MANUAL AGREEMENT PROCEDURE 1.     Where a resident of Contracting State considers that the actions 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 domestic 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 avoidance of taxation which is not in accordance with the Convention. Any agreement reached shall be implemented notwithstanding any time limits in the domestic laws of the Contracting State. 3.     The competent authorities of the Contracting States shall endeavour to resolve by mutual agreement any difficulties or doubts arising as to the interpretation or application of 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 an agreement to have an oral exchange of opinions, such exchange may take place through a Commission consisting or representatives of the competent authorities of the Contracting States. Article 26 EXCHANGE OF INFORMATION 1.     The competent authorities of the Contracting States shall exchange such information (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 there under 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 State shall agree from time to time on the list of the information or documents which shall be furnished on a routine basis. 3.     In no case shall the provisions of paragraph 1 be construed so as to impose on a Contracting State the obligation: a.     to carry out administrative measures at variance with the laws or administrative practice of that or of the other Contracting State; b.    to supply information or documents which are not obtainable under the laws or in the normal course of the administration of that or of the other Contracting State; c.     to supply information or documents which would disclose any trade, business, industrial, commercial or professional secret or trade process, or information, the disclosure of which would be contrary to public policy. Article 27 ASSISTANCE IN COLLECTION 1.     The Contracting States undertake to lend assistance and support to each other, in the collection of the taxes to which this convention relates, in the cases where the taxes are definitely due according to the laws of the State making the request. 2.     In the Case of a request for enforcement or collection, tax claims of either of the Contracting States which have been finally determined will be accepted for enforcement by the other Contracting State to which the request is made and collected in that State in accordance with the laws applicable to the enforcement and collection of its taxes. 3.     In the case of Indian tax, the request will be sent by the Central Board of Direct Taxes to the Danish Tax Directorate, Stat shattedirektoratet, Postbox 100, DK-3460 Birkerod, Denmark, and will be accompanied by such certificate as is required by the laws of India to establish that

Portuguese Double Taxation Avoidance Agreement Agreement Between the Government of Republic of India and the Government of The Portuguese for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income. Notification No. G. S. R. 542(E) dated 16th June 2000. Download Word Document In English. (Rs.85/-) Whereas the annexed Convention between the Government of the Republic of India and the Government of the Portuguese Republic for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income, has come into force on the 30th April, 2000, thirty days after the date of exchange of diplomatic notes indicating the completion of internal legal procedures necessary in each Contracting State for the entry into force of this Convention in accordance with article 29 of the said Convention; 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 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 PORTUGUESE 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 PORTUGUESE REPUBLIC 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 pet-sons who are residents of one or both of the Contracting States. Article 2 TAXES COVERED 1.     This Convention shall apply to taxes on income imposed on behalf of a Contracting State or of its political or administrative sub-divisions or local authorities irrespective of the manner in which they are levied. 2.     There shall be regarded as taxes on income all taxes imposed on total income or on elements of income, including taxes on gains from the alienation of movable or immovable property and taxes on the amounts of wages or salaries paid by enterprises. a.      In the case of the Portuguese Republic:                       i.        Personal income-tax (imposto sobre o Rendimento das Pessoas Singulares-IRS);                      ii.        Corporate Income-tax (imposto sobre o Rendimento das Pessoas Collectivas-IRC);                     iii.        Local surtax on corporate income tax (Derrama); (hereinafter referred to as "Portuguese tax"); b.     In the case of the Republic of India:  The income-tax, including any surcharge thereon; (hereinafter referred to as "Indian tax"). 4.     The Convention shall apply also to any identical or substantially similar taxes which are imposed after the date of signature of the Convention in addition to, or in place of, the existing taxes. The competent authorities of the Contracting States shall notify each other of any substantial changes which have been made in their respective taxation laws. CHAPTER II DEFINITIONS Article 3 GENERAL DEFINITIONS 1.     For the purposes of this Convention, unless the context otherwise requires: a.     the term "Portugal" means the territory of the Portuguese Republic situated in the European Continent, the archipelagoes of Azores and Madeira, the respective territorial sea and any other zone in which, in accordance with the laws of Portugal and international law, the Portuguese Republic has its jurisdiction or sovereign rights with respect to the exploration and exploitation of the natural resources of the sea bed and subsoil, and of the superjacent waters; b.    the term "India" means the territory of India and includes the territorial sea and airspace above it, as well as any other maritime zone in which India has sovereign rights, other rights and jurisdictions, according to the Indian law and in accordance with international law, including the U. N. Convention on the Law of the Sea, 1982; c.     the terms "a Contracting State" and "the other Contracting State" mean Portugal or India, as the context requires; d.    the term "tax" means Portuguese tax or Indian tax as the context requires; e.     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 a Contracting State; 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 "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 "competent authority" means:                       i.         In Portugal:  The Minister of Finance or the Director-General of Taxation (Director-General dos Impostos) or their authorised representative;                      ii.         In India:  The Central Government in the Ministry of Finance (Department of Revenue) or their authorised representative; j.      the term "national" means:                       i.        any individual possessing the nationality of a Contracting State:                      ii.        any legal person, partnership or association deriving its status as such from the laws in force in a Contracting State; k.     the term "fiscal year" means:                       i.        In the case of Portugal, the civil year as laid down in the IRS Code or the taxation period as defined in the IRC Code;                      ii.        in the case of India, "previous year" as defined under section 3 of the Income-tax Act, 1961. 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 for the purposes of the taxes to which the Convention applies, any meaning under the applicable tax laws of that State prevailing over a meaning given to the term under other laws of that State. Article 4 RESIDENT 1.     For the purposes of this 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. This term, however, 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 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 only of the State with which his personal and economic relations are closer (centre of vital interests); b.    if the State in which he has his centre of vital interests cannot be determined, or if he has not a permanent home available to him in either State, he shall be deemed to be a resident only of the State in which he has an habitual abode; c.     if he has an habitual abode in both States or in neither of them. he shall be deemed to be a resident only of the State of which he is a national; d.    if he is a national of both States or of neither of them, the competent authorities of the Contracting States shall settle the question by mutual agreement. 3.     Where, by reason of the provisions of paragraph 1 a person other than an individual is a resident of both Contracting States, then it shall be deemed to be a resident only of the State in which its place of effective management is situated. If the State in which its place of effective management is Situated cannot be determined, then the competent authorities of the Contracting States shall settle the question by mutual agreement. Article 5 PERMANENT ESTABLISHMENT 1.     For the purposes of this 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 sales outlet; and g.    a mine, an oil or gas well, a quarry or any other place of extraction of natural resources, including an installation or structure used for the exploration or exploitation of natural resources only if so used for a period of more than 120 days in a fiscal year. 3.     A building site, construction, installation or assembly project or supervisory activities in connection therewith, constitutes a permanent establishment only if it lasts more than nine months. 4.     Notwithstanding the preceding provisions of this article, the term permanent establishment" shall be deemed not to include: a.     the use of facilities solely for the purpose of storage, display or delivery of goods or merchandise belonging to the enterprise; b.    the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of storage, display or delivery; c.     the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of processing by another enterprise; d.    the maintenance of a fixed place of business solely for the purpose of purchasing goods or merchandise or of collecting information, for the enterprise; e.     the maintenance of a fixed place of business solely for the purpose of carrying on, for the enterprise, any other activity of a preparatory or auxiliary character. f.     the maintenance of a fixed place of business solely for any combination of activities mentioned in sub-paragraphs (a) to (e), provided that the overall activity of the fixed place of business resulting from this combination is of a preparatory or auxiliary character. 5.     Notwithstanding the provisions of paragraphs 1 and 2, where a person-other than an agent of an independent status to whom paragraph 6 applies-is acting in a Contracting State on behalf of an enterprise of the other Contracting State, that enterprise shall be deemed to have a permanent establishment in the first-mentioned 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 wholly to the activities described in paragraph 4; b.    he has no such authority, but habitually maintains in the first-mentioned State a stock of goods or merchandise from which he regularly delivers goods or merchandise on behalf of the enterprise and some additional activities conducted in that State on behalf of the enterprise have contributed to the sale of the goods or merchandise. 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 all independent status, provided that such persons are acting in the ordinary course of their business. 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 6 applies. 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. CHAPTER III TAXATION OF INCOME 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, motor vehicles and aircraft shall not be regarded as immovable property. 3.     The provisions of paragraph 1 shall apply to income derived from the direct use, letting, or use in any other form of immovable property. 4.     The provisions of paragraphs 1 and 3 shall also apply to the income from immovable property of an enterprise and to income from immovable property used for the performance of independent personal services. 5.     The foregoing provisions shall also apply to income from movable property, or income derived from services connected with the use or the right to use the immovable property, either of which, under the taxation law of the Contracting State in which the property is situated, is assimilated to income from immovable property. 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 of 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 permanenent 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, subject to the provisions of the domestic laws of the Contracting State in which the permanent establishment is situated. 4.     No profits shall be attributed to a permanent establishment by reason of the mere purchase by that permanent establishment of goods or merchandise for the enterprise. 5.     For the purposes of the preceding paragraphs, the profits to be attributed to the permanent establishment shall be determined by the same method year by year, unless 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 from the operation of ships or aircraft in international traffic shall be taxable only in the Contracting State of which the enterprise is a resident. 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.     Whenever companies from different countries have agreed to carry on an air transportation business together in the form of a consortium, the provisions of paragraph 1 shall apply to such part of the profits of the consortium as corresponds to the participation held in that consortium by a company that is a resident of a Contracting State. 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 owner or lessees or charterers of the ships or aircraft, including profits from:               i.        the sale of tickets for such transportation on behalf of other enterprises;              ii.        the incidental lease of ships or aircraft used in such transportation; and             iii.        the use, maintenance or rental of containers (including trailers and related equipment for the transport of containers) by the enterprise engaged in international traffic in connection with such transportation. 5.     Interest on funds generated by the operation of ships or aircraft and arising directly to a permanent establishment of an enterprise of one Contracting State in the other Contracting State shall be regarded as profits derived from the operation of ships or aircraft in international traffic. It is clarified that Such interest shall not refer to interest on funds representing investments. 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 profits which would, but for those conditions, have accrued to one of the enterprises, but, by reason of those conditions, have not so accrued, be included in the profits of that enterprise and taxed accordingly. 2.     Where a Contracting State includes in the profits of in enterprise of that State-and taxes accordingly-profits on which an enterprise of the other Contracting State has been charged to tax in that other State and the profits so included are profits which would have accrued to the enterprise of the first mentioned State if the conditions made between the two enterprises had been those which would have been made between enterprises, then that other State shall make an appropriate adjustment to the amount of the tax charged therein on those profits. In determining such adjustment, due regard shall be had to the other provisions of this Convention and the competent authorities of the Contracting States shall, if necessary, consult each other. Article 10 DIVIDENDS 1.     Dividends paid by a company which is a resident of a Contracting State to a resident of the other Contracting State may be taxed in that other State. 2.     However, such dividends may also be taxed in the Contracting State of which the company paying the dividends is a resident and according to the laws of that State, but: a.     Where the dividends are paid by a company which is a resident of Portugal to a resident of India who is the beneficial owner thereof, the Portuguese tax so charged shall not exceed:                       i.        15 per cent. of the gross amount of the dividends; or                      ii.        10 per cent. of the gross amount of the dividends if the beneficial owner is a company that, for an uninterrupted period of two years prior to the payment of the dividend, owns directly at least 25 per cent. of the capital stock (capital social) of the company paying the dividends. b.    Where the dividends are paid by a company which is a resident of India to a resident of Portugal who is the beneficial owner thereof, the Indian tax so charged shall not exceed                       i.        15 per cent. of the gross amount of the dividends; or                      ii.        10 per cent. of the gross amount of the dividends if the beneficial owner is a company that, for an uninterrupted period of two fiscal years prior to the payment of the dividend, owns directly at least 25 per cent. of the capital stock of the company paying the dividends. This paragraph shall not affect the taxation of the company in respect of the profits out of Which the dividends are paid. 3.     The term "dividends" as used in this article means income from shares, "jouissance" shares or "jouissance" rights, mining shares, founders' shares or other rights not being debt-claims, participating in profits, as well as income 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. The term also includes profits attributed under an arrangement for participation in profits (associacao em participacao). 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 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 exempted from tax in that State: a.     if the debtor of such interest is that State, a political or administrative sub-division or a local authority thereof; or b.    if interest is paid to the other Contracting State, a political or administrative sub-division or a local authority thereof or an institution (including a financial institution) in connection with any financing granted by them under an agreement between the Governments 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 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 or administrative sub-division, thereof, a local authority or a resident of that State. Where, however, the person paying the interest, whether he is a resident of a Contracting State or not, has in a Contracting State a permanent establishment or a fixed base in connection with which the indebtedness on which the interest is paid was incurred, and such interest is borne by such permanent establishment or fixed base, then such interest shall be deemed to arise in the State in which the permanent establishment or fixed base is situated. 7.     Where, by reason of a special relationship between the payer and the beneficial owner or between both of them and some other person, the amount of the interest having regard to the debt-claim for which it is paid exceeds the amount which would have been agreed upon by the payer and the beneficial owner in the absence of such relationship, the provisions of this article shall apply only to the last mentioned amount. In such case, the excess part of the payments shall remain taxable according to the laws of each Contracting State, due regard being had to the other provisions of this Convention. Article 12 ROYALTIES AND FEES FOR INCLUDED SERVICES 1.     Royalties and fees for included services arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State. 2.     However, such royalties or fees for included services may also be taxed in the Contracting State in which they arise and according to the laws of that State, but if the beneficial owner of the royalties and fees for included services is a resident of the other Contracting State, the tax so charged shall not exceed 10 per cent. of the gross amount. The competent authorities of the Contracting States shall by mutual agreement settle the mode of application of this limitation. 3.     The term "royalties" as used in this article means payments of any kind received as a consideration for the use of, or the right to use, any copyright of literary, artistic or scientific work including cinematograph films or tapes or any other means of reproduction for use in connection with 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.     For the purposes of this article "fees for included services" means payments of any kind, other than those mentioned in articles 14 and 15 of this Convention, to any person in consideration of the rendering of any technical or consultancy services (including through the provisions of services of technical or other personnel) if such services: a.     are ancillary and subsidiary to the application or enjoyment of the right, property or information for which a payment described in paragraph 3 is received, or b.    make available technical knowledge, experience, skill, know-how or processes or consist of the development and transfer of a technical plan or technical design which enables the person acquiring the services to apply the technology contained therein. 5.     Notwithstanding paragraph 4, "fees for included 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; 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 craft; 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(f) of article 5; g.    for services referred to in paragraph 3 of article 5. 6.     The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the royalties and fees for included services, being a resident of a Contracting State, carries on business in the other Contracting State, in which the royalties and fees for included services arise, through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the right or property in respect of which the royalties and fees for included 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 included services shall be deemed to arise in a Contracting State where the payer is that State itself, a political or administrative sub-division thereof, a local authority or a resident of that State. Where, however, the person paying the royalties and fees for included services, whether he is a resident of a Contracting State or not, has in a Contracting State a permanent establishment or fixed base in connection with which the obligation to pay the royalties and fees for included services was incurred, and such royalties and fees for included services are borne by that permanent establishment or fixed base, then such royalties and fees for included 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 the royalties and fees for included services having regard to the use, right or information for which they are paid, exceeds the amount which would have been agreed upon by the payer and the beneficial owner in the absence of such relationship, the provisions of this article shall apply only to the last mentioned amount. In such case, the excess part of the payments shall remain taxable according to the laws of each Contracting State, due regard being had to the other provisions of this Convention. Article 13 CAPITAL GAINS 1.     Gains derived by a resident of a Contracting State from the alienation of immovable property referred to in article 6 and situated in the other Contracting State may be taxed in that other State. 2.     Gains from the alienation of movable property forming part of the business property of a permanent establishment which an enterprise of a Contracting State has in the other Contracting State or of movable property pertaining to a fixed base available to a resident of a Contracting State in the other Contracting State for the purpose of performing independent personal services, including such gains from the alienation of such a permanent establishment (alone or with the whole enterprise) or of such fixed base, may be taxed in that other State. 3.     Gains 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 enterprise is a resident. 4.     Gains from the alienation of shares in the capital stock of a company the property of which consists directly or indirectly principally of immovable property situated in a Contracting State may also be taxed in that State. Gains from the alienation of shares other than those mentioned above in a company which is a resident of 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. 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 exceeding in the aggregate 183 days in any twelve months 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 the 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, and 19, salaries, wages and other similar remuneration derived by a resident of a Contracting State in respect of an employment shall be taxable only in that State unless the employment is exercised in the other Contracting State. If the employment is so exercised, such remuneration as is derived therefrom may be taxed in that other State. 2.     Notwithstanding the provisions of paragraph 1, remuneration derived by a resident of a Contracting State in respect of an employment exercised in the other Contracting State shall be taxable only in the first mentioned State if: a.     the recipient is present in the other State for a period or periods not exceeding in the aggregate 183 days in any twelve months period commencing or ending in the fiscal year concerned, and b.    the remuneration is paid by, or on behalf of, an employer who is not a resident of the other State, and c.     the remuneration is not borne by a permanent establishment or a fixed base which the employer has in the other State. 3.     Notwithstanding the preceding provisions of this article, remuneration derived in respect of an employment exercised aboard a ship or aircraft operated in international traffic may be taxed in the Contracting State of which the enterprise is a resident. Article 16 DIRECTORS' FEES Directors' fees and other similar payments derived by a resident of Contracting State in his capacity as a member of the board of directors or supervisory board (in Portugal, conselho fiscal) or of another similar organ of a company which is a resident of the other Contracting State may be taxed in that other State. Article 17 ARTISTES AND SPORTSMEN 1.     Notwithstanding the provisions of articles 14 and 15, income derived by a resident of a Contracting State as an entertainer, such as a theatre, motion picture, radio or television artiste, or a musician, or as a sportsman, from his personal activities as such exercised in the other Contracting State, may be taxed in that other State. 2.     Where income in respect of personal activities exercised by an entertainer or sportsman in his capacity as such accrues not to the entertainer or sportsman himself but to another person, that income may, notwithstanding the provisions of articles 7, 14 and 15 be taxed in the Contracting State in which the activities of the entertainer or sportsman are exercised. 3.     However, such income shall not be taxed in the State mentioned in paragraph 1 if the said activities are exercised during a visit to that State by a resident of the other Contracting State and when such visit is wholly or substantially financed by that other State, a political or administrative sub-division or a local authority thereof. Article 18 PENSIONS Subject to the provisions of paragraph 2 of article 19, pensions and other similar remuneration paid to a resident of a Contracting State in consideration of past employment shall be taxable only in that State. Article 19 GOVERNMENT SERVICE 1.       a.     Salaries, wages and other similar remuneration, other than pension, paid by a Contracting State or a political or administrative 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 or administrative 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, 17 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 or administrative sub-division or a local authority thereof. Article 20 PROFESSORS, TEACHERS AND RESEARCH SCHOLARS 1.     A professor, teacher or research scholar who is or was a resident of the Contracting State immediately before visiting the other Contracting State for the purpose of teaching or engaging in research, or both, at a university, college, school or other approved institution in that other Contracting State shall be exempt from tax in that other State on any remuneration for such teaching or research for a period not exceeding two years from the date of his arrival in that other State. 2.     This article shall not apply to income from research, if such research is undertaken primarily for the private benefit of a specific person or persons. 3.     For the purposes of this article and article 21, 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 21 STUDENTS AND TRAINEES Payments which a student, a business apprentice or trainee who is or was immediately before visiting a Contracting State a resident of the other Contracting State and who is present in the first-mentioned State solely for the purpose of his education or training receives, for the purpose of his maintenance, education or training, shall not be taxed in that State, provided that such payments: a.     arise from sources outside that State; b.    are remuneration from employment in that other State in an amount not exceeding US $ 3000 per annum during a period not exceeding two years from the day of his first arrival in that other Contracting State, provided that such employment is directly related to his studies. Article 22 OTHER INCOMES 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. CHAPTER IV METHODS FOR ELIMINATION OF DOUBLE TAXATION Article 23 ELIMINATION OF DOUBLE TAXATION 1.     The laws in force in either of the Contracting State will continue to govern the taxation of income in the respective Contracting States except, where provisions to the contrary are made in this Convention. 2.     In the case of Portugal double taxation shall be eliminated as follows: 3.     Where a resident of Portugal derives income which, in accordance with the provisions of this Convention, may be taxed in India, Portugal shall allow as a deduction from the tax on the income of that resident an amount equal to the income-tax paid in India. Such deduction shall not, however, exceed that part of the income-tax as computed before the deduction is given, which is attributable to the income which may be taxed in India. 4.     In the case of India, double taxation shall be eliminated as follows: 5.     Where a resident of India derives income which, in accordance with the provisions of this Convention, may be taxed in Portugal, India shall allow as a deduction from the tax on the income of that resident an amount equal to the income-tax paid in Portugal, whether directly or by 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 Portugal. 6.     Where in accordance with any provisions of this Convention income derived by a resident of a Contracting State is exempt from tax in that State, such State may nevertheless, in calculating the amount of tax on the remaining income of such, resident, take into account the exempted income. 7.     The tax paid in a Contracting State mentioned in paragraphs 1 and 2 of this article shall be deemed to include the tax on dividends, interest, royalties and fees for included services and business profits which would have been payable as laid down in this Convention but for the legal provisions concerning tax reduction or exemption of the Contracting States for the encouragement of genuine investment or economic development. The provisions of this paragraph shall apply for the first seven years during which this Convention is applicable. This period may be extended by mutual agreement between the competent authorities. CHAPTER V SPECIAL PROVISIONS Article 24 NON-DISCRIMINATION 1.     Nationals of a Contracting State shall not be subjected in the other Contracting State to any taxation or any requirement connected therewith which is other or more burdensome than the taxation and connected requirements to which nationals of that other State in the same circumstances, in particular with respect to residence, are or may be subjected. This provision shall, notwithstanding the provisions of article 1, also apply to persons who are not residents of one or both of the Contracting States. 2.     The taxation on a permanent establishment which an enterprise of a Contracting State has in the other Contracting State shall not be less favourably levied in that other State than the taxation levied on enterprises of that other State carrying on the same activities. This provision shall not be construed as obliging a Contracting State to grant to residents of the other Contracting State any personal allowances, reliefs, and reductions for taxation purposes on account of civil status or family responsibilities which it grants to its own residents. 3.     Except where the provisions of paragraph 1 of article 9, paragraph 6 of article 11, or paragraph 4 of article 12, apply, interest, royalties, technical fees 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. 4.     Enterprises of a Contracting State, the capital of which is wholly or partly owned or controlled, directly or indirectly by one or more residents of the other Contracting State, shall not be subjected in the first-mentioned State to any taxation or any requirement connected therewith which is other or more burdensome than the taxation and connected requirements to which other similar enterprises of the first-mentioned State are or may be subjected. 5.     The provisions of this article shall, notwithstanding the provisions of article 2, apply to taxes of every kind and description Article 25 MUTUAL AGREEMENT PROCEDURES 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 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 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 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 the Convention. 4.     The competent authorities of the Contracting States may communicate with each other directly, including through a joint commission consisting of themselves or their representatives, for the purpose of reaching an agreement in the sense of the preceding paragraphs. Article 26 EXCHANGE OF INFORMATION 1.     The competent authorities of the Contracting States shall exchange such information, including authenticated copies of the documents, as is necessary for carrying out the provisions of this Convention or of the domestic laws of the Contracting States concerning taxes covered by the Convention in so far as the taxation thereunder is not contrary to the Convention. The exchange of information is not restricted by article 1. Any information received by a Contracting State shall be treated as secret in the same manner as information obtained under the domestic laws of that State and shall be disclosed only to persons or authorities (including courts and administrative bodies) concerned with the assessment or collection of, the enforcement or prosecution in respect of, or the determination of appeals in relation to, the taxes covered by the Convention. Such persons or authorities shall use the information only for such purposes. They may disclose the information in public court proceedings or in judicial decisions. 2.     In no case shall the provisions of paragraph 1 be construed so as to impose on a Contracting State the obligation: a.     to carry out administrative measures at variance with the laws and administrative practice of that or of the other Contracting State; b.    to supply information which is not obtainable under the laws or in the normal course of the administration of that or of the other Contracting State; c.     to supply information which would disclose any trade, business, industrial, commercial or professional secret or trade process or information, the disclosure of which would be contrary to public policy (order public). Article 27 COLLECTION ASSISTANCE 1.     The Contracting States agree to provide mutual assistance and support for recovering, in accordance with the respective provisions and rules of their legislations or regulations, the taxes covered by this Convention, when these amounts are definitely due under the laws and regulations of the Contracting State seeking the assistance for such recovery. 2.     The competent authorities of the Contracting States shall consult each other to decide the mode of application of this article in case they consider the rendering of assistance for collection of taxes feasible. Article 28 MEMBERS OF DIPLOMATIC MISSIONS AND CONSULAR POSTS Nothing in this Convention shall affect the fiscal privileges of members of diplomatic missions and consular posts under the general rules of international law or under the provisions of special agreements. Article 29 ENTRY INTO FORCE 1.     This Convention shall enter into force on the thirtieth day after the date on which diplomatic notes indicating the completion of internal legal procedures necessary in each Contracting State for the entry into force of this Convention have been exchanged. 2.     This Convention shall apply: a.     In Portugal:                       i.        in respect of taxes withheld at source, the fact giving rise to them appearing on or after the first day of January in the year next following the year in which his Convention enters