Agreement between the Government of India and the Government of the Sultanate of Oman for the avoidance of double taxation of income derived from international transport
Notification F. No.
484/36/77-FTD, dated 27 March, 1985
G.S.R. 313(E).--Whereas
the annexed Agreement between the Government of India and the Government of the
Sultanate of Oman for the avoidance of double taxation of income derived from
international air transport has come into force on the notification by both the
Contracting States to each other of completion of the procedures required by
their respective laws, as required by Article 5 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.
The Government of India
and the Government of the Sultanate of Oman,.
Desiring to conclude an
Agreement for the avoidance of double taxation of income derived from
international air transport.
Have agreed as follows :
ARTICLE 1: Taxes
covered.--The existing taxes to which this Agreement shall apply are :
(a) in the case of the Sultanate of Oman :
the income-tax imposed
under the Income-tax Decree, 1961 and the Company Income-tax imposed under the
Company Income-tax Law 1981.
(hereinafter referred to
as "Omani tax")
(b) in the case of India :
(i) the income-tax including any surcharge
thereon imposed under the Income-tax Act, 1961 (43 of 1961);
(ii) the
surtax imposed under the Companies (Profits) Surtax Act, 1964 (7 of 1964).
(hereinafter referred to
as "Indian tax").
2. This Agreement shall
also apply to any identical or substantially similar taxes which are imposed
after the date of signature of this Agreement in addition to, or in place, of
the taxes referred to in paragraph 1 of this Article. The competent authorities
of the Contracting States shall notify each other of any substantial changes
which are made in their respective taxation laws.
ARTICLE 2:
Definitions.--1. For the purpose of this Agreement, unless the context
otherwise requires--
(a) the term "Sultanate of Oman" means the territory of
Oman including the territorial sea and air space above it as well as any other
maritime zone referred to in Decree 15/1981 concerning the Territorial Waters,
the Continental Shelf and the Exclusive Economic Zone in which Oman has
sovereign rights and to the extent that those rights can be exercised therein
as if such maritime zone is part of the territory of Oman;
(b) the term "India" means the territory of India and
includes the territorial sea and airspace above it as well as any other
maritime zone referred to in the Territorial Waters, Continental Shelf,
Exclusive Economic Zone and other Maritime Zones Act, 1976 (Act No. 80 of
1976), in which India has sovereign rights and to the extent that these rights
can be exercised therein as if such maritime zone is a part of the territory of
India;
(c) the terms "a Contracting State" and the "other
Contracting State" mean Sultanate of Oman or India, as the context
requires;
(d) the term "tax" means "Omani tax" or
"Indian tax" as the context requires;
(e) the term "enterprise of India" includes enterprises
designated by the Government of India;
(f) the term "enterprise of Oman" includes enterprises
designated by the Government of the Sultanate of Oman;
(g) the term "international traffic" means any
transport by an aircraft operated by an enterprise of a Contracting State,
except when the aircraft is operated solely between places in the other
Contracting State;
(h) the expression "operation of aircraft" means
business of carriage by air of passengers, 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 and any other activity directly connected with such
transportation.
2. The list of enterprises
designated by each Government in terms of sub-paragraphs (e) and (f) of
paragraph 1, as given in the Annex to this Agreement, may be modified by mutual
agreement through exchange of letters between both States.
3. In the application of
the provisions of this Agreement by one of the Contracting State, any term used
but not defined herein shall, unless the context otherwise requires, have the
meaning which it has under the laws in force in that State relating to the
taxes which are the subject of this Agreement.
ARTICLE 3: Avoidance of
double taxation.--1. Income which an enterprise of Oman derives from the
operation of aircraft in international traffic shall be exempted in India from
Indian tax.
2. Income which an
enterprise of India derives from the operation of aircraft in international
traffic shall be exempted in Oman from Omani tax.
3. The provisions of
paragraphs 1 and 2 shall also apply to income from the participation in a pool,
a joint business or an international operating agency.
4. For the purposes of
paragraphs 1 and 2, interest on funds directly connected with the operation of
aircraft in international traffic shall be regarded as income from the
operation of aircraft.
ARTICLE 4: Residual
provisions.--The laws in force in either of the Contracting States will
continue to govern the assessment and taxation of income in the Contracting
States except where express provision to the contrary is made in this
Agreement.
ARTICLE 5: Entry into
force.--1. Each State shall notify to the other the completion of the procedure
required by its law for the bringing into force of this Agreement. The
Agreement shall enter into force on the first day of the second month following
the month in which the latter of these notifications has been given.
2. The provisions of this
Agreement shall have effect in respect of income derived on or after the 1st
day of January, 1971.
3. No action would be
taken to reopen assessments in respect of the period prior to the 1st day of
January, 1971.
ARTICLE 6:
Termination.--This Agreement shall continue in effect indefinitely but either
Contracting State may, on or before the thirtieth day of June in any calendar
year, give notice of termination to the other Contracting State and in such
event this Agreement shall cease to be effective :
(a) In the Sultanate of Oman, in respect of any tax year
commencing on or after the 1st day of January of the second calendar year
following the year in which the notice is given;
(b) in India, in respect of any assessment year commencing on or
after the 1st day of April of the second calendar year following the year in
which the notice is given.
In witness whereof the
undersigned, duly authorised thereto have signed this Agreement.
Done at New Delhi this
twenty-third day of October, one thousand nine hundred and eighty-four in two
originals in the Hindi, Arabic and English languages, all texts being equally
authentic. In case of dispute as to interpretation and application of this
Agreement, the English text shall prevail.
Sd/- (C. K. Tikku) Sd/-
(MR. Abdulla Bin Saeed Bin
For the Government of
India. Rashid
Al-Balushi)
For the
Government of
the
Sultanate of Oman.
List of Designated
Enterprises Vide Article 2 paragraph 2
Enterprises designated by
the Government of India :
AIR-INDIA
Enterprises designated by
the Government of Sultanate of Oman :
GULF AIR COMPANY (KNOWN AS GULF AIR)
Eng. Mohamed Rajab
Al-Ba'Omar,
Head of Delegation of the
Government
of the Sultanate of Oman.
Dear Sir,
The Agreement between the
Government of India and the Government of Sultanate of Oman for the avoidance
of double taxation of income derived from international air transport being
signed today, I have the honour on behalf of the Government of India to inform
you that the provisions of Article 3 of the said Agreement are based on the
understanding that the enterprise of India is not taxed on its income derived
from international air transport in the States of Bahrain, Oman, Qatar and
United Arab Emirates who are the joint owners of Gulf Air. However, in the
event of the States of Bahrain, Qatar and United Arab Emirates or any one of
them charging to tax the enterprise of India for any year in respect of its
income derived from international air transport, the exemption available in
India to the enterprise of Oman on its income derived from the operation of
aircraft in international traffic shall be reduced by a proportion appropriate
to the share of the revenues of the enterprise of India in the State which imposes
such tax.
I should be grateful if
you confirm your Agreement to the above understanding of the provisions of
Article 3 of the said Agreement, and that in such case this note and your reply
thereto shall be deemed to be part of the Agreement.
Please accept, Sir, the
assurances of my highest consideration.
MUSCAT,
27th October, 1982
Jagdish Chand,
Head of Delegation of the
Government of India.
Mr. Jagdish Chand,
Head of Delegation of the
Government of India.
Dear Sir,
With reference to the Agreement,
signed today, between the Government of India and the Government of the
Sultanate of Oman for the avoidance of double taxation of income derived from
the international air transport you have informed of the following :--
"The Agreement
between the Government of India and the Government of Sultanate of Oman for the
avoidance of double taxation of income derived from international air transport
being signed today, I have the honour on behalf of the Government of India to
inform you that the provisions of Article 3 of the said Agreement are based on
the understanding that the enterprise of India is not taxed on its income
derived from international air transport in the States of Bahrain, Oman, Qatar
and United Arab Emirates who are the joint owners of Gulf Air. However, in the
event of the States of Bahrain, Qatar and United Arab Emirates or any one of
them charging to tax the enterprise of India for any year in respect of its
income derived from international air transport, the exemption available in India
to the enterprise of Oman on its income derived from the operation of aircraft
in international traffic shall be reduced by a proportion appropriate to the
share of the revenues of the enterprise of India in the State which imposes
such tax.
I should be grateful if
you confirm your Agreement to the above understanding of the provisions of
Article 3 of the said Agreement, and that in such case this note and your reply
thereto shall be deemed to be part of the Agreement."
I have the honour to
confirm on behalf of the Government of the Sultanate of Oman the understandings
outlined in your note.
Please accept, Sir, the
assurances of my highest consideration.
MUSCAT,
27th October, 1982.
ENG. Mohamed Rajab
Al-Ba'omar,
Head of Delegation of the
Government of the
Sultanate of Oman.
Agreement between the
Republic of India and the Sultanate of Oman for the Avoidance of Double
Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income
Notification No. 10415,
dated 23-9-1997
Whereas the annexed
Agreement between the Government of the Sultanate of Oman and the Government of
the Republic of India for the avoidance of double taxation and the prevention
of fiscal evasion with respect to taxes on income has entered into force on the
3rd June, 1997 after the notification by both the Contracting States to each
other of the completion of the proceedings required by their laws for bringing
into force of the said agreement in accordance with paragraph 1 of Article 29
of the said Agreement:
Now, therefore, in
exercise of the powers conferred by section 90 of the Income-tax Act, 1961 (43
of 1961), the Central Government hereby directs that all the provisions of the
said Agreement shall be given effect to throughout the territory of India.
The Government of the
Republic of India and the Government of the Sultanate of Oman,
DESIRING to conclude an
Agreement for the avoidance of double taxation and the prevention of fiscal
evasion with respect to taxes on income;
HAVE agreed as follows:
Article 1
Personal Scope
This Agreement shall apply
to persons who are residents of one or both of the Contracting States.
Article 2
Taxes Covered
1. The taxes to which this
Agreement shall apply are:
(a) in India, the income-tax including any surcharge thereon;
(hereinafter referred to
as "Indian tax")
(b) in the Sultanate of Oman:
(i) the Company Income Tax;
(ii) the
Profit Tax on Commercial and Industrial Establishments;
(hereinafter referred to
as "Omani tax")
2. This Agreement shall
also apply to any identical or substantially similar taxes which are imposed by
either Contracting State after the date of signature of this Agreement in
addition to, or in place of, the taxes referred to in paragraph 1. The
competent authorities of the Contracting States shall notify each other of any
substantial changes which are made in their respective taxation laws within one
year from the date of such changes.
Article 3
General Definitions
1. In this Agreement,
unless the context otherwise requires:
(a) the term 'India' means the territory of India and includes
the territorial sea and airspace above it, as well as any other maritime zone
in which India has sovereign rights, other rights and jurisdictions, according
to the Indian Law and in accordance with international law and the UN
Convention on the Law of the sea;
(b) the term 'the Sultanate of Oman' means the territory of the
Sultanate of Oman and the islands belonging thereto, including the territorial
waters and any area outside the territorial waters over which the Sultanate of
Oman may, in accordance with international law, exercise sovereign rights with
respect to the exploration and exploitation of the natural resources of the sea
bed and the sub-soil and the above-lying waters;
(c) the terms "a Contracting State" and "the other
Contracting State" mean India or the Sultanate of Oman as the context
requires;
(d) the term "company" means any body corporate or any
entity which is treated as a company or body corporate under the taxation laws
in force in the respective Contracting States;
(e) the term "competent authority" means in the case of
India, the Central Government in the Ministry of Finance (Department of
Revenue) or their authorised representative; and in the case of Sultanate of
Oman, the Minister of National Economy and Supervisor of Ministry of Finance or
his authorised representative;
(f) the terms "enterprise of a Contracting State" and
"enterprise of the other Contracting State" mean respectively an
enterprise carried on by a resident of a Contracting State and an enterprise
carried on by a resident of the other Contracting State;
(g) the term "fiscal year" means:
(i) in the case of India, 'previous year' as defined under
section 3 of the Income-tax Act, 1961;
(ii) in the case of the Sultanate of Oman,
'taxable year' as defined in the Company Income Tax Law, 1981;
(h) the term "international traffic" means any
transport by a ship or aircraft operated by an enterprise of a Contracting
State, except when the ship or aircraft is operated solely between places in
the other Contracting State;
(i) the term "national" means any individual
possessing the nationality of a Contracting State, and any legal person,
partnership or association deriving its status from the laws in force in the
Contracting State;
(j) the term "person" includes an individual, a
company, a body of persons and any other entity which is treated as a taxable
unit under the taxation laws in force in the respective Contracting States;
(k) the term "tax" means Indian tax or Omani tax, as the
context requires, but shall not include any amount which is payable in respect
of any default or omission in relation to the taxes to which this Agreement
applies or which represents a penalty imposed relating to those taxes.
2. As regards the
application of this Agreement by a Contracting State, any term not defined
therein shall, unless the context otherwise requires, have the meaning which it
has under the law of that Contracting State concerning the taxes to which this
Agreement applies.
Article 4
Resident
1. For the purposes of
this Agreement, the term "resident of a Contracting State" means any
person who, under the laws of that Contracting State, is liable to tax therein
by reason of his domicile, residence, place of management or any other
criterion of a similar nature.
2. Where by reason of the
provisions of paragraph 1, an individual is a resident of both Contracting
States, then his status shall be determined as follows:
(a) he shall be deemed to be a resident of the State in which he
has a permanent home available to him; if he has a permanent home available to
him in both States, he shall be deemed to be a resident of the State with which
his personal and economic relations are closer (centre of vital interests);
(b) if the State in which he has his centre of vital interests
cannot be determined, or if he has not a permanent home available to him in
either State, he shall be deemed to be a resident of the State in which he has
an habitual abode;
(c) if he has an habitual abode in both States or in neither of
them, he shall be deemed to be a resident of the State of which he is a
national;
(d) if he is a national of both States or of neither of them, the
competent authorities of the Contracting States shall settle the question by
mutual agreement.
3. Where by reason of the
provisions of paragraph 1, a person other than an individual is a resident of
both Contracting States, then it shall be deemed to be a resident of the State
in which its place of effective management is situated.
Article 5
Permanent Establishment
1. For the purposes of
this Agreement, the term "permanent establishment" means a fixed
place of business through which the business of the enterprise is wholly or
partly carried on.
2. The term
"permanent establishment" includes especially:
(a) a place of management;
(b) a branch;
(c) an
office;
(d) a
factory;
(e) a
workshop;
(f) a mine,
an oil or gas well, a quarry or any other place of extraction of natural
resources;
(g) a building site or construction or assembly
project or supervisory activities in connection therewith; but only where such
site, project or activity continues for a period of more than 6 months.
3. Notwithstanding the
preceding provisions of this Article, the term "permanent
establishment" shall be deemed not to include:
(a) the use of facilities solely for the purpose of storage,
display or delivery of goods or merchandise belonging to the enterprise;
(b) the maintenance of a stock of goods or merchandise belonging
to the enterprise solely for the purpose of storage, display or delivery;
(c) the maintenance of a stock of goods or merchandise belonging
to the enterprise solely for the purpose of processing by another enterprise;
(d) the maintenance of a fixed place of business solely for the
purpose of purchasing goods or merchandise, or of collecting information, for
the enterprise;
(e) the maintenance of a fixed place of business solely for the
purpose of carrying on, for the enterprise, any activity of a preparatory or
auxiliary character.
4. Notwithstanding the
provisions of paragraphs 1 and 2, where a person (other than an agent of
independent status to whom paragraph 5 applies) is acting on behalf of an
enterprise and has, and habitually exercises, in a Contracting State an
authority to conclude contracts in the name of the enterprise, that enterprise
shall be deemed to have a permanent establishment in that State in respect of
any activities which that person undertakes for the enterprise, unless the
activities of such person are limited to those mentioned in paragraph 3 of this
Article which, if exercised through a fixed place of business, would not make
this fixed place of business a permanent establishment under the provisions of
that paragraph.
5. An enterprise of a
Contracting State shall not be deemed to have a permanent establishment in the
other Contracting State merely because it carries on business in that other
State through a broker, general commission agent or any other agent of an
independent status, provided that such persons are acting in the ordinary
course of their business.
6. The fact that a company
which is a resident of a Contracting State controls or is controlled by a
company which is a resident of the other Contracting State, or which carries on
business in that other Contracting State (whether through a permanent
establishment or otherwise), shall not of itself constitute either company a
permanent establishment of the other.
Article 6
Income from Immovable
Property
1. Income derived by a
resident of a Contracting State from immovable property (including income from
agriculture or forestry) situated in the other Contracting State may be taxed
in that other Contracting State.
2. The term
"immovable property" shall have the meaning which it has under the
law of the Contracting State in which the property in question is situated. The
term shall in any case include property accessory to immovable property,
livestock and equipment used in agriculture and forestry, rights to which the
provisions of general law respecting landed property apply, usufruct of
immovable property and rights to variable or fixed payments as consideration
for the working of, or the right to work, mineral deposits, sources and other
natural resources. Ships, boats and aircraft shall not be regarded as immovable
property.
3. The provisions of
paragraph 1 shall also apply to income derived from the direct use, letting, or
use in any other form of immovable property.
4. The provisions of
paragraphs 1 and 3 shall also apply to the income from immovable property of an
enterprise and to income from immovable property used for the performance of
independent personal services.
Article 7
Business Profits
1. The profits of an
enterprise of a Contracting State shall be taxable only in that State unless
the enterprise carries on business in the other Contracting State through a
permanent establishment situated therein. If the enterprise carries on business
as aforesaid, the profits of the enterprise may be taxed in the other
Contracting State but only so much of them as is attributable directly or
indirectly to that permanent establishment.
The words "directly
or indirectly" mean, for the purposes of this Article, that where a
permanent establishment takes an active part in negotiating, concluding or
fulfilling contracts entered into by the enterprise, then notwithstanding that
other parts of the enterprise have also participated in those transactions,
there shall be attributed to the permanent establishment that proportion of
profits of the enterprise arising out of those contracts as the contribution of
the permanent establishment to those transactions bears to that of the
enterprise as a whole.
2. Subject to the
provisions of paragraph 3, where an enterprise of a Contracting State carries
on business in the other Contracting State through a permanent establishment
situated therein, there shall in each Contracting State be attributed to that
permanent establishment the profits which it might be expected to make if it
were a distinct and separate enterprise engaged in the same or similar
activities under the same or similar conditions and dealing wholly
independently with the enterprise of which it is a permanent establishment.
3. In determining the
profits of a permanent establishment, there shall be allowed as deductions
expenses which are incurred for the purposes of the business of the permanent
establishment including executive and general administrative expenses so
incurred, whether in the State in which the permanent establishment is situated
or elsewhere in accordance with the provisions of and subject to the
limitations of the tax laws of that State.
4. 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 reasons of the mere purchase by that
permanent establishment of goods or merchandise for the enterprise.
6. For the purposes of the
preceding paragraphs, the profits to be attributed to the permanent
establishment shall be determined by the same method year by year unless there
is good and sufficient reason to the contrary.
7. Where profits include
items of income which are dealt with separately in other Articles of this
Agreement, then the provisions of those Articles shall not be affected by the
provisions of this Article.
Article 8
Air Transport
1. Profits derived by an
enterprise of a Contracting State from the operation of aircraft in
international traffic shall be taxable only in that Contracting State.
2. The provisions of
paragraph 1 shall also apply to profits from the participation in a pool, a
joint business or an international operating agency.
3. For the purposes of
this Article, interest on funds directly connected with the operation of
aircraft in international traffic shall be regarded as income or profits
derived from the operation of such aircraft, and the provisions of Article 12
shall not apply in relation to such interest.
4. The term
"operation of aircraft" means business of transportation by air of
passengers, mail, livestock or goods carried on by the owners or lessees or
charterers of aircraft, including the sale of tickets for such transportation
on behalf of other enterprises, the incidental lease of aircraft and any other
activity directly connected with such transportation.
5. For the purposes of
this Article and notwithstanding the provisions of paragraph 1 (f) of Article
3, the term "enterprise of a Contracting State" means:
(i) in case of Sultanate of Oman, Gulf Air, Oman Aviation
Services Company (SAOG) and any other enterprise carried on by a resident of
the Sultanate of Oman;
(ii) in case of India, Air India, Indian
Airlines and any other enterprise carried on by a resident of India.
Article 9
Shipping
1. Profits derived by an
enterprise of a Contracting State from the operation of ships in international
traffic shall be taxable only in that Contracting State.
2. The provisions of
paragraph 1 shall also apply to profits from the participation in a pool, a
joint business or an international operating agency.
3. For the purposes of
this Article, interest on funds directly connected with the operation of ships
in international traffic shall be regarded as income or profits from the
operation of such ships and the provisions of Article 12 shall not apply in
relation to such interest.
4. The term
"operation of ships" means business of transportation by sea of
passengers, mail, livestock or goods carried on by the owners or lessees or
charterers of ships, including the sale of tickets for such transportation on
behalf of other enterprises, the incidental lease of ships and any other activity
directly connected with such transportation.
Article 10
Associated Enterprises
Whereas:
(a) an enterprise of a Contracting State participates directly or
indirectly in the management, control or capital of an enterprise of the other
Contracting State, or
(b) the same persons participate directly or indirectly in the
management, control or capital of an enterprise of a Contracting State and an
enterprise of the other Contracting State, and in either case, conditions are
made or imposed between the two enterprises in their commercial or financial
relations which differ from those which would be made between independent
enterprises, then any profits which would, but for those conditions, have
accrued to one of the enterprises, but, by reason of those conditions, have not
so accrued may be included in the profits of that enterprise and taxed
accordingly.
Article 11
Dividends
1. Dividends paid by a
company which is resident of a Contracting State to a resident of the other
Contracting State may be taxed in that other Contracting State.
2. However, such dividends
may also be taxed in the Contracting State of which the company paying the
dividends is a resident and according to the laws of the State, but if the
recipient is the beneficial owner of the dividends, the tax so charged shall
not exceed:
(a) 10 per cent of the gross amount of the dividends if the
beneficial owner is a company which owns at least 10 per cent of the shares of
the company paying the dividends;
(b) 121/2 per cent of the gross amount of the dividends in all
other cases.
This paragraph shall not
affect the taxation of the company in respect of the profits out of which the
dividends are paid.
3. The term
"dividends" as used in this Article means income from shares or other
rights, not being debt-claims, participating in profits, as well as income from
other corporate rights which is subjected to the same taxation treatment as
income from shares by the laws of the Contracting State of which the company
making the distribution is a resident.
4. The provisions of
paragraphs 1 and 2 shall not apply if the beneficial owner of the dividends,
being a resident of a Contracting State, carries on business in the other
Contracting State of which the company paying the dividends is a resident, through
a permanent establishment situated therein or performs in that other
Contracting State independent personal services from a fixed base situated
therein, and the holding in respect of which the dividends are paid is
effectively connected with such permanent establishment or fixed base. In such
case, the provisions of Article 7 or Article 16, as the case may be, shall
apply.
5. Where a company which
is a resident of a Contracting State derives profits or income from the other
Contracting State, that other Contracting State may not impose any tax on the
dividends paid by the company except insofar as such dividends are paid to a
resident of that other Contracting State or insofar as the holding in respect
of which the dividends are paid is effectively connected with a permanent
establishment or a fixed base situated in that other Contracting State, nor
subject the company's undistributed profits to a tax on the company's
undistributed profits,even if the dividends paid or the undistributed profits
consist wholly or partly of profits or income arising in such other Contracting
State.
Article 12
Interest
1. Interest arising in a
Contracting State and paid to a resident of the other Contracting State may be
taxed in that other Contracting State.
2. However, such interest
may also be taxed in the Contracting State in which it arises and according to
the laws of that State, but if the recipient is the beneficial owner of the
interest the tax so charged shall not exceed 10 per cent of the gross amount of
the interest.
3. Notwithstanding the
provisions of paragraph 2,
(a) interest arising in a Contracting State shall be exempt from
tax in that State provided it is derived and beneficially owned by:
(i) the Government, a political
sub-division or a local authority of the other Contracting State; or
(ii) the
Central Bank of the other Contracting State;
(b) interest arising in a Contracting State shall be exempt from
tax in that Contracting State to the extent approved by the Government of that
Contracting State if it is derived and beneficially owned by any person other
than a person referred to in sub-paragraph (a) who is resident of the other
Contracting State provided that the transaction giving rise to the debt-claim
has been approved in this regard by the Government of the first-mentioned
Contracting State.
4. The term 'interest' as
used in this Article means income from debt-claims of every kind, whether or
not secured by mortgage and whether or not carrying a right to participate in
the debtor's profits, and in particular, income from government securities and
income from bonds or debentures, including premiums and prizes attaching to
such securities, bonds or debentures. Penalty charges for late payment shall
not be regarded as interest for the purpose of this Article.
5. The provisions of
paragraphs 1 and 2 shall not apply if the beneficial owner of the interest,
being a resident of a Contracting State, carries on business in the other
Contracting State in which the interest arises, through a permanent establishment
situated therein, or performs in that other Contracting State independent
personal services from a fixed base situated therein, and the debt-claim in
respect of which the interest is paid is effectively connected with such
permanent establishment or fixed base. In such case, the provisions of Article
7 or Article 16, as the case may be, shall apply.
6. Interest shall be
deemed to arise in a Contracting State when the payer is that Contracting State
itself, a political sub-division, a local authority or a resident of that
Contracting State. However, where the person paying the interest, whether he is
a resident of a Contracting State or not, has in that Contracting State a
permanent establishment or a fixed base in connection with which the indebtedness
on which the interest is paid was incurred, and such interest is borne by such
permanent establishment or fixed base, then such interest shall be deemed to
arise in the Contracting State in which the permanent establishment or fixed
base is situated.
7. Where, by reason of a
special relationship between the payer and the beneficial owner or between both
of them and some other person, the amount of the interest, having regard to the
debt-claim for which it is paid, exceeds the amount which would have been
agreed upon by the payer and the beneficial owner in the absence of such
relationship, the provisions of this Article shall apply only to the last
mentioned amount. In such case, the excess part of the payments shall remain
taxable according to the laws of each Contracting State, due regard being had
to the other provisions of this Agreement.
Article 13
Royalties
1. Royalties arising in a
Contracting State and paid to a resident of the other Contracting State may be
taxed in that other Contracting State.
2. However, such royalties
may also be taxed in that Contracting State in which they arise and according
to the laws of that Contracting State, but if the recipient is the beneficial
owner of the royalties, the tax so charged shall not exceed 15 per cent of the
gross amount of the royalties.
3. The term
"royalties" as used in this Article means payments of any kind
received as a consideration for the use of, or the right to use, any copyright
of literary, artistic or scientific work, including cinematograph films, or
films or tapes used for radio or television broadcasting, any patent, trade
mark, design or model, plan, secret formula or process, or for the use of, or
the right to use, industrial, commercial or scientific equipment, or for information
concerning industrial, commercial or scientific experience.
4. The provisions of
paragraphs 1 and 2 shall not apply if the beneficial owner of the royalties,
being a resident of a Contracting State, carries on business in the other
Contracting State in which the royalties arise, through a permanent
establishment situated therein, or performs in that other Contracting State
independent personal services from a fixed base situated therein, and the right
or property in respect of which the royalties are paid is effectively connected
with such permanent establishment or fixed base. In such case, the provisions
of Article 7 or Article 16, as the case may be, shall apply.
5. Royalties shall be
deemed to arise in a Contracting State where the payer is that Contracting
State itself, a political sub-division, a local authority or a resident of that
Contracting State. However, where the person paying the royalties, whether he
is a resident of a Contracting State or not, has in that Contracting State a
permanent establishment or a fixed base in connection with which the liability
to pay the royalties was incurred, and such royalties are borne by such
permanent establishment or fixed base, then the royalties shall be deemed to
arise in the Contracting State in which the permanent establishment or fixed
base in situated,
6. Where by reason of
special relationship between the payer and the beneficial owner or between both
of them and some other person, the amount of royalties, having regard to the
use, right or information for which they are paid, exceeds the amount which
would have been agreed upon by the payer and beneficial owner in the absence of
such relationship, the provisions of this article shall apply only to the
last-mentioned amount. In such case, the excess part of the payments shall
remain taxable according to the laws of each Contracting State, due regard
being had to the other provisions of this Agreement.
Article 14
Technical Fees
1. Technical fees arising
in a Contracting State which are derived by a resident of the other Contracting
State may be taxed in that other Contracting State.
2. However, such technical
fees may also be taxed in the Contracting State in which they arise, and
according to the laws of that Contracting State; but if the recipient is the
beneficial owner of the technical fees, the tax so charged shall not exceed 15
per cent of the gross amount of the technical fees.
3. The term
"technical fees" as used in this Article means payments of any kind
to any person, other than to an employee of the person making the payments, in
consideration for any services of a technical, managerial or consultancy
nature.
4. The provisions of
paragraphs 1 and 2 shall not apply if the beneficial owner of the technical
fees, being a resident of a Contracting State carries on business in the other
Contracting State in which the technical fees arise through a permanent
establishment situated therein, or performs in that other Contracting State
independent personal services from a fixed base situated therein and the
technical fees are effectively connected with such permanent establishment or
fixed base. In such case, the provisions of Article 7 or Article 16, as the
case may be, shall apply.
5. Technical fees shall be
deemed to arise in a Contracting State when the payer is that Contracting State
itself, a political sub-division, a local authority, or a resident of that
Contracting State. However where the person paying the technical fees, whether
he is a resident of that Contracting State or not, has in that Contracting
State a permanent establishment or a fixed base in connection with which the
liability to pay the technical fees was incurred, and such technical fees are
borne by such permanent establishment or fixed base then the technical fees
shall be deemed to arise in the Contracting State in which the permanent
establishment or fixed base is situated.
6. Where, by reason of a
special relationship between the payer and the beneficial owner or between both
of them and some other person, the amount of the technical fees paid exceeds,
for whatever reason, the amount which would have been agreed upon by the payer
and the beneficial owner in the absence of such relationship, the provisions of
the Article shall apply only to the last-mentioned amount. In such case, the
excess part of the payments shall remain taxable according to the laws of each
Contracting State, due regard being had to the other provisions of this
Agreement.
Article 15
Capital Gains
1. Gains derived by a
resident of a Contracting State from the alienation of immovable property
referred to in Article 6, and situated in the other Contracting State may be
taxed in that other Contracting State.
2. Gains from the
alienation of movable property forming part of the business property of a permanent
establishment which an enterprise of a Contracting State has in the other
Contracting State or of movable property pertaining to a fixed base available
to a resident of a Contracting State in the other Contracting State for the
purpose of performing independent personal services, including such gains form
the alienation of such a permanent establishment (alone or together with the
whole enterprise) or of such fixed base, may be taxed in that other Contracting
State.
3. Gains from the
alienation of ships or aircraft operated in international traffic or movable
property pertaining to the operation of such ships or aircraft or both shall be
taxable only in the Contracting State of which the alienator is a resident.
4. Gains from the
alienation of shares of the capital stock of a company the property of which
consists directly or indirectly principally of immovable property situated in a
Contracting State may be taxed in that Contracting State.
5. Gains from the
alienation of shares other than those mentioned in paragraph 4 in a company
which is a resident of a Contracting State may be taxed in that Contracting
State.
6. Gains from the
alienation of any property other than that mentioned in paragraphs 1, 2, 3, 4
and 5 shall be taxable only in the Contracting State of which the alienator is
a resident.
Article 16
Independent Personal
Services
1. Income derived by a
resident of a Contracting State in respect of professional services or other
independent activities of a similar character shall be taxable only in that
Contracting State except in the following circumstances when such income may
also be taxed in the other Contracting State:
(a) if he has a fixed base regularly available to him in the
other Contracting State for the purpose of performing his activities; in that
case, only so much of the income as is attributable to that fixed base may be
taxed in that other Contracting State; or
(b) if his stay in the other Contracting State is for a period or
periods amounting to or exceeding in the aggregate 183 days in the relevant
fiscal year; in that case, only so much of the income as is derived from his
activities performed in that other State may be taxed in that other State.
2. The term
"professional services" include independent scientific, literary,
artistic, educational or teaching activities, as well as the independent
activities of physicians, surgeons, lawyers, engineers, architects, dentists
and accountants.
Article 17
Dependent Personal
Services
1. Subject to the
provisions of Articles 18, 19, 20, 21, 22 and 23, salaries, wages and other
similar remuneration derived by a resident of a Contracting State in respect of
an employment shall be taxable only in that Contracting State unless the
employment is exercised in the other Contracting State. If the employment is so
exercised, such remuneration as is derived therefrom may be taxed in that other
Contracting State.
2. Notwithstanding the
provisions of paragraph 1, remuneration derived by a resident of a Contracting
State in respect of an employment exercised in the other Contracting State
shall be taxable only in the first mentioned Contracting State if:
(a) the recipient is present in the other Contracting State for a
period or periods not exceeding in the aggregate 183 days in the relevant
fiscal year, and
(b) the remuneration is paid by, or on behalf of an employer who
is not a resident of the other Contracting State, and
(c) the remuneration is not borne by a permanent establishment or
a fixed base which the employer has in the other Contracting State.
3. Notwithstanding the
preceding provisions of this Article, remuneration derived in respect of an
employment exercised aboard a ship or aircraft operated in international
traffic by an enterprise of a Contracting State shall be taxable only in that
Contracting State. In case of aircraft, the term "enterprise of a
Contracting State" shall have the same meaning as defined in paragraph 5
of Article 8 of this Agreement.
Article 18
Directors' Fees
Directors' fees and other
similar payments derived by a resident of a Contracting Sate in his capacity as
a member of the board of directors of a company which is a resident of the
other Contracting State may be taxed in that other Contracting State.
Article 19
Income Earned by
Entertainers and Sportspersons
1. Notwithstanding the
provisions of Articles 16 and 17, income derived by a resident of a Contracting
State as an entertainer such as a theatre, motion picture, radio or television
artiste, or a musician or as a sportsperson, from his personal activities as
such exercised in the other Contracting State, may be taxed in that other
Contracting State.
2. Where income in respect
of personal activities exercised by an entertainer or a sportsperson in his
capacity as such accrues not to the entertainer or sportsperson himself but to
another person, that income may, notwithstanding the provisions of Article 7,
16 and 17, be taxed in the Contracting State in which the activities of the
entertainer or sportsperson are exercised.
3. Notwithstanding the
provisions of paragraph 1, income derived by an entertainer or a sportsperson
who is a resident of a Contracting State from his personal activities as such
exercised in the other Contracting State, shall be taxable only in the
first-mentioned Contracting State, if the activities in the other Contracting
State are supported wholly or substantially from the public funds of the
first-mentioned Contracting State, including any of its political sub-divisions
or local authorities.
4. Notwithstanding the
provisions of paragraph 2 and Articles 7, 16 and 17, where income in respect of
personal activities exercised by an entertainer or a sportsperson in his
capacity as such in a Contracting State accrues not to the entertainer or
sportsperson himself but to another person, that income shall be taxable only
in the other Contracting State, if that other person is supported wholly or
substantially from the public funds of that other Contracting State, including
any of its political sub-divisions or local authorities.
Article 20
Remuneration and Pensions
in Respect of Government Service
1. (a) Remuneration,
other than a pension, paid by a Contracting State or a political sub-division
or a local authority thereof to an individual in respect of services rendered
to that Contracting State or 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 Contracting State who:
(i) is a national of that other Contracting State; or
(ii) did not
become a resident of that other Contracting State solely for the purpose of
rendering the services.
2. (a) Any pension
paid by, or out of funds created by a Contracting State or a political
sub-division or a local authority thereof to an individual in respect of
services rendered to that Contracting State or sub-division or authority shall
be taxable only in that Contracting State.
(b) However, such pension shall be taxable only in the other
Contracting State if the individual is a resident of, and a national of that
other Contracting State.
3. The provisions of
Articles 17, 18 and 21 shall apply to remuneration and pensions in respect of
services rendered in connection with a business carried on by a Contracting
State or a political sub-division or a local authority thereof.
Article 21
Non-Government Pensions
and Annuities
1. Any pension, other than
a pension referred to in Article 20, or any annuity derived by a resident of a
Contracting State from sources within the other Contracting State may be taxed
only in the first mentioned Contracting State.
2. The term
"pension" means a periodic payment made in consideration of past
services or by way of compensation for injuries received in the course of
performance of services.
3. The term
"annuity" means a stated sum payable periodically at stated times
during life or during a specified or ascertainable period of time, under an
obligation to make the payments in return for adequate and full consideration
in money or money's worth.
Article 22
Payments Received by
Students and Apprentices
1. A student or business
apprentice who is or was a resident of a Contracting State immediately before
visiting the other Contracting State and who is present in that other
Contracting State solely for the purpose of his education or training, shall be
exempt from tax in that other Contracting State on:
(a) payments made to him by persons residing outside that other
Contracting State for the purposes of his maintenance, education or training;
or
(b) remuneration from employment in that other Contracting State,
in an amount not exceeding US dollars 2,000 or its equivalent amount during any
fiscal year, provided that such employment is directly related to his studies
or is undertaken for the purpose of his maintenance.
2. The benefits of this
Article shall extend only for such period of time as may be reasonable or
customarily required to complete the education or training undertaken, but in
no event shall any individual have the benefits of this Article for more than
three consecutive years from the date of his first arrival in that other
Contracting State.
Article 23
Payments Received by
Professors, Teachers and Research Scholars
1. A professor or teacher
who is or was a resident of a Contracting State immediately before visiting the
other Contracting State for the purpose of teaching or engaging in research, or
both, at a university, college, school or other approved institution in that
other Contracting State shall be exempt from tax in that other Contracting
State on any remuneration for such teaching or research for a period not
exceeding two years from the date of his arrival in that other Contracting
State.
2. This Article shall not
apply to income from research if such research is undertaken primarily for the
private benefit of a specific person or persons.
3. For the purposes of
this Article and Article 22, an individual shall be deemed to be a resident of
a Contracting State if he is resident in that Contracting State in the fiscal
year, in which he visits the other Contracting State or in the immediately
preceding fiscal year.
4. For the purposes of
paragraph 1, "approved institution" means an institution which has
been approved in this regard by the competent authority of the concerned
Contracting State.
Article 24
Other Income
1. Subject to the
provisions of paragraph 2 of this Article, items of income of a resident of a
Contracting State, wherever arising, which are not expressly dealt with in the
foregoing Articles of this Agreement, shall be taxable only in that Contracting
State.
2. The provisions of
paragraph 1 of this Article shall not apply to income, other than income from
immovable property as defined in paragraph 2 of Article 6, if the recipient of
such income being a resident of a Contracting State, carries on business in the
other Contracting State through a permanent establishment situated therein, or
performs in that other Contracting State independent personal services from a
fixed base situated therein, and the right of property in respect of which the
income is paid is effectively connected with such permanent establishment or
fixed base. In such case, the provisions of Article 7 or 16, as the case may
be, shall apply.
3. Notwithstanding the
provisions of paragraphs 1 and 2, items of income of a resident of a
Contracting State not dealt with in the foregoing Articles of this Agreement
and arising in the other Contracting State may also be taxed in that other
State.
Article 25
Avoidance of Double
Taxation
1. The laws in force in
either of the Contracting States will continue to govern the taxation of income
in the respective Contracting States except where provisions to the contrary
are made in this Agreement.
2. Where a resident of
India derives income which, in accordance with the provisions of this
Agreement, may be taxed in the Sultanate of Oman, India shall allow as a
deduction from the tax on the income of that resident an amount equal to the
income-tax paid in the Sultanate of Oman, whether directly or by deduction.
Such deduction shall not, however, exceed that part of the income-tax (as
computed before the deduction is given) which is attributable to the income which
may be taxed in the Sultanate of Oman.
3. Where a resident of the
Sultanate of Oman derives income which, in accordance with the provisions of
this Agreement, may be taxed in India, the Sultanate of Oman shall allow as a
deduction from the tax on the income of the resident an amount equal to the
income-tax paid in India, whether directly or by deduction. Such deduction
shall not, however, exceed that part of the income-tax (as computed before the
deduction is given) which is attributable to the income which may be taxed in
India.
4. The tax payable in a
Contracting State mentioned in paragraph 2 and paragraph 3 of this Article
shall be deemed to include the tax which would have been payable but for the
tax incentives granted under the laws of the Contracting State and which are
designed to promote economic development.
5. Income which, in
accordance with the provisions of this Agreement, is not to be subjected to tax
in a Contracting State, may be taken into account for calculating the rate of
tax to be imposed in that Contracting State.
Article 26
Mutual Agreement Procedure
1. Where a person of a
Contracting State considers that the actions of one or both of the Contracting
States result or will result for him in taxation not in accordance with this
Agreement, he may, notwithstanding the remedies provided by the national laws
of those States, present his case to the competent authority of the Contracting
State of which he is a resident. This case must be presented within three years
of the date of receipt of notice of the action which gives rise to taxation not
in accordance with the Agreement.
2. The competent authority
shall endeavour, if the objection appears to it to be justified and if it is
not itself able to arrive at an appropriate solution, to resolve the case by
mutual agreement with the competent authority of the other Contracting State,
with a view to the avoidance of taxation not in accordance with the Agreement.
Any agreement reached shall be implemented notwithstanding any time limits in
the domestic laws of the Contracting State.
3. The competent
authorities of the Contracting States shall endeavour to resolve by mutual
agreement any difficulties or doubts arising as to the interpretation or
application of this Agreement. They may also consult together for the
elimination of double taxation in cases not provided for in this Agreement.
4. The competent
authorities of the Contracting States may communicate with each other directly
for the purpose of reaching an agreement in the sense of the preceding
paragraphs. When it seems advisable in order to reach agreement to have an oral
exchange of opinions, such exchange may take place through a Commission
consisting of representatives of the competent authorities of the Contracting
States.
Article 27
Exchange of Information
1. The competent
authorities of the Contracting States shall exchange such information
(including documents) as is necessary for carrying out the provisions of this
Agreement or of the domestic laws of the Contracting States concerning taxes
covered by this Agreement, insofar as the taxation, thereunder is not contrary
to this Agreement, in particular for the prevention of fraud or evasion of such
taxes. Any information received by a Contracting State shall be treated as secret
in the same manner as information obtained under the domestic laws of that
Contracting State. However, if the information is originally regarded as secret
in the transmitting State, it shall be disclosed only to persons or authorities
(including courts and administrative bodies) involved in the assessment or
collection of, the enforcement or prosecution in respect of, or the
determination of objections and appeals in relation to the taxes which are the
subject of this Agreement. Such persons or authorities shall use the
information only for such purposes but may disclose the information in public
court proceedings or in judicial decisions. The competent authorities shall,
through consultation, develop appropriate conditions, methods and techniques concerning
the matters in respect of which such exchange of information shall be made,
including, where appropriate, exchange of information regarding tax avoidance.
2. The exchange of
information or documents shall be either on a routine basis or on request with
reference to particular cases or both. The competent authorities of the
Contracting States shall agree from time to time on the list of the information
or documents which shall be furnished on a routine basis.
3. In no case shall the
provisions of paragraph 1 be construed so as to impose on a Contracting State
the obligation:
(a) to carry out administrative measures at variance with the
laws or administrative practice of that or of the other Contracting State;
(b) to supply information or documents which are not obtainable
under the laws or in the normal course of the administration of that or of the
other Contracting State;
(c) to supply information or documents which would disclose any
trade, business, industrial, commercial or professional secret or trade process
or information, the disclosure of which would be contrary to public policy.
Article 28
Diplomatic and Consular
Activities
Nothing in this Agreement
shall affect the fiscal privileges of diplomatic or consular officials under
the general rules of international law or under the provisions of special
agreements.
Article 29
Entry into Force
1. Each of the Contracting
State shall notify to the other the completion of the procedures required by
its law for the bringing into force of this Agreement. This Agreement shall
enter into force on the date of the latter of these notifications and shall
thereupon have effect:
(a) in India, in respect of income arising in any fiscal year
beginning on or after the first day of April next following the calendar year
in which the latter of the notifications is given;
(b) in the Sultanate of Oman, in respect of income arising on or
after the first day of January in the calendar year immediately following that
in which the latter of the notifications is given.
2. The Agreement between
the Government of India and the Government of Sultanate of Oman for the
Avoidance of Double Taxation of Income derived from International Transport
signed at New Delhi on 23rd October, 1984 and the exemptions granted under that
Agreement will cease to have effect on the date on which this Agreement comes
into force.
Article 30
Termination
This Agreement shall
remain in force indefinitely but either of the Contracting States may, on or
before the thirtieth day of June in any calender year beginning after the
expiration of a period of five years from the date of its entry into force,
give the other Contracting State through diplomatic channels, written notice of
termination and, in such event, this Agreement shall cease to have effect:
(a) in India, in respect of income arising in any fiscal year
beginning on or after the 1st day of April next following the calendar year in
which the notice is given;
(b) in the Sultanate of Oman, in respect of income arising on or
after the 1st day of January next in the calendar year immediately following
that 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 2nd day of April, one thousand nine hundred and ninety-seven in the
Arabic, Hindi and English languages, all the texts being equally authentic. In
case of divergent interpretation of the texts, the English text shall prevail.
At the signing of the
Agreement between the Republic of India and the Sultanate of Oman for the
Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect
to Taxes on Income, both sides have agreed upon the following provision which
shall be an integral part of the Agreement:
"If an air transport
enterprise of India with respect to profits referred to in Article 8 is charged
to any tax of the kind referred to in Article 2 in one of the shareholding
States of Gulf Air, the Contracting States shall reopen negotiations without
delay with a view to arriving at an appropriate solution in respect of the
application of Article 8 of the Agreement."
IN WITNESS WHEREOF the
undersigned, being duly authorised thereto, have signed this Protocol.
DONE in duplicate at New
Delhi, this 2nd day of April, one thousand nine hundred ninety-seven in the
Arabic, Hindi and English languages, all the texts being equally authentic. In
case of divergent interpretation of the texts, the English text shall prevail.