Convention between the
Republic of India and the Republic of Finland for the avoidance of double
taxation with respect to taxes on income and on capital
Notification F. No.
501/13/80-FTD, dated 20 November, 1984
G.S.R. 786(E).--Whereas
the annexed Convention between the Government of the Republic of India and the
Government of the Republic of Finland for avoidance of double taxation with
respect to taxes on income and on capital has come into force on the
notification by both the Contracting States to each other of the compliance of
the constitutional requirements, as required by paragraph 1 of Article 29 of
the said Convention;
Now, therefore, in
exercise of the powers conferred by section 90 of the Income-tax Act, 1961 (43
of 1961), section 24A of the Companies (Profits) Surtax Act, 1964 (7 of 1964)
and section 44A of the Wealth-tax Act, 1957 (27 of 1957), the Central
Government hereby directs that all the provisions of the said Convention shall
be given effect to in the Union of India.
The Government of the
Republic of India and the Government of the Republic of Finland,
Desiring to conclude a new
Convention for the avoidance of double taxation with respect to taxes on income
and on capital.
Have agreed as follows :
ARTICLE 1: Personal
scope.--This Convention shall apply to persons who are residents of one or both
of the Contracting States.
ARTICLE 2: Taxes
covered.--(1) The taxes which are the subject of the present Convention are :
(a) in Finland :
(i) the state income and capital tax;
(ii) the
communal tax;
(iii) the
church tax;
(iv) the
sailors' tax; and
(v) the tax
withheld at source from non-residents' income;
(hereinafter referred to as "Finnish
tax").
(b) in India :
(i) the income-tax including any surcharge thereon;
(ii) the
surtax; and
(iii) the
wealth-tax;
(hereinafter referred to
as "Indian tax")
2. The Convention shall apply also to any
identical or substantially similar taxes which are imposed after the date of
signature of the Convention in addition to, or in place of, the existing taxes.
The competent authorities of the Contracting States shall notify each other of
significant changes which have been made in their respective taxation laws.
ARTICLE 3: General
definitions.—
(1) For the purposes of this Convention,
unless the context otherwise requires,--
(a) the term "person" includes an individual, a company
and any other body of persons;
(b) the term "company" means any
body corporate or any entity which is treated as a body corporate for tax
purposes;
(c) the 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;
(d) the term "national" means any
individual possessing the nationality of a Contracting State, and any legal
person, partnership and association deriving its status as such from the laws
in force in a Contracting State;
(e) the term "international
traffic" means any transport by a ship or aircraft operated by an
enterprise a Contracting State, except when the ship or aircraft is operated
solely between places in the other Contracting State;
(f) the term
"competent authority" means :
(i) in Finland, the Ministry of Finance or its authorised
representative;
(ii) in
India, the Ministry of Finance (Deptt of Revenue).
2. As regards the application of the
Convention by a Contracting State any term not defined therein shall, unless
the context otherwise requires, have the meaning which it has under the laws of
that State concerning the taxes to which the Convention applies.
ARTICLE 4: Fiscal
domicile.—
(1) For the purposes of this Convention, the
term "resident of a Contracting State" means any person who, under
the laws of that State is liable to tax therein by reason of his domicile,
residence, place of management or any other criterion of a similar nature.
2. Where by reason of the provisions of
paragraph 1 an individual is a resident of both Contracting States then its
status shall be determined as follows:
(a) he shall be deemed to be a resident of
the State in which he has a permanent home available to him; if he has a
permanent home available to him in both States, he shall be deemed to be a
resident of the State with which his personal and economic relations are closer
(centre of vital interest);
(b) if the State in which he has his centre
of vital interests cannot be determined, or if he has not a permanent home
available to him in either State, he shall be deemed to be a resident of the
State in which he has an habitual abode;
(c) if he has an habitual abode in both
States or in neither of them, he shall be deemed to be a resident of the State
of which he is a national;
(d) if he is a national of both States or of
neither of them, the competent authorities of the Contracting States shall
settle the question by mutual agreement.
3. Where by reason of the provisions of
paragraph 1 a person other than an individual is a resident of both Contracting
States, then it shall be deemed to be a resident of the State in which its
place of effective management is situated.
ARTICLE 5: Permanent
establishment.—
(1) For the purposes of this Convention, the
term "permanent establishment" means a fixed place of business
through which the business of an enterprise is wholly or partly carried on.
2. The term "permanent establishment" includes
especially :
(a) a place of management;
(b) a branch;
(c) an
office;
(d) a
factory;
(e) a
workshop;
(f) a mine, a
quarry or any other place of extraction of natural resources;
(g) warehouse;
and
(h) premises
used as a sales outlet or for receiving or soliciting orders.
3. The term "permanent establishment" also includes :
(a) a building site, a construction, assembly
or installation project or supervisory activities in connection therewith, but
only where such site, project or activities continue for a period of more than
six months;
(b) a building site, a construction,
assembly or installation project or supervisory activity being incidental to
the sale of machinery of equipment, where such site, project or activity
continues for a period not exceeding six months and the charges payable for the
project or supervisory activity exceed 10 per cent of the sale price of the
machinery or equipment.
4. Notwithstanding the preceding provisions
of this Article, the term "permanent establishment" shall be deemed
not to include :
(a) the use of facilities solely for the
purpose of storage or display of goods, or merchandise belonging to the
enterprise;
(b) the maintenance of a stock of goods or
merchandise belonging to the enterprise solely for the purpose of storage or
display;
(c) the maintenance of a stock of goods or
merchandise belonging to the enterprise solely for the purpose of processing by
another enterprise;
(d) the maintenance of a fixed place of
business solely for the purpose of purchasing goods or merchandise or of
collecting information, for the enterprise;
(e) the maintenance of a fixed place of
business solely for the purpose of advertising, for the supply of information
or for scientific research, being activities solely of a preparatory or
auxiliary character in the business of the enterprise.
5. Notwithstanding the provisions of
paragraphs 1 and 2, where a person--other than an agent of an independent
status to whom paragraph 7 applies--is acting in Contracting State on behalf of
an enterprise of the other Contracting State that enterprise shall be deemed to
have a permanent establishment in the first-mentioned Contracting State in
respect of any activities which that person undertakes for the enterprise, if
such a person :
(a) has and habitually exercises in that
State an authority to conclude contracts in the name of the enterprise, unless
the activities of such person are limited to those mentioned in paragraph 4
which, if exercised through a fixed place of business would not make this fixed
place of business a permanent establishment under the provisions of that
paragraph; or
(b) has no such authority, but habitually
maintains in the first-mentioned State a stock of goods or merchandise from
which he regularly delivers goods or merchandise on behalf of the enterprise.
6. Notwithstanding the preceding provisions
of this Article, an insurance enterprise of a Contracting State shall, except
in regard to re-insurance, be deemed to have a permanent establishment in the
other Contracting State if it collects premiums in the territory of that other
State or insures risks situated therein through a person other than an agent of
an independent status to whom paragraph 7 applies.
7. An enterprise shall not be deemed to
have a permanent establishment in a Contracting State merely because it carries
on business in that State through a broker, general commission agent or any
other agent of an independent status, provided that such persons are acting in
the ordinary course of their business. However, when the activities of such an
agent are devoted wholly or almost on behalf of that enterprise, he shall not
be considered an agent of an independent status within the meaning of this
paragraph.
8. The fact that a company which is a
resident of a Contracting State controls or is controlled by a company which is
a resident of the other Contracting State, or which carries on business in that
other State (whether through a permanent establishment or otherwise), shall not
of itself constitute either company or a permanent establishment of the other.
ARTICLE 6: Income from
immovable property.—
1. Income derived by a resident of a
Contracting State from immovable property (including income from agriculture or
forestry) situated in the other Contracting State may be taxed in that other
State.
2. (a) The
term "immovable property" shall, subject to the provisions of sub-paragraphs
(b) and (c) have the meaning which it has under the law of the Contracting
State in which the property in question is situated.
(b) The term "immovable property"
shall in any case include property accessory to immovable property, livestock
and equipment used in agriculture and forestry, rights to which the provisions
of general law respecting landed property apply, usufruct of immovable property
and rights to variable or fixed payments as consideration for the working of,
or the right to work, mineral deposits, sources and other natural resources.
(c) Ships and
aircraft shall not be regarded as immovable property.
3. The provisions of paragraph 1 shall
apply to income derived from the direct use, letting, or use in any other form
of immovable property.
4. Where the ownership of shares or other
corporate rights in a company entitles the owner of such shares or corporate
rights to the enjoyment of immovable property held by the company, the income
from the direct use letting, or use in any other form of such right of
enjoyment may be taxed in the Contracting State in which the immovable property
is situated.
5. The provisions of 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 those sold through that permanent establishment; or (c) other business
activities carried on in that other State of the same or similar kind as those
effected through that permanent establishment.
2. Subject to the provisions of paragraph
3, where an enterprise of a Contracting State carries on business in the other
Contracting State through a permanent establishment situated therein, there
shall in each Contracting State be attributed to that permanent establishment
the profits which it might be expected to make if it were a distinct and
separate enterprise engaged in the same or similar activities under the same or
similar conditions and dealing wholly independently with the enterprise of
which it is a permanent establishment.
3. In determining the profits of a
permanent establishment, there shall be allowed as deduction expenses which are
incurred for the purposes of the permanent establishment, including executive and
general administrative expenses so incurred, whether in the State in which the
permanent establishment is situated or elsewhere, which are allowed under the
provisions of the domestic law of the Contracting State in which the permanent
establishment is situated. However, no such deduction shall be allowed in
respect of amounts, if any, paid (otherwise than towards reimbursement of
actual expenses) by the permanent establishment to the head office of the
enterprise or any of its other offices, by way of royalties, fees or other
similar payments in return for the use of patents or other rights, or by way of
commission, for specific services performed or for management, or, except in
the case of a banking enterprise, by way of interest on money lent to the permanent
establishment. Likewise no account shall be taken, in determining the profits
of a permanent establishment, for amounts charged (otherwise then towards
reimbursement of actual expenses), by the permanent establishment to the head
office of the enterprise or any of its other offices, by way of royalties, fees
or other similar payments in return for the use of patents or other rights, or
by way of commission for specific services performed or for management or,
except in the case of a banking enterprise by way of interest on money lent to
the head office of the enterprise or any of its other offices.
4. Insofar as it has been customary in a
Contracting State to determine the profits to be attributed to a permanent
establishment on the basis of an apportionment of the total profits of the
enterprise to its various parts, nothing in paragraph 2 shall preclude that
Contracting State from determining the profits to be taxed by such an
apportionment as may be customary. The method of apportionment adopted shall,
however, be such that the result shall be in accordance with the principles
contained in this article.
5. No profits shall be attributed to a
permanent establishment by reason of the mere purchase by that permanent
establishment of goods or merchandise for the enterprise.
6. For the purposes of the preceding
paragraphs, the profits to be attributed to the permanent establishment shall
be determined by the same method year by year unless there is good and
sufficient reason to the contrary.
7. Where profits include items of income
which are dealt with separately in other articles of this Convention, then the
provisions of those articles shall not be affected by the provisions of this
Article.
ARTICLE 8: Air transport.—
1. Income derived by an enterprise of a
Contracting State from the operation of aircraft in international traffic shall
be taxable only in that State.
2. Paragraph 1 shall likewise apply in
respect of participations in pools of any kind by enterprise engaged in air
transport.
3. For the purposes of this Article :
(a) interest on funds connected with the
operation of aircraft in international traffic shall be regarded as income from
the operation of such aircraft; and
(b) the term "operation of
aircraft" shall include transportation by air of persons, livestock, goods
or mail, carried on by the owners or lessees or charterers of aircraft,
including the sale of tickets for such transportation on behalf of other
enterprises, the incidental lease of aircraft on a charter basis and any other
activity directly connected with such transportation.
ARTICLE 9: Shipping.—
1. Income of an enterprise of a Contracting
State derived from the other Contracting State from the operation of ships in
international traffic may be taxed in that other State, but the tax chargeable
in that other State on such income shall be reduced by an amount equal to fifty
per cent of such tax.
2. Paragraph 1 shall not apply to profits arising as a result of
coastal traffic.
ARTICLE 10: Associated
enterprises.--Where--
(a) an enterprise of a Contracting State
participates directly or indirectly in the management, control or capital of an
enterprise of the other Contracting State; or
(b) the same persons participate directly or
indirectly in the management, control or capital of an enterprise of a
Contracting State and an enterprise of the other Contracting State,
and in either case
conditions are made or imposed between the two enterprises in their commercial
or financial relations which differ from those which would be made between
independent enterprises, then any profits which would, but for those
conditions, have accrued to one of the enterprises, but by reason of those
conditions, have not so accrued, may be included in the profits of that
enterprise and taxed accordingly.
ARTICLE 11: Dividends.—
1. Dividends paid by a company which is
resident of a Contracting State to a resident of the other Contracting State
may be taxed in that other State.
2. However, such dividends may also be
taxed in the Contracting State of which the company paying the dividends is a
resident and according to the law of the State, but the tax so charged shall
not exceed :
(a) 15 per cent of the gross amount of the
dividends if the recipient is a company (other than a partnership) which holds
directly at least 10 per cent of the capital of the company paying the
dividends.
(b) 25 per
cent of the gross amount of the dividends in all other cases.
This paragraph shall not
affect the taxation of the company in respect of the profits out of which the
dividends are paid.
3. The provisions of sub-paragraph (a) of
paragraph 2 would apply in respect of dividends arising out of investments made
after the date of signature of this Convention.
4. The term "dividends" as used
in this article means income from shares, or other rights, not being
debt-claims, participating in profits, as well as income from other corporate
rights which is subjected to the same taxation treatment as income from shares
by the laws of the State of which the company making the distribution is a
resident.
5. The provisions of paragraphs 1 and 2
shall not apply if the recipient of the dividends, being a resident of a
Contracting State, carries on business in the other Contracting State of which
the company paying the dividends is a resident, through a permanent
establishment situated therein, or performs in that other State independent
personal services from a fixed base situated therein, and the holding in
respect of which the dividends are paid is effectively connected with such
permanent establishment or fixed base. In such case the provisions of Article 7
or Article 15, as the case may be, shall apply.
6. Where a company which is a resident of a
Contracting State derives profits or income from the other Contracting State,
that other State may not impose any tax on the dividends paid by the company,
except insofar as such dividends are paid to a resident of that other State or
insofar as the holding in respect of which the dividends are paid is
effectively connected with a permanent establishment or a fixed base situated
in that other State, nor subject the company's undistributed profits to a tax
on the company's undistributed profits, even if the dividends paid or the
undistributed profits consist wholly or partly of profits or income arising in
such other State.
ARTICLE 12: Interest.—
1. Interest arising in a Contracting State
and paid to a resident of the other Contracting State shall be taxable only in
the first-mentioned State, provided, however, the tax so charged shall not
exceed 15 per cent of the gross amount of the interest.
2. The provisions of paragraph 1 would
apply in respect of interest payable arising out of investments made after the
date of signature of this Convention.
3. The term "interest" as used in
this article means income from debt-claims of every kind, whether or not
secured by mortgage and whether or not carrying a right to participate in the
debtor's profits, and in particular, income from Government securities and income
from bonds or debentures, including premiums and prizes attaching to such
securities, bonds and debentures. Penalty charges for late payment shall not be
regarded as interest for the purpose of this article.
4. The provisions of paragraph 1 shall not
apply if the recipient of the interest, being a resident of a Contracting
State, carries on business in the other Contracting State in which the interest
arises, through a permanent establishment situated therein, or performs in that
other State independent personal services from a fixed base situated therein,
and the debt-claim in respect of which the interest is paid is effectively
connected with such permanent establishment or fixed base. In such case the
provisions of Article 7 or Article 15, as the case may be, shall apply.
5. Interest shall be deemed to arise in a
Contracting State when the payer is that State itself, a political
sub-division, a statutory body, a local authority or, a resident of that State.
Where, however, the person paying the interest, whether he is a resident of a
Contracting State or not, has in a Contracting State a permanent establishment
or a fixed base in connection with which the indebtedness on which the interest
is paid was incurred and such interest is borne by such permanent establishment
or fixed base, then such interest shall be deemed to arise in the State in
which the permanent establishment or fixed base is situated.
6. Where, by reason of a special
relationship between the payer and the recipient or between both of them and
some other person, the amount of the interest, having regard to the debt-claim
for which it is paid, exceeds the amount which would have been agreed upon by
the payer and the recipient in the absence of such relationship, the provisions
of this Article shall apply only to the last-mentioned amount. In such case,
the excess part of the payments shall remain taxable according to the laws of
each Contracting State, due regard being had to the other provisions of this
Convention.
ARTICLE 13: Royalties and fees
for technical services.—
1. Royalties and fees for technical
services arising in a Contracting State and paid to a resident of the other
Contracting State may be taxed in that other State.
2. However, such royalties and fees for
technical services may also be taxed in the Contracting State in which they
arise and according to the laws of that State; provided that where the
royalties or fees for technical services are paid to a resident of the other
Contracting State who is the beneficial owner thereof and they are paid in
respect of a right or property which is first granted, or under a contract
which is signed, after the date of signature of this Convention, the tax so
charged shall not exceed 30 per cent of the gross amount of the royalties and fees
for technical services.
3. The term "royalties" as used
in this Article means payments of any kind including rentals received as a
consideration for the use of, or the right to use :
(a) any patent, trademark, design or model, plan, secret formula
or process;
(b) industrial, commercial or scientific
equipment or information concerning industrial, commercial or scientific
experience;
(c) any copyright of literary, artistic or
scientific work, cinematograph films or tapes for radio or television broadcasting;
but does not include
royalties or other amounts paid in respect of the operation of mines or
quarries or of the extraction or removal of natural resources.
4. The term "fees for technical
services" as used in this Article means payments of any kind to any
person, other than payments to an employee of the person making the payments
and to any individuals for independent personal services mentioned in Article
15, in consideration for services of a managerial, technical or consultancy
nature, including the provision of services of technical or other personnel.
5. The provisions of paragraphs 1 and 2
shall not apply if the beneficial owner of the royalties or fees for technical
services, being a resident of a Contracting State, carries on business in the
other Contracting State in which the royalties or fees for technical services
arise, through a permanent establishment situated therein, or performs in that
other State independent personal services from a fixed base situated therein,
and the right, property or contract in respect of which the royalties or fees
for technical services are paid is effectively connected with such permanent
establishment or fixed base. In such case the provisions of Article 7 or
Article 15, as the case may be, shall apply.
6. Royalties and fees for technical
services shall be deemed to arise in a Contracting State when the payer is that
State itself, a political sub-division, a statutory body, a local authority or
a resident of that State. Where, however, the person paying the royalties or
fees for technical services, whether he is a resident of a Contracting State or
not, has in a Contracting State a permanent establishment or a fixed base in
connection with which the obligation to make the payments was incurred, and such
payments are borne by such permanent establishment or fixed base, then such
royalties or fees for technical services shall be deemed to arise in the State
in which the permanent establishment or fixed base is situated.
7. Where, by reason of a special relationship
between the payer and the recipient or between both of them and some other
person, the amount of the royalties or fees for technical services exceeds for
whatever reason, the amount which would have been paid in the absence of such
relationship, the provisions of this Article shall apply only to the
last-mentioned amount. In such case, the excess part of the payments shall
remain taxable according to the law of each Contracting State, due regard being
had to the other provisions of this Convention.
ARTICLE 14: Capital
gains.—
1. Gains derived by a resident of a
Contracting State from the alienation of immovable property referred to in
paragraph 2 of Article 6 and situated in the other Contracting State may be
taxed in that other State.
2. Gains derived by a resident of a
Contracting State from the alienation of shares or other corporate rights may
be taxed in the Contracting State in which the company is registered.
3. Gains from the alienation of movable
property forming part of the business property of a permanent establishment
which an enterprise of a Contracting State has in the other Contracting State
or of movable property pertaining to a fixed base available to a resident of a
Contracting State in the other Contracting State for the purpose of performing
independent personal services, including such gains from the alienation of such
a permanent establishment (alone or with the whole enterprise) or of such fixed
base, may be taxed in that other State.
4. Gains from the alienation of ships or
aircraft operated in international traffic or movable property pertaining to
the operation of such ships or aircraft, shall be taxable only in the
Contracting State in which the place of effective management of the enterprise
is situated.
ARTICLE 15: Independent
personal services.—
1. Income derived by a resident of a
Contracting State in respect of professional services or other independent
activities of a similar character may be taxed in that State. Such income may
also be taxed in the other Contracting State if such services are performed in
that other State and if :
(a) he is present in that other State or a
period or periods aggregating 90 days or more in the relevant fiscal year; or
(b) he has a fixed base regularly available
to him in that other State for the purpose of performing his activities;
but in each case only so
much of the income as is attributable to those services.
2. The term "professional
services" includes especially independent scientific, literary, artistic,
educational or teaching activities as well as the independent activities of
physicians, surgeons, lawyers, engineers, architects, dentists and accountants.
ARTICLE 16: Dependent
personal services.—
1. Subject to the provisions of Articles
17, 19, 20 and 21, salaries, wages and other similar remuneration derived by a
resident of a Contracting State in respect of an employment shall be taxable
only in that State unless the employment is exercised in the other Contracting
State. If the employment is so exercised, such remuneration as is derived
therefrom may be taxed in that other State.
2. Notwithstanding the provisions of
paragraph 1, remuneration derived by a resident of a Contracting State in
respect of an employment exercised in the other Contracting State shall be
taxable only in the first-mentioned State if :
(a) the recipient is present in the other
State for a period or periods not exceeding in the aggregate 183 days in the
calendar year concerned, and
(b) the remuneration is paid by, or on
behalf of, an employer who is not a resident of the other State, and
(c) the remuneration is not borne by a
permanent establishment or a fixed base which the employer has in the other
State.
3. Notwithstanding the preceding provisions
of this Article, remuneration derived in respect of an employment exercised
aboard a ship or aircraft operated in international traffic, may be taxed in
the Contracting State in which the place of effective management of the
enterprise is situated.
ARTICLE 17: Directors'
fees.--Directors' fees and other similar payments derived by a resident of a
Contracting State in his capacity as a member of the board of directors or any
other similar organ of a company which is a resident of the other Contracting
State may be taxed in that other State.
ARTICLE 18: Artistes and
athletes.—
1. Notwithstanding the provisions of
Articles 15 and 16, income derived by a resident of a Contracting State as an
entertainer, such as a theatre, motion picture, radio or television artiste, or
a musician, or as an athlete, from his personal activities as such exercised in
the other Contracting State, may be taxed in that other State.
2. Where income in respect of personal
activities exercised by an entertainer or an athlete in his capacity as such
accrues not to the entertainer or athlete himself but to another person, that
income may, notwithstanding the provisions of Articles 7, 15 and 16, be taxed
in the Contracting State in which the activities of the entertainer or athlete
are exercised.
3. The provisions of paragraphs 1 and 2
shall not apply if the visit to a Contracting State of the entertainer or the
athlete is directly or indirectly supported, wholly or substantially, from the
public funds of the other Contracting State, including a political
sub-division, of a statutory body or a local authority of that other State.
ARTICLE 19: Pensions and
social security payments.--Subject to the provisions of paragraph 2 of Article
20 pensions and other similar remuneration in consideration of past employment
paid by a resident of, and pensions and other payments made under a public
scheme which is part of the social security system of a Contracting State to a
resident of the other Contracting State shall be taxable only in the
first-mentioned State.
ARTICLE 20: Government
service.—
1. (a) Remuneration, other
than a pension, paid by a Contracting State or a statutory body or a local
authority thereof to an individual in respect of services rendered to that
State or body or authority shall be taxable only in that State.
(b) However, such remuneration shall be
taxable only in the Contracting State of which the individual is a resident if
the services are rendered in that State and the individual :
(i) is a national of that State; or
(ii) did not
become a resident of that State solely for the purpose of rendering the
services.
2. (a) Any
pension paid by, or out of funds created by, a Contracting State or a statutory
body or a
local authority thereof to
an individual in respect of services rendered to that State or body or authority
shall be taxable only in that State.
(b) However, such pension shall be taxable
only in the Contracting State of which the individual is a resident if he is a
national of that State.
3. The provisions of Articles 16, 17 and 19
shall apply to remuneration and pensions in respect of services rendered in
connection with a business carried on by a Contracting State or a statutory
body or a local authority thereof.
ARTICLE 21: Students and
apprentices.—
1. Payments which a student or business,
technical, agricultural or forestry apprentice who is or was immediately before
visiting a Contracting State a resident of the other Contracting State and who
is present in the first-mentioned state solely for the purpose of his education
or training receives for the purpose of his maintenance, education or training
shall not be taxed in that State, provided that such payments arise from
sources outside that State.
2. A student at a university or other
institution for higher education in a Contracting State, or a business,
technical, agricultural or forestry apprentice who is or was immediately before
visiting the other Contracting State a resident of the first-mentioned State
and who is present in the other Contracting State for a period or periods not
exceeding in the aggregate 183 days in the calendar year concerned, shall not
be taxed in that other State in respect of remuneration for services rendered
in that State, provided that the services are in connection with his studies or
training and the remuneration constitutes earnings necessary for his
maintenance. If he is present in that other State for a period or periods
aggregating 183 days or more in the
calendar year concerned, he shall be entitled to the same exemptions, reliefs
or reductions in respect of taxes as are granted to residents of that State.
ARTICLE 22: Other
income.--Items of income of a resident of a Contracting State, wherever
arising, not dealt with in the foregoing articles of this Convention shall be
taxable only in that State except that, if such income is derived from sources
in the other Contracting State it may also be taxed in accordance with the law
of that other State.
ARTICLE 23: Capital.—
1. Capital represented by immovable
property referred to in paragraph 2 of Article 6, owned by a resident of a
Contracting State and situated in the other Contracting State, may be taxed in
that other State.
2. Capital represented by shares or other
corporate rights referred to in paragraph 4 of Article 6 and owned by a
resident of a Contracting State may be taxed in the Contracting State in which
the immovable property held by the company is situated.
3. Capital represented by movable property
forming part of the business property of a permanent establishment which an
enterprise of a Contracting State has in the other Contracting State or by
movable property pertaining to a fixed base available to a resident of a
Contracting State in the other Contracting State for the purpose of performing
independent personal services, may be taxed in that other State.
4. Capital represented by ships and
aircraft operated in 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. Elements of capital of a resident of a
Contracting State not dealt with in the foregoing paragraphs of this Article
shall be taxable only in that State except that, if such elements are situated
in the other Contracting State they may also be taxed in accordance with the
law of that other State.
ARTICLE 24: Elimination of
double taxation.—
1. In Finland double taxation shall be eliminated as follows :
(a) Where a resident of Finland derives
income or owns capital which in accordance with the provisions of this
Convention may be taxed in India, Finland shall, subject to the provisions of
sub-paragraph (b), allow :
(i) as a deduction from the tax on income
of that person, as amount equal to the tax on income paid in India.
(ii) as a deduction from the tax on capital
of that person, an amount equal to the tax on capital paid in India.
Such deduction in either
case shall not, however, exceed that part of the tax on income or on capital,
as computed before the deduction is given, which is attributable, as the case
may be, to the income or the capital which may be taxed in India.
(b) Dividends paid by a company which is a
resident of India to a company which is a resident of Finland shall be exempt
from Finnish tax to the extent that the dividends would have been exempt from
tax under Finnish taxation law if both companies had been residents of Finland.
(c) Notwithstanding any other provision of
this Convention, an individual who is a resident of India and under Finnish
taxation law with respect to the Finnish taxes referred to in Article 2 also is
regarded as a resident of Finland may be taxed in Finland. However, Finland
shall allow any Indian tax paid on the income or the capital as a deduction from Finnish tax in
accordance with the provisions of sub-paragraph (a). The provisions of this
sub-paragraph shall apply only to nationals of Finland.
(d) Where in accordance with any provisions
of the Convention income derived or capital owned by a resident of Finland is
exempt from tax in Finland, Finland may nevertheless, in calculating the amount
of tax on the remaining income or capital of such resident, take into account
the exempted income or capital.
2. For the purposes of paragraph 1, taxes
paid in India shall be deemed to include any amount which would have been
payable as Indian tax but for a deduction allowed in computing the taxable
income or an exemption or reduction of tax granted for that year under :
(a) sections 10(4), 10(4A), 10(6)(viia),
10(15)(iv), 32A, 33A, 35B, 35C, 80HH,
80-I, 80J and 80K of the Income-tax Act, 1961 (No. 43 of 1961), so far
as they were in force on and have not been modified since the date of signature
of this Convention, or have been modified only in minor respects so as not to
affect their general character; or
(b) any other provision which may
subsequently be enacted granting an exemption or reduction from tax which is
agreed by the competent authorities of the two Contracting States.
3. In India double taxation shall be eliminated as follows :
(a) The amount of Finnish tax payable under
the laws of Finland and in accordance with the provisions of this Convention,
whether directly or by deduction, by a resident of India, in respect of income
which has been subjected to tax both in India and Finland shall be allowed as a
credit against the Indian tax payable in respect of such income but in an
amount not exceeding that proportion of Indian tax which such income bears to
the entire income chargeable to Indian tax.
(b) For the purposes of the credit referred
to in sub-paragraph (a) above, where the resident of India is a company by
which surtax is payable, the credit to be allowed against the Indian tax shall
be allowed in the first instance against the income-tax payable by the company
in India and, as to the balance, if any, against the surtax payable by it in
India:
Provided that income which
in accordance with the provisions of this Convention is not to be subjected to
tax may be taken into account in calculating the rate of tax to be imposed.
ARTICLE 25:
Non-discrimination.—
1. The nationals of a Contracting State
shall not be subjected in the other Contracting State to any taxation or any
requirement connected therewith, which is other or more burdensome than the
taxation and connected requirements to which nationals of that other State in
the same circumstances are or may be subjected.
2. The taxation on a permanent
establishment which an enterprise of a Contracting State has in the other
Contracting State shall not be less favourably levied in that other State than
the taxation levied on enterprises of that other State carrying on the same
activities in the same circumstances or under the same conditions. This
provision shall not be construed as preventing a Contracting State from
charging profits of a permanent establishment which an enterprise of the other
Contracting State has in the first-mentioned State at a rate of tax which is
higher than that imposed on the profits of a similar enterprise of the
first-mentioned Contracting State, nor as being in conflict with the provisions
of paragraph 3 of Article 7.
3. Nothing contained in this Article shall
be construed as obliging a Contracting State to grant to individuals not
resident in that State any personal allowances, reliefs and reductions for
taxation purposes which are by law available only to individuals who are so
resident.
4. Nothing contained in this Article shall
be construed as obliging a Contracting State to compute the shipping profits in
the same manner as is done in the case of enterprises of that State.
5. Enterprises of a Contracting State, the
capital of which is wholly or partly owned or controlled, directly or
indirectly, by one or more residents of the other Contracting State, shall not
be subjected in the first-mentioned State to any taxation or any requirement
connected therewith which is other or more burdensome than the taxation
connected requirements to which other similar enterprises of the
first-mentioned State are or may be subjected.
6. The provisions of this Article shall apply to all taxes which
are covered by this Convention.
ARTICLE 26: Mutual
agreement procedure.—
1. Where a person considers that the
actions of one or both of the Contracting States result or will result for him
in taxation not in accordance with the provisions of this Convention, he may,
irrespective of the remedies provided by the domestic law of those States,
present his case to the competent authority of the Contracting State of which
he is a resident or, if his case comes under paragraph 1 of Article 25, to that
of the Contracting State of which he is
a national. The case must be present within three years from the first
notification of the action resulting in taxation not in accordance with the
provisions of the Convention.
2. The competent authority shall endeavour,
if the objection appears to it to be justified and if it is not itself able to
arrive at a satisfactory solution, to resolve the case by mutual agreement with
the competent authority of the other Contracting State, with a view to the
avoidance of taxation which is not in accordance with the Convention.
3. The competent authorities of the
Contracting States shall endeavour to resolve by mutual agreement any
difficulties or doubts arising as to the interpretation or application of the
Convention. In particular, they may consult together for the purpose of
reaching an agreement on the allocation of income in cases referred to in
Article 10. They may also consult together for the elimination of double
taxation in cases not provided for in the Convention.
4. In the event the competent authorities
reach an agreement referred to in paragraphs 2 and 3, taxes shall be imposed on
such income, and refund or credit of taxes shall be allowed by the Contracting
States in accordance with such agreement. It shall be implemented
notwithstanding any time limits in the domestic law of the Contracting States.
5. The competent authorities of the
Contracting States may communicate with each other directly for the purpose of
reaching an agreement in the sense of the preceding paragraphs. When it seems
advisable in order to reach agreement to have an oral exchange of opinions,
such exchange may take place through a Commission consisting of representatives
of the competent authorities of the Contracting States.
ARTICLE 27: Exchange of
information.—
1. The competent authorities of the
Contracting States shall exchange such information (including documents) as is
necessary for carrying out the provisions of this Convention or of the domestic
laws of the Contracting States concerning taxes covered by the Convention
insofar as the taxation thereunder is not contrary to the Convention or for the
prevention of fraud or evasion of taxes. The exchange of information is not
restricted by Article 1. Any information received by a Contracting State shall
be treated as secret in the same manner as information obtained under the
domestic laws of the State and shall be disclosed only to persons or
authorities (including courts and administrative bodies involved in the
assessment or collection of the enforcement of prosecution in respect of, or
the determination of appeals in relation to, the taxes covered by the
Convention. Such persons or authorities shall use the information only for such
purposes. They may disclose the information in public court proceedings or in
judicial decisions.
2. In no case shall the provisions of
paragraph 1 be construed so as to impose on a Contracting State the obligation
:
(a) to carry out administrative measures at
variance with the laws of the administrative practice of that or of the other
Contracting States;
(b) to supply information which is not
obtainable under the laws or in the normal course of the administration of that
or of the other Contracting States;
(c) to supply information which would
disclose any trade, business, industrial, commercial or professional secret or
trade process, or information, the disclosure of which would be contrary to
public policy (order, public).
ARTICLE 28: Diplomatic
agents and consular officers.--Nothing in the Convention shall affect the
fiscal privileges of diplomatic agents or consular officers under the general
laws of international law or under the provisions of special agreements.
ARTICLE 29: Entry into force.—
1. The Government of the Contracting States
shall notify each other that the constitutional requirements for the entry into
force of this Convention have been complied with.
2. The Convention shall enter into force
thirty days after the date of the later of the notifications referred to in
paragraph 1 and its provisions shall have effect :
(a) In Finland,
(i) in respect of taxes withheld at source
to income derived on or after 1 January in the calendar year next following the
year in which the Convention enters into force;
(ii) in respect of other taxes on income, and
taxes on capital, to taxes chargeable for any taxable year beginning on or
after 1 January, in the calendar year next following the year in which the
Convention enters into force;
(b) In India, in respect of taxes for
assessment years beginning on or after 1 April of the calendar year next
following the year in which the Convention enters into force.
3. The Agreement between Finland and India
for the avoidance of double taxation of income, signed at New Delhi on 23 June,
1961, as amended by exchange of notes on 16 August, 1979, shall cease to have
effect at the time that the provisions of this Convention shall be effective in
accordance with the provisions of paragraph 2.
ARTICLE 30:
Termination.--This Convention shall remain in force until terminated by a
Contracting State. Either Contracting State may terminate the Convention,
through diplomatic channels, by giving notice of termination at least six
months before the end of any calendar year following after the period of five
years from the date on which the Convention enters into force. In such event,
the Convention shall cease to have effect :
(a) In Finland :
(i) in respect to taxes withheld at source,
to income derived on or after 1 January in the calendar year next following the
year in which the notice is given;
(ii) in respect of other taxes on income, and
taxes on capital, to taxes chargeable for any taxable year beginning on or
after 1 January in the calendar year next following the year in which the
notice is given;
(b) In India, in respect of taxes for any
assessment year beginning on or after 1 April of the second calendar year
following that in which the notice is given.
In witness whereof the
undersigned, duly authorised thereto, have signed this Convention.
Done in duplicate at
Helsinki on this 10th day of June, 1983, in the Hindi, Finnish and English
languages, all the texts being equally authentic, except that in the case of
divergence of interpretation the English text shall prevail.
Sd/- Sd/-
(M. Rasgotra) (Matti
Tuovinen)
For the Government For
the Government
of the Republic of India : of
the Republic of Finland :
Protocol to amend the
Convention between the Republic of India and the Republic of Finland for the
avoidance of double taxation with respect to taxes on income and on capital
Notification No. 10671 [F.
No. 501/13/80-FTD], dated 13-8-1998
Whereas the Convention
between the Government of the Republic of India and the Government of Republic
of Finland for the avoidance of double taxation with respect to taxes on income
and on capital came into force on the notification by the Contracting States to
each other of the compliance of the constitutional requirements, as required by
Paragraph 1 of Article 29 of the said Convention;
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 1964), and section 44A of the Wealth-tax Act, 1957 (27 of 1957),
directed, by Notification of the Government of India in the Ministry of Finance
(Department of Revenue) (Foreign Tax Division) Number G.S.R. 786(E), dated the
20th November 1984, that all the provisions of the Convention annexed to the
said Notification shall be given effect to in the Union of India;
And whereas the Government
of Republic of Finland and the Government of Republic of India desired to amend
the said Convention between the Contracting States;
And whereas the annexed
Protocol to amend the aforesaid Convention between the Government of the
Republic of India and the Government of the Republic of Finland for the
avoidance of double taxation with respect to taxes on income and on capital has
come into force on 10th January, 1998, thirty days after date of later of
notifications referred to in and as required by Article VII of the said
Protocol.
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 Protocol shall be
given effect to in the Union of India and the aforesaid Convention shall stand
amended to the extent mentioned in the annexed Protocol.
The Government of the
Republic of India and the Government of the Republic of Finland,
Desiring to conclude a
Protocol to amend the Convention between the Contracting Parties for the
avoidance of double taxation with respect to taxes on income and on capital,
signed at Helsinki on 10 June, 1983.
Have agreed as follows:
Article I
Paragraph 1 of Article 2
of the Convention shall be deleted and replaced by the following:
"1. The taxes which
are the subject of the present Convention are:
(a) in Finland:
(i) the state income taxes;
(ii) the
corporate income tax;
(iii) the
communal tax;
(iv) the
church tax;
(v) the tax
withheld at source from interest;
(vi) the tax
withheld at source from non-residents' income' and
(vii) the state
capital tax;
(hereinafter referred to
as "Finnish Tax");
(b) in India:
(i) the income-tax including any surcharge thereon; and
(ii) the
wealth-tax;
(hereinafter referred to as "Indian
tax")."
Sub-paragraph (f) of
paragraph 1 of Article 3 of the Convention shall be deleted and replaced by the
following, and the following new sub-paragraphs (g) and (h) shall be inserted
after sub-paragraph (f):
"(f) the term "competent authority"
means:
(i) in Finland, the Ministry of Finance,
its authorised representative or the authority which, by the Ministry of
Finance, is designated as competent authority;
(ii) in India, the Central Government in the
Ministry of Finance (Department of Revenue), or their authorised representative;
(g) the term "fiscal year" means:
(i) in Finland, the "tax year" as defined in the
taxation laws of Finland relating to income-tax;
(ii) in
India, the "previous year" as defined in Section 3 of the Income-tax
Act, 1961;
(h) the term "tax" means Finnish
tax or Indian tax, as the context requires, but shall not include any amount
which is payable in respect of any default or omission in relation to the taxes
to which the Convention applies or which represents a penalty or interest
imposed relating to those taxes."
Paragraphs 1, 2 and 3 of
Article 11 of the Convention shall be deleted and replaced by the following:
"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. 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 the tax so charged shall not exceed 15
per cent of the gross amount of the dividends.
2. However, as long as an individual
resident in Finland is entitled to a tax credit in respect of dividends paid by
a company resident in Finland, the following provisions of this paragraph shall
apply in Finland instead of the provisions of paragraph 1:
Dividends paid by a
company which is a resident of Finland to a resident of India shall be exempt
from Finnish tax on dividends.
3. The provisions of paragraphs 1 and 2
shall not affect the taxation of the company in respect of the profits out of
which the dividends are paid."
Paragraphs 1, 2, 3 and 4
of Article 12 of the Convention shall be deleted and replaced by the following,
and the existing paragraphs 5 and 6 shall be renumbered as paragraphs 6 and 7,
respectively:
"1. Interest arising in a Contracting State
and paid to a resident of the other Contracting State may be taxed in that
other State.
2. However, such interest may also be taxed
in the Contracting State in which it arises and according to the laws of that
State, but the tax so charged shall not exceed 10 per cent of the gross amount
of the interest.
3. Notwithstanding the provisions of paragraphs 1 and 2,
(a) interest arising in India shall be exempt from India tax if
the interest is paid to
(i) the Bank of Finland; and
(ii) the Finnish Fund for Industrial
Cooperation Ltd. (FINNFUND) or any other similar institution, as may be agreed
upon from time to time between the competent authorities of the Contracting
States;
(b) interest arising in Finland shall be exempt from Finnish tax
if the interest is paid to
(i) the Reserve Bank of India;
(ii) National
Housing Bank;
(iii) Small
Industries Development Bank of India (SIDBI); and
(iv) EXIM
Bank;
(c) interest arising in a Contracting State
on a loan guaranteed by any of the bodies mentioned or referred to in
sub-paragraphs (a) or (b) and paid to a resident of the other Contracting State
shall be exempt from tax in the first mentioned 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 and 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 recipient of the interest, being a resident of a Contracting State, carries
on business in the other Contracting State in which the interest arises,
through a permanent establishment situated therein, or performs in that other
State independent personal services from a fixed base situated therein, and the
debt-claim in respect of which the interest is paid is effectively connected
with such permanent establishment or fixed base. In such case the provisions of
Article 7 or Article 15, as the case may be, shall apply."
Paragraphs 2, 3 and 4 of
Article 13 of the Convention shall be deleted and replaced by the following and
the existing paragraphs 5, 6 and 7 shall be renumbered as paragraphs 6, 7 and
8, respectively:
"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 the tax so charged shall not
exceed:
(a) in the case of royalties within
sub-paragraph (a) of paragraph 3, and fees for technical services within
sub-paragraphs (a) and (c) of paragraph 4;
(i) during the years 1997 to 2001:
(aa) 15 per cent of the gross amount of such
royalties or fees for technical services when the payer of the royalties or
fees for technical services is the Government of the first-mentioned
Contracting State or a political sub-division of that State, and
(bb) 20 per cent of the gross amount of such
royalties or fees for technical services; and
(ii) during subsequent years, 15 per cent of
the gross amount of such royalties or fees for technical services; and
(b) in the case of royalties within
sub-paragraph (b) of paragraph 3 and fees for technical services defined in
sub-paragraph (b) of paragraph 4, 10 per cent of the gross amount of such
royalties and fees for technical services.
3. For the purposes of this Article, the term
"royalties" means:
(a) payments of any kind received as a
consideration for the use of, or the right to use, any copyright of a literary,
artistic or scientific work, including cinematograph films or work on film,
tape or otherwise 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 information concerning industrial, commercial or scientific
experience; and
(b) payments of any kind received as a
consideration for the use of, or the right to use, any industrial, commercial
or scientific equipment, other than income derived by an enterprise of a
Contracting State from the operation of ships or aircraft in international
traffic.
4. For the purposes of paragraph 2, and
subject to paragraph 5, the term "fees for technical services" means
payments of any kind to any person in consideration for the rendering of any
technical or consultancy services (including the provision of services of
technical or other personnel) which:
(a) are ancillary and subsidiary to the
application or enjoyment of the right, property or information for which a
payment described in sub-paragraph (a) of paragraph 3 is received; or
(b) are ancillary and subsidiary to the
enjoyment of the property for which a payment described in sub-paragraph (b) of
paragraph 3 is received; or
(c) make available technical knowledge,
experience, skill, know-how or processes, or consist of the development and
transfer of a technical plan or technical design.
5. The definitions of fees for technical services in paragraph 4
shall not include amounts paid:
(a) for services that are ancillary and
subsidiary, as well as inextricably and essentially linked, to the sale of
property, other than property described in sub-paragraph (a) of paragraph 3;
(b) for services that are ancillary and
subsidiary to the rental of ships, aircraft, containers or other equipment used
in connection with the operation of ships, or aircraft in international
traffic;
(c) for
teaching in or by educational institutions;
(d) for services for the private use of the individual or
individuals making the payment; or
(e) to an employee of the person making the
payments or to any individual or partnership for professional services as
defined in Article 15."
1. Sub-paragraph (b) of paragraph 1 of
Article 24 of the Convention shall be deleted and replaced by the following:
"(b) Dividends paid
by a company being a resident of India to a company which is a resident of
Finland and which controls directly at least 10 per cent of the voting power in
the company paying the dividends shall be exempt from Finnish tax."
2. Sub-paragraph (a) of paragraph 2 of the Article shall be
deleted and replaced by the following:
"(b) sections 10(4),
10(4A), 10(5B), 10(15(iv) and 80-IA of the Income-tax Act, 1961 so far as they
are in force or as modified only in minor respects so as not to affect their
general character; or"
1. The Contracting Parties shall notify
each other that the constitutional requirements for the entry into force of
this Protocol have been complied with.
2. The Protocol shall enter into force
thirty days after the date of the later of the notifications referred to in
paragraph 1 and its provisions shall have effect:
(a) in Finland:
(i) in respect of taxes withheld at source,
on income derived on or after 1 January in the calendar year next following the
year in which the Protocol enters into force;
(ii) in respect of other taxes on income, and
tax on capital, for taxes chargeable for any fiscal year beginning on or after
1 January in the calendar year next following the year in which the Protocol
enters into force;
(b) in India, in respect of taxes for any
fiscal year beginning on or after 1 April of the calendar year next following
the year in which the Protocol enters into force.
In witness whereof the
undersigned, duly authorised thereto, have signed this Protocol.
Done in duplicate at New Delhi
this ninth day of April, 1997 in the Finnish, Hindi and English languages, all
the texts being equally authentic, except that in the case of divergence of
interpretation the English text shall prevail.
Agreement between the
Government of the Republic of India and the Government of the French Republic
forthe avoidance of double taxation and the prevention of fiscal evasion with
respect to taxes on income and oncapital
Notification No. 9602 [F.
No. 501/16/80-FTD], dated 7-9-1994 as amended by Notification No. 11438 [F.
No.501/16/80-FTD], dated 10-7-2000
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) Sur-tax 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.
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 'impôt sur le
revenue) including any withholding tax, pre-payment (précompte) or advance
payment with respect thereto;
(ii) the corporation tax (1 'impôt sur less
societies) including any withholding tax, pre-payment (précompte) or advance
payment with respect thereto; and
(iii) the
wealth-tax (1' impôt de solidarité 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.—
1. In this Convention, unless the context otherwise requires:
(a) the term "India" means the
territory of India and includes the territorial sea and air space above it, as
well as any other maritime zone in which India, according to the Indian law,
has sovereign rights, of 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-beas 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) 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" 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;
(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) 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) 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) the term "tax" means Indian tax or French tax 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 Contracting 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 Contracting State, is liable to tax therein by reason of his
domicile, residence, place of management or any other criterion of a similar
nature.
2. Where by reason of the provisions of
paragraph 1, an individual is a resident of both Contracting States, then his
status shall be determined as follows:
(a) he shall be deemed to be a resident of
the 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 shall be deemed
to be a resident of the Contracting State in which he has an habitual abode;
(c) if he has an habitual abode in both
Contracting States or in neither of them, he shall be deemed to be a resident
of the Contracting State of which he is a national;
(d) if he is a national of both Contracting
States or of neither of them, the competent authorities of the Contracting
States shall settle the question by mutual agreement.
3. Where by reason of the provisions of
paragraph 1, a person other than an individual is a resident of both
Contracting States, then it shall be deemed to be a resident of the Contracting
State in which its place of effective management is situated.
ARTICLE 5: Permanent
establishment.—
1. For the purposes of this Convention, the
term "permanent establishment" means a fixed place of business
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) 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 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 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 States 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 or, 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 aircrafts 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 1-1-1990 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
the 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 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 10 per cent of the gross amount of the dividends. [with effect from
1-4-1997]
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 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 purposes of this Convention.
4. When the prepayment (precompte) 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 law 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.
[With effect from
1-4-1995]
2. However, such interest may also be taxed
in the Contracting State in which it arise, 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 cases.
[With
effect from 1-4-1997]
2. However, such interest may also be taxed
in the Contracting State in which it arises, and according to the laws of that
State, but if the recipient is the beneficial owner of the interest, the tax so
charged shall not exceed 10 per cent of the gross amount of the interest.
3. Notwithstanding the provisions of paragraph 2:
(a) interest arising in a Contracting State
shall be exempt from tax in that 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 State;
(b) 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 Exteriur, 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" was used
in this article means income from debt-claims of every kind, whether or not
secured by mortgage and whether or not carrying a right to participate in the
debtor's profits, and in particular, income from government securities and
income from bonds or debentures, including premiums and prizes attaching to
such securities, bonds or debentures. Penalty charges for late payment shall
not be regarded as interest for the purpose of this article.
5. The provisions of paragraphs 1 and 2
shall not apply if the beneficial owner of the interest, being a resident of a
Contracting State, carries on business in the other Contracting State in which
the interest arises, through a permanent establishment situated therein, or
performs in that other Contracting State independent personal services from a
fixed base situated therein, and the debt-claim in respect of which the
interest is paid is effectively connected with such permanent establishment or
fixed base. In such case, the provisions of article 7 or article 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, than 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.
[With effect from
1-4-1995]
2. However, such royalties, fees and
payments may also be taxed in the Contracting State in which they arises and
according to the laws of that Contracting State, but if the receipient 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.
[With effect from
1-4-1997]
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 10 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 he 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 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 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, 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, than
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, 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 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,
surgeon, 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-division 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 sub-division 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 State immediately before visiting
the other Contracting State and who is present in that other Contracting State
solely for the purpose of his education or training, shall be exempt from tax
in that other Contracting State on 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 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 or 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 remuneration referred to in article 19 and in
paragraph 4 of article 20.
(b) As regards the application of
sub-paragraph (1) 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-credit 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 not to affect their general character; or
(ii) any other provisions which may be
enacted after this Convention enters into force granting a deduction in
computing the taxable income or an exemption or reduction from tax which the
competent authorities of the Contracting States agreed 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.
(d) For the purposes of tax credit referred
to in sub-paragraph (c), where 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 12, 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 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.
(e) Notwithstanding the provisions of
sub-paragraphs (a) and (c), dividends paid by a company which is a resident of
India to a company which is a resident of France, shall be exempt from French
Corporation tax to the extent that the dividends would have been exempt under
French law if both companies had been residents of France.
(f) Residents of France who own capital
taxable in India may also be taxed in France on such capital. The French tax is
computed by allowing a tax credit equal to the amount of tax paid in India in
accordance with the provisions of Article 24. However, such credit shall not
exceed the French tax attributable to such capital.
ARTICLE 26:
Non-discrimination.—
1. Nationals of one of the Contracting
States 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 the other Contracting
State in the same circumstances are or may be subjected. The 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. Except where the provisions of paragraph
3 of article 7 apply the taxation on a permanent establishment which an
enterprise of one of the Contracting States 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.
3. The provision of paragraph 2 shall not
be construed as obliging one of the Contracting States 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. Except where the provisions of article
10, paragraph 7 of article 12 or paragraph 8 of article 13, apply, interest,
royalties and other disbursements paid by an enterprise of one of the
Contracting States to a resident of the other Contracting State shall, for the
purpose of determining the taxable profits of such enterprise, be deductible
under the same conditions as if they had been paid to a resident of the first
mentioned Contracting State. Similarly, any debts of an enterprise of one of
the Contracting States 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 Contracting State.
5. Enterprises of one of the Contracting
States, the capital of which is wholly or partly owned or controlled, directly
or indirectly, by one or more residents of the other Contracting State, shall
not be subjected in the first mentioned Contracting State to any taxation or
any requirement connected therewith which is other or more burdensome than the
taxation and connected requirements to which other similar enterprises of the
first mentioned Contracting State are or may be subjected.
ARTICLE 27: Mutual
agreement procedure.—
1. Where a resident of a Contracting State
considers that the actions of one or both of the Contracting States result or
will result for him in taxation not in accordance with this Convention, he may,
notwithstanding the remedies provided by the national law of those Contracting
States, present his case to the competent authority of the Contracting State of
which he is a resident. This case must be presented within three years of the
date of receipt of notice of the action which gives rise to taxation not in
accordance with the Convention.
2. The competent authority shall endeavour,
if the objection appears to it to be justified and if it is not itself able to
arrive at an appropriate solution, to resolve the case by mutual agreement with
the competent authority of the other Contracting State, with a view to
avoidance of taxation not in accordance with the Convention. Any agreement
reached shall be implemented notwithstanding any time limits in the national
laws of the Contracting States.
3. The competent authorities of the
Contracting States shall endeavour to resolve by mutual agreement any
difficulties or doubts arising as to the interpretation or application of the
Convention. They may also consult together for the elimination of double
taxation in cases not provided for in 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.
5. The competent authorities of the
Contracting States may, jointly or separately, if they consider it necessary,
settle the mode of application of the Convention and, especially the
requirements to which the residents of Contracting State shall be subjected in
order to obtain, in the other Contracting State, the tax reliefs or exemptions
provided for by the convention.
ARTICLE 28: Exchange of
information.—
1. The competent authorities of the
Contracting States shall exchange such information (including documents) as is
necessary for carrying out the provisions of the Convention or of the domestic
laws of the Contracting States concerning taxes covered by the Convention, 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 Contracting
State. However, if the information is originally regarded as secret in the
transmitting State, it shall be disclosed only to persons or authorities
(including courts and administrative bodies) involved in the assessment or
collection of, the enforcement or prosecution in respect of, or the
determination of 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 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 29: Diplomatic and
consular activities.--Nothing in this Convention shall affect the fiscal
privileges of diplomatic or consular officials under the general rules of
international law or under the provisions of agreement concluded between the
parties to this Convention.
ARTICLE 30: Entry into
force.—
1. Each of the Contracting States shall
notify to the other the completion of the procedure required by its law for the
bringing into force of this Convention. This Convention shall enter into force
on the first day of the second month following the date of reception of the
later of these notifications and shall thereupon have effect:
(a) in India:
(i) in respect of income arising in any
fiscal year beginning on or after the first day of April following the calendar
year in which the Convention enters into force;
(ii) in respect of capital which is held on
the last day of any fiscal year beginning on or after the first day of April
following the calendar year in which the Convention enters into force;
(b) in France:
(i) in respect of income arising in any
calendar year or accounting period beginning on or after the first of January
following the calendar year in which the Convention enters into force;
(ii) in respect of capital owned on the first
day in any calendar year following the calendar year in which the Convention
enters into force.
2. The Agreement between the Government of
French Republic and the Government of the Republic of India for the avoidance
of double taxation in respect of taxes on income signed in Paris on March 26,
1969 shall be terminated and its provisions shall cease to have effect when the
corresponding provisions of this Convention shall become effective.
ARTICLE 31:
Termination.--This Convention shall remain in force indefinitely. However, either
Contracting State may, on or before the thirtieth day of June in any calendar
year beginning after the expiration of a period of five years from the date of
its entry into force, give the other Contracting State through diplomatic
channels, written notice of termination and, in such event, this Convention
shall cease to have effect:
(a) in India:
(i) in respect of income arising in any
fiscal year beginning on or after the first day of April following the calendar
year in which the notice of termination is given;
(ii) in respect of capital which is held on
the last day of any fiscal year beginning on or after the first day of April
following the calendar year in which the notice of termination is given.
(b) in France:
(i) in respect of income arising in any
calendar year or accounting period beginning on or after the first of January
following the calendar year in which the notice of termination is given;
(ii) in respect of capital owned on the first
day of any calendar year following the calendar year in which the notice of
termination is given.
In witness whereof the
undersigned, being duly authorised thereto, have signed the present Convention.
Done in duplicate at
........... this ......... day of ....... one thousand nine hundred and
........ in the French, Hindi and English languages, all the texts being
equally authentic.
For the Government of the For the Government
of the
Republic of India French
Republic
Protocol.--At the time of
proceeding to the signature of the Convention between France and India for the
avoidance of double taxation with respect to taxes on income and on capital,
the undersigned have agreed on the following provisions which form an integral
part of the Convention.
1. For the purposes of this Convention, it
is understood that the words "political sub-division" wherever they
occur shall mean political sub-division of India.
2. With respect to paragraph 1 of article 7
(Business Profits), it is understood that if in both India's new tax
Conventions, Agreements or Protocols with the United Kingdom and Federal
Republic of Germany, it is provided that the profits of an enterprise of a
Contracting State carrying on business through a permanent establishment in the
other Contracting State may be taxed in that other Contracting State as are
attributable directly or indirectly to that permanent establishment or
attributable to: (a) Sales in that other Contracting State of goods or
merchandise of the same or similar kind as those sold through that permanent
establishment; or (b) other business activities carried on in that other State,
of the same or similar kind as those effected through that permanent
establishment, such provisions shall also apply to the extent so provided to
the present Convention with effect from the date from which the later of those
two Conventions, Agreements or Protocols between India and United Kingdom and
the Federal Republic of Germany enters into force. It is understood that only
the provisions included in both new Conventions, Agreements or Protocols
between India and United Kingdom and Federal Republic of Germany shall apply to
the present Convention.
3. In respect of paragraphs 1 and 2 of
article 7, where an enterprise of one of the Contracting States sells goods or
merchandise or carries on business in the other Contracting State through a
permanent establishment situated therein, the profits of that permanent
establishment shall not be determined on the basis of the total amount received
by the enterprise, but shall be determined only on the basis of the
remuneration which is attributable to the actual activity of the permanent
establishment for such sales or business. Especially, in the case of contracts
for the survey, supply, installation or construction of industrial, commercial
or scientific equipment or premises, or of public works, when the enterprise
has a permanent establishment, the profits of such permanent establishment
shall not be determined on the basis of the total amount of the contract, but
shall be determined only on the basis of that part of the contract which is
effectively carried out by the permanent establishment in the Contracting State
where the permanent establishment is situated. The profits related to that part
of the contract which is carried out by the head office of the enterprise shall
be taxable only in the Contracting State of which the enterprise is a resident.
4. It is understood that with respect to
paragraph 2 of article 7, no profits shall be attributed to a permanent
establishment by reason of the facilitation of the conclusion of foreign trade
or loan agreements or the mere signing thereof.
5. Where the law of the Contracting State
in which a permanent establishment is situated imposes in accordance with the
provisions of sub-paragraph (a) of paragraph 3 of article 7 a restriction on
the amount of the executive and general administrative expenses which may be
allowed as a deduction in determining the profits of such permanent
establishment, it is understood that in determining the profits of such permanent
establishment, the deduction in respect of such executive and general
administrative expenses in no case shall be less than what is allowable under
the Indian Income-tax Act as on the date of signature of this Convention.
6. Where tax has been levied at source in
excess of the amount of tax chargeable under the provisions of article 11, 12
or 13, applications for the refund of the excess amount of tax have to be
lodged with the competent authority of the Contracting State having levied the
tax, within a period of three years after the expiration of the calendar year
in which the tax has been levied.
7. In respect of articles 11 (Dividends),
12 (Interest) and 13 (Royalties, fees for technical services and payments for
the use of equipment), if under any Convention, Agreement or Protocol signed
after 1-9-1989, between India and a third State which is a member of the OECD,
India limits 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 of scope provided for in this Convention on
the said items of income, the same rate of scope as provided for in that
Convention, Agreement or Protocol on the said items income shall also apply under
this Convention, with effect from the date on which the present Convention or
the relevant Indian Convention, Agreement or Protocol enters into force,
whichever enters into force later.
8. It is understood that 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 is not considered as an interest for the purposes of article 12
(Interest) and is not considered as tax for the purpose of article 25
(Elimination of Double Taxation).
9. In respect of article 13 (Royalties,
Fees for Technical Services and payments for the use of equipment),
notwithstanding the provisions of paragraph 2 of this Article, royalties, fees
for technical services and payments for the use of equipment arising in France
and paid to a resident of India, shall not be taxable in France.
10. It is understood that in case India
applies a levy, not being a levy covered by article 2, such as the Research and
Development Cess on payments meant in article 13, and if after the signature of
this Convention under any Convention or Agreement or Protocol between India and
third State which is a member of the OECD, India should give relief from such
levy, directly by reducing the rate or the scope of the levy, either in full or
in part, or, indirectly by reducing the rate or the scope of the Indian tax
allowed under the Convention, Agreement or Protocol in question on payments as
meant in Article 13 of this Convention with the levy, either in full or in
part, then, as from the date on which the relevant Indian Convention, Agreement
or Protocol enters into force, such relief as provided for in that Convention,
Agreement or Protocol shall also apply under this Convention.
11. As regards article 16 (Dependent Personal
Services), it is understood that the provisions of this article apply to
remuneration derived by a resident of a Contracting State in his capacity as an
official in a top level managerial position of a company which is a resident of
the other Contracting State. It is clear that in respect of the remuneration
due from a resident of this other Contracting State, the provisions of
paragraph 2 of article 16 shall not apply.
12. As regards the application of paragraph 1
of article 26, it is understood that an individual, legal person, partnership
or association which is a resident of a Contracting State shall not be deemed
to be in the same circumstances as an individual, legal person, partnership or
association which is a resident of the other Contracting State. This shall also
apply where such individuals, legal persons partnership or associations are, in
applying paragraph 1.h of article 3 (General Definitions), deemed to be
nationals of the Contracting State of which they are residents.
13. In respect of article 25 (Elimination of
Double Taxation), it is understood that for the purpose of sub-paragraph
2(a)(ii), income which is exempt totally or partially in India shall also be
considered as income taxable in India.
Done in duplicate at
.......................... this ................... day of ................,
one thousand nine hundred and ............................, in French, Hindi
and English languages, all the texts being equally authentic.
For the Government of the For the
Government of the
Republic of India French
Republic
Agreement between the
Government of India and the Government of the French Republic for the avoidance
of double taxation in respect of taxes on income
Notification No. 20 [F.
No. 11 (33-a) 63-TPL], dated 18 February, 1970 as corrected by Notification No.
GSR 394,dated 17 March, 1971
G.S.R. 260.--Whereas the
annexed Agreement between the Government of India and the Government of the
French Republic for the avoidance of double taxation in respect of taxes on
income has been approved in accordance with the laws in force in each of the
two Contracting States and the diplomatic notes to this effect have been
exchanged today, as required by paragraph (1) of Article XXV of the said
Agreement;
Now, therefore, in
exercise of the powers conferred by section 90 of the Income-tax Act, 1961 (43
of 1961) and section 24A of the Companies (Profits) Surtax Act, 1964 (7 of
1964), the Central Government hereby directs that all the provisions of the
said Agreement shall be given effect to in the Union of India thirty days after
this date.
The Government of India
and the Government of the French Republic, Desiring to conclude an Agreement
for the avoidance of double taxation in respect of taxes on income. Have agreed
as follows :
ARTICLE I: (1) The taxes
which are the subject of the present Agreement are :
(a) in India :
--the income-tax and any
surcharge on income-tax levied under the Income-tax Act, 1961 (43 of 1961), and
--the surtax levied under
the Companies (Profits) Surtax Act, 1964 (7 of 1964),
(hereinafter referred to
as "Indian tax");
(b) in France :
--the income-tax on
individuals (import sur le revenue des personnes physiques),
--the complementary tax (taxe
complementaire),
--the tax on the profits
of companies and other legal entities (import sur les benefices des societes et autres personnes morales),
(hereinafter referred to
as "French tax").
(2) The present Agreement 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 beginning of each
year, the competent authorities of India and France shall notify to each other
any changes which have been made in their respective taxation laws in the
preceding year.
ARTICLE II: (1) In the
present Agreement :
(a) The term "India", when used in
a geographical sense, means all the territory in which the laws relating to
Indian tax are in force;
(b) The term "France", when used
in a geographical sense, means the European departments and the overseas
departments (Guadeloupe Guiana, Martinique and Reunion);
(c) The terms "one of the Contracting
States" and "the other Contracting State" mean India or France,
as the context requires;
(d) The term "person" includes
natural persons, companies and all other entities which are treated as taxable
units under the tax laws in force in the respective Contracting States;
(e) The term "company" means any
body corporate and includes any entity which is treated as a body corporate or
a company for tax purposes under the laws of the respective Contracting States;
(f) The term
"tax" means Indian tax or French tax as the context requires;
(g) The terms "resident of India"
and "resident of France" mean respectively any person who is resident
in India for the purposes of Indian tax and not resident in France for the
purposes of French tax, and any person who is resident in France for the
purposes of French tax, and not resident in India for the purposes of Indian
tax. A company shall be regarded as resident in India if it is incorporated in
India or its business is wholly managed and controlled in India. A company
shall be regarded as resident in France if it is incorporated in France or its
business is wholly managed and controlled in France;
(h) The terms "Indian enterprise"
and "French enterprise" mean respectively an industrial or commercial
enterprise or undertaking carried on by a resident of India and an industrial
or commercial enterprise or undertaking carried on by a resident of France; and
the terms "enterprise of one of the Contracting States" and
"enterprise of the other Contracting State" mean an Indian enterprise
or a French enterprise as the context requires;
(i) The term "permanent
establishment" means a fixed place of business in which the business of
the enterprise is wholly or partly carried on :
(aa) The term "fixed place of
business" shall include a place of management, a branch, an office, a
factory, a workshop, a warehouse, a mine, a quarry or other place of extraction
of natural resources.
(bb) An enterprise of one of the Contracting
States shall be deemed to have a fixed place of business in the other
Contracting State if it carries on in that other Contracting State a
construction, installation or assembly project or the like.
(cc) The use of mere storage facilities or the
maintenance of a place of business exclusively for the purchase of goods or
merchandise and not for any processing of such goods or merchandise in the
country of purchase, shall not constitute a permanent establishment.
(dd) 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 in the
first-mentioned Contracting State, if--
1. he has and habitually exercises in the
first-mentioned Contracting 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 exclusively to the purchase of goods or merchandise for or
on behalf of the enterprise, or
2. he habitually maintains in the
first-mentioned Contracting State a stock of goods or merchandise belonging to
the enterprise from which the person regularly fulfils orders for or on behalf
of the enterprise, or
3. 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 which are controlled
by it or have a controlling interest in it. A person from one of the
Contracting States who is present in the other Contracting States for not more
than three months in the taxable year for the purpose of securing orders shall
not be deemed to be habitually securing orders within the meaning of this
sub-paragraph.
(ee) A broker, a commission agent or other
agent of a genuinely independent status who merely acts as an intermediary
between an enterprise of one of the Contracting States and a prospective
customer in the other Contracting State shall not be deemed to be a permanent
establishment in that other Contracting State in cases where such activities do
not involve securing of orders within the meaning of sub-paragraph (dd) (3)
above.
(ff) 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 shall not, of itself, constitute that
subsidiary company a permanent establishment of its parent company;
(j) The term "competent authority" means :
--In the
case of India, the Central Government in the Ministry of Finance, Department of
Revenue, or its authorised representative.
--in the case of France,
for the purpose of interpretation of the present Agreement, the Minister of
Foreign Affairs and for
any other purposes, the Minister of
Finance or his authorised representative.
2. In the application of the provisions of
the present Agreement in either Contracting State, any term not otherwise
defined in the present Agreement shall, unless the context otherwise requires,
have the meaning which it has under the laws in force in that Contracting State
relating to the taxes which are the subject of the present Agreement.
ARTICLE III:
(1) The industrial or commercial profits
(excluding the profits derived from the operation of ships or aircraft) of an
enterprise of one of the Contracting States shall not be subjected to tax in
the other Contracting State unless the enterprise has a permanent establishment
situated in that other Contracting State. If it has such a permanent
establishment, the profits attributable thereto shall be subjected to tax only
in that other Contracting State.
(2) Where an enterprise of one of the
Contracting States has a permanent establishment situated in the other
Contracting State, there shall be attributed to such permanent establishment
the industrial or commercial profits which it might be expected to derive in
that other Contracting State, if it were an independent enterprise engaged in
the same or similar activities under the same or similar conditions and dealing
on an independent basis with the enterprise of which it is a permanent
establishment.
(3) In determining the industrial or
commercial profits of a permanent establishment, there shall be allowed as
deductions all expenses, wherever incurred, reasonably allocable to such
permanent establishment, including executive and general administrative expenses
so allocable.
(4) In a case where the ascertainment of the
correct amount of the industrial or commercial profits of a permanent
establishment presents difficulties, such profits may be reasonably estimated
with reference to the extent to which the activities of such permanent
establishment have contributed to earning of profits.
(5) The term "industrial or commercial
profits", as used in this Article, shall not include income in the form of
dividends, interest, rents, royalties and similar payments as referred to in
paragraph (2) of Article VII, capital gains, remuneration for personal
services, or fees for technical services.
ARTICLE IV: Where--
(a) an enterprise of one of the Contracting
States participates directly or indirectly in the management, control or
capital of an enterprise of the other Contracting State, or
(b) the same persons participated directly
or indirectly in the management, control or capital of an enterprise of one of
the Contracting States and an enterprise of the other Contracting State,
and, in either case,
conditions are made or imposed between the two enterprises in their commercial
or financial relations which differ from those which would be made between
independent enterprises, then any profits which but for those conditions would
have accrued to one of the enterprises but by reason of those conditions have
not so accrued may be included in the profits of that enterprise and taxed
accordingly.
ARTICLE V:
(1) Profits derived by an enterprise of one
of the Contracting States from the operation of aircraft shall not be subjected
to tax in the other Contracting State unless the aircraft is operated wholly or
mainly between places within that other Contracting State.
(2) The provisions of paragraph (1) shall
likewise apply in respect of participations in a pooled service, in a joint air
transport operating organisation or an international operating agency.
ARTICLE VI:
(1) Where an enterprise of one of the
Contracting States derives profits through shipping operations carried on in
the other Contracting State, the tax leviable on such profits in the other
Contracting State shall be reduced by an amount equal to fifty per cent thereof
and the reduced amount of tax payable in that other Contracting State on such
profits shall be allowed as a credit against, but in an amount not exceeding,
the tax charged in respect of such profits in the first-mentioned Contracting
State.
(2) Paragraph (1) shall not apply to profits
arising as a result of coastal traffic. The term "coastal traffic"
means traffic which originates and terminates in the territorial waters of the
same Contracting State.
(3) This Article shall not, in the case of
India, affect the provisions of sub-sections (1) to (6) of section 172 of the
Income-tax Act, 1961, relating to the assessment of profits from occasional
shipping or tramp steamers. When an adjustment is to be made under sub-section
(7) of section 172 of the said Act in the case of occasional shipping or tramp
steamers, the provisions of paragraph (1) shall apply.
ARTICLE VII:
(1) Royalties derived by a resident of one of
the Contracting States from sources in the other Contracting State may be taxed
in both the Contracting States.
(2) In this Article, the term
"Royalties" means payment of any kind received as consideration for
the use of; or for the right to use, any copyrights of literary, artistic or
scientific works, cinematographic films, patents, models, designs, plans,
secret processes or formulae, trade marks or for the use of, or for 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 similar payments in respect of the operation of mines,
quarries, or other places of extraction of natural resources.
ARTICLE VIII: Interest on
bonds, securities notes, debentures or any other form of indebtedness derived
by a resident of one of the Contracting States from sources in the other
Contracting States may be taxed in both the Contracting States.
ARTICLE IX: Dividends paid
by a company which is a resident of one of the Contracting States to a resident
of the other Contracting State may be taxed in both the Contracting States.
ARTICLE X:
(1) Income from immovable property may be
subjected to tax only in the Contracting State in which the property is
situated.
(2) For the purposes of paragraph (1), any
royalty or other income derived from the operation of a mine, quarry, or other
place of extraction of natural resources shall be regarded as income from
immovable property.
ARTICLE XI: Capital gains
arising from the sale, exchange or transfer of a capital asset, whether movable
or immovable, may be taxed only in the Contracting State in which the capital
asset is situated at the time of such sale, exchange or transfer. For this
purpose, the situs of the shares of a company shall be deemed to be in the
Contracting State where the company is incorporated.
ARTICLE XII:
(1) Remuneration paid by or out of the funds
created by a Contracting State or any political sub-division thereof or a local
authority therein to any individual in respect of services rendered to the
State or sub-division or local authority shall be taxed only in that
Contracting State.
(2) The provisions of paragraph (1) shall not apply:
(a) where remuneration is paid by a
Contracting State or a political sub-division thereof or a local authority
therein to any individual who is a national of the other Contracting State
without being a national of the first-mentioned Contracting State, the
remuneration in such a case being taxable only in the Contracting State in
which the individual is resident;
(b) to remuneration paid in respect of
services rendered in connection with any trade or business carried on for the
purpose of profit by a Contracting State or a political sub-division thereof or
a local authority therein referred to in paragraph (1).
(3) The provisions of paragraph (1) and
sub-paragraph (a) of paragraph (2) of this article shall also apply to
remuneration paid by the Reserve Bank of India, the Public Railways Authorities
and the Postal Administration of India and the corresponding organisations in
France.
ARTICLE XIII:
(1) Any pension or annuity derived from
sources within one of the Contracting States by an individual who is a resident
of the other Contracting State shall be taxable only in the first-mentioned
Contracting State.
(2) The term "pension", as used in
this Article, means periodic payments made in consideration of services
rendered or by way of compensation for injuries received.
(3) The term "annuity", as used in
this Article, 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 XIV:
(1) Subject to the provisions of Article XII,
salaries, wages or other similar remuneration for services as an employee
performed in one of the Contracting States by an individual who is a resident
of the other Contracting State may be taxed only in the Contracting State in
which such services are rendered.
(2) Notwithstanding the provisions of
paragraph (1) of this Article, salaries, wages, or other similar remuneration paid
to an individual who is a resident of one of the Contracting States for
services performed in the other Contracting State shall not be subjected to tax
in that other Contracting State and may be subjected to tax in the former
Contracting State, if--
(a) he is present in that other Contracting
State for a period or periods not exceeding in the aggregate 183 days in the
taxable year concerned, and
(b) the remuneration is paid by or on behalf
of an employer who is not a resident of that other Contracting State, and
(c) the remuneration is not deducted in
computing the profits of a permanent establishment chargeable to tax in that
other Contracting State.
(3) Notwithstanding the provisions of
paragraphs (1) and (2) of this Article, remuneration for personal services
performed aboard a ship or aircraft operated by an enterprise of one of the
Contracting States in international traffic shall be taxed only in that
Contracting State.
ARTICLE XV:
(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 subjected to tax only in the
Contracting State where such services or activities are performed.
(2) 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 shall be subjected to
tax only in the Contracting State in which such activities are exercised.
ARTICLE XVI: Amounts paid
by an enterprise of one of the Contracting States for technical services
furnished by an enterprise of the other Contracting State shall not be
subjected to tax in the first-mentioned Contracting State except in so far as
such amounts are attributable to activities actually performed in the
first-mentioned Contracting State. In computing the income so subjected to tax
there shall be allowed as deductions the expenses incurred in the
first-mentioned Contracting State in connection with the activities performed
in that Contracting State.
ARTICLE XVII:
(1) A resident of one of the Contracting
States, who, at the invitation of a university, college, school or other
recognised educational institution in the other Contracting State, visits that
other Contracting State solely for the purpose of teaching or engaging in
research at such educational institution for a period not exceeding two years
shall not be taxed in that other Contracting State on his remuneration for such
teaching or research.
(2) This article shall apply to an individual
engaged in research only if the results of such research are freely available
to the general public.
ARTICLE XVIII:
(1) An individual who is a resident of one of
the Contracting States and is temporarily present in the other Contracting
State solely,--
(a) as a student at a recognised university, college or school in
that other Contracting State, or
(b) as a
business apprentice, or
(c) as the recipient of a grant, allowance
or reward for the primary purpose of study or research from a governmental,
religious, charitable, scientific, literary or educational organisation of the
former Contracting State,
shall not be subjected to
tax in that other Contracting State--
(i) on the remittances from abroad for the
purposes of his maintenance, education, training study or research, and
(ii) with respect to any amount representing
remuneration for an employment in that other Contracting State if that
employment is related with his studies or his training or if it is necessary
for his maintenance; and
(iii) the
grant, allowance or award,
as the case may be.
(2) An individual who is a resident of one
of the Contracting States and is temporarily present in the other Contracting
State for a period not exceeding one year as an employee of, or under contract
with, an enterprise of the former Contracting State or an organisation referred
to in paragraph (1)(c) above solely to acquire technical, professional or
business experience from a person other than such enterprise or organisation,
shall not be subjected to tax in that other Contracting State on the
remuneration for such period in an amount not exceeding 12,000 new French
Francs (or its equivalent sum in Indian currency at the official rate of
exchange) including remuneration from such person in the other Contracting
State.
(3) An individual who is resident in one of
the Contracting States and is temporarily present in the other Contracting
State under arrangements with a Government in that other Contracting States
except where express provision to the contract of training, study or
orientation shall not be subjected to tax in that other Contracting State on
remuneration, received from abroad or paid in that other Contracting State for
his services directly related to such training, study or orientation, in an
amount not exceeding the sum of 15,000 new French Francs (or its equivalent sum
in Indian currency at the official rate of exchange) during any taxable year.
ARTICLE XIX:
(1) The laws in force in either of the
Contracting States will continue to govern the taxation of increase in the
respective Contracting States except where express provision to the contrary is
made in the present Agreement. However, a company which is a resident of India
and has a permanent establishment in France and which is liable to the tax on
income from movable capital under Article 109.2 of the General Code of Taxes of
France shall not be charged to that tax on income exceeding the profits
attributable to such permanent establishment in accordance with Article III of
the present Agreement.
(2) Subject to the provisions of Article VI
and paragraph (1) above, where, in the case of a resident of India, any income
from sources within France is subjected to tax both in India and in France,
India shall allow against the Indian tax payable in respect of such income and
within the limit of such Indian tax, a credit of French tax payable in respect
of such income; 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 the income-tax payable by the company, in India and, as to
the balance, if any, against the surtax payable by it in India.
(3) Subject to the provisions of Article VI
and paragraph (1) above, in respect of income subject to tax in both the
Contracting States, tax shall be determined in the case of a resident of France
as follows :
(a) On royalties mentioned in Article VII
derived from sources within India and which have been subjected to tax in
India, France shall allow, against the French tax payable in respect of such
royalties and within the limit of such French tax, a credit of Indian tax
payable in respect of such royalties.
(b) On
interest mentioned in Article VIII derived from sources within India :
(i) in cases where such interest has been
subjected to tax in India, France shall allow, against the French tax payable
in respect of such interest and within the limit of such French tax, a credit
of Indian tax payable in respect of such interest.
(ii) in cases where, owing to the operation
of section 10(15)(iv) of the Income-tax Act, 1961, no Indian tax is payable on
such interest, France shall reduce the French tax payable in respect of such
interest by any amount equal to fifty per cent thereof.
(c) On dividends, mentioned in Article IX,
derived from sources within India, France shall allow, against the French tax
payable in respect of such dividends and within the limit of such French tax, a
credit of an amount equal to thirty per cent of the gross amount of such
dividends. In computing the French tax on such dividends in cases where the
Indian tax thereon has been reduced or exempted by the operation of sections
80L, 80K and 80M of the Income-tax Act, 1961, it shall be deemed that the
amount by which the Indian tax has been reduced or exempted has been actually
paid in India.
(4) Income which, in accordance with the
provisions of the present Agreement, is not to be subjected to tax in any
Contracting State, may be included in the amount of income to be taken into
account for calculating the rate of tax to be imposed in that Contracting
State.
ARTICLE XX: The competent
authorities of the Contracting States shall upon request, exchange such
information (being information available under the respective taxation laws of
the Contracting States) as is necessary for carrying out the provisions of the
present Agreement. Any information so exchanged shall be treated as secret and
shall not be disclosed to any persons other than those concerned with the
assessment and collection of taxes which are the subject of a present
Agreement. No information shall, however, be exchanged which would disclose any
trade, business, industrial or professional secret or any trade process.
ARTICLE XXI: The nationals
of one of the Contracting States 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. In particular, the citizens of one Contracting State who
are subjected to tax in the other Contracting State shall be entitled to the
same extent as the citizens of that other Contracting State, to any exemption, deduction,
credit or other allowance accorded in consideration of the family
circumstances.
ARTICLE XXII:
(1) Where a resident of a Contracting State
considers that the actions of one or both of the Contracting States result or
will result for him in taxation not in accordance with the present Agreement,
he may, notwithstanding the remedies provided by the national laws of the
Contracting 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 present Agreement.
(3) The competent authorities of the
Contracting States shall endeavour to resolve by mutual agreement any
difficulties arising as to the interpretation or application of the present
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.
ARTICLE XXIII:
(1) The present Agreement may be extended,
either in its entirety or with necessary modifications, to overseas Territories
of the French Republic, which impose taxes substantially similar in character
to those to which the present Agreement applies. Any such extension shall take
effect from such date and subject to such modifications and conditions
(including conditions as to termination) as may be specified and agreed to
between the Contracting States in notes to be exchanged through diplomatic
channels.
(2) Unless otherwise agreed to by both
Contracting States the termination of the present Agreement by one of the
Contracting States under paragraph (3) of Article XXV shall also terminate the
application of the present agreement to any territory to which it has been
extended under this Article.
ARTICLE XXIV: The
competent authorities of the two Contracting States may consult together as may
be necessary to prescribe regulations necessary to carry into effect the
present Agreement within the respective Contracting States. They may
communicate with each other directly for the purpose of giving effect to the
present Agreement.
ARTICLE XXV:
(1) The present Agreement shall be approved
in accordance with the laws in force in each of the two States. It shall enter
into force thirty days after the exchange of letters certifying that the proper
procedure was fulfilled in each State. The exchange of letters shall take place
at New Delhi.
(2) The present Agreement shall thereupon be applicable :
(a) In India, in respect of income derived
during the "previous years" beginning on or after the first day of
January of the calendar year in which the exchange of letters takes place.
(b) In France, in respect of income derived
during the years of assessment beginning on or after the first day of January
of the calendar year in which the exchange of letters takes place.
(3) This Agreement shall continue in effect
indefinitely but either of the Contracting States may, on or before the
thirtieth day of June in any calendar year after 1971, give to the other Contracting
State notice of termination, and in such event, the present Agreement shall
cease to be effective :
(a) In India, in respect of income derived
during the "previous year" beginning on or after the first day of
January of the calendar year next following the calendar year in which such
notice is given,
(b) In France, in respect of income derived
during the years of assessment beginning on or after the first day of Janurary
of the calendar year next following the calendar year in which such notice is given.
In witness whereof the
undersigned, duly authorised thereto, have signed the present Agreement.
Done at Paris on the 26th
day of March, 1969 in duplicate in the French and Hindi languages, both texts
being equally authentic.
For the Government of
India. For
the Government of the French Republic
Sd./- D.N. Chatterjee Sd/-
Herve Alphand
Paris
26th March, 1969
Monsieur le Ministre,
The Agreement between the
Governments of India and the Republic of France for the avoidance of double
taxation in respect of taxes on income, being signed today, I have the honour,
on behalf of my Government, to propose as follows :
(1) Where a resident of one of the
Contracting States fulfils an order for sale of machinery to a resident of the
other Contracting State and it is incidental to the sale of the machinery that
a person or persons employed by the resident of the first-mentioned Contracting
State should proceed to the other Contracting State for assisting in the
installation of the machinery therein, such activity shall not be deemed to
constitute a permanent establishment unless it is carried on for a period
exceeding three months or the expenses incurred on such activity are more than
10 per cent of the total sale price for the order.
(2)(a) Where a person, who is a resident of India,
visits France in connection with any activity under the terms of the Agreement
dated 7th June, 1966, concerning Cultural, Scientific and Technical
Co-operation between the Government of India and the Government of the French
Republic, he shall not be taxable in France in respect of the remuneration
received by him in connection with such activity.
(b) Where a person, who was domiciled in
France, visits India in connection with any activity under the terms of the
Agreement, dated 7th June, 1966, concerning Cultural, Scientific and Technical
Co-operation between the Government of India and the Government of the French
Republic, he shall not be taxable in India in respect of the remuneration
received by him in connection with such activity. In that case, the part of
such remuneration received from French sources shall be subject to French
income-tax.
I shall be grateful if you
confirm your agreement to the above proposals and that in such case, this
letter and your reply thereto, shall be deemed to be part of the Agreement.
Please accept, Monsieur le
Ministry, the assurance of my highest consideration.
Sd/- D. N. Chatterjee
Monsieur Herve Alphand,
Secretary General,
Ministry of External
Affairs, Paris.
Paris
26th March, 1969.
Monsieur I’Ambassadeur,
By your letter of today’s
date, you on behalf of the Government of India, informed me of the following
:--
“The Agreement between the
Governments of India and the Republic of France for the avoidance of double
taxation in respect of taxes on income, being signed today, I have the honour,
on behalf of my Government, to propose as follows :
(1) Where a resident of one of the
Contracting States fulfils an order for sale of machinery to a resident of the
other Contracting State and it is incidental to the sale of the machinery that
a person or persons employed by the resident of the first-mentioned Contracting
State should proceed to the other Contracting State for assisting in the
installation of the machinery therein, such
activity shall not be deemed to constitute a permanent establishment unless it
is carried on for a period exceeding three months or the expenses incurred on
such activity are more than 10 per cent of the total sale price for the order.
(2) (a) Where
a person, who is a resident of India, visits France in connection with any
activity under the terms of the Agreement, dated 7th June, 1966, concerning
Cultural, Scientific and Technical Co-operation between the Government of India
and the Government of the French Republic, he shall not be taxable in France in
respect of the remuneration received by him in connection with such activity.
(b) Where a person, who was domiciled in France, visits India in
connection with any activity under the terms of the Agreement, dated 7th June,
1966, concerning Cultural, Scientific and Technical Co-operation between the
Government of India and the Government of the French Republic, he shall not be
taxable in India in respect of the remuneration received by him in connection
with such activity. In that case, the part of such remuneration recieved from
French sources shall be subject to French income-tax.”
I have the honour to
inform you that this proposal meets with the approval of the Government of the
French Republic. It is, therefore, confirmed that your letter of today’s date
and my reply thereto shall form part of the Agreement.
Please accept, Monsieur
I’Ambassadeur, the assurance of my highest consideration.
Sd./- Herve Alphand
His Excellency Shri D. N.
Chatterjee,
Ambassador of India,
Paris.
Agreement between the
Republic of India and the Federal Republic of Germany for the Avoidance of
DoubleTaxation with respect to Taxes on Income and Capital
Notification No. 10235 [F.
No. 500/47/90-FTD], dated 29-11-1996
Whereas the annexed
Agreement between the Government of the Republic of India and the Government of
the Federal Republic of Germany for the avoidance of double taxation with
respect to taxes on income and capital has been concluded;
And Whereas the aforesaid
Agreement was brought into force on the 26th day of October, 1996 after the
completion by both the Contracting States to each other of the procedure
required under their laws 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)
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.
Whereas the Government of
the Federal Republic of Germany and the Government of the Republic of India
desire to conclude an Agreement for the avoidance of double taxation with
respect to taxes on income and capital, and for promoting their mutual economic
relations:
Now, therefore, it is
hereby 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 and on capital imposed on behalf of a Contracting State, of a Land or a
political sub-division or local authority thereof, irrespective of the
procedure 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 the payroll tax.
(3) The existing taxes to which this
Agreement shall apply are in particular:
(a) in the Federal Republic of Germany:
(i) the Einkommensteuer (income-tax),
(ii) the
Korperschaftsteuer (corporation tax),
(iii) the
Vermogensteuer (capital tax), and
(iv) the
Gewerbesteuer (trade tax).
(hereinafter referred to
as "German tax");
(b) in the Republic of India:
(i) the income-tax including any surcharge
tax thereon (Einkommensteuer, einschl, darauf entfallender Zusatzsteuern), and
(ii) the
wealth-tax (Vermogensteuer)
(hereinafter referred to
as "Indian tax").
(4) This Agreement shall apply also to any identical or substantially similar taxes which are imposed after the date of signature of this Agreement in addition to, or in place of, the existing taxes. The competent authorities of the Contracting State shall notify each other of changes of importance which have been made in their respective taxation laws.
Article 3
General definitions
(1) For the purposes of this Agreement,
unless the context otherwise requires:
(a) the term "Federal Republic of Germany"
means the area in which the tax law of the Federal Republic of Germany is in
force including the area of the sea-bed, its sub-soil and the superjacent water
column adjacent to the territorial sea, insofar as the Federal Republic of
Germany exercises their sovereign rights and jurisdiction in conformity with
international law and its national legislation;
(b) the term "Republic of India"
means the territory of the Republic of India and includes the territorial sea
and airspace above it. For the purposes of this Agreement the term shall also
cover any other maritime zone in which the Republic of India has sovereign
rights, other rights and jurisdictions, according to the Indian law and in
accordance with international law in particular as laid down in the UN
Conversion of the Law of the Sea;
(c) the terms "a Contracting
State" and "the other Contracting State" mean the Federal
Republic of Germany or the Republic of India as the context requires;
(d) the term "person" includes an
individual, a company and any other entity which is treated as a taxable unit
under the taxation laws in force in the respective Contracting States;
(e) the term "company" means any
body corporate or any entity which is treated as a company or body corporate
under the taxation laws in force in the respective Contracting States;
(f) the term "immovable property"
has 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
respective 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;
(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
"national" means:
(i) in respect of the Federal Republic of
Germany and German within the meaning of Article 116, paragraph (1), of the
Basic Law for the Federal Republic of Germany and any legal person, partnership
and association deriving its status as such from the law in force in the
Federal Republic of Germany;
(ii) in respect of the Republic of India and
national of the Republic of India and any legal person, partnership and
association deriving its status as such from the law in force in the Republic
of India;
(i) 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;
(j) the term "competent
authority" means in the case of the Federal Republic of Germany the
Federal Ministry of Finance, and in the case of the Republic of India the
Central Government in the Ministry of Finance (Department of Revenue) or its
authorised representative;
(k) the term "fiscal year" means:
(i) in relation to Indian tax, the previous year as defined in
the Income-tax Act, 1961;
(ii) in relation to German tax, the calender
year;
(l) the term "tax" means German
tax or Indian tax as the context requires but shall not include interest or
penalty imposed in relation to such taxes.
(2) As regards the application of this
Agreement by a Contracting State any term not defined therein shall, unless the
context otherwise requires, have the meaning which it has under the law of that
State concerning the taxes to which this Agreement applies.
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 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 State shall
settle the question by mutual agreement.
(3) Where by reason of the provisions of
paragraph 1 a person other than an individual is a resident of both Contracting
States, then it shall be deemed to be a resident of the State in which its
place of effective management is situated.
Article 5
Permanent establishment
(1) For the purposes of this Agreement, the
term "permanent establishment" means a fixed place of business
through which the business of an enterprise is wholly or partly carried on.
(2) The term "permanent
establishment" includes especially:
(a) a place of management;
(b) a branch;
(c) an
office;
(d) a
factory;
(e) a
workshop;
(f) a mine, an oil or gas well, a quarry or
any other place of extraction of natural resources, including an installation
or structure used for the exploration or exploitation;
(g) a
warehouse or sales outlet;
(h) a farm, plantation or other place where
agricultural, forestry, plantation or related activities are carried on; and
(i) a building site or construction,
installation or assembly project or supervisory activities in connection
therewith, where such site, project or activities continue for a period
exceeding six months.
(3) 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.
(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 his 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 this
person:
(a) has and habitually exercises in that
State an authority to conclude contracts on behalf of the enterprise, unless
his activities are limited to the purchase of goods or merchandise for the
enterprise;
(b) has no such authority, but habitually
maintains in the first-mentioned State a stock of goods or merchandise from
which he regularly delivers goods or merchandise on behalf of the enterprise;
or
(c) habitually secures orders in the
first-mentioned State, wholly or almost wholly or the enterprise itself or for
the enterprise and other enterprises controlling, controlled by, or subject to
the same common control, as that enterprise.
(6) An enterprise shall not be deemed to have
a permanent establishment in a Contracting State merely because it carries on
business in that State through a broker, general commission agent or any other
agent of an independent status, provided that such persons are acting in the
ordinary course of their business and in their commercial and financial
relations to the enterprise no conditions are agreed or imposed which differ
from those usually agreed between independent persons.
(7) The fact that a company which is a resident of a Contracting State controls or is controlled by a company which is a resident of the other Contracting State or which carries on business in that other State (whether through a permanent establishment or otherwise), shall not of itself constitute either company a permanent establishment of the other.
Article 6
Income from immovable
property
(1) Income derived by a resident of a
Contracting State from immovable property situated in the other Contracting State
may be taxed in that other State.
(2) The provisions of paragraph 1 shall apply
to income derived from the direct use, letting, or use in any other form of
immovable property.
(3) The provisions of paragraphs 1 and 2
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.
Business profits
(1) The profits of an enterprise of a
Contracting State shall be taxable only in that State unless the enterprise
carries on business in the other Contracting State through a permanent
establishment situated therein. If the enterprise carries on business as
aforesaid, the profits of the enterprise may be taxed in the other State but
only so much of them as is attributable to that permanent establishment.
(2) Subject to the provisions of paragraph 3,
where an enterprise of a Contracting State carries on business in the other
Contracting State through a permanent establishment situated therein, there
shall in each Contracting State be attributed to that permanent establishment
the profits which it might be expected to make if it were a distinct and
separate enterprise engaged in the same or similar activities under the same or
similar conditions and dealing wholly independently with the enterprise of
which it is a permanent establishment.
(3) In the determination of the profits of a
permanent establishment, there shall be allowed as deduction expenses which are
incurred for the purposes of the business of the permanent establishment
including executive and general administrative expenses so incurred, whether in
the State in which the permanent establishment is situated or elsewhere, and
according to the domestic law of the Contracting State in which the permanent
establishment is situated.
(4) Insofar as in a Contracting State and in
exceptional cases the determination of the profits to be attributed to a
permanent establishment in accordance with paragraph 2 is impossible or gives
rise to unreasonable difficulties, nothing in paragraph 2 shall preclude the
determination of the profits to be attributed to a permanent establishment by
means of either apportioning the total profits of the enterprise to that
permanent establishment or estimating on any other reasonable basis; the method
of apportionment or estimation adopted shall, however, be such that the result
shall be in accordance with the principles contained in this Article.
(5) No profits shall be attributed to a
permanent establishment by reason of the mere purchase by that permanent
establishment of goods or merchandise for the enterprise.
(6) For the purposes of the preceding
paragraphs, the profits to be attributed to the permanent establishment shall
be determined by the same method year by year unless there is good and
sufficient reason to the contrary.
(7) Where profits include items of income
which are dealt with separately in other Articles of this Agreement, then the
provisions of those articles shall not be affected by the provisions of this
Article.
Article 8
Shipping and air transport
(1) Profits 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 enterprise is situated.
(2) If the place of effective management of a
shipping enterprise is aboard a ship, then it shall be deemed to be situated in
the Contracting State in which the home harbour of the ship is situated, or, if
there is no such home harbour, in the Contracting State of which the operator
of the ship is a resident.
(3) For the purposes of this Article,
interest on funds connected with the operation of ships or aircraft in
international traffic shall be regarded as profits derived from the operation of
such ships or aircraft, and the provisions of Article 11 shall not apply in
relation to such interest.
(4) The provisions of paragraph 1 shall
also apply to profits from the participation in a pool, a joint business or an
international operating agency.
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 person 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
(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--
(a) dividends on shares including income
from shares, "jouissance" shares on "jouissance" rights,
mining shares, founders' shares or other rights, not being debt-claims,
participating in profits, and
(b) other 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.
(4) The provisions of paragraphs 1 and 2
shall not apply if the beneficial owner of the dividends, being a resident of a
Contracting State, carries on business in the other Contracting State of which
the company paying the dividends is a resident, through a permanent
establishment situated therein, or performs in that other State independent
personal services from a fixed base situated therein, and the holding in respect
of which the dividends are paid is effectively connected with such permanent
establishment or fixed base. In such case the provisions of Article 7 or
Article 14, as the case may be, shall apply.
(5) Where a company which is a resident of a
Contracting State derives profits or income from the other Contracting State,
that other State may not impose any tax on the dividends paid by the company,
except insofar as such dividends are paid to a resident of that other State or
insofar as the holding in respect of which the dividends are paid is
effectively connected with a permanent establishment or a fixed base situated
in that other State, nor subject the company's undistributed profits to a tax
on the company's undistributed profits, even if the dividends paid or the
undistributed profits consists wholly or partly of profits or income arising in
such other State.
Article 11
(1) Interest arising in a Contracting State
and paid to a resident of the other Contracting State may be taxed in that
other State.
(2) However, such interest may also be taxed
in the Contracting State in which it arises and according to the laws of that
State, but if the recipient is the beneficial owner of the interest the tax so
charged shall not exceed 10 per cent of the gross amount of the interest.
(3) Notwithstanding the provisions of paragraphs 1 and 2:
(a) interest arising in the Federal Republic
of Germany and paid to the Government of the Republic of India, the Reserve
Bank of India, the Industrial Finance Corporation of India, the Industrial
Development Bank of India, the Export-Import Bank of India, National Housing
Bank and Small Industries Development Bank of India shall be exempt from German
tax;
(b) interest arising in the Republic of
India and paid to the Government of the Federal Republic of Germany, the
Deutsche Bundesbank, the Kreditanstalt fur Wiederaufbau or the Deutsche
Investitions and Entwicklungsgesellschaft (DEG) and interest paid in
consideration of a loan guaranteed by HERMES-Deckung shall be exempt from
Indian tax.
(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 on right to participate in the
debtor's profits, and in particular, income from government securities and
income from bonds or debentures, including premiums and prizes attaching to
such securities, bonds or debentures. Penalty charges for late payment shall
not be regarded as interest for the purpose of this Article.
(5) The provisions of paragraphs 1, 2 and 3
shall not apply if the beneficial owner of the interest, being a resident of a
Contracting State, carries on business in the other Contracting State in which
the interest arises, through a permanent establishment situated therein, or
performs in that other State independent personal services from a fixed base
situated therein, and the debt-claim in respect of which the interest is paid
is effectively connected with such permanent establishment or fixed base. In
such case the provisions of Article 7 or Article 14, as the case may be, shall
apply.
(6) Interest shall be deemed to arise in a
Contracting State when the payer is that State itself, a land, a political
sub-division, a local authority or a resident of that State. Where, however,
the person paying the interest, whether he is a resident of a Contracting State
or not, has in a Contracting State a permanent establishment or a fixed base in
connection with which the indebtedness on which the interest is paid was
incurred, and such interest is borne by such permanent establishment or fixed
base, then such interest shall be deemed to arise in the State in which the
permanent establishment or fixed base is situated.
(7) Where, by reason of a special
relationship between the payer and the beneficial owner or between both of them
and some other person, the amount of the interest, having regard to the
debt-claim for which it is paid, exceeds the amount which would have been
agreed upon by the payer and the beneficial owner in the absence of such
relationship, the provisions of this Article shall apply only to the
last-mentioned amount. In such case, the excess part of the payment shall
remain taxable according to the laws of each Contracting State, due regard
being had to the other provisions of this Agreement.
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 10 per cent of the gross amount of the royalties or
the fees for technical services.
(3) The term "royalties" as used in
this Article means payments of any kind received as a consideration for the use
of, or the right to use, any copyright of literary, artistic or scientific
work, including cinematograph films or films or tapes used for radio or
television broadcasting, any patent, trade mark, design or model, plan, secret
formula or process, or for the use of, or the right to use, industrial,
commercial or scientific equipment, or for information concerning industrial,
commercial or scientific experience.
(4) The term "fees for technical
services" as used in this Article means payments of any amount in
consideration for the services of managerial, technical or consultancy nature,
including the provision of services by technical or other personnel, but does
not include payments for services mentioned in Article 15 of this 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 State independent personal services from a fixed base situated therein,
and the right, property or contract in respect of which the royalties or fees
for technical services are paid is effectively connected with such permanent
establishment or fixed base. In such case, the provisions of Article 7 or
Article 14, as the case may be, shall apply.
(6) Royalties and fees for technical services
shall be deemed to arise in a Contracting State when the payer is that State
itself, a land or a political sub-division, a local authority or a resident of
that State. Where, however, the person paying the royalties or fees for
technical services, whether he is a resident of a Contracting State or not, has
in a Contracting State a permanent establishment or a fixed base in connection
with which the liability to pay the royalties or fees for technical services
was incurred, and such royalties or fees for technical services are borne by
such permanent establishment or fixed base, then such royalties or fees for
technical services shall be deemed to arise in the State in which the permanent
establishment or fixed base is situated.
(7) Where, by reason of special relationship
between the payer and the beneficial owner or between both of them and some
other person, the amount of royalties or fees for technical services paid
exceeds the amount which would have been paid in the absence of such
relationship, the provisions of this Article shall apply only to the
last-mentioned amount. 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 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 in which the place of effective management of the enterprise
is situated.
(4) Gains from the alienation of shares 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 to 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 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 120
days in the relevant fiscal year, in that case, only so much of the income as
is derived from his activities performed in that other State may be taxed in
that other State.
(2) The term "professional
services" includes independent scientific, literary, artistic, educational
or teaching activities, as well as the independent activities of physicians,
surgeons, lawyers, engineers, architects, dentists and accountants.
Article 15
Dependent personal
services
(1) Subject to the provisions of Articles 16,
18, 19 and 20 salaries, wages and other similar remuneration derived by a
resident of a Contracting State in respect of an employment shall be taxable in
the other Contracting State only if the employment is exercised there.
(2) Notwithstanding the provisions of
paragraph 1, remuneration derived by a resident of a Contracting State in
respect of an employment exercised in the other Contracting State shall be
taxable only in the first-mentioned State if:
(a) the recipient is present in the other
State for a period or periods not exceeding in the aggregate 183 days in the
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 operating the ship or aircraft is a resident.
Article 16
Director's fees
Director's fees and
similar payments derived by a resident of a Contracting State in his capacity
as a member of the board of directors of a company which is a resident of the
other Contracting State may be taxed in that other State.
Article 17
Artistes and sportspersons
(1) Notwithstanding the provisions of
Articles 7, 14 and 15, income derived by a resident of a Contracting State as
an entertainer, such as a theatre, motion picture, radio or television artiste,
or a musician, or as a sportsperson, from his personal activities as such
exercised in the other Contracting State, may be taxed in that other State.
(2) Where income in respect of personal
activities exercised by an entertainer or a sportsperson in his capacity as
such accrues not to the entertainer or sportsperson himself but to another
person, that income may, notwithstanding the provisions of Articles 7, 14 and
15, be taxed in the Contracting State in which the activities of the
entertainer or sportsperson are exercised.
(3) 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 where such visit is financed directly or indirectly by that other State, a land, a political sub-division or a local authority thereof or by an organisation which in that other State is recognised as a charitable organisation.
Article 18
Non-government pensions
Subject to the provisions
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.
Government service
(1) (a) Remuneration other than a pension, paid by a
Contracting State, a land, a political sub-division or a local authority
thereof to an individual in respect of services rendered to that State, land,
sub-division or authority shall be taxable only in that State;
(b) However, such remuneration shall be taxable only in the
other Contracting State, if the services are
rendered in that State and the individual is a resident of that State
who:
(i) is a national of that State; or
(ii) did not
become a resident of that State solely for the purpose of rendering the
services.
(2) (a) Any pension paid by a Contracting State, a
land, a political sub-division or a local authority thereof to an individual in
respect of services rendered to that State, land, sub-division or authority
shall be taxable only in that State.
(b) However, such pension shall be taxable
only in the other Contracting State if the individual is a resident of and a
national of that other State.
(3) The provisions of Articles 15, 16 and 18
shall apply to remuneration and pensions in respect of services rendered in
connection with a business carried on by a Contracting State, a land, a
political sub-division or a local authority thereof.
(4) The provisions of paragraph 1 shall likewise apply in respect or remuneration paid, under a development assistance programme of a Contracting State, a land, a political sub-division or a local authority thereof, out of funds exclusively supplied by that State, land, political sub-division or local authority, to a specialist or volunteer seconded to the other Contracting State with the consent of that other State.
Article 20
Teachers, students and
trainees
(1) An individual who visits a Contracting
State at the invitation of that State or of a university, college, school,
museum or other cultural institution of that State or under an official
programme of cultural exchange for a period not exceeding two years solely for
the purpose of teaching, giving lectures or carrying out research at such
institution and who is, or was immediately before that visit, a resident of the
other Contracting State shall be exempt from tax in the first-mentioned State
on his remuneration for such activity during the period of the first year from the
date of his arrival and in the next year of the exemption will be only in
respect of remuneration derived by him from outside that State.
(2) An individual who is present in a
Contracting State solely:
(a) as a student at a university, college or school in that
Contracting State,
(b) as a business apprentice (including in
the case of the Federal Republic of Germany a "Volontar" or a
"Praktikant"),
(c) as the receipt of a grant, allowance or
award for the primary purpose of study or research from a religious,
charitable, scientific or educational organisation, or
(d) as a member of a technical cooperation
programme entered into by the Government of that Contracting State, and who is,
or was immediately before visiting that State, a resident of the other Contracting
State, shall be exempt from tax in the first-mentioned Contracting State in
respect of
(i) remittances from abroad for the purposes of his maintenance,
education or training; and
(ii) remuneration from employment in that
other State, in an amount not exceeding DM 7,200 (seven thousand and two
hundred Deutsche Mark) or its equivalent in 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.
Article 21
Other income
(1) Items of income of a resident of a
Contracting State, wherever arising, not dealt with in the foregoing Articles
of this Agreement shall be taxable only in that State.
(2) The provisions of paragraph 1 shall not
apply to income, other than income from immovable property, 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 22
Capital
(1) Capital represented by immovable
property, owned by a resident of a Contracting State and situated in the other
Contracting State, may be taxed in that other State.
(2) Capital represented by movable property
forming part of the business property of a permanent establishment which an
enterprise of a Contracting State has in the other Contracting State or by
movable property pertaining to a fixed base available to a resident of a
Contracting State in the other Contracting State for the purpose of performing
independent personal services, may be taxed in that other State.
(3) Capital represented by ships and aircraft
operated in international traffic and by movable property pertaining to the
operation of such ships or aircraft, shall be taxable only in the Contracting
State in which the place of effective management of the enterprise is situated.
(4) All other elements of capital of a
resident of a Contracting State shall be taxable only in that State.
Article 23
Relief from double
taxation
Tax shall be determined in
the case of a resident of the Federal Republic of Germany as follows:
(a) Unless foreign tax credit is to be
allowed under sub-paragraph (b), there shall be exempted from German tax any
item of income arising in the Republic of India and any item of capital
situated within the Republic of India, which, according to this Agreement, may
be taxed in the Republic of India. The Federal Republic of Germany, however,
retains the right to take into account in the determination of its rate of tax
the items of income and capital so exempted.
In the case of dividends
exemption shall apply only to such dividends as are paid to a company (not
including partnerships) being a resident of the Federal Republic of Germany by
a company being a resident of the Republic of India at least 10 per cent of the
capital of which is owned directly by the German company.
There shall be exempted from taxes on capital
any shareholding the dividends of which are exempted or, if paid, would be
exempted, according to the immediately foregoing sentence.
(b) Subject to the provisions of German tax
law regarding credit for foreign tax, there shall be allowed as a credit
against German tax payable in respect of the following items of income arising
in the Republic of India and the items of capital situated there the Indian tax
paid under the laws of the Republic of India and in accordance with this
Agreement on:
(i) dividends not dealt with in sub-paragraph (a);
(ii) interest;
(iii) royalties
and fees for technical services;
(iv) income in
the meaning of paragraph 4 of Article 13;
(v) director's
fees;
(vi) income of
artistes and sportspersons.
(c) For the purpose of credit referred to in
letter (ii) of sub-paragraph (b) the Indian tax shall be deemed to be 10 per
cent of the gross amount of the interest, if the Indian tax is reduced to a
lower rate or totally waived according to domestic law, irrespective of the
amount of tax actually paid.
(d) The provisions of sub-paragraph (c)
shall apply for the first 12 fiscal year for which this Agreement is effective.
(e) Notwithstanding the provisions of
sub-paragraph (a) items of income dealt with in Articles 7 and 10 and gains
derived from the alienation of the business property of a permanent
establishment as well as the items of capital underlying such income shall be
exempted from German tax only if the resident of the Federal Republic of
Germany can prove that the receipts of the permanent establishment or company
are derived exclusively or almost exclusively from active operations.
In the case of items of
income dealt with in Article 10 and the items of capital underlying such income
the exemption shall apply even if the dividends are derived from holdings in
other companies being residents of the Republic of India which carry on active
operations and in which the company which last made a distribution has a
holding of more than 25 per cent.
Active operations are the
following: producing or selling goods or merchandise, giving technical advice
or rendering engineering services, or doing banking or insurance business, within
the Republic of India.
If this is not proved,
only the credit procedure as per sub-paragraph (b) shall apply.
(2) Tax shall be determined in the case of a
resident of the Republic of India as follows:
Where a resident of the
Republic of India derives income or owns capital which, in accordance with the
provisions of this Agreement, may be taxed in the Federal Republic of Germany,
the Republic of India shall allow as a deduction from the tax on such income of
that resident an amount equal to the income-tax paid in the Federal Republic of
Germany, whether directly or by deduction, and as a deduction from the tax on
such capital of that resident an amount equal to the capital tax paid in the
Federal Republic of Germany. 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 Federal Republic of Germany.
(3) The laws in force in either of the
Contracting States shall continue to govern the taxation of income and capital
in the respective Contracting States except where express provision to the
contrary is made in this Agreement.
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 and under the same conditions 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 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. This
provision shall not be construed as preventing a Contracting State from
charging the profits of a permanent establishment which a company of the other
Contracting State has in the first-mentioned State at a rate of tax which is
higher than that imposed on the profits of a similar company of the
first-mentioned Contracting State, nor as being in conflict with the provisions
of paragraph 3 of Article 7 of this Agreement. Further this provision shall not
be construed as obliging a Constructing State to grant to residents of the
other Contracting State any personal allowances, reliefs and reductions for
taxation purposes which it grants only to its own residents.
(3) Except where the provisions 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. Similarly, any debts of an enterprise of a Contracting State to a
resident of the other Contracting State shall, for the purpose of determining
the taxable capital of such enterprise, be deductible under the same conditions
as if they had been contracted to a resident of the first-mentioned State.
(4) Enterprises of a Contracting State, the
capital of which is wholly or partly owned or controlled, directly or
indirectly, by one or more residents of the other Contracting State, shall not
be subjected in the first-mentioned State to any taxation or any requirement
connected therewith which is other or more burdensome than the taxation and
connected requirements to which other similar enterprises of the
first-mentioned State are or may be subjected.
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 this 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 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 this
Agreement. They may also consult together for the elimination of double
taxation in cases not provided for in this Agreement.
(4) The competent authorities of the
Contracting States may establish by mutual agreement the mode of application of
the provisions of this Agreement regarding the exemption of reduction of taxes.
(5) The competent authorities of the
Contracting States may communicate with each other directly for the purpose of
reaching an agreement in the sense of the preceding paragraphs.
Article 26
Exchange of information
(1) The competent authorities of the
Contracting States shall exchange such information as is necessary for carrying
out the provisions of this Agreement. Any information received by a Contracting
State shall be treated as secret in the same manner as information obtained
under the domestic laws of that State and shall be disclosed only to persons or
authorities (including courts and administrative bodies) involved in the
assessment or collection of the enforcement or prosecution in respect of, or
the determination of appeals in relation to, the taxes covered by this
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 which is not
obtainable under the laws or in the normal course of the administration of that
or of the other Contracting State;
(c) to supply information which would
disclose any trade, business, industrial, commercial or professional secret or
trade process, or information, the disclosure of which would be contrary to
public policy (ordre public).
Article 27
Diplomatic and consular
privileges
Nothing in this Agreement
shall affect the fiscal privileges of members of a diplomatic mission, a
consular post or an international organisation under the general rules of
international law or under the provisions of special agreements.
Article 28
Entry into force
(1) The Governments of the Contracting States
shall notify to each other that the legal requirements for the entry into force
of this Agreement have been complied with.
(2) This Agreement shall enter into force one
month after receipt of the latter of the notifications referred to in paragraph
1 and shall have effect:
(a) In the Federal Republic of Germany
(i) in the case of taxes withheld at source
on dividends, interest, royalties and fees for technical services, in respect
of amounts paid on or after the first day of January of the calendar year next
following that in which this Agreement enters into force;
(ii) in the case of other taxes, in respect
of taxes levied for periods beginning on or after the first day of January of
the calendar year next following that in which this Agreement enters into
force;
(b) In the Republic of India
(i) in respect of income arising in any
fiscal year beginning on or after the first day of April following the calendar
year in which this Agreement enters into force;
(ii) in respect of capital which is held on
the last day of any fiscal year beginning on or after the first day of April
following the calendar year in which this Agreement enters into force.
(3) Upon the entry into force of this
Agreement the Agreement between the Government of Federal Republic of Germany
and the Government of India for the Avoidance of Double Taxation of Income
signed on 18th March, 1959 and the Protocol amending the Agreement between the
Government of the Federal Republic of Germany and the Government of India for
the Avoidance of Double Taxation of income signed on 28th June, 1984 along with
the Exchange of Notes of the same date shall expire and shall cease to have
effect as from the date on which the provisions of this Agreement commence to
have effect.
Termination
This Agreement shall
continue in effect indefinitely but either of the Contracting States may, on or
before the thirtieth day of June in any calendar year beginning after the
expiration of a period of five years from the date of its entry into force,
give the other Contracting State, through diplomatic channels, written notice
of termination and, in such event, this Agreement shall cease to have effect:
(a) In the Federal Republic of Germany:
(i) in the case of taxes withheld at source
on dividends, interest, royalties and fees for technical services, in respect
of amounts paid on or after the first day of January of the calendar year next
following that in which notice of termination is given;
(ii) in the case of other taxes in respect of
taxes levied for periods beginning on or after the first day of January of the
calendar year next following that in which notice of termination is given.
(b) In the Republic of India
(i) in respect of income arising in any
fiscal year beginning on or after the first day of April following the calendar
year in which the notice of termination is given;
(ii) in respect of capital which is held on
the last day of any fiscal year beginning on or after the first day of April
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 at Bonn on June 19th,
1995 in two originals, each in the German, Hindi and English languages, all
three texts being authentic. In case of divergent interpretation of the German
and the Hindi text the English text shall prevail.
The Republic of India and
the Federal Republic of Germany
have agreed at the signing
at Bonn on June 19th, 1995 of the Agreement between the two States for the
avoidance of double taxation with respect to taxes on income and capital upon
the following provisions which shall form an integral part of the said
Agreement.
1. With reference to Article 7
(a) In the determination of the profits of a
building site or construction, assembly or installation project there shall be
attributed to that permanent establishment in the Contracting State in which
the permanent establishment is situated only the profits resulting from the
activities of the permanent establishment as such. If machinery or equipment is
delivered from the head office or another permanent establishment of the
enterprise (situated outside that Contracting State) or a third person
(situated outside that Contracting State) in connection with those activities
or independently therefrom there shall not be attributed to the profits of the
building site or construction, assembly or installation project the value of
such deliveries.
(b) Income derived by a resident of a
Contracting State from planning, project, construction or research activities
as well as income from technical services exercised in that State in connection
with a permanent establishment situated in the other Contracting State, shall
not be attributed to that permanent establishment.
(c) In respect of paragraph 1 of Article 7,
profits derived from the sale of goods or merchandise of the same or similar
kind as those sold, or from other business activities of the same or similar
kind as those effected, through that permanent establishment, may be considered
attributable to that permanent establishment if it is proved that:
(i) this transaction has been resorted to
in order to avoid taxation in the Contracting State where the permanent
establishment is situated, and
(ii) the
permanent establishment in any way was involved in this transaction.
(d) It is understood that the deductions in
respect of the head office expenses as referred to in paragraph 3 of Article 7
shall in no case be less than those allowable under the Indian Income-tax Act
as on the date of entry into force of this Agreement.
(e) No deduction shall be allowed in respect
of amounts paid or 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:
(i) royalties, fees or other similar payments in return for the
use of patents or other rights;
(ii) commission
for specific services performed or for management; and
(iii) interest on moneys lent to the permanent
establishment except in case of a banking institution.
2. With reference to Article 8
For the purposes of Article
8 income from the operation of ships includes income 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.
3. With reference to Article 10
For the purpose of
taxation in the Federal Republic of Germany, the term dividends includes income
derived by a sleeping partner ("stiller Gesellschafter") from his
participation as such and distributions on certificates of an investment fund
or investment trust. For the purpose of taxation in the Republic of India any
income of a similar kind will be treated alike.
4. With reference to Articles 10 and 11
Notwithstanding the
provisions of these Articles, dividends and interest may be taxed in the
Contracting State in which they arise, and according to the law of that State:
(a) if they are derived from rights or debt
claims carrying a right to participate in profits (including income derived by
a sleeping partner from his participation as such, from a "partiarisches
Dariehen" and from "Gewinnobligationen" within the meaning of
the tax law of the Federal Republic of Germany), and
(b) under the condition that they are
deductible in the determination of profits of the debtor of such income.
5. With reference to Article 13
In view of the position
confirmed on behalf of the Government of the Federal Republic of Germany that
the Deutsche Investitions und Entwicklungsgesellschaft (DEG) is wholly owned by
the Government of the Federal Republic of Germany and is exempted from paying
income-tax in Germany, it is agreed that the long-term capital gains arising to
the DEG be to alienation of shares in Indian companies will be exempt from
taxation in India.
6. With reference to Article 23
(a) The exemption provided for in
sub-paragraph (a) of paragraph 1 of Article 23 is granted irrespective of
whether the income or capital concerned is effectively taxed in the Republic of
India or not.
(b) Where a company being a resident of the
Federal Republic of Germany distributes incomes derived from sources within the
Republic of India, paragraph 1 of Article 23 shall not preclude the
compensatory imposition of corporation tax on such distributions in accordance
with the provisions of German tax law.
(c) The Federal Republic of Germany shall
avoid double taxation by a tax credit as provided for in paragraph 1(b) of
Article 23, and not by a tax exemption under paragraph 1(a) of Article 23.
(aa) if in the Contracting State income is
placed under differing provisions of the Agreement or attributed to different
persons (other than under Article 9) and this conflict cannot be settled by
procedure pursuant to Article 25, and
(i) if as a result of such placement or
attribution the relevant income would be subject to double taxation; or
(ii) if as a result of such placement or
attribution the relevant income would remain untaxed or be subject only to
inappropriately reduced taxation in the Republic of India and would (but for
the application of this paragraph) remain exempt from tax in the Federal
Republic of Germany; or
(bb) if the Federal Republic of Germany has,
after due consultation and subject to the limitation of its internal law,
notified the Republic of India through diplomatic channels of other items of
income to which it intends to apply this paragraph in order to prevent the
exemption of income from taxation in both Contracting States or other
arrangements for the improper use of the Agreement.
In the case of a notification
under sub-paragraph (bb) the Republic of India may, subject to notification
through diplomatic channels, characterise such income under the Agreement
consistently with the characterisation of that income by the Federal Republic
of Germany. A notification made under this paragraph shall have effect only
from the first day of the calender year following the year in which it was
transmitted and any legal prerequisites under the domestic law of the notifying
State for giving it effect have been fulfilled.
7. With reference to Article 26
(a) It is also understood that in relation
to the Agreement, the term "information" shall include documents. It
is further understood that the German tax law provides for the transmission of
information in terms of paragraph 3 of Article 117 of the Fiscal Code
(Abgabenordnung) -- upon request -- and it would be possible to furnish
information to the competent authority in the Republic of India under these
provisions irrespective of this Article.
(b) If personal data is exchanged under this
Article, the following additional provisions shall apply subject to the
domestic laws of each Contracting State:
(i) The data supplying Contracting State
shall be responsible for the accuracy of the data they supply. If it emerges
that inaccurate data or data which should not have been supplied have been
communicated, the receiving State shall be notified of this without delay. That
State shall be obliged to correct or destroy said data;
(ii) The Contracting States shall be obliged
to keep official records of the transmission and receipt of personal data;
(iii) The Contracting States shall be obliged
to take effective measures to protect the personal data communicated against
unauthorised access, unauthorised alteration and unauthorised disclosure;
(iv) Upon application the person concerned
shall be informed of the information stored about him and of the use planned to
be made of it. There shall be no obligation to give this information if on
balance it appears that the public interest in withholding it outweighs the
interest of the person concerned in receiving it. In all other respects the
right of the person concerned to be informed of the data stored about him shall
be governed by the domestic law of the Contracting State in whose sovereign
territory the application for the information is made.
Done at Bonn on June 19th,
1995 in two originals, each in the German, Hindi and English languages, all
three texts being authentic. In case of divergent interpretation of the German
and the Hindi text the English text shall prevail.
(i) Agreement between the Government of the
Republic of India and the Government of the GermanDemocratic Republic for the
avoidance of double taxation with respect to taxes on income and on capital
G.S.R. 107(E).--Whereas
the annexed agreement between the Government of the Republic of India and the
Government of the German Democratic Republic for the avoidance of double
taxation with respect to taxes on income and on capital has come into force on
the 24th November, 1989, on the notification by both the Contracting States to
each other of the approval of the agreement under their laws in accordance with
Article 31 of the said agreement;
Now, therefore, in
exercise of the powers conferred by section 44A of the Wealth-tax Act, 1957 (27
of 1957), and 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.
The Government of the
Republic of India and the Government of the German Democratic Republic;
Desiring to promote
economic co-operation between the two States through an Agreement for the avoidance
of double taxation 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 the Republic of India:
(i) the income-tax including any surcharge
thereon imposed under the income-tax Act, 1961 (43 of 1961); and
(ii) the wealth-tax imposed under the
Wealth-tax Act, 1957 (27 of 1957) (hereinafter referred to as "Indian
tax").
(b) in the German Democratic Republic:
(i) Einkommensteuer (income-tax);
(ii) Koerperschaftsteuer
(corporate income-tax);
(iii) Gewinnabfuhrungen
der Staatlichen Betriebe (revenue transfer by public enterprises);
(iv) Lohnsteuer
(tax on wages);
(v) Steuer
auf Lizenzgebuhren (tax on royalties);
(vi) Gewerbesteuer
(trade-tax); and
(vii) Vermogensteuer
(property-tax)
(hereinafter referred to
as "German Democratic Republic tax").
2. The Agreement shall also apply to any
identical or substantially similar taxes which are imposed by either
Contracting State after the date of signature of the present Agreement in
addition to, or in place of, the taxes referred to in paragraph 1.
The competent authorities
of the Contracting States shall notify each other of any substantial changes
which are made in their respective taxation laws.
ARTICLE 3 : General
definitions.--In this Agreement, unless the context otherwise requires:
(a) the term "a Contracting State"
and "the other Contracting State" mean Republic of India or the
German Democratic Republic as the context requires;
(b) the term "tax" means Indian
tax or German Democratic Republic 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;
(c) 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;
(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 respectively an enterprise carried on by a resident of a
Contracting State and an enterprise carried on by a resident of the other Contracting
State;
(f) the term "competent authority"
means in the case of India, the Central Government in the Ministry of Finance
(Department of Revenue) or their authorised representative; and in the case of
the German Democratic Republic, the Ministry of Finance;
(g) the term
"national" means:
(i) any individual possessing the
nationality of a Contracting State under the laws in force in that State; and
(ii) any legal person, partnership or
organisation deriving its status from the laws in force in the Contracting
State;
(h) the term "international
traffic" means any transport by a ship or aircraft operated by an
enterprise of a Contracting State, except when the ship or aircraft is operated
solely between places in the other Contracting State.
2. As regards the application of the
Agreement by a Contracting State, any term not defined therein shall, unless
the context otherwise requires, have the meaning which it has for the purposes
of 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 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, as 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, 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 or a warehouse;
(f) a mine,
an oil or gas well, a quarry or any other place of extraction of natural
resources;
(g) a farm or
plantation;
(h) a
premises used as a sales outlet or for receiving or soliciting orders;
(i) an
installation or structure used for the exploration or development 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. Notwithstanding the preceding provisions
of this article, the term "permanent establishment" shall be deemed
not to include:
(a) a temporary building site or
construction or installation project executed by the Government of a
Contracting State in the other State;
(b) the use of facilities solely for the
purpose of storage or display of goods or merchandise belonging to the
enterprise;
(c) the maintenance of a stock of goods or
merchandise belonging to the enterprise solely for the purpose of storage or
display;
(d) the maintenance of a stock of goods or
merchandise belonging to the enterprise solely for the purpose of processing by
another enterprise;
(e) the maintenance of a fixed place of
business solely for the purpose of purchasing goods or merchandise, or of
collecting information, for the enterprise;
(f) 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 (b) to (f) shall not be applicable where the enterprise
maintains any other fixed place of business in the other Contracting State for
any purposes other than the purposes specified in the said sub-paragraphs.
4. Notwithstanding the provisions of
paragraphs 1 and 2 where a person--other than an agent of an independent status
to whom paragraph 5 applies--is acting in a Contracting State on behalf of an
enterprise of the other Contracting State, that enterprise shall be deemed to
have a permanent establishment in the first-mentioned State, if
(a) he has and habitually exercises in that
State an authority to conclude contracts on behalf of the enterprise, unless
his activities are limited to the purchase of goods or merchandise for the enterprise;
(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.
5. An enterprise of a Contracting State
shall not be deemed to have a permanent establishment in the other Contracting
State merely because it carries on business in that other State through a
broker, general commission agent or any other agent of an independent status
provided that such persons are acting in the ordinary course of their business.
However, when the activities of such an agent are devoted wholly or almost
wholly on behalf of that enterprise itself or on behalf of that enterprise and
other enterprises controlling, controlled by, or subject to the same common
control, as that enterprise, he will not be considered an agent of an
independent status within the meaning of this paragraph.
6. The fact that a company which is a
resident of a Contracting State controls or is controlled by a company which is
a resident of the other Contracting State, or which carries on business in that
other Contracting State (whether through a permanent establishment or
otherwise), shall not of itself constitute either company a permanent
establishment of the other.
ARTICLE 6 : Income from
immovable property.—
1. Income derived by a resident of a
Contracting State from immovable property (including income from agriculture or
forestry) situated in the other Contracting State may be taxed in that other
State.
2. The term "immovable property"
shall have the meaning which it has under the law of the Contracting State in
which the property in question is situated. The term shall in any case include
property accessory to immovable property, livestock and equipment used in
agriculture and forestry, rights to which the provisions of the law of the
Contracting State 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 paragraphs 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 are attributable to (a) that permanent establishment;
(b) sales in that other State of goods or merchandise of the same or similar
kind as those sold through that permanent establishment; or (c) other business
activities carried on in that other State of the same or similar kind as those
effected through that permanent establishment.
2. Subject to the provisions of paragraph
3, where an enterprise of a Contracting State carries on business in the other
Contracting State through a permanent establishment situated therein, there
shall in each Contracting State be attributed to that permanent establishment
the profits which it might be expected to make if it were a distinct and
separate enterprise engaged in the same or similar activities under the same or
similar conditions and dealing wholly independently with the enterprise of
which it is a permanent establishment. In any case where the correct amount of
profits attributable to a permanent establishment is incapable of determination
or the determination thereof presents exceptional difficulties, the profits
attributable to the permanent establishment may be estimated on a reasonable
basis.
3. In the determination of the profits of a
permanent establishment, there shall be allowed as deductions expenses which
are incurred for the purposes of the business of the permanent establishment
including executive and general administrative expenses so incurred, whether in
the State in which the permanent establishment is situated or elsewhere, in
accordance with the provisions of and subject to the limitations of the
taxation laws of that State. However, no such deduction shall be allowed in
respect of amounts, if any, paid (otherwise than towards reimbursement of
actual expenses) by the permanent establishment to the head office of the
enterprise or any of its other offices, by way of royalties, fees or other
similar payments in return for the use of patents, know-how or other rights, or
by way of commission or other charges for specific services performed or for
management, or, except in the case of a banking enterprise, by way of interest
on moneys lent to the permanent establishment. Likewise, no account shall be
taken, in the determination of the profits of a permanent establishment, for
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, know-how or other rights, or by way of commission or
other charges for specific services performed or for management, or, except in
the case of a banking enterprise, by way of interest on moneys lent to the head
office of the enterprise or any of its other offices.
4. No profits shall be attributed to a
permanent establishment by reason of the mere purchase by that permanent
establishment of goods or merchandise for the enterprise.
5. For the purposes of the preceding
paragraphs, the profits to be attributed to the permanent establishment shall
be determined by the same method year by year unless there is good and
sufficient reason to the contrary.
6. Where profits include items of income
which are dealt with separately in other articles of this Agreement, then the
provisions of those articles shall not be affected by the provisions of this
article.
ARTICLE 8 : Air
transport.—
1. Profits derived by an enterprise of a
Contracting State from the operation of aircraft in international traffic shall
be taxable only in that State.
2. The provisions of paragraph 1 shall also
apply to profits from the participation in a pool, a joint business or an
international operating agency.
3. For the purposes of this article,
interest on the 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. Income derived by an enterprise of a
Contracting State from the operation of ships in international traffic may be
taxed in the other Contracting State.
2. No income-tax and/or turnover-tax shall
be levied or collected by the Government of the German Democratic Republic on
the freight earnings and/or profits on national cargo carried by the Indian
vessels including those under time-charter between ports of the two States,
and, similarly, no income-tax and/or turnover-tax shall be levied or collected
by the Government of the Republic of India on the freight earnings and/or profits
on national cargo carried by the vessels of the German Democratic Republic
including those under time-charter between ports of the two States.
3. Income derived by an enterprise of a
Contracting State from the operation of ships in international traffic for the
transport of cargo other than that belonging to either Contracting State may be
taxed also in that other Contracting State; but such tax shall be restricted to
50 per cent of the tax otherwise leviable in the source country.
4. The provisions of this article shall
also apply to profits from the participation in a pool, a joint business or an
international operating agency engaged in the operation of ships.
5. For the purposes of this article:
(a) interest on funds connected with the
operation of ships in international traffic shall be regarded as income from
the operation of such ships and the provisions of article 12 shall not apply in
relation to such interest; and
(b) income from the operation of ships
includes income derived from the use, maintenance or rental of containers
(including trailers and related equipment for the transport of containers) in
connection with the transport of goods or merchandise in international traffic.
ARTICLE 10 : Associated
enterprises.--Where :
(a) an enterprise of a Contracting State
participates directly or indirectly in the management, control or capital of an
enterprise of the other Contracting State, or
(b) the same persons participate directly or
indirectly in the management, control or capital of an enterprise of a
Contracting State and an enterprise of the other Contracting State,
and in either case
conditions are made or imposed between the two enterprises in their commercial
or financial relations which differ from those which would be made between independent
enterprises, then any profits which would, but for those conditions, have
accrued to one of the enterprises, but, by reason of those conditions, have not
so accrued, may be included in the profits of that enterprise and taxed
accordingly.
ARTICLE 11 : Dividends.—
1. Dividends paid by a company which is 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 as charged shall not exceed:
(a) 15 per cent of the gross amount of the
dividends if the beneficial owner is a company which owns at least 25 per cent
of the shares of the company paying the dividends;
(b) 25 per
cent of the gross amount of the dividends in all other cases.
This paragraph shall not
affect the taxation of the company in respect of the profits out of which the
dividends are paid.
3. The 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 a case, the provisions of
article 7 or article 15, as the case may be, shall apply.
5. Where a company which is resident of a
Contracting State derives profits or income from the other Contracting State,
that other State may not impose any tax on the dividends paid by the company
except in so far as such dividends are paid to a resident of that other State
or so far as the holding in respect of which the dividends are paid is
effectively connected with a permanent establishment or a fixed base situated
in that other State, nor subject the company's undistributed profits to a tax
on the company's undistributed profits, even if the dividends paid or the
undistributed profits consist wholly or partly of profits or income arising in
such other State.
ARTICLE 12 : Interest.—
1. Interest arising in a Contracting State
and paid to a resident of the other Contracting State may be taxed in that
other State.
2. However, such interest may also be taxed
in the Contracting State in which it arises and according to the laws of that
State, but if the recipient is the beneficial owner of the interest, the tax so
charged shall not exceed 15 per cent of the gross amount of the interest.
3. Notwithstanding the provisions of paragraph 2,--
(a) interest arising in a Contracting State
shall be exempt from tax in that State provided it is derived and beneficially
owned by:
(i) the Government, a political
sub-division or a local authority of the other Contracting State; or
(ii) the
Central Bank of the other Contracting State;
(b) interest arising in a Contracting State
shall be exempt from tax in the 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 "interests" 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 a 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 the State. Where, however, the
person paying the interest, whether he is a resident of a Contracting State or
not, has in a Contracting State a permanent establishment or a fixed base in
connection with which the indebtedness on which the interest is paid was
incurred, and such interest is borne by such permanent establishment or fixed
base, then such interest shall be deemed to arise in the Contracting State in
which the permanent establishment or fixed base is situated.
7. Where, by reason of a special
relationship between the payer and the beneficial owner or between both of them
and some other person, the amount of the interest, having regard to the
debt-claim for which it is paid, exceeds the amount which would have been
agreed upon by the payer and the beneficial owner in the absence of such
relationship, the provisions of this article shall apply to the last-mentioned
amount. In such case, the excess part of the payments shall remain taxable
according to the laws of each Contracting State, due regard being had to the
other provisions of this Agreement.
ARTICLE 13 : Royalties and
fees for technical services.—
1. Royalties and fees for technical
services arising in a Contracting State and paid to a resident of the other
Contracting State may be taxed in that other State.
2. However, such royalties and fees for
technical services may also be taxed in the Contracting State in which they
arise and according to the laws of that State, but if the recipient is the
beneficial owner of the royalties, or fees for technical services, the tax so
charged shall not exceed 22.5 (twenty-two and a half) per cent of the gross
amount of the royalties or fees for technical services.
3. The term "royalties" as used
in this article means payments of any kind received as a consideration for the
use of, or the right to use, any copyright of literary, artistic or scientific
work, including cinematograph films or tapes used for radio or television
broadcasting, any patent, trade mark, design or model, plan, secret formula or
process, or for the use of, or the right to use, industrial, commercial or
scientific equipment, or for information concerning industrial, commercial or
scientific experience.
4. The term "fees for technical
services" as used in this article means payments of any amount to any
person other than payments to an employee of a person making payments, in
consideration for the services of a managerial, technical or consultancy nature,
including the provision of services of technical or other personnel.
5. The provisions of paragraphs 1 and 2
shall not apply if the beneficial owner of the royalties or fees for technical
services, being a resident of a Contracting State, carries on business in the
other Contracting State in which the royalties or fees for technical services
arise, through a permanent establishment situated therein, or performs in that
other State independent personal services from a fixed base situated therein,
and the right, property or contract in respect of which the royalties or fees
for technical services are paid is effectively connected with such permanent
establishment or fixed base. In such case, the provisions of article 7 or
article 15, as the case may be, shall apply.
6. Royalties and fees for technical
services shall be deemed to arise in a Contracting State when the payer is that
State itself, a political sub-division,
a local authority or a resident of that State. Where, however, the person
paying the royalties or fees for technical services, whether he is a resident
of a Contracting State or not, has in a Contracting State a permanent
establishment or a fixed base in connection with which the liability to pay the
royalties or fees for technical services was incurred, and such royalties or
fees for technical services are borne by such permanent establishment or fixed
base, then such royalties or fees for technical services shall be deemed to
arise in the State in which the permanent establishment or fixed base is
situated.
7. Where, by reason of special relationship
between the payer and the beneficial owner or between both of them and some
other person, the amount of royalties or fees for technical services paid
exceeds the amount which would have been paid in the absence of such
relationship, the provisions of this article shall apply only to the
last-mentioned amount. In such case, the excess part of the payments shall
remain taxable according to the laws of each Contracting State, due regard being
had to the other provisions of this agreement.
ARTICLE 14 : Capital
gains.—
1. Gains derived by a resident of a
Contracting State from the alienation of immovable property, referred to in
article 6, and situated in the other Contracting State may be taxed in that
other State.
2. Gains from the alienation of movable
property forming part of the business property of a permanent establishment
which an enterprise of a Contracting State has in the other Contracting State
or of movable property pertaining to a fixed base available to a resident of a
Contracting State in the other Contracting State for the purpose of performing
independent personal services, including such gains from the alienation of such
a permanent establishment (alone or together with the whole enterprise) or of
such fixed base, may be taxed in that other State.
3. Gains from the alienation of ships or
aircraft operated in international traffic or movable property pertaining to
the operation of such ships or aircraft shall be taxable only in the
Contracting State of which the alienator is a resident.
4. Gains from the alienation of shares of
the capital stock of a company the property of which consists directly or
indirectly principally of immovable property situated in a Contracting State
may be taxed in that State.
5. Gains from the alienation of shares
other than those mentioned in paragraph 4, in a company which is a resident of
a Contracting State may be taxed in that State.
6. Gains from the alienation of any
property other than that mentioned in paragraphs 1, 2, 3, 4 and 5 shall be
taxable only in the Contracting State of which the alienator is a resident.
ARTICLE 15 : Independent
personal services.—
1. Income derived by an individual who is a
resident of a Contracting State from the performance of professional services
or other independent activities of a similar character shall be taxable only in
that State except in the following circumstances when such income may also be
taxed in the other Contracting State:
(a) if he has a fixed base regularly
available to him in the other Contracting State for the purpose of performing
his activities; in that case, only so much of the income as is attributable to
that fixed base may be taxed in that other State; or
(b) if his stay in the other Contracting
State is for a period or periods amounting to or exceeding in the aggregate 90
days in the relevant "previous year" or "year of income",
as the case may be; in that case, only so much of the income as is derived from
his activities performed in that other State may be taxed in that other State.
2. The term "professional
services" includes independent scientific, literary, artistic, educational
or teaching activities, as well as the independent activities of physicians,
surgeons, lawyers, engineers, architects, dentists and accountants.
ARTICLE 16: Dependent personal services.—
1. Subject to the provisions of articles
17, 18, 19, 20, 21 and 22 salaries, wages and other similar remuneration
derived by a resident of a Contracting State in respect of an employment shall
be taxable only in that State unless the employment is exercised in the other
Contracting State. If the employment is so exercised, such remuneration as is
derived therefrom may be taxed in that other State.
2. Notwithstanding the provisions of
paragraph 1, remuneration derived by a resident of a Contracting State in
respect of an employment exercised in the other Contracting State shall be
taxable only in the first mentioned State if:
(a) the recipient is present in the other
State for a period or periods not exceeding in the aggregate 183 days in the
relevant "fiscal year", as the case may be; and
(b) the remuneration is paid by, or on
behalf of, an employer who is not a resident of the other State; and
(c) the remuneration is not borne by a
permanent establishment or a fixed base which the employer has in the other
State.
3. Notwithstanding the preceding provisions
of this article, remuneration derived in respect of an employment exercised
aboard a ship or aircraft operated in international traffic by an enterprise of
a Contracting State may be taxed in that State.
4. Experts of either Contracting State
delegated to the other Contracting State under Agreements for Scientific
Exchanges and co-operation between India and the German Democratic Republic in
force from time to time, shall be exempted by the other State from payment of
income-tax on the salaries and allowances paid to them by their respective
States.
ARTICLE 17: Directors'
fees 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 Contracting State may be taxed in that other State.
ARTICLE 18: Income earned
by entertainers.--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 from his
personal activities as such exercised in the other Contracting State may be
taxed in that other State:
Provided that income
derived by individuals or groups of persons from activities exercised in the
framework of cultural exchanges agreed between the Contracting States on a
bilateral or multilateral basis may be taxed only in the State of which they
are residents.
ARTICLE 19: Remuneration
and pensions in respect of Government service.—
1. (a) Remuneration, other than a pension, paid by a
Contracting State or a political sub-division or a local authority thereof to
an individual in respect of services rendered to that State or sub-division or
authority shall be taxable only in that State.
(b) However, such remuneration shall be
taxable only in the other Contracting State if the services are rendered in
that other State and the individual is a resident of that State who:
(i) is a national of that State; or
(ii) did not
become a resident of that State solely for the purpose of rendering the services.
2. (a) Any
pension paid by, or out of, funds created by a Contracting State or a political
sub-
division or a local
authority thereof to an individual in respect of services rendered to that
State or sub-division or authority shall be taxable only in that State.
(b) However, such pension shall be taxable
only in the other Contracting State if the individual is a resident of and a
national of, that other State.
3. The provisions of articles 16, 17 and 18
shall apply to remuneration and pensions in respect of services rendered in
connection with a business carried on by a Contracting State or a political
sub-division or local authority thereof.
ARTICLE 20: Non-Government
pensions and annuities.—
1. Any pension, other than a pension
referred to in article 19, or any annuity derived by a resident of a
Contracting State from sources within the other Contracting State may be taxed
only in the first-mentioned Contracting State.
2. The term "pension" means a
periodic payment made in consideration of past services or by way of
compensation for injuries received in the course of performance of services.
3. The term "annuity" means a
stated sum payable periodically at stated times during life or during a
specified or ascertainable period of time, under an obligation to make the
payments in return for adequate and full consideration in money or money's
worth.
ARTICLE 21: Payments
received by students and apprentices.—
1. A student or business apprentice who is
or was a resident of one of the Contracting States immediately before visiting
the other Contracting State and who is present in that other State solely for
the purpose of his education or training, shall be exempt from tax in that
other State on:
(a) payments made to him by persons residing
outside that other State for the purposes of his maintenance, education or
training; and
(b) remuneration from employment in that
other State in an amount not exceeding Rs. 15,000 or its equivalent in
"Mark of the GDR" 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 six
consecutive years from the date of his first arrival in that other Contracting
State.
ARTICLE 22: Payments
received by professors, teachers and research scholars.—
1. A professor or teacher who is or was a
resident of one of the Contracting States immediately before visiting the other
Contracting State for the purpose of teaching or engaging in research, or both,
at a university, college, school or other approved institution in that other
Contracting State shall be exempt from tax in that other State on any
remuneration for such teaching or research for a period not exceeding two years
from the date of his arrival in that other State.
2. This article shall not apply to income
from research if such research is undertaken primarily for the private benefit
of a specific person or persons.
3. For the purposes of this article and
article 21, an individual shall be deemed to be a resident of a Contracting
State if he is resident in that Contracting State in the "previous
year" or the "year of income", as the case may be, in which he
visits the other Contracting State or in the immediately preceding
"previous year" or the "year of income".
4. For the purposes of paragraph 1,
"approved institution" means an institution which has been approved
in this regard by the competent authority of the concerned Contracting State.
ARTICLE 23: Other income.—
1. Subject to the provisions of paragraph
2, items of income of a resident of a Contracting State, wherever arising,
which are not expressly dealt with in the foregoing articles of this Agreement,
shall be taxable only in that Contracting State.
2. The provisions of paragraph 1 shall not
apply to income, other than income from immovable property as defined in
paragraph 2 of article 6, if the recipient of such income, being a resident of
a Contracting State, carries on business in the other Contracting State through
a permanent establishment situated therein, or performs in that other State
independent personal services from a fixed base situated therein, and the right
or property in respect of which the income is paid is effectively connected
with such permanent establishment or fixed base. In such a case, the provisions
of article 7 or article 15, as the case may be, shall apply.
3. Notwithstanding the provisions of
paragraphs 1 and 2, items of income of resident of a Contracting State not
dealt with in the foregoing articles of the Agreement and arising in the other
Contracting State may be taxed in that other State.
ARTICLE 24: Capital.—
1. Capital represented by immovable
property referred to in article 6, owned by a resident of a Contracting State
and situated in the other Contracting State, may be taxed in that other State.
2. Capital represented by movable property
forming part of the business property of a permanent establishment which an
enterprise of a Contracting State has in the other Contracting State or by
movable property pertaining to a fixed base available to a resident of a
Contracting State in the other Contracting State for the purpose of performing
independent personal services, may be taxed in that other State.
3. Capital represented by ships or
aircraft, operated in international traffic and by movable property pertaining
to the operation of such ships or aircraft shall be taxed only in the
Contracting State of which the enterprise owning such property is a resident.
4. All other elements of capital of a
resident of a Contracting State may be taxed in both Contracting States.
ARTICLE 25: Elimination of
double taxation.—
1. The laws in force in either of the
Contracting States shall continue to govern the taxation of income and capital
in the respective Contracting States except where an express provision to the
contrary is made in this Agreement.
2. Where a resident of a Contracting State
derives income or owns capital which, in accordance with the provisions of this
Agreement may be taxed in the other Contracting State, the first-mentioned
State shall, subject to the provisions of paragraph 3, exempt such income or
capital from tax.
3. Where in accordance with any provision
of the Agreement income derived or capital owned 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 or capital of such
resident, take into account the exempted income or capital.
ARTICLE 26:
Non-discrimination.—
1. The nationals of a Contracting State
shall not be subjected in the other Contracting State to any taxation or any
requirement connected therewith which is other or more burdensome than the
taxation and connected requirements to which nationals of that other State in
the same circumstances and under the same conditions are or may be subjected.
2. The 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 and under the same conditions.
3. Nothing contained in this article shall
be construed as obliging a Contracting State to grant to persons not resident
in that State any personal allowances, reliefs, reductions and deductions for
taxation purposes which are by law available only to persons who are so
resident.
4. Enterprises of a Contracting State, the
capital of which is wholly or partly owned or controlled, directly or
indirectly, by one or more residents of the other Contracting State, shall not
be subjected in the first-mentioned Contracting State to any taxation or any
requirement connected therewith which is other or more burdensome than the
taxation and connected requirements to which other similar enterprises of that
first-mentioned State are or may be subjected in the same circumstances and
under the same conditions.
5. In this article, the term "taxation" means taxes
which are the subject of this Agreement.
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 Contracting State of which
he is a resident. The case must be presented within three years of receipt of
notice of the action which gives rise to taxation not in accordance with the
Agreement.
2. The competent authority shall endeavour,
if the objection appears to it to be justified and if it is not itself able to
arrive at an appropriate solution, to resolve the case by mutual agreement with
the competent authority of the other Contracting State, with a view to
avoidance of taxation not in accordance with the Agreement. Any agreement
reached shall be implemented notwithstanding any time limits in the national
laws of the Contracting States.
3. The competent authorities of the
Contracting States shall endeavour to resolve by mutual agreement any
difficulties or doubts arising as to the interpretation or application of the
Agreement. They may also consult together for the elimination of double
taxation in cases not provided for in the Agreement.
4. The competent authorities of the
Contracting States may communicate with each other directly for the purpose of
reaching an agreement in the sense of the preceding paragraphs. When it seems
advisable in order to reach Agreement to have an oral exchange of opinions,
such exchange may take place through a Commission consisting of representatives
of the competent authorities of the Contracting States.
ARTICLE 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, in so
far as the taxation thereunder is not contrary to the Agreement, in particular
for the prevention of fraud or evasion of such taxes. Any information received
by a Contracting State shall be treated as secret in the same manner as
information obtained under the domestic laws of that State. However, if the
information is originally regarded as secret in the transmitting State, it
shall be disclosed only to persons or authorities (including courts and
administrative bodies) involved in the assessment or collection of, the
enforcement or prosecution in respect of, or the determination of appeals in
relation to, the taxes which are the subject of the Agreement. Such persons or
authorities shall use the information only for such purposes but may disclose
the information in public court proceedings or in judicial decisions. The
competent authorities shall, through consultation, develop appropriate
conditions, methods and techniques concerning 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 a request with reference to particular
cases or both. The competent authorities of the Contract States shall agree
from time to time on the list of 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 29: Assistance in
collection.—
1. The Contracting States undertake to lend
assistance and support to each other, in the collection of the taxes to which
this Agreement relates, in the cases where the taxes are definitely due
according to the laws of the 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
Ministry of Finance of the German Democratic Republic, and will be accompanied
by such certificate as is required by the laws of India to establish that the
taxes have been finally determined on the basis of the relevant domestic laws
and are due from the taxpayer.
4. In the case of the German Democratic
Republic tax, the request will be sent by the Ministry of Finance 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 the German
Democratic Republic to establish that the taxes have been finally determined on
the basis of the relevant domestic laws, 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 income or 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 assistance in the recovery of such tax
but in no event, such costs shall exceed 10 per cent of the amount so
recovered.
ARTICLE 30: 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 31: Entry into
force.—
1. This Agreement shall be ratified or
approved in accordance with the laws in force in the two Contracting States.
2. This Agreement shall enter into force
upon the exchange of notes notifying the approval or ratification of the
Agreement in accordance with the laws in force.
3. The provisions of the Agreement shall apply:
(a) in the Republic of India, to taxes
covered by this Agreement which are levied for any year of assessment beginning
on or after the first day of April, 1985;
(b) in the German Democratic Republic, to
taxes covered by this Agreement which are levied for any year of assessment,
beginning on or after the first day of January, 1985.
ARTICLE 32: Period of
validity.—
1. This Agreement is concluded for
unlimited duration but either Contracting State may terminate the Agreement by
giving written notice after five years from the day of its entry into force, so
however, that at least six months remain before the end of the calendar year in
which the notice is given.
2. In such event, the Agreement shall cease to have effect:
(a) in the Republic of India, in respect of
income arising in any previous year beginning on or after the 1st day of
January next following the calendar year in which the notice is given;
(b) in the German Democratic Republic in
respect of income arising in any year of income beginning on or after the 1st
day of January next following the calendar year in which the notice of
termination is given.
In witness whereof the
undersigned, being duly authorised thereto, have signed the present Agreement.
Done in duplicate at New
Delhi this twenty-sixth day of July one thousand nine hundred and eighty-nine
in the Hindi, German and English languages, all the texts being equally
authentic. In case of divergence between any of the two texts, the English text
shall be the operative one.
For the Government of the
Republic For
the Government of the German
of India Democratic
Republic
(Sd.)................ (Sd.)........................
(ii) Agreement between the Government of
German Democratic Republic and the Government of the Republicof India on
co-operation in the field of merchant shipping
G.S.R. 282(E).--Whereas the annexed Agreement between the Government of German Democratic Republic and the Government of the Republic of India on Co-operation in the Field of Merchant Shipping has been concluded;
And whereas Article 9 of
the said Agreement provides for the avoidance of double taxation in respect of
taxes on income derived from the freight earnings or profits or both on
national cargo carried by the vessels of the respective countries including
those under time-charter between ports of the two States;
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) Sur-tax Act, 1964 (7 of
1964), the Central Government hereby directs that the provisions of the said
Article of the said Agreement shall be given effect to in the Union of India.
The Government of the
German Democratic Republic and the Government of the Republic of India
(hereinafter called the Contracting Parties); being desirous of,
Strengthening the friendly
relations between the German Democratic Republic and the Republic of India
according to the principles of international law, especially the principle of
sovereign equality of States and the principle of non-interference in internal
affairs; and Developing and extending co-operation in the field of merchant shipping;
Have agreed as follows:
ARTICLE I: The Contracting
Parties agreed to develop the relations between the German Democratic Republic
and the Republic of India in the field of merchant shipping on the basis of
equal rights and mutual benefit.
ARTICLE II: For the
purposes of this Agreement;
(a) The term "vessel" shall mean
any merchant vessel flying under the national flag of a Contracting Party and
registered in the Contracting State of the German Democratic Republic and in
the Contracting State of the Republic of India respectively or time chartered
by the national shipping companies in the two States.
This definition excludes
warships and fishing vessels from the scope of application of this Agreement.
(b) The term "member of the crew"
shall mean any person actually employed for duties on board during a voyage in
connection with the operation or service of the vessel and included in the crew
list.
ARTICLE III:
(1) The Contracting Parties shall further
develop co-operation between their authorities responsible for maritime affairs
according to their respective national laws and regulation. In particular, the
Contracting Parties shall promote mutual consultations and exchange of
information on reciprocal basis between these authorities as well as co-operation
between the respective shipping organisations and enterprises.
(2) The Contracting Parties shall grant all
possible assistance to each other's vessels and shall not take any action which
may cause hindrance for the development of merchant shipping between the German
Democratic Republic and the Republic of India.
(3) The provisions of this Agreement shall be
applicable to bilateral shipping and shipping relations between the two
Contracting Parties.
ARTICLE IV:
(1) The Contracting Parties agree to
strengthen the existing regular liner shipping service between the ports of the
German Democratic Republic and the ports of the Republic of India to cater for
the movement of national general cargo between the two States.
The Contracting Parties further
agree that the national shipping companies in the two States operating
bilateral liner shipping service should observe the principle of party in
liftings of national general cargoes and freight earnings thereof. Imbalance,
if any, in this respect, shall be determined the financial terms at the end of
each year and settlement effected in accordance with the procedure agreed among
the national lines.
(2) The Contracting Parties agree to the
participation of their respective shipping enterprises in the carriage of
national bulk cargoes in the bilateral trade on the principles of party and
equality.
Details of arrangements
concerning the carriage of bulk cargoes in the bilateral trade shall be worked
out by the competent organisations to be nominated for this purpose by the
Contracting Parties.
(3) In case the shipping companies of one of
the Contracting Parties are not able to undertake the carriage in accordance
with the provisions of this Article, such carriage will be offered to vessels
of the other Contracting Party. If that Contracting Party cannot make available
the required suitable tonnage on acceptable conditions, the first-mentioned
Contracting Party is entitled to use vessels under the flag of third countries
for the carriage of its share of cargo.
ARTICLE V:
(1) The vessels of one Contracting Party and
their crew and cargo shall be subject to the same conditions as ships, crew and
cargo of the most-favoured nation when entering into, sailing from or staying
in the ports of the other Contracting Party.
(2) The vessels, crew, passengers and cargo
of one Contracting Party, whilst within the Contracting State of the State of
the other Contracting Party, shall be subject to laws, rules and regulations of
the latter mentioned Contracting Party.
(3) All port dues and charges for services
rendered to the vessels operating under the provisions of this Agreement shall
be regulated in accordance with the national laws and regulations applicable at
the respective ports from time to time.
(4) The provisions of this Article shall not
apply to activities legally reserved by each of the Contracting Parties to its
organisations or enterprises including, in particular, coastal navigation and
pilot service and also shall not affect the rules concerning entry and stay of
foreigners.
ARTICLE VI: The
Contracting Parties shall adopt within the limits or their concerned national
laws and regulations all appropriate measures to facilitate and expedite
maritime traffic, to prevent delays to vessels and to simplify and expedite as
much as possible the carrying out of customs and other formalities required in
ports.
ARTICLE VII:
(1) The documents relating to nationality and
registration of vessels, tonnage certificates, certificates of seaworthiness
and other ship documents issued or recognised by the competent authorities of
one Contracting Party shall be recognised by the competent authorities of the
other Contracting Party.
(2) Vessels of one Contracting Party in
possession of duly issued tonnage certificates shall not be subject to
re-measurement in the ports of the other Contracting Party.
ARTICLE VIII:
(1) Each of the Contracting parties shall
recognise the seamen's identity documents issued by the competent authorities
of the other Contracting Party.
These seamen's identity
documents are:
--for nationals of the
German Democratic Republic "Seefahrtsbuch der Deutschen Demokratischen
Republic".
--for seamen of the Indian
vessels "Continuous Discharge Certificate".
(2) Holders of the seamen's identity
documents specified in paragraph (1) above shall be permitted in the case of
members of the crew of the vessel to land on temporary shore leave without visa
during stay of the vessel in port of the other Contracting Party, provided that
the master had submitted the crew list to the competent authorities in
accordance with the regulations in force in that port. While landing and
returning to the vessel, the said persons shall be subject to frontier and
customs control in force in that port.
(3) When a member of the crew possessing an
identity document and the prescribed permission, disembarks in the port of the
other Contracting Party due to illness, official reasons or other reasons, the
latter shall allow his being put up at a hospital, his being repatriated or
returning to his home country or his being moved to another port in order to be
accommodated in another vessel. The identity documents shall be accompanied by
an official order issued, under seal and signature, by the competent officer of
the shipping organisations or by the master of the vessels under his signature.
(4) Holders of the seamen's identity
documents shall be permitted to enter, move through by any means of transport
in the Contracting State of the other Contracting Party in order to be able to
join a vessel of their country in a port of the other Contracting Party with
the approval of the appropriate authorities of that Contracting Party. In all
such cases, the seamen shall be required to have proper visa of the other
Contracting Party which shall be granted by the concerned authorities within
the shortest possible time.
(5) For the purpose of regulation of shipping
affairs, the master of the vessel staying in the port of the other Contracting
Party or a person authorised by him shall be permitted to contact or visit the
consular official or the representative of the shipping company.
ARTICLE IX: No income-tax
and/or turnover tax shall be levied or collected by the Government of the
German Democratic Republic on the freight earnings and/or profits on national
cargo carried by the Indian vessels including those under time charter between
ports, of the two States, and similarly no income-tax and/or turnover tax shall
be levied or collected by the Government of the Republic of India on the
freight earnings and/or profits on national cargo carried by the vessels of the
German Democratic Republic including those under time charter between ports of
the two States.
ARTICLE X:
(1) Each Contracting Party shall allow in its
Contracting State the establishment of representations of the shipping
organisations of the other Contracting Party for looking after the requirements
of the vessels of the shipping companies of the other Contracting Party in
accordance with its laws and regulations. The said representation and their
personnel shall enjoy the same rights and privileges which are granted to
similar representations and their personnel of the most favoured nation.
(2) Each Contracting Party shall grant to the
representatives of shipping enterprises with offices in the Contracting State
of the other Contracting Party unhindered entry into is sea ports, according to
the national laws and regulations in force, in order to enable them to perform
their official duties with regard to the care of vessels, crew and cargo and
shall permit them to board vessels.
ARTICLE XI:
(1) If a vessel of one of the Contracting
Parties suffers shipwreck, runs aground, is cast ashore or suffers any other
accident within the Contracting State of the State of the other Contracting
Party, the vessel, the crew, the passengers and the cargo shall receive, in the
Contracting State of the latter Contracting Party, the same assistance which is
accorded by the Contracting Party to its national vessel, crew, passengers and
cargo.
(2) VEB Deufracht Seereederei, Rostock and
the Shipping Party against a shipwrecked vessel, its cargo or store of the
other Contracting Party unless they are delivered for use in the Contracting
State of the first-mentioned Contracting Party.
(3) Nothing in the provisions of this Article
shall prevent the application of the laws and regulations of the Contracting
Parties and their international obligations.
ARTICLE XII: All payments
and expenses under the Agreement arising from the operation of vessels shall be
made according to the provisions of the Trade and Payments Agreement between
the Contracting Parties that may in force from time to time.
ARTICLE XIII:
(1) For the purpose of evaluating,
supervising and reviewing the overall working of this Agreement and resolving
any outstanding issues, the Contracting Parties agree to set up an
Inter-Governmental Joint Committee on Shipping which will meet as often as
necessary, in the German Democratic Republic and in the Republic of India, alternatively.
The Ministry of Transport of the German Democratic Republic and the Ministry of
Shipping and Transport of the Republic of India will nominate their
representatives to the Joint Committee.
(2) VEB Deufracht/Seereederei, Rostock and
the Shipping Corporation of India Ltd Bombay will be the competent
organisations authorised to deal with day-to-day shipping operational issues
between the two States, such as distribution of cargoes, fixation of sailings,
tariff matters and similar other issues arising out of their operations. Each
Contracting Party may nominate any other organisation in addition to the above
by notifying to other Contracting Party.
ARTICLE XIV: The
Contracting Parties agree that their competent authorities will consult each
other in all matters relating to international Conferences and Agreements in
the field of maritime traffic in which both Contracting Parties are interested.
In particular, this relates to co-operation in International Organisations and
Conventions in the field of maritime traffic.
ARTICLE XV: The provisions
of this Agreement do not affect the rights and obligations of the Contracting
Parties arising out of International Conventions on maritime law and shipping.
ARTICLE XVI: Any
differences of opinion with regard to interpretation of application of this
Agreement shall be settled by the Inter-governmental Joint Committee on
Shipping mentioned in Article 13, para 1. In case the said Joint Committee is
unable to come to an agreement on any issue, the same shall be settled by
reference to the respective Governments.
ARTICLE XVII:
(1) This agreement supersedes all previous
Agreements signed between the two Contracting Parties in the field of merchant
shipping with effect from its entry into force.
(2) All the previous commercial level
arrangements between the competent institutions and organisations and the
national shipping companies in the States of the two Contracting Parties shall
continue to remain in force insofar as they are not inconsistent with the provisions
of this Agreement.
ARTICLE XVIII:
(1) This agreement shall enter into force 30
days after the exchange of notes signifying the approval of the agreement in
accordance with the national laws and regulations.
(2) This Agreement shall be valid for a
period of five years. It shall be automatically renewed for a further one-year
period at a time unless either of the Contracting Parties gives written notice
of termination of the Agreement not later than six months before the expiry of
such period.
In witness whereof the
undersigned duly empowered by their respective Governments, have signed this
Agreement.
Done at New Delhi on 9th
January, 1979 in two originals each in German, Hindi and English languages, all
the text being equally authentic. In case of discrepancy in the German and
Hindi texts, the English text shall prevail.
Sd./- Sd./-
(Oskar Fischer), (Chand
Ram)
For the Government of the For
the Government of the
German Democratic Republic Republic
of India
New Delhi
9th January, 1979
Excellency,
I have the honour to
invite your attention to Article 12 of the Agreement between the Government of
the Republic of India and the Government of the German Democratic Republic on
co-operation in the field of merchant shipping. Article 12 reads with clause
(3) of Article 3 of this Agreement provides that all payments and expenses,
under the said Agreement arising from the operation of vessels between the two
countries shall be made according to the provisions of Trade and Payments
Agreement between the two countries that may be in force for the time being.
This is to clarify that this clause would be applicable only in respect of
payment of freight earnings and expenses arising from the carriage of cargo
between the two countries.
I shall be grateful if you
kindly confirm that the above correctly sets out the understanding reached
between the Government of India and the Government of the German Democratic
Republic.
Assuring you of my highest
consideration.
Yours sincerely,
Sd/- Chand Ram
Minister of Shipping and
Transport
Government of India.
New Delhi.
His Excellency Mr. Oskar
Fischer,
Minister of External
Affairs
of the German Democratic
Republic
New Delhi
9th January, 1979
Excellency,
I acknowledge the receipt
of your letter of 9th January, 1979 which reads as follows:
"I have the honour to
invite your attention to Article 12 of the Agreement between the Government of
the Republic of India and the Government of the German Democratic Republic on
co-operation in the field of merchant shipping. Article 12 reads with clause
(3) of Article 3 of this Agreement provides that all payments and expenses,
under the said Agreement, arising from the operation of vessels between the two
countries shall be made according to the provisions of Trade and Payments
Agreement between the two countries that may be in force for the time being.
This is to clarify that this clause would be applicable only in respect of
payment of freight earnings and expenses arising from the carriage of cargo
between the two countries.
I shall be grateful if you
kindly confirm that the above correctly sets out the understanding reached
between the Government of India and the Government of the German Democratic
Republic."
I, have the honour to
confirm that the contents of your letter correctly set out the understanding
reached between the Government of the German Democratic Republic and the
Government of India.
Assuring you of my highest
consideration.
Yours sincerely,
Sd./- Oskar Fischer,
Minister of External
Affairs,
of the German Democratic
Republic.
His Excellency Mr. Chand
Ram,
Minister of Shipping and
Transport,
Government of India,
New Delhi.
Application of agreement between the Government of India and the Government
of the Federal Republic of Germany for avoidance of double taxation of income
and capital over the unified territories of Federal Republic of Germany and the
German Democratic Republic.
Circular No. 659, dated 8
September, 1993.
The unification of the
Federal Republic of Germany with the German Democratic Republic took place on
3rd October, 1990. Under the unification treaty, the tax law in force in the
Federal Republic of Germany is applicable in the territory of the former German
Democratic Republic from 1st January, 1991.
2. Under Article XVIII of
the Agreement between the Government of India and the Government of the Federal
Republic of Germany for Avoidance of Double Taxation of Income (as notified
vide Notification No. 87 (25/33/57-IT), dated 13th September, 1960, and
subsequently amended by a protocol notified, vide Notification No. 6387 (F. No.
501/2/90-FTD), and exchange of notes dated 28th June, 1984, mutual agreement
has been reached for application of this agreement with effect from 1st
January, 1991, in the territory of five new States as well as part of the Land
Berlin where Basic Law was not valid before the coming into force of the German
merger. The existing Agreement between the Government of India and the
Government of the German Democratic Republic for the avoidance of double
taxation with respect to taxes on income and on capital (as notified vide
Notification No. GSR 107(E), dated 2nd March 1990) will be applied only until
31st December, 1990.
3. A similar intention has
also been expressed by the Government of the Federal Republic of Germany for
extension of the aforesaid agreement to the five new States as well as part of
Land Berlin, vide their Circular No. 2/95, dated 4th January, 1993.
Agreement between the
Republic of India and the Federal Republic of Germany for the avoidance of
double taxation with respect to taxes on income and capital
Notification No. 87
[25/33/57-IT], dated 13 September, 1960 amended by Notification No. 6387 [F.
No. 501/2/80-FTD], dated 26 August, 1985 as corrected by Notification No. 7374
[F. No. 501/2/80-FTD], dated 30 June, 1987
G.S.R. 1090.--Whereas the
annexed agreement for the avoidance of double taxation of income between the
Government of India and the Government of the Federal Republic of Germany has
been ratified and the Instruments of Ratification exchanged as required by
Article XX of the said Agreement:
Now, therefore, in
exercise of the powers conferred by section 49A of the Indian Income-tax Act,
1922 (11 of 1922), the Central Government hereby directs that all provisions of
the said Agreement shall be given effect to in the Union of India.
Whereas the Government of
India and the Government of the Federal Republic of Germany desire to conclude
an Agreement for the avoidance of double taxation of income;
Now, therefore, it is
hereby agreed as follows:--
ARTICLE I: (1) The taxes
which are the subject of the present Agreement are:
"(a) in the Federal Republic of Germany;
(i) the income-tax (Eimkommensteuer),
(ii) the
corporation tax (Koerperschaftsteuer),
(iii) the
capital tax (Vermoegensteur), and
(iv) the trade
tax (Gewerbesteuer)
(hereinafter referred to
as "German tax");
(b) in India:
(i) the income-tax including any surcharge thereon,
(ii) the
surtax, and
(iii) the
wealth-tax
(hereinafter referred to
as "Indian tax")
(2) The present Agreement shall also apply to
any other taxes of a substantially similar character imposed in India or the
Federal Republic of Germany subsequent to the date of signature of the present
Agreement.
ARTICLE IA:
(1) For the purposes of this Agreement the
term "resident of a Contracting State" means any person who, under
the laws of that State, is liable to tax therein by reason of his domicile,
residence, place of management or any other criterion of a similar nature.
(2) Where by reason of the provisions of
paragraph (1) an individual is a resident of both Contracting States, then his
status shall be determined as follows:
(a) he shall be deemed to be a resident of
the State in which he has a permanent home available to him 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 II: (1) In the
present Agreement, unless the context otherwise requires,--
(a) the term "Federal Republic"
means the Federal Republic of Germany, and when used in a geographical sense,
the area in which the tax law of the Federal Republic of Germany is in force;
(b) the term "India" means the
Republic of India, and when used in a geographical sense, the area in which the
tax law of the Republic of India is in force;
(c) the terms "a Contracting
State" and "the other Contracting State" mean the Federal Republic
of India, as the context requires.
(d) the term "person" includes
natural persons, companies and all other entities which are treated as taxable
units under the tax laws in force in the respective Contracting States;
(e) the term "company" means any entity
which is treated as a body corporate or as a company for tax purposes;
(f) the term
"tax" means German tax or Indian tax, as the context requires;
(g) the terms "Federal Republic
enterprise" and "Indian enterprise" mean, respectively, an
industrial or commercial enterprise or undertaking carried on by a resident of
the Federal Republic, and an industrial or commercial enterprise or undertaking
carried on by a resident of India; and the terms "enterprise of one of the
Contracting States" and "enterprise of the other Contracting
State" mean a Federal Republic enterprise or an Indian enterprise, as the
context requires;
(h) (aa) the
term "permanent establishment" means a fixed place of business
through which the business of an enterprise is wholly or partly carried on.
(bb) the term "permanent
establishment" includes especially:
(i) a place of management;
(ii) a
branch;
(iii) an
office;
(iv) a
factory;
(v) a
workshop;
(vi) a sales
outlet;
(vii) a
warehouse; and
(viii) a mine,
an oil or gas well, a quarry or any other place of extraction of natural
resources.
(cc) A building site or construction or
installation project constitutes a permanent establishment only if it lasts
more than six months.
(dd) Notwithstanding the preceding provisions
of this Article, the term "permanent establishment" shall be deemed
not to include:
(i) the use of facilities solely for the
purpose of storage or display of goods or merchandise belonging to the
enterprise;
(ii) the maintenance of a stock of goods or
merchandise belonging to the enterprise solely for the purpose of storage or
display;
(iii) the maintenance of a stock of goods or
merchandise belonging to the enterprise solely for the purpose of processing by
another enterprise.
(iv) the maintenance of a fixed place of
business solely for the purpose of purchasing goods or merchandise or of
collecting information, for the enterprise;
(v) 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;
(vi) the maintenance of a fixed place of
business solely for any combination of activities mentioned in sub-paragraphs
(i) to (v) provided that the overall activity of the fixed place of business
resulting from this combination is of a preparatory or auxiliary character.
(ee) 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 sub-paragraph (ff) applies, shall be deemed to be
a permanent establishment of that enterprise in the first-mentioned Contracting
State.
(i) if he has, and habitually exercises in
that Contracting State, an authority to conclude, unless contracts in the name
of the enterprise, unless his activities are limited to the purchase of goods
or merchandise for the enterprise; or
(ii) if he habitually maintains in the
first-mentioned Contracting State a stock of goods or merchandise belonging to
the enterprise from which he regularly delivers goods or merchandise for or on
behalf of the enterprise; or
(iii) if 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 which are
controlled by it or have a controlling interest in it.
(ff) An enterprise shall not be deemed to have
a permanent establishment in a Contracting State merely because it carries on
business in the 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.
(gg) 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;
(i) the term "pension" means
periodic payments made in consideration of services rendered or by way of
compensation for injuries received;
(j) the term "annuity" means a
stated sum payable periodically at stated times during life or during a
specified or ascertainable period of time;
(k) the term "competent authority"
means in the case of India, the Central Government in the Ministry of Finance,
Department of Revenue, and in the case of the Federal Republic of Germany, the
Federal Ministry of Finance.
"(l) the term "fiscal year" means:
(i) in relation to Indian tax, the previous year as defined in
the Income-tax Act, 1961;
(ii) in
relation to German tax, the calendar year.
(2) In the application of the provisions of
this Agreement in one of the Contracting States any term not otherwise defined
in this Agreement shall, unless the context otherwise requires, have the
meaning which it has under the laws in force in that Contracting State relating
to the taxes which are the subject of this Agreement.
ARTICLE III:
(1) The profits of an enterprise of a
Contracting State shall be taxable only in that State unless the enterprise
carries on business in the other Contracting State through a permanent
establishment situated therein. If the enterprise carries on business as
aforesaid, the profits of the enterprise may be taxed in the other State but
only so much of them as is attributable to that permanent establishment.
(2) Subject to the provisions of paragraph
(3), where an enterprise of a Contracting State carries on business in the
other Contracting State through a permanent establishment situated therein,
there shall in each Contracting State be attributed to that permanent
establishment the profits which it might be expected to make if it were a
distinct and separate enterprise engaged in the same or similar activities
under the same or similar conditions and dealing wholly independently with the
enterprise of which it is a permanent establishment.
(3) In 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, and
according to the domestic law of the Contracting State in which the permanent
establishment is situated.
(4) Insofar as it has been customary in a
Contracting State to determine the profits to be attributed to a permanent
establishment on the basis of an apportionment of the total profits of the
enterprise to its various parts, nothing in paragraph (2) shall preclude that
Contracting State from determining the profits to be taxed by such an
apportionment as may be customary; the method of apportionment adopted shall, however,
be such that the result shall be in accordance with the principles contained in
this Article.
(5) No profits shall be attributed to a
permanent establishment by reason of the mere purchase by that permanent
establishment of goods or merchandise for the enterprise.
(6) For the purposes of the preceding
paragraphs, the profits to be attributed to the permanent establishment shall
be determined by the same method year by year unless there is good and
sufficient reason to the contrary.
(7) Where profits include items of income
which are dealt with separately in other articles of this Agreement, then the
provisions of those articles shall not be affected by the provisions of this
Article.
ARTICLE IV: Where a
resident of one of the Contracting States carries on business with a resident
of the other Contracting State and it appears to the taxation authorities of
the first-mentioned Contracting State that owing to the close connection
between such persons the course of business is so arranged that the business
done produces to the resident of the first-mentioned Contracting State either
no profits or less than ordinary profits which might be expected to arise in
that business, tax shall be leviable in the former Contracting State on such
profits as may reasonably be deemed to have arisen there from.
ARTICLE V:
(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 VI:
(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 the Protocol signed on June 28, 1984, 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 paragraphs (1) and (2)
shall also apply to profits from the participation in a pool, a joint business
or an international operating agency.
(4) Paragraphs (1) and (2) shall not apply to
profits arising as a result of coastal traffic. The term "coastal
traffic" means traffic which originates and terminates in the territorial
waters of the same Contracting State.
ARTICLE VII:
(1) Dividends paid by a company which is a
resident of a Contracting State to a resident of the other Contracting State
may be taxed in that other State.
(2) However, such dividends may also be taxed
in the Contracting State of which the company paying the dividends is a
resident, and according to the laws of that State. But if the beneficial owner
of the dividends is a resident of the other Contracting State, the tax so
charged shall not exceed:
(a) in the case of the Federal Republic, 15 per cent of the gross
amount of the dividends;
(b) in the
case of India, where the dividends relate in whole or in part to a new
contribution,
15 per cent of the gross amount of the dividends
attributable to the new contribution.
In this Article, the term
"new contribution" means any share capital, other than bonus shares,
issued after the date of entry into force of the Protocol signed on June 28,
1984 by a company which is a resident of India, and beneficially owned by a
resident of the Federal Republic.
(3) The term "dividends" as used in
this article means income from shares, mining shares, founders' shares or other
rights, not being debt-claims, participating in profits, as well as income from
other corporate rights which is subjected to the same taxation treatment as
income from shares by the laws of the State of which the company making the
distribution is a resident, and income derived by a sleeping partner from his
participation as such and distributions on certificates of an investment trust.
(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, and the holding in respect of which the
dividends are paid is effectively connected with such permanent establishment.
In such case the provisions of Article III shall apply.
(5) Where a company which is a resident of a
Contracting State derives profits or income from the other Contracting State,
that other State may not impose any tax on the dividends paid by the company,
except insofar as such dividends are paid to a resident of that other State or
insofar as the holding in respect of which the dividends are paid is
effectively connected with a permanent establishment 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 or profits or income arising in
such other State.
ARTICLE VIII:
(1) Interest arising in a Contracting State
and paid to a resident of the other Contracting State may be taxed in that
other State.
(2) However, such interest may also be taxed
in the Contracting State in which it arises and according to the laws of that
State. But the tax so charged on interest payable in respect of a loan given or
debt created after the date of entry into force of the Protocol and signed on
June 28, 1984 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).
(a) interest arising in the Federal Republic
and paid to the Indian Government or the Reserve Bank of India shall be exempt
from German tax;
(b) interest arising in India and paid to
the Government of the Federal Republic of Germany, the Deutsche Bundesbank
bank, the Kreditanstalt fur Wiederaufbau or the Deutsche Gesellschaft fur
wirtschaftliche Zusmmenarbeit (Entwicklungsgelsell-schaft) shall be exempt from
Indian tax.
(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.
(5) Interest shall be deemed to arise in a
Contracting State when the payer is that State itself, a land, a political
sub-division, a local authority or a resident of that State. Where, however,
the person paying the interest, whether he is a resident of a Contracting State
or not has in a Contracting State a permanent establishment in connection with
which the indebtedness on which the interest is paid was incurred, and such
interest is borne by such permanent establishment, then such interest shall be
deemed to arise in the State in which the permanent establishment is situated.
(6) The provisions of paragraphs (1) and (2)
shall not apply if the beneficial owner of the interest, being a resident of a
Contracting State, carries on business in the other Contracting State in which
the interest arises, through a permanent establishment situated therein, and
the debt-claim in respect of which the interest is paid is effectively
connected with such permanent establishment. In such case, the provisions of
Article III shall apply.
ARTICLE VIIIA:
(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 insofar as the fees for
technical services are concerned, the tax so charged shall not exceed 20 per
cent of the gross amount of such fees.
(3) The term "royalties" as used in
this Article means payments of any kind received as a consideration for the use
of, or the right to use, any copyright of literary, artistic or scientific work
including cinematograph films, or films or tapes used for radio or television
broadcasting, any patent, trade mark, design or model, plan, secret formula or
process, or for the use of, or the right to use, industrial, commercial or
scientific equipment, or for information concerning industrial, commercial or
scientific experience.
(4) The term "fees for technical
services" as used in this Article means payments of any kind to any
person, other than payments to an employee of the person making the
payments, in consideration for services
of a managerial, technical or consultancy nature, including the provisions of
services of technical or other personnel.
(5) The provisions of paragraphs (1) and (2)
of this Article shall not apply if the beneficial owner of the royalties or
fees for technical services, being a resident of a Contracting State, carries
on business in the other Contracting State in which the royalties or fees for
technical services, arise through a permanent establishment situated therein,
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. In such case, the provisions of Article III shall apply.
(6) Royalties and fees for technical services
shall be deemed to arise in a Contracting State where the payer is that State
itself a land, 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 in connection with which the
obligation to make the payments was incurred and the payments are borne by that
permanent establishment, then the royalties or fees for technical services
shall be deemed to arise in the Contracting State in which the permanent
establishment is situated.
(7) Where, owing to a special relationship
between the payer and some other person, the amount of the royalties or fees
for technical services paid exceeds for whatever reason the amount which would
have been paid in the absence of such relationship, the provisions of this
Article shall apply only to the last-mentioned amount. In that case, the excess
part of the payments shall remain taxable according to the law of each
Contracting State, due regard being had to the other provisions of this
Agreement.
ARTICLE IX: Income from
immovable property may be taxed in the Contracting State in which the property
is situated. For this purpose any rent or royalty or other income derived from
the operation of a mine, quarry or any other extraction of natural resources
shall be regarded as income from immovable property.
ARTICLE X:
(1) Capital gains arising from the sale,
exchange or transfer of a capital asset, whether movable or immovable, may be
taxed in the Contracting State in which the capital asset is situated at the
time of such sale, exchange or transfer. For this purpose the situs of the
shares of a company shall be deemed to be in the Contracting State where the
company is incorporated.
(2) However, gains from the alienation of
ships or aircraft operating in international traffic and movable property
pertaining to the operation of such ships or aircraft shall be taxable only in
the Contracting State in which the place of effective management of the
enterprise is situated.
ARTICLE XI:
(1) Remuneration, including pensions and
annuities, paid out of public funds of India in respect of present or past
services shall not be taxed in the Federal Republic unless the payment is made
to a citizen of the Federal Republic.
(2) Remuneration, including pensions and
annuities, paid out of public funds of the Federal Republic or its Lender or
political sub-divisions thereof in respect of present or past services shall
not be taxed in India unless the payment is made to a citizen of India.
(3) The provisions of paragraphs (1) and (2)
of this Article shall not apply to payments in respect of services in
connection with any trade or business carried on by either of the Contracting
Parties or political sub-divisions thereof for purposes of profit.
(4) The provisions of paragraphs (1) and (2)
of this Article shall also apply to remuneration, including pensions and
annuities, paid by the Federal Bank, the Federal Railways and the Postal
Administration of the Federal Republic and the corresponding organisations of
India.
ARTICLE XII:
(1) Profits or remuneration from professional
services (including services as a director) or from services as an employee
derived by an individual who is a resident of one of the Contracting States may
be taxed in the other Contracting State only if such services are rendered in
that other Contracting State.
(2) An individual who is a resident of India
shall not be taxed in the Federal Republic on profits or remuneration referred
to in paragraph (1) if:
(a) he is temporarily present in the Federal
Republic for a period or periods not exceeding in the aggregate 183 days during
a taxable year,
(b) the
services are rendered for or on behalf of a resident of India,
(c) the
profits or remuneration are subject to Indian tax, and
(d) the profits or remuneration are not
deducted in computing the profits of an enterprise chargeable to German tax.
(3) An individual who is a resident of the
Federal Republic shall not be taxed in India on the profits or remuneration
referred to in paragraph (1) if:
(a) he is temporarily present in India for a
period or periods not exceeding in the aggregate 183 days during a relevant
"previous year",
(b) the
services are rendered for or on behalf of a resident of the Federal Republic
(c) the
profits or remuneration are subject to German tax, and
(d) the profits or remuneration are not
deducted in computing the profits of an enterprise chargeable to Indian tax.
(4) Where an individual permanently or
predominantly renders services on ships or aircraft operated by an enterprise
of one of the Contracting States such services shall be deemed to be rendered
in that Contracting State.
ARTICLE XIII: Any pension
or annuity (other than pension or annuities to which Article XI applies)
derived by a resident of one of the Contracting States from source in the other
Contracting State may be taxed in that other Contracting State.
ARTICLE XIV: A professor
or teacher from one of the Contracting States, who receives remuneration for
teaching, during a period of temporary residence not exceeding two years, at a
university, college, school or other educational institution in the other
Contracting State, shall not be taxed in that other Contracting State in
respect of that remuneration.
ARTICLE XV:
(1) An individual from one of the Contracting
States who is temporarily presents in the other Contracting State solely.
(a) as a student at a recognized university, college or school in
such other Contracting State,
(b) as a
business apprentice (including in the Federal Republic a Volontar or a
Praktikant), 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, in respect of a scholarship, and in
respect of any amount representing remuneration for an employment in that other
Contracting State.
(2) An individual from one of the territories
who is temporarily present in the other Contracting State for a period not
exceeding one year, as an employee of, or under contract with, an enterprise of
the former Contracting State or an organisation referred to in paragraph (1)
sub-paragraph (c) above, solely to acquire technical, professional or business
experience from a person other than such enterprise or organisation, shall not
be taxed in that other Contracting State on remuneration for such period,
unless, the amount thereof exceeds 15,000 DM or its equivalent in Indian
currency.
(3) An individual from one of the Contracting
States temporarily present in the other Contracting State under arrangements
with the Government of that other Contracting State solely for the purpose of
training, research or study shall not be taxed in that other Contracting State
on remuneration received in respect of such training, research or study, unless
the amount thereof exceeds 25,000 DM or its equivalent in Indian currency.
ARTICLE XVA:
(1) Capital represented by immovable property
referred to in Article IX, 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 may be
taxed in that other State.
(3) Capital represented by ships and aircraft
operated in international traffic and by movable property pertaining to the
operation of such ships or aircraft shall be taxable only in the Contracting
State in which the place of effective management of the enterprise is situated.
(4) Capital represented by shares in a
company shall be taxable in the Contracting State in which such company is
resident.
(5) All other elements of capital of a
resident of a Contracting State shall be taxable only in that State.
ARTICLE XVI:
(1) The laws in force in either of the
Contracting States will continue to govern the assessment and taxation of
income in the respective Contracting States except where express provision to
the contrary is made in this Agreement.
(2) Where a resident of India derives income
or owns capital which, in accordance with the provisions of this Agreement, may
be taxed in the Federal Republic, 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
Federal Republic, 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 Federal Republic. 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 Federal Republic. Further, where such resident is a
company by which surtax is payable in India, the deduction in respect of
income-tax paid in the Federal Republic shall be allowed in the first instance
from income-tax payable by the company in India and as to the balance, if any,
from surtax payable by it in India.
(3) Subject to the provision of paragraph (1)
above, tax shall be determined in the case of a resident of the Federal
Republic as follows:
(a) Unless the provisions of sub-paragraph
(b), apply, there shall be excluded from the basis upon which German tax is
imposed any item of income arising in India and any item of capital situated
within India, which, according to this Agreement, may be taxed in India. The Federal
Republic, however, retains the right to take into account in the determination
of its rate to tax the items of income and capital so excluded.
In the case of income from
dividends the foregoing provisions shall apply only to such dividends as are paid
to a company (not including partnerships) being a resident of the Federal
Republic by a company being a resident of India at least 10 per cent of the
capital of which is owned directly by the first-mentioned company. For the
purposes of taxes on capital there shall also be excluded from the basis upon
which German tax is imposed any shareholding, the dividends of which are
excluded or, if paid, would be excluded, according to the immediately foregoing
sentence, from the basis upon which German tax is imposed.
(b) Subject to the provisions of German tax
law regarding credit for foreign tax (as it may be amended from time to time
without changing the general principle hereof), there shall be allowed as a
credit against German income and corporation tax payable in respect of the
following items of income arising in India the Indian tax paid under the laws
of India and in accordance with this Agreement on:
(aa) profits derived from the operation of
ships in international traffic;
(bb) dividends
not dealt with in sub-paragraph (a);
(cc) interest;
(dd) royalties
and fees for technical services.
(c) For the purpose of It. (bb) to (dd) of
sub-paragraph (b), the term "Indian tax" 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 Agreement for any year but for an exemption from,
or reduction of, tax granted for that year under:
(a) sections 10(4), 10(4A), 10(15)(iv) and 80K of the Income-tax
Act, 1961
(b) any other provision of similar character
to be agreed between the competent authorities of both Contracting States.
If this amount is less
than 50 per cent of the German tax chargeable on such volume, the term
"Indian tax" shall be deemed to be at least this 50 per cent of the German
tax.
(d) The provisions of sub-paragraph (a)
shall not apply to the profits of, and to the capital represented by, movable
and immovable property forming part of the business property of a permanent
establishment and to the gains from the alienation of such property; to
dividends paid by, and to the shareholding in a company unless the resident of
the Federal Republic concerned proves that the receipts of the permanent
establishment or company are derived exclusively or almost exclusively.
(aa) from producing or selling goods or
merchandise, giving technical advice or rendering engineering services, or
doing banking or insurance business, within India, or
(bb) from dividends paid by one or more
companies, being residents of India, more than 25 per cent of the capital of
which is owned by the first-mentioned company, which themselves derive their
receipts exclusively or almost exclusively from producing or selling goods or
merchandise, giving technical advice or rendering engineering services, or doing
banking or insurance business, within India.
In such a case, Indian tax
payable under the laws of India and in accordance with this Agreement on the
above-mentioned items of income and capital shall, subject to the provisions of
German tax law regarding credit for foreign tax (as it may be amended from time
to time without changing the general principle hereof), be allowed as a credit
against German income or corporation tax payable on such items of income or
against German capital tax payable on such items of capital.
ARTICLE XVII: The
competent authorities shall exchange such information (being information which
is at their disposal under their respective taxation laws in the normal course
of administration) as is necessary for carrying out the provisions of the
present Agreement. Any information so exchanged shall be treated as secret and
shall not be disclosed to any persons other than those concerned with the
assessment and collection of the taxes which are the subject of the present
Agreement. No information as aforesaid shall be exchanged by the competent
authority of one of the Contracting States which would disclose any trade,
business, industrial or professional secret or any trade process to the
authority of the other Contracting State.
ARTICLE XVIII:
(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. 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 Agreement. Any
Agreement reached shall be implemented notwithstanding any time limits in the
domestic law of the Contracting States.
(3) The competent authorities of the
Contracting States shall endeavour to resolve by mutual agreement any
difficulties or doubts arising as to the interpretation or application of the
Agreement. They may also consult together for the elimination of double taxation
in cases not provided for in the Agreement.
(4) The competent authorities of the
Contracting States may communicate with each other directly for the purpose of
reaching an agreement in the sense of the preceding paragraphs.
ARTICLE XIX:
(1) This Agreement shall apply to Land Berlin
provided that the Government of the Federal Republic of Germany has not
delivered a contrary declaration to the Government of India within three months
from the date of entry into force of the Agreement.
(2) Upon the application of this Agreement to
Land Berlin, references in the Agreement to the Federal Republic shall be
deemed also to be references to Land Berlin.
ARTICLE XX:
(1) The present Agreement shall be ratified.
(2) The instruments of ratification shall be exchanged
at Bonn as soon as possible.
(3) This Agreement shall come into force
after the expiration of a month following the date on which the instruments of
ratification are exchanged and shall thereupon have effect:--
(a) in respect of Indian tax in relation to
the income for any "previous year" relevant to any year of assessment
beginning on or after the 1st April, 1958, and
(b) in respect of the German tax, for taxes
which are levied for the calendar year 1957 and for subsequent calendar years.
ARTICLE XXI: This
Agreement shall continue in effect indefinitely but either of the Contracting
Parties may on or before the 30th day of June in any calendar year after 1960
give to the other Contracting Party notice of termination and in such event
this Agreement shall cease to be effective:--
(a) in respect of Indian tax, in relation to
income and capital assessable for the assessment years commencing on or after
the first day of April, in the calendar year next following that in which the
notice of termination is given, and
(b) in respect of German tax, for taxes
which are levied for the calendar years following the year in which the notice
of termination is given.
In witness whereof the
undesigned duly authorised thereto have singed this Agreement and have affixed
thereto their seals.
Done at New Delhi on 18th
March, 1959 in duplicate, in the English, German and Hindi languages, all the
three texts being equally authentic, except in the case of doubt, when the
English text shall prevail.
(DR. B. GOPALA REDDY), (DR.
W. MELCHERS),
Minister for Revenue and
Civil Expenditure, Ambassador
of the Federal
Government of India. Republic
of Germany in India,
New Delhi, the 18th day of
March, 1959.
Dear Sir,
The Agreement between the
Government of India and the Government of the Federal Republic of Germany for
the Avoidance of Double Taxation of Income being signed today, I have the
honour, on behalf of the Government of India, to inform you that the two
Contracting Parties have agreed that the provisions referred to shall be
applied as follows:
1. Article II (1)(i)(dd).--The term
"person" as used in the provision referred to includes an employee as
well as person who, though being of independent status, performs activities
similar to those of an employee.
2. Article II (1)(i)(dd)(3).--The term
"almost exclusively" shall be understood to mean that the person's
activities for or on behalf of enterprises other than those referred to therein
are of such minor importance in relation to his activities for or on behalf of
the enterprises mentioned therein that for all practical purposes such person
may be regarded as working solely for or on behalf of the latter enterprises.
Enterprises controlled by
the same person shall be treated as one enterprise.
I should be grateful if
you would confirm your Agreement with the above definitions and that, in such
case, this note and your reply thereto should be deemed to be part of the
Agreement.
Please accept, Mr.
Ambassador, the assurance of my high consideration.
DR. B. Gopala Reddy.
To
His Excellency Dr. W.
Melchers,
Ambassador of the Federal
Republic of Germany in India, New Delhi
New Delhi, the 18th March,
1959
Mr. Minister,
With reference to the
Agreement, signed to-day, between the Government of the Federal Republic and
the Government of India for the Avoidance of Double Taxation of Income, you on
behalf of the Government of India informed me of the following:
"The Agreement
between the Government of India and the Government of the Federal Republic of
Germany for the Avoidance of Double Taxation of Income being signed to-day, I
have the honour, on behalf of the Government of India, to inform you that the
two Contracting Parties have agreed that the provisions referred to below shall
be applied as follows:
1. Article II(1)(i)(dd).--The term
"person" as used in the provision referred to includes an employee as
well as a person who, though being of independent status, performs activities
similar to those of an employee.
2. Article II(1)(i)(dd)(3).--The term
"almost exclusively" shall be understood to mean that the person's
activities for or on behalf of enterprises other than those referred to therein
are of such minor importance in relation to his activities for or on behalf of
the enterprises mentioned therein that for all practical purposes such person
may be regarded as working solely for or on behalf of the latter enterprises.
Enterprises controlled by
the same person shall be treated as one enterprise.
I should be grateful if
you would confirm your Agreement with the above definitions and that, in such
case, this note and your reply thereto should be deemed to be part of the
Agreement.
I have the honour to
inform you that this proposal meets with the approval of the Government of the
Federal Republic of Germany. Your note of today's date and my reply thereto
shall therefore be part of the Agreement.
Accept, Mr. Minister, the
assurance of my high consideration.
DR. W. Melchers
To
Dr. B. Gopala Reddy,
Minister for Revenue and
Civil Expenditure, New Delhi.
Agreement between the
Government of India and the Government of Greece for the avoidance of double
taxation of income
Notification No. 19, [F.
No. 11(6)63/TPL], dated 17 March, 1967
G.S.R. 394.--Whereas the
annexed agreement between the Government of India and the Government of Greece
for the avoidance of double taxation of income has been ratified and the
instruments of ratification exchanged, as required by Article XX 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.
Whereas the Government of
India and the Government of Greece desire to conclude an agreement for the
avoidance of double taxation of income:
Now, therefore, it is
hereby agreed as follows:
ARTICLE I: (1) The taxes
which are the subject of the present agreement are:
(a) in India:
the income-tax,
the super-tax,
the surcharge,
imposed under the
Income-tax Act, 1961 (43 of 1961) (hereinafter referred to as "Indian
tax");
(b) In Greece:
the tax on physical
persons and the income-tax on legal entities, and any special tax levied in
Greece with reference to freight earned by shipping enterprises by the carriage
of passengers, livestock or goods, imposed under the Royal Decrees No.
3323/1955 and 3843/1958 and the Law No. 1880/1951 (hereinafter referred to as
"Greek tax").
(2) The present agreement shall also apply to
any other taxes of a substantially similar character imposed in India or Greece
subsequent to the date of signature of the present Agreement.
ARTICLE II:
(1) In the present agreement, unless the
context otherwise requires--
(a) the term "Greece" means the Contracting State of
the Kingdom of Greece;
(b) the terms "one of the Contracting
States" and "the other Contracting State" mean Greece or India
as the context requires;
(c) the term "person" includes
natural persons, companies and all other entities which are treated as taxable
units under the tax laws in force in the respective Contracting States;
(d) the term "company" means any
entity which is treated as a body corporate or as a company for tax purposes;
(e) the term "tax" means the Greek tax or Indian tax,
as the context requires;
(f) the terms "resident of Greece"
and "resident of India" mean, respectively, a person who is resident
in Greece for the purposes of Greek tax and not resident in India for the
purposes of Indian tax, and a person who is resident in India for the purposes
of Indian tax and not resident in Greece for the purposes of Greek tax. A
company shall be regarded as resident in Greece if it is incorporated in Greece
or its business is wholly managed and controlled in Greece; a company shall be
regarded as resident in India if it is incorporated in India or its business is
wholly managed and controlled in India.
(g) the terms "Greek enterprise"
and "Indian enterprise" mean, respectively, an industrial or
commercial enterprise or undertaking carried on by a resident of Greece and an
industrial or commercial enterprise or undertaking carried on by a resident of
India; and the terms "enterprise of one of the Contracting States"
and "enterprise of the other Contracting State" mean a Greek
enterprise or an Indian enterprise, as the context requires;
(h) the term "permanent
establishment" means a fixed place of business in which the business of
the enterprise is wholly or partly carried on;
(aa) the term "fixed place of business"
shall include a place of management, a branch, an office, a factory, a
workshop, a warehouse, a mine, quarry or other place of extraction of natural
resources;
(bb) an enterprise of one of the Contracting
States shall be deemed to have a fixed place of business in other territory if
it carries on in that other territory a construction, installation or assembly
project or the like;
(cc) the use of mere storage facilities or the
maintenance of a place of business exclusively for the purchase of goods or merchandise
and not for any processing of such goods or merchandise in the territory of
purchase, shall not constitute a permanent establishment;
(dd) a person acting in one of the Contracting
States for or on behalf of an enterprise of the other territory shall be deemed
to be a permanent establishment of that enterprise in the first-mentioned
territory, only if:
1. he has and habitually exercises in the
first-mentioned territory a general authority to negotiate and enter into
contracts for or on behalf of the enterprise, unless the activities of the
person are limited exclusively to the purchase of goods or merchandise for the
enterprise, or
2. he habitually maintains in the
first-mentioned territory 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
3. he habitually secures orders in the
first-mentioned territory wholly or almost wholly for the enterprise itself or
for the enterprise and other enterprise which are controlled by it or have a
controlling interest in it.
(ee) A broker of a genuinely independent status
who merely acts as an intermediary between an enterprise of one of the
Contracting States and a prospective customer in the other territory shall not
be deemed to be a permanent establishment of the enterprise in the
last-mentioned territory.
(ff) 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 territory or carries on a trade or business
in that other territory (whether through a permanent establishment or
otherwise) shall not, of itself constitute that subsidiary company a permanent
establishment of its parent company.
(i) the term "pension" means a
periodic payment made in consideration of services rendered or by way of
compensation for injuries received;
(j) the term "annually" 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 or money's
worth;
(k) the term "competent authority"
means in the case of India, the Central Government in the Ministry of Finance,
Department of Revenue, or its authorised representative and in the case of
Greece, the Ministry of Finance or its authorised representative.
(2) In the application of the provisions of
this agreement in one of the territories any term not otherwise defined in this
Agreement shall, unless the context otherwise requires, have the meaning which
it has under the laws in force in that territory relating to the taxes which
are the subject of this Agreement.
ARTICLE III:
(1) Subject to the provisions of paragraph
(3) below, tax shall not be levied in one of the territories on the industrial
or commercial profits of an enterprise of the other territory unless profits
are derived in the first-mentioned territory through a permanent establishment
of the said enterprise situated in the first-mentioned territory. If profits
are so derived, tax may be levied in the first-mentioned territory on the
profits attributable to the said permanent establishment.
(2) There shall be attributed to the
permanent establishment of an enterprise of one of the territories situated in
the other territory the industrial or commercial profits which it might be
expected to derive in that other territory if it were an independent enterprise
engaged in the same or similar activities under the same or similar conditions
and dealing at arm's length with the enterprise of which it is a permanent
establishment. In any case, where the correct amount of profits attributable to
a permanent establishment is incapable of determination or the ascertainment
thereof presents exceptional difficulties, the profits attributable to the
establishment may be estimated on a reasonable basis.
(3) For the purpose of this agreement the
term "industrial or commercial profits" shall not include income in
the form of rents, royalties, interest, dividends, management charges,
remuneration for labour or personal services or income from the operation of
ships or aircraft.
ARTICLE IV: Where--
(a) an enterprise of one of the territories,
participates directly or indirectly in the management, control or capital of an
enterprise of the other territory, or
(b) the same persons participate directly or
indirectly in the management, control or capital of an enterprise of one of the
territories and an enterprise of the other territory, and
in either case conditions
are made or imposed between the two enterprises, in their commercial or
financial relations which differ from those which would be made between
independent enterprises, then any profits which but for those conditions would
have accrued to one of the enterprises but by reason of those conditions have
not so accrued may be included in the profits of that enterprise and taxed
accordingly.
ARTICLE V:
(1) Income derived from the operation of
aircraft by an enterprise of one of the territories shall not be taxed in the
other territory, unless the aircraft is operated wholly or mainly between
places within that other territory.
(2) Paragraph (1) shall likewise apply in
respect of participations in pools of any kind by enterprises engaged in air
transport.
ARTICLE VI:
(1) When a resident of Greece, operating
ships, derives profits from India through such operations carried on in India,
such profits may be taxed in Greece as well as in India; but the tax so charged
in India shall be reduced by an amount equal to 50 per cent thereof, and the
reduced amount of Indian tax payable on the profits shall be allowed as a
credit against Greek tax charged in respect of such income. The credit
aforesaid shall not exceed the Greek tax charged in respect of such income.
(2)(a) When a resident of India; operating ships,
derives profits from Greece, through such operations carried on in Greece, such
profits may be taxed in Greece as well as in India; but the tax so charged in
Greece shall be reduced by an amount equal to 50 per cent thereof and the
reduced amount of Greek tax payable shall be allowed as a credit against Indian
tax charged in respect of such income. The credit aforesaid shall not exceed
the Indian tax charged in respect of such income.
(b) Sub-clause (a) of clause (2) shall not,
however, apply as long as the laws in Greece do not impose any tax on income
derived from the operation of ships belonging to foreign enterprises operating
in the Greek territory, in such cases, the only in India.
(3) Paragraphs (1) and (2) shall not apply to
profits arising as a result of coastal traffic.
(4) The provisions of clause (1) shall not in
case of India affect the application of sub-sections (1) to (6) of section 172
of the Income-tax Act, 1961 for the assessment of profits from occasional
shipping or tramp steamers; but the provisions of that clause will be applied,
when an adjustment is to be made under sub-section (7) of the aforesaid section
of the Income-tax Act, 1961 in such cases.
ARTICLE VII: Royalties
derived by a resident of a Contracting State from sources in the other
territory may be taxed only in that other territory.
In this Article, the term
"Royalty" means any royalty or other like amount received as
consideration for the right to use copyrights, artistic or scientific works,
cinematographic films, patents, models, designs, plans, secret processes or
formulae, trade-marks and other like property or rights, but does not include
any royalty or other like amount in respect of the operation of mines, quarries
or other natural resources.
ARTICLE VIII: Dividends
paid by a company which is a resident of a Contracting State to a resident of
the other territory may be taxed only in the first-mentioned territory.
ARTICLE IX: Interest on
bonds, securities, notes, debentures or any other form of indebtedness, derived
by a resident of a Contracting State from sources in the other territory may be
taxed only in that other territory.
ARTICLE X: Income from
immovable property may be taxed only in the territory in which the property is
situated. For this purpose any rent or royalty or other income derived from the
operation of a mine, quarry or any other place of extraction of natural
resources shall be regarded as income from immovable property.
ARTICLE XI: Capital gains
derived from the sale, exchange or transfer of a capital asset, whether movable
or immovable, may be taxed only in the territory in which the capital asset is
situated at the time of such sale, exchange or transfer.
ARTICLE XII:
(1) Remuneration other than pensions and
annuities, paid in Greece for services rendered therein out of public funds of
India shall not be taxed in Greece unless the payment is made to a citizen of
Greece.
(2) Remuneration other than pensions and
annuities, paid in India for services rendered therein out of public funds
of Greece shall not be taxed in India
unless the payment is made to a citizen of India.
(3) The provisions of paragraphs (1) and (2)
of this Article shall not apply to payments in respect of services in
connection with any trade or business carried on by either of the Contracting
Parties or political sub-divisions thereof for purposes of profit.
(4) The provisions of paragraphs (1) and (2)
of this Article shall also apply to remuneration other than pensions and
annuities paid by the Reserve Bank of India, the Public Railways Authorities
and the Postal Administration of India and by the Bank of Greece, Greek State
Railways and the Greek Postal and Telegraphic Administration.
ARTICLE XIII: Any pension
or annuity derived by a resident of a Contracting State from sources in the
other territory may be taxed only in that other territory.
ARTICLE XIV:
(1) Profits or remuneration for professional
services or for services as an employee (including services as a director)
performed in one of the territories by an individual who is a resident of the
other territory may be taxed only in the territory in which such services are
performed.
(2) An individual who is a resident of India
shall not be taxed in Greece on profits or remuneration referred to in
paragraph (1) if--
(a) he is temporarily present in Greece for
a period or periods not exceeding in the aggregate 183 days during the calendar
year immediately preceding the relevant fiscal year,
(b) the
services are performed for or on behalf of a resident of India,
(c) the
profits or remuneration are subject to Indian tax, and
(d) the profits or remuneration are not
deducted in computing the profits of an enterprise chargeable to Greek tax.
(3) An individual who is a resident of Greece
shall not be taxed in India on the profits or remuneration referred to in
paragraph (1) if--
(a) he is temporarily present in India for a
period or periods not exceeding in the aggregate 183 days during the relevant
"previous year",
(b) the
services are rendered for or on behalf of a resident of Greece,
(c) the
profits or remuneration are subject to Greek tax, and
(d) the profits or remuneration are not
deducted in computing the profits of an enterprise chargeable to Indian tax.
(4) Where an individual permanently or
predominantly performs services on ships or aircraft in international traffic
operated by an enterprise of one of the territories, profits or remuneration
from such services may be taxed only by the country of which the individual is
resident.
ARTICLE XV: A professor or
teacher from one of the territories, who receives remuneration for teaching,
during a period of temporary residence not exceeding two years, at a
university, college, school or other educational institution in the other
territory, shall not be taxed in that other territory in respect of that
remuneration.
ARTICLE XVI: An individual
from one of the territories who is temporarily present in the other territory
solely--
(a) as a student at a university, college or school in such other
territory,
(b) as a
business 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 territory in respect of remittances from abroad for the purposes of his
maintenance, education or training in respect of a scholarship, and in respect
of any amount representing remuneration for services rendered in that other
territory, provided that such services are in connection with his studies or
training or are necessary for the purpose of his maintenance.
ARTICLE XVII:
(1) The laws in force in either of the
territories will continue to govern the assessment and taxation of income in
the respective territories except where express provision to the contrary is
made in this Agreement.
(2) Subject to the provisions of Article VI
income from sources within Greece which under the laws of Greece and in
accordance with this agreement is subject to tax in Greece either directly or
by deduction shall not be subject to Indian tax.
(3) Subject to the provisions of Article VI
income from sources within India which under the laws of India and in
accordance with this agreement is subject to tax in India either directly or by
deduction shall not be subject to Greek tax.
(4) The graduated rate of Greek tax to be
imposed on residents of Greece and the graduated rate of Indian tax to be
imposed on residents of India may be calculated as though income which under
this agreement is not subject to Greek or Indian tax, as the case may be, were
included in the amount of the total income.
ARTICLE XVIII: The
competent authorities shall exchange such information (being information which
is at their disposal under their respective taxation laws in the normal course
of administration) as is necessary for carrying out the provisions of the
present Agreement. Any information so exchanged shall be treated as secret and
shall not be disclosed to any persons other than those concerned with the
assessment and collection of the taxes which are the subject of the present
Agreement. No information as aforesaid shall be exchanged by the competent
authority of one of the territories which would disclose any trade, business,
industrial or professional secret or any trade process to the authority of the
other territory.
ARTICLE XIX: Where a
resident of a Contracting State shows proof that the action of the taxation
authorities of the other territory has resulted or will result in double
taxation contrary to the provisions of the present Agreement, he shall be
entitled to present his case to the competent authority of the territory of
which he is resident. Should his claim be deemed worthy of consideration, the
competent authority to which the claim is made shall endeavour to come to an
agreement with the competent authority of the other territory with a view to
avoiding double taxation.
ARTICLE XX:
(1) The present agreement shall be ratified
and the instruments of ratification shall be exchanged at New Delhi as soon as
possible.
(2) Upon exchange of the instruments of
ratification, the present Agreement shall have effect:--
(a) in India, for any year of assessment beginning on or after
the 1st April, 1964
(b) in
Greece, for any fiscal year, beginning on or after the 1st January, 1964.
ARTICLE XXI: This
agreement shall continue in effect indefinitely but either of the Contracting
Parties may on or before the 30th day of June in any calendar year after 1965
give to the other Contracting Party notice of termination, and in such event
this Agreement shall cease to be effective--
(a) in India, for any year of assessment
beginning on or after the 1st April in the calendar year next following such written
notice of termination,
(b) in Greece, for any fiscal year beginning
on or after the 1st January next following such written notice of termination.
In witness whereof the
undersigned duly authorised thereto have signed this agreement and have affixed
thereto their seals.
Done at New Delhi on the
11th February, 1965; in duplicate in the English language.
For the Republic of India: For
the Royal Government of Greece:
Sd/- Rameshwar Sahu, Sd/-George
Warsamy,
Deputy Minister of
Finance, Ambassador
of Greece,
Government of India. New Delhi.