(i) Convention between the
Government of the Republic of India and the Government of the Socialist
Republic of Romania for the avoidance of double taxation and the prevention of
fiscal evasion with respect to taxes on income
Notification No. 7754
[F.No. 501/4/76/FTD], dated 8 February, 1988
G.S.R. 80(E).--Whereas the
annexed Convention between the Government of the Republic of India and the
Government of the Socialist Republic of Romania for the avoidance of double
taxation and the prevention of fiscal evasion with respect to taxes on income
has come into force on the 14th November, 1987 on the exchange of the
Instruments of Ratification by both the Contracting States, as required by
paragraph 1 of Article 31 of the said Convention.
Now, therefore, in
exercise of the powers conferred by section 90 of the Income-tax Act, 1961 (43
of 1961) and section 24A of the Companies (Profits) Surtax Act, 1964 (7 of
1964), the Central Government hereby directs that all the provisions of the
said Convention shall be given effect to in the Union of India.
The Government of Republic
of India and the Government of the Socialist Republic of Romania designing to
conclude a Convention for the avoidance of double taxation and the prevention
of fiscal evasion with respect to taxes on income and to promote and strengthen
the economic relations between the two countries on the basis of equality in
rights and reciprocal advantage.
Have agreed as follows:
ARTICLE 1: Personal
scope.--This Convention shall apply to persons who are residents of one or both
the Contracting States.
ARTICLE 2: Taxes
covered.--1. The taxes to which this Convention shall apply are:
(a) In the case of India:
(1) income-tax and any surcharge thereon; and
(2) sur tax;
(hereinafter referred to
as "Income-tax").
(b) In the case of Romania:
(1) the tax on incomes derived by individuals and corporate
bodies;
(2) the tax on the profits of joint
companies constituted with the participation of some Romanian economic
organisations and some foreign partners; and
(3) the tax
on income realised from agricultural activities;
(hereinafter referred to
as "Romanian 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.
3. The competent
authorities of the Contracting States shall notify to each other any
significant changes which are made in their respective taxation laws which are
the subject of this Convention and furnish copies of relevant enactments and
regulations.
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 zones in which India has sovereign rights, other rights and
jurisdiction, according to the Indian law and in accordance with international
law;
(b) the term "Romania" used in a geographical sense,
means the territory of the Socialist Republic of Romania including the
territorial sea and the Continental Shelf as well as any other area beyond the
territorial waters of Romania where Romania exercise sovereign rights, in
accordance with the international law and with its own law concerning the
exploration and exploitation of the natural, biological and mineral resources
existing in the sea waters, seabed and sub-soil of these waters;
(c) the terms "a Contracting State" and "the other
Contracting State" mean India or Romania as the context requires;
(d) the term "tax" means Indian tax or Romanian tax, as
the context requires, but shall not include any amount which is payable in
respect of any default or omission in relation to the taxes to which this
Convention applies or which represents a penalty imposed relating to those
taxes;
(e) the term "person" shall have the meaning assigned
to it in the taxation laws in force in the respective Contracting States;
(f) the term "company" means any body corporate,
including a joint company which is incorporated under the Romanian law or any
entity which is treated as a company under the taxation laws of the respective
Contracting States;
(g) the terms "enterprise of a Contracting State" and
"enterprise of the other Contracting State" mean, respectively, an
enterprise carried on by a resident of a Contracting State and an enterprise
carried on by a resident of the other Contracting State;
(h) the term "competent authority" means in the case of
India the Central Government in the Ministry of Finance (Department of Revenue)
or their authorised representative, and in the case of Romania the Ministry of
Finance or its authorised representative;
(i) the term "national" means:
in the case of India, any
individual possessing the nationality of India and any legal person,
partnership or association deriving its status from the laws in force in India;
in the case of Romania,
any individual possessing the citizenship of Romania and any legal person,
partnership or association deriving its status from the laws in force in
Romania;
(j) the term "a political sub-division" means a
political sub-division in India;
(k) the term "an administrative territorial unit" means
an administrative territorial unit in Romania;
(l) 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. In the application of
the provisions of this Convention by one of the Contracting States, any term
not defined herein shall, unless the context otherwise requires, have the
meaning which it has under the laws in force in that State relating to the
taxes which are the subject of this Convention.
ARTICLE 4: Fiscal
domicile.--1. For the purposes of this
Convention, the term "resident of a Contracting State" means any
person who is a resident of that State in accordance with the taxation laws of
that State.
2. Where by reason of the
provision of paragraph 1, an individual is a resident of both Contracting
States, then his residential status for the purposes of this Convention shall
be determined in accordance with the following rules:--
(a) He shall be deemed to be a resident of the Contracting State
in which he has a permanent home available to him. If he has a permanent home
available to him in both Contracting States, he shall be deemed to be a
resident of the Contracting State with which his personal and economic
relations are closer (hereinafter referred to as his "centre of vital
interests");
(b) If the Contracting States in which he has his centre of vital
interests cannot be determined or if he does not have a permanent home
available to him in either Contracting State, he shall be deemed to be a
resident of the Contracting State in which he has an habitual abode;
(c) If he has an habitual abode in both Contracting States or in
neither of them, he shall be deemed to be a resident of the Contracting State
of which he is a national;
(d) If he is a national of both Contracting States or of neither
of them, the competent authorities of the Contracting States 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 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,
and oil or gas well, a quarry or any other place of extraction of natural
resources;
(g) a
warehouse in relation to a person providing storage facilities for others;
(h) a farm, plantation or other place where
agriculture, forestry, plantation or related activities are carried on;
(i) a premise used as a sales outlet or for receiving or
soliciting orders;
(j) an
installation or structure used for the exploration of natural resources;
(k) a building site or construction,
installation or assembly project or supervisory activities in connection
therewith, where such site, project or supervisory activity (together with
other such sites, projects or activities, if any) continues for a period of
more than six months, or where such project or supervisory activity, being
incidental to the sale of machinery or equipment, continues for a period not
exceeding six months and the charges payable for the project or supervisory
activity exceed 10 per cent of the sale price of the machinery or equipment.
3. Notwithstanding the
preceding provisions of this Article the term "permanent
establishment" shall be deemed not to include:
(a) the use of facilities solely for the purpose of storage or
display of goods or merchandise belonging to the enterprise;
(b) the maintenance of a stock of goods or merchandise belonging
to the enterprise solely for the purpose of storage or display;
(c) the maintenance of a stock of goods or merchandise belonging
to the enterprise solely for the purpose of processing by another enterprise;
(d) the maintenance of a fixed place of business solely for the
purpose of purchasing goods or merchandise or for collecting information for
the enterprise;
(e) the maintenance of a fixed place of business solely for the
purpose of advertising, for the supply of information, for scientific research,
or for similar activities which have a preparatory or auxiliary character for
the enterprise;
(f) the selling of goods or merchandise belonging to the
enterprise displayed in an occasional temporary fair or exhibition in the
process of closing down of such fair or exhibition;
(g) project or supervisory activity, being incidental to sale of
machinery or equipment, carried on by an enterprise other than the seller of
machinery or equipment and not continuing for a period exceeding six months.
However, the provisions of
sub-paragraphs (a) to (g) shall not be applicable where the enterprise
maintains any other fixed place of business in the other Contracting State for
any purposes other than the purposes specified in the said sub-paragraphs.
4. Notwithstanding the
provisions of paragraphs 1 and 2 where a person--other than 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 carried 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 carried 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 from immovable property may be taxed only in the
Contracting State in which such property is situated.
2. The term
"immovable property" shall be defined in accordance with the law and
usage of the Contacting State in which the property is situated. The term shall
in any case include property accessory to immovable property, livestock and
equipment used in agriculture and forestry, rights to which the provisions of
general law respecting landed property apply, usufruct of immovable property
and rights to variable or fixed payments as consideration for the working of,
or the right to work, mineral deposits, oil-wells, quarries and other places of
extraction of natural resources. Ships and aircraft shall not be regarded as
immovable property.
3. The provisions of
paragraph 1 shall apply to income derived from the direct use, letting, or use
in any other form of immovable property.
4. The provisions of
paragraphs 1 and 3 shall also apply to the income from immovable property of an
enterprise and to income from immovable property used for the performance of
independent personal services.
ARTICLE 7: Business
profits.--1. The profits of an enterprise of a Contracting State shall be
taxable only in that State unless the enterprise carries on business in the
other Contracting State through a permanent establishment situated therein. If
the enterprise carries on business as aforesaid, the profits of the enterprise
may be taxed in the other State but only so much of them as it 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 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 the taxation laws of that
State. However, no such deduction shall be allowed in respect of amounts, if
any, paid (otherwise than towards reimbursement of actual expenses) by the
permanent establishment to the head office of the enterprise or any of its
other offices, by way of royalties, fees or other similar payments in return
for the use of patents, know-how or other
rights or by way of commission or other charges, for specific services
performed or, for management, or except in the case of a banking enterprise, by
way of interest on moneys lent to the permanent establishment. Likewise, no
account shall be taken, in the determination of the profits of a permanent
establishment, for amounts charged (otherwise than towards reimbursement of
actual expenses), by the permanent establishment to the head office of the
enterprise or any of its other offices, by way of royalties, fees or other
similar payments in return for the use of patents, know-how or other rights, or
by way of commission or other charges for specific services performed or for
management, or except in the case of a
banking enterprise, by way of interest on money lent to the head office of the
enterprise or any of its other offices.
4. No profits shall be
attributed to a permanent establishment by reason of the mere purchase by that
permanent establishment of goods or merchandise for the enterprise.
5. For the purposes of the
preceding paragraphs, the profits to be attributed to the permanent
establishment shall be determined by the same method year by year unless there
is good and sufficient reason to the contrary.
6. Where profits include
items of income which are dealt with separately in other Articles of this
Convention, then the provisions of those Articles shall not be affected by the
provisions of this Article.
ARTICLE 8: Air
transport.--1. Profits derived by an enterprise of a Contracting State from the
operation of aircraft in international traffic shall be taxable only in that
State.
2. The provisions of
paragraph 1 shall also apply to profits from the participation in a pool, a
joint business or an international operating agency.
3. For the purposes of
this Article, interest on funds connected with the operation of aircraft in
international traffic shall be regarded as profits derived from the operation
of such aircraft, and the provisions of Article 12 shall not apply in relation
to such interest.
4. The term
"operation of aircraft" shall mean business of transportation by air
of passengers, mail, livestock or goods carried on by the owners or lessees or
charterers of aircraft, including the sale of tickets for such transportation
on behalf of other enterprises, the incidental lease of aircraft and any other
activity directly connected with such transportation.
ARTICLE 9: Shipping.--1.
Profits derived by an enterprise of a Contracting State from the operation of
ships in international traffic shall be taxable only in that State.
2. Notwithstanding the
provisions of paragraph 1, such profits may also be taxed in the other
Contracting State, if the shipping activities connected with the operation of
ships in international traffic are carried on in that other State, but the tax
so charged shall not be exceed 2.50 per cent of the gross amount payable in
respect of operation of ships in that other State.
3. The provisions of
paragraphs 1 and 2 shall also apply to profits from the participation in a
pool, a joint business or an international operating agency engaged in the
operation of ships.
4. For the purposes of
this Article, the gorss amount payable in respect of operation of ships in a
Contracting State shall mean the aggregate of the following amounts, namely :
(a) the gross amount payable on account of carriage of
passengers, livestock, mail or goods shipped at a port or ports in that
Contracting State;
(b) interest arising in that Contracting State of funds connected
with the operation of ships in international traffic; and
(c) the gross amount payable in that State on account of the use,
maintenance or rental of containers (including trailers and related equipment
of the transport of containers) in connection with the transport of goods of
merchandise in international traffic.
The provisions of Article
12 shall not apply in relation to interest referred to in (b) above.
5. In determining the
income of an enterprise of a Contracting
State for the purposes of taxation in the other Contracting State, no
deduction shall be allowed in respect of any loss or depreciation allowance
admissible to that enterprise for any earlier "previous year" or
"calendar year", as the case may be.
ARTICLE 10: Associated
enterprises.--Where--
(a) an enterprise of a Contracting State participates directly or
indirectly in the management, control of 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 only profits which would, but for those
conditions, have accrued to one of the enterprises, but by reason of those
conditions, have not to 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 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 charge 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) 20 per cent of the gross amount of the dividends in all other
cases.
This paragraph shall not
affect the taxation of the company in respect of the profits out of which the
dividends are paid.
3. The term
"dividends" as used in this Article means income from shares or other
rights, not being debt-claims, participating in profits, as well as income
from other corporate rights which is subjected
to the same taxation treatment as income from shares by the laws of the State
of which the company making the distribution is a resident. In this context,
the profits distributed by Romanian Joint Companies to the capital subscribers
are assimilated to dividends.
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 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 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 of partly or 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, an administrative territorial unit, or a local authority of the other Contracting State; or
(ii) the
Central Bank of the other Contracting State;
(b) interest arising in a Contracting State shall be exempt from
tax in that State if it is beneficially owned by a resident of the other
Contracting State and is derived in connection with a loan or credit extended
or endorsed by :
(i) in the case of Socialist Republic of
Romania, BANCA ROMANA DE COMERT EXTERIOR
to the extent such interest is attributable to financing of exports and
import only;
(ii) in the case of India, the Export-Import
Bank of India (Exim Bank) to the extent
such interest is arrtributable to financing of exports and imports only;
(iii) any
institution of a Contracting State in charge of public financing of external
trade;
(iv) any other person provided that the loan
or credit is approved by the Government of the first-mentioned Contracting
State;
4. The term
"interest" as used in this Article means income from debt-claims of
every kind, whether or not secured by mortgage and whether or not carrying a
right to participate in the debtor's profits and in particular, income from
Government securities and income from bonds or debentures, including premiums
and prizes attaching to such securities, bonds or debentures. Penalty charges
for late payment shall not be regarded as interest for the purpose of this
Article.
5. The provisions of
paragraphs 1 and 2 shall not apply if the beneficial owner of the interest,
being a resident of a Contracting State, carries on business in the other
Contracting State in which the interest arises, through a permanent
establishment situated therein, or performs in that other State independent
personal services from a fixed base situated therein, and the debt-claim in
respect of which the interest is paid is effectively connected with such
permanent establishment or fixed base. In such case, the provisions of Article
7 or Article 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, an
administrative territorial unit, a local authority or a resident of that State.
Where, however, the person paying the interest, whether he is a resident of a
Contracting State or not, has in a Contracting State a permanent establishment
or a fixed base in connection with which the indebtedness on which the interest
is paid was incurred, and such interest is borne by such permanent
establishment or fixed base, then such interest shall be deemed to arise in the
Contracting State in which the permanent establishment or fixed base is
situated.
7. Where, by reason of a
special relationship between the payer and the beneficial owner or between both
of them and some other person, the amount of the interest, having regard to the
debt-claim for which it is paid, exceeds the amount which would have been
agreed upon by the payer and the beneficial owner in the absence of such
relationship, the provisions of this Article shall apply to the last mentioned
amount. In such case, the excess part of the payments shall remain taxable
according to the laws of each Contracting State, due regard being had to other
provisions of this Convention.
ARTICLE 13:
Commission.--1. Commission 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
commission may be taxed in the Contracting State in which it arises and
according to the law of that State, but the tax so charged shall not exceed 5
per cent of the amount of the commission. The competent authorities of the
Contracting State shall by mutual agreement settle the mode of application of
this limitation.
3. The term
"commission" as used in this Article means a payment made to a
broker, a general commission agent or to any other person assimilated to such a
broker or agent by the taxation laws of the Contracting State in which such
payment arises.
4. The provisions of
paragraphs 1 and 2 shall not apply if the recipient of the commission, being
the other Contracting State in which the commission arises a permanent
establishment with which the activity giving rise to the commission is
effectively connected. In such a case, the provisions of Article 7 shall apply.
5. Commission shall be
deemed to arise in a Contracting State
when the payer is that State itself, a political sub-division, an
administrative territorial unit, a local authority or a resident of that State.
Where however the person paying the commission, whether he is a resident of a
Contracting State or not, has in a Contracting State a permanent establishment
in connection with which the activities for which the payment is made was
incurred, and such commission is borne by such permanent establishment, when
such commission shall be deemed to arise in the Contracting State in which the
permanent establishment is situated.
6. Where by reason of a
special relationship between the payer and the recipient or between both of
them and some other person, the amount of the commission, having regard to the
transaction 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 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: 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 owner of the royalties, or fees for technical services, the tax so
charged shall not exceed 22.5 per cent of the gross amount of the royalties or
fees for technical services.
3. The term
"royalties" as used in this Article means payments of any kind
received as a consideration for the use of, or the right to use, any copyright
of literary, artistic or scientific work, including cinematograph films or
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 then payments to an employee or 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 16, 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, an administrative
territorial unit, 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 Convention.
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 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 arising from a
capital asset being ships or aircraft operated in international traffic or
movable property pertaining to the operation of such ships or aircraft by an
enterprise of a Contracting State shall be taxable only in the Contracting
State in which the place of effective management of the enterprise is situated.
4. Gains from the
alienation of shares of the capital stock of a company the property of which
consists directly or indirectly principally of immovable property situated in a
Contracting State may be taxed in that State.
5. Gains from the
alienation of any property other than that referred to in paragraphs 1, 2, 3,
and 4 shall be taxable only in the Contracting State of which the alienator is
a resident.
ARTICLE 16: Independent
personal services.--1. Income derived by an individual who is a resident of a
Contracting State from the performance or 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 is attribute to that fixed base may be taxed in
that other State; or
(b) if his stay in the other Contracting State is for a period or
periods amounting to or exceeding in the aggregate 183 days in the relevant
"previous year" or "calendar year", 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 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 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
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 "previous
year" or "calendar year", as the case may be; and
(b) the remuneration is paid by, or on behalf or, an employer who
is not resident of the other State; and
(c) the remuneration is not borne by a permanent establishment or
a fixed base which the employer has in the other State.
3. Notwithstanding the
preceding provisions of this Article, remuneration derived in respect of an
employment exercised aboard a ship or aircraft operated in international
traffic by an enterprise of a Contracting State may be taxed in that State.
ARTICLE 18: Directors'
fees and remuneration of top level managerial officials.--1. Directors fees and
other similar payments derived by a resident of a Contracting State in his
capacity as a member of the board of directors of a company which is 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 19: Artistes and
athletes.--1. Notwithstanding the provision 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 an
athlete, from his personal activities as such exercised in the other
Contracting State may be taxed in that other State.
2.Where income in respect
of personal activities exercised by an entertainer or athlete in his capacity
as such accrues not the entertainer or athlete himself but to another person,
that income may, notwithstanding the provisions of Articles 7, 16 and 17, be
taxed in the Contracting State in which the activities of the entertainer or
athlete are exercised.
3. Notwithstanding the
provisions of paragraph 1, income derived by an entertainer or an athlete who
is a resident of a Contracting State, from his personal activities as such
exercised in the other Contracting State, shall be taxable only in the
first-mentioned Contracting State, if the activities in the other Contracting
State are supported wholly or substantially from the public funds of the
first-mentioned Contracting State, including any of its political
sub-divisions, administrative territorial units 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 an athlete in his capacity
as such in a Contracting State accrues not to the entertainer or athlete
himself but to another person that income shall be taxable only in the other
Contracting State, if that other person is supported wholly or substantially
from the public funds of that other State, including any of its political
sub-divisions, administrative territorial units or local authorities.
ARTICLE 20: Remuneration
and pensions in respect of government service.--1. (a) Remuneration, other than
a person, paid by a Contracting State, a political sub-division, an
administrative territorial unit or a local authority thereof to an individual
in respect of services rendered to that State, sub-division, unit 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, a political sub-division, an
administrative territorial unit or a local authority thereof to an individual
in respect of services rendered to that State, sub-division, unit 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, 17, 18 and 19 shall apply to remuneration and pensions in respect of
services rendered in connection with a business carried on by a Contracting
State, a political sub-division, an administrative territorial unit or a local
authority thereof.
ARTICLE 21: Non-government
pension 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 of by way of compensation for injuries received in the course of
performance of service.
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: Students,
apprentices and persons sent for specialisation.--1. An individual who is or
was resident of one of the other Contracting State and who is temporarily
present in the other Contracting State solely :
(a) as a student at a recognised university, college or school in
that other State; or
(b) as a
business apprentice; or
(c) as the recipient of a grant, allowance
or award for the primary purpose of study from a religious, charitable,
scientific or educational organisation;
shall be exempt from tax
in that other State for a period of six years from his arrival in that other
Contracting State in respect of :
(i) the remittance from abroad for the purposes of his
maintenance, education, study or training;
(ii) the
grant, allowance or award; and
(iii) any
remuneration from abroad.
2. The same exemption
shall apply to income derived by the above-mentioned individual from an
employment which he exercises in the other Contracting State in order to
supplement his means for maintenance, education, training and other expenses
for specialisation, for a period limited to two years from his arrival in that
other State.
3. A resident of one of
the Contracting States present in the other Contracting State under
arrangements with the exercises in the other Contracting State in order to
supplement thereof solely for the purpose of training, study or orientation
shall be exempt from tax for a period not exceeding two years from his arrival
in that other Contracting State in respect of remuneration received by him on
account of such training or study.
4. For the purposes of paragraph
1, the term "recognised university, college or school" means a
university, college or school which has been recognised in this regard by the
competent authority of the concerned Contracting State.
ARTICLE 23: 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 22, an individual shall be deemed to be a resident of
a Contracting State if he is resident in that Contracting State in the
"previous year" or the "calendar year", as the case may be,
in which he visits the other Contracting State or in the immediately preceding
"previous year" or the "calendar 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. Items of income of a
resident of a Contracting State, wherever, arising, which are not expressly
dealt with in the foregoing Articles of this Convention, shall be taxable only
in that Contracting State.
2. The provisions of
paragraph 1 shall not apply to income, other than income from immovable
property as defined in paragraph 2 of Article 6, if the recipient of such
income, being a resident of a Contracting State, carries on business in the
other Contracting State through a permanent establishment situated therein, or
performs in that other State independent personal services from a fixed base
situated therein, and the right or property in respect of which the income is
paid is effectively connected with such permanent establishment or fixed base,
in such case, the provisions of Article 7 or Article 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 Convention,
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
shall continue to govern the taxation of income in the respective Contracting
States except where provisions to the contrary are made in the Convention.
2. The amount of Ramanian
tax payable, under the laws of Romania and in accordance with the provisions of
this Convention, whether directly or by deduction, by a resident of India, in
respect of profits or income arising in Romania, which has been subjected to
tax both in India and in Romania, shall be allowed as a credit against Indian
tax payable in respect of such profits or income provided that such credit
shall not exceed Indian tax (as computed before allowing any such credit) which
is appropriate to the profits or income arising in Romania. Further, where such
resident is a company by which surtax is payable in India, the credit aforesaid
shall be allowed in the first instance against income-tax payable by the
company in India and as to the balance, if any, against surtax payable by it in
India.
3. The amount of Indian
tax payable under the laws of India and in accordance with the provisions of
this Convention, whether directly or by deduction, by a resident of Romania, in
respect of profits or income arising in India, which has been subjected to tax
both in India and in Romania, shall be allowed as a credit against Romanian tax payable in respect of such profits or
income provided that such credit shall not exceed Romanian tax (as computed before
allowing any such credit) which is appropriate to the profits or income arising
in India.
For the purposes of this
paragraph, profits paid by the Romania State enterprises to the State budget
shall be deemed to be Romanian tax.
4. For the purposes of the
credit referred to in paragraph 3, the term "Indian tax payable"
shall be deemed to include any amount which would have been payable as Indian
tax for any assessment year but for an exemption or reduction of tax granted
for that year or any part thereof by the special incentive measures under the
provisions of the Income-tax Act, 1961 (43 of 1961), which are designed to
promote economic development, or which may be introduced hereafter in
modification of, or in addition to, the existing provisions for promoing
economic development in India.
5. Where under this
Convention a resident of a Contracting State is exempt from tax in that
Contracting State in respect of income derived from the other Contracting
State, then the first-mentioned Contracting State may, in calculating tax on
the remaining income of that person, apply the rate of tax which would have
been applicable if the income exempted from tax in accordance with this
Convention had not been so exempted.
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 residents 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 Convention.
ARTICLE 27: Mutual
agreement procedure.--1. Where a
resident of a Contracting State considers that the actions of one or both of
the Contracting States result or will result for him in taxation not in
accordance with this Convention, he may, notwithstanding the remedies provided
by the national laws of those States, present his case to the competent
authority of the Contracting State of which he is a resident. This case must be
presented within three years of the date of receipt of notice of the action
which gives rise to taxation not in accordance with the Convention.
2. The competent authority
shall endeavour, if the objection appears to it to be justified and if it is
not itself able to arrive at an appropriate solution, to resolve the case by
mutual agreement with the competent authority of the other Contracting State,
with a view to avoidance of taxation 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.
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 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, the enforcement of prosecution in
respect of, or the determination of appeals in relation to, the taxes which are
the subject of the Convention. Such persons or authorities shall use the information
only for such purposes but may disclose the information in public court
proceedings or in judicial decisions. The competent authorities shall, through
consultation, develop appropriate conditions, methods and techniques concerning
the matters in respect of which such exchange of information shall be made,
including, where appropriate, exchange of information regarding tax avoidance.
2. The exchange of
information or documents shall be either on 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 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 Convention relates,
in the cases where the taxes are definitely due according to the laws of the
State making the request.
2. In the case of a
request for enforcement of collection, tax claims of either of the Contracting
States which have been finally determined will be accepted for enforcement by
the other Contracting State to which the request is made and collected in that
State in accordance with the laws applicable to the enforcement and collection
of its taxes.
3. In the case of Indian
tax, the request will be sent by the Central Board of Direct Taxes, Department
of Revenue to the Ministry of Finance of the Socialist Republic of Romania and
will be accompanied by such certificate as is required by the laws of India to
establish that the taxes have been finally determined and are due from the
taxpayer.
4. In the case of Romanian
tax, the request will be sent by the Ministry of Finance of the Socialist
Republic of Romania 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 Romania to establish that the taxes have been finally determined
and are due from the taxpayer.
5. Where the tax claim has
not become final by reason of its being subject to appeal or any other
proceeding, a Contracting State may, in order to protect its revenues, request
the other Contracting State to take such interim measures in this behalf as are
lawful under the laws of that other Contracting State.
6. A request for
assistance in collection of taxes due from a taxpayer shall be made only if
adequate assets of that taxpayer are not available for recovering the taxes
from him in the Contracting State making the request.
7. The Contracting State
in which tax is recovered in pursuance of paragraphs 1, 2 and 5 of this Article
shall immediately thereafter remit the amount so recovered to the Contracting
State which made the request but it shall be entitled to reimbursement of any
reasonable costs incurred in the course of rendering assistance in the recovery
of such tax.
ARTICLE 30: Diplomatic and
consular activities.--Nothing in this Convention shall affect the fiscal
privileges and 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 Convention shall be ratified and the instruments of
ratification shall be exchanged at Bucharest.
2. This Convention shall
enter into force upon the exchange of instruments of ratification and its
provision shall thereupon have effect:
(a) In India, in respect of income arising
in any previous year beginning on or after the first day of April next
following the calendar year in which the instruments of ratification are
exchanged;
(b) in Romania, in respect of income arising
in any calendar year beginning on or after the first day of January next
following the calendar year in which the instruments of ratification are
exchanged.
3. The existing Agreement
for the avoidance of double taxation of income of enterprises operating aircraft
and ships in international traffic dated the 25th September, 1968 shall cease
to have effect upon the entry into force of this Convention.
ARTICLE 32:
Termination.--This Convention shall remain in force indefinitely but either of
the Contracting States may, on or before the thirtieth day of June in any
calendar year beginning after the expiration of a period of five years from the
date of its entry into force, give the other Contracting State through
diplomatic channels, written notice of termination and, in such event, this
Convention shall cease to have effect:
(a) in India, in respect of income arising
in any previous year beginning on or after the first day of April next
following the calendar year in which the notice is given;
(b) in Romania, in respect of income arising
any calendar year beginning on or after the 1st day of January next following
the calendar year in which the notice of termination is given.
In witness whereof the
undersigned, being duly authorised thereto, have signed the present Convention.
Done in duplicate at New
Delhi this 10th day of March one thousand nine hundred and eighty-seven in the
Hindi, Romanian and English languages, all the texts being equally authentic.
In case of divergence amongst the three texts, the English text shall be the operative one.
Sd/- Brahm Dutt Sd/-
Dimitrie Ancuta
For the Government of For
the Government of the
the Republic of India Socialist
Republic of Romania.
(ii) Agreement between the
Government of India and the Government of Socialist Republic of Romania for the
avoidance of double taxation of income of enterprises operating aircraft and
ships in international traffic
Notification
No. 134 [F. No. 11(16)/67-TPL], dated 20 December, 1968
G.S.R. 2203.--Whereas the annexed Agreement between the Government of India and the Government of Socialist Republic of Romania for the avoidance of double taxation of income of enterprises operating aircraft and ships in international traffic 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, as required by paragraph (1) of Article VIII 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.
Whereas the Government of
India and the Government of Socialist Republic of Romania desire to conclude an
Agreement for the avoidance of double taxation of income of enterprises
operating aircraft and ships in international traffic;
Now, therefore, the said
two Governments do hereby agree as follows:
ARTICLE 1: (1) The taxes
to which this Agreement shall apply are :
(a) in the case of India:
(i) the income-tax including any surcharge
on income-tax imposed under the Income-tax Act, 1961 (43 of 1961) as amended;
and
(ii) the surtax imposed under the Companies
(Profits) Surtax Act, 1964 (7 of 1964) as amended (hereinafter referred to as
"Indian tax");
(b) in the case of Romania:
the income-tax imposed
under the Income-tax Decree, 1954 (153 of April 28, 1954) as amended
(hereinafter referred to as "Romanian tax").
(2) This Agreement shall also apply to any
identical or substantially similar taxes which are imposed after the date of
the signature of this Agreement in addition to, or in place of, the existing
taxes.
ARTICLE II: (1) In this
Agreement, unless the context otherwise requires--
(a) the term "India" shall have
the meaning assigned to it in Article 1 of the Constitution of India;
(b) the term "Romania" shall have
the meaning assigned to it in the Constitution of the Socialist Republic of
Romania :
(c) the terms "a Contracting
State" and the "other Contracting State" mean India or Romania,
as the context requires;
(d) the term
tax means "Indian tax" or "Romanian tax", as the context requires:
(e) the terms "Indian enterprise"
and "Romanian 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
Romania, and the terms "enterprise of one of the Contracting States"
and "enterprise of the other Contracting State" mean an Indian
enterprise or a Romanian enterprise, as the context requires;
(f) the terms "resident of India"
and "resident of Romania", mean respectively, a person who is
resident in India for the purposes of Indian tax and not resident in Romania
for the purpose of Romanian tax and a person who is resident in Romania for the
purposes, of Romanian tax and not resident in India for the purposes of Indian
tax;
(g) the term "person" includes
individuals, companies, societies and all other entities which are treated as
taxable units under the tax laws in force in either Contracting State;
(h) the term "competent authority"
means in the case of India, the Central Government in the Ministry of Finance
(Department of Revenue and Insurance); and in the case of the Socialist
Republic of Romania, the Ministry of Finance.
(2) In the application of the provisions of this
Agreement by one of the Contracting States, 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 to which his
Agreement applies.
ARTICLE III: (1) Income
derived from the operation of aircraft in international traffic by an
enterprise of one of the Contracting States shall be exempt from tax in the
other Contracting State.
(2) Paragraph (1) shall likewise apply in
respect of participations in pools of any kind by enterprises engaged in air
transport.
ARTICLE IV: (1) Income
derived by a resident of Romania through shipping operations carried on in
India may be taxed in Romania, as well as in India; but the tax so charged in
India shall be reduced by an amount equal to fifty per cent thereof, and the reduced amount of Indian
tax payable on the profits shall be allowed as a credit against Romanian tax
charged in respect of such income. The credit aforesaid shall not exceed the
Romanian tax charged in respect of such income.
(2) Income derived by a resident of India
through shipping operations carried on in Romania may be taxed in India, as
well as in Romania but the tax so charged in Romania shall be reduced by an
amount equal to fifty per cent thereof, and the reduced amount of Romanian tax
payable shall be allowed as a credit against Indian tax charged in respect of
such income. However, 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. The credit aforesaid shall
not exceed the Indian tax charged in respect of such income.
(3) In the determination of income arising in a
Contracting State to an enterprise of the other Contracting State from shipping
operations (that is to say, carriage of passengers; livestock, mail or goods
from any port of ports in the first-mentioned Contracting State), there shall be
allowed as deductions depreciation in respect of the ship or ships and all
operating expenses, wherever incurred and also executive and general
administrative expenses so incurred in so far as these are reasonably
attributable to the shipping operations carried on in the first-mentioned
Contracting State. However, the amount of the deductions to be so allowed
shall, in no case be less than five-sixths of the gross earnings of the ship
from the carriage of passengers, livestock, mail or goods from any port or
ports in the Contracting State.
(4) Paragraphs (1) and (2) shall not apply to
profits arising as a result of coastal traffic.
ARTICLE V: 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 provisions to the contrary is made in this Agreement.
ARTICLE VI: (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.
(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.
(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.
(4) The competent authorities of the Contracting
States may communicate with each other directly for the purpose of reaching an
agreement in the sense of the preceding paragraphs. When it seems advisable in
order to reach agreement to have an oral exchange of opinions, such exchange
may take place through representatives of the competent authorities of the
Contracting States.
ARTICLE VII: (1) The
competent authorities of the Contracting States shall exchange such information
as is necessary for the carrying out of this Agreement and of the domestic laws
of the Contracting States concerning taxes covered by this Agreement in so far
as the taxation thereunder is in accordance; with this Agreement. Any
information so exchanged shall be treated as secret and shall not be disclosed
to any persons or authorities other than those concerned with the assessment,
including judicial determination, or collection of the taxes which are the
subject of this Agreement.
(2) In no case shall the provisions of paragraph
(1) be construed so as to impose on one of the Contracting States the
obligation :
(a) to carry out administrative measures at variance with the
laws or the administrative practice of that or of the other Contracting State;
(b) to supply particulars which are not obtainable under the laws
or in the normal course of the administration of that or of the other
Contracting State;
(c) to supply information which would disclose any trade,
business, industrial, commercial or professional secret or trade process, or
information, the disclosure of which would be contrary to public policy (order
public).
ARTICLE VIII: (1) The
present Agreement shall be approved in accordance with the laws in force in
each of the two Contracting States. It shall enter into force on the date of
exchange of diplomatic notes certifying that the proper procedure was fulfilled
in each State. The exchange of notes shall take place at New Delhi.
(2) The present Agreement shall thereupon be
applicable :
(a) in India, in respect of income arising in India on or after
the 1st day of January, 1966;
(b) in Romania in respect of income arising in Romania on or
after the 1st day of January, 1966.
ARTICLE IX: This Agreement
shall continue in effect indefinitely but either of the Contracting States may,
on or before the 30th day of June in any calendar year after the year 1972,
give notice of termination to the other Contracting State and in such event
this Agreement shall cease to be effective :
(a) in India, in respect of income arising
in India on or after the 1st day of January in the calendar year next following
that year in which the notice is given;
(b) in Romania, in respect of income arising
in Romania on or after the 1st day of January in the calendar year next
following that year in which the notice is given.
In witness whereof the
undersigned, duly authorised thereto, have signed the present Agreement.
Done in duplicate at New
Delhi, this 25th day of September, one thousand nine hundred and sixty-eight in
the English language.
For the Government of
India For
the Government of Socialist Republic of Romania
(Sd/-) (Sd/-)
Krishna Chandra Pant Aurel
Ardeleanu
Minister for Ambassador
Revenue and Expenditure Extraordinary
and Plenipotentiary.
Double Taxation Avoidance
Agreement between the Government of the Republic of India and the Government of
the Russian Federation for the avoidance of double taxation with respect to
taxes on income
Whereas the annexed
Agreement between the Government of the Russian Federation and the Government
of the Republic of India for the avoidance of double taxation with regard to
taxes on income has entered into force on the eleventh day of April, 1998,
thirty days after the receipt of later of notifications by both the Contracting
States to each other of the completion of the procedures required under their
respective laws for entry into force of the said Agreement in accordance with
Article 28 of the said agreement;
Now, therefore, in
exercise of the powers conferred by section 90 of the Income-tax Act, 1961 (43
of 1961), the Central Government hereby directs that all the provisions of the
said Agreement shall be given effect to in the Union of India.
Text of Double Taxation
Avoidance Agreement between the Government of the Republic of India and the
Government of the Russian Federation for the avoidance of double taxation with
respect to taxes on income
The Government of the
Republic of India and the Government of the Russian Federation, desiring to
conclude an Agreement for the avoidance of double taxation with respect to
taxes on income and with a view to promoting economic cooperation between the
two countries, have agreed as follows:
Article 1
Personal Scope
This Agreement shall apply
to persons who are residents of one or both of the Contracting States.
Article 2
Taxes Covered
1. This Agreement shall
apply to taxes on income imposed in each Contracting State.
2. The taxes to which this
Agreement shall apply are in particular:
(a) in the case of the Russian Federation:
(i) taxes on profits (income) of enterprises and organisations;
and
(ii) the
income-tax on individuals (hereinafter referred to as "Russian Tax");
(b) in the case of India:
income-tax, including any
surcharge thereon
(hereinafter referred to as "Indian Tax").
3. This Agreement shall
apply also to any identical or substantially similar taxes on income 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 2.
The competent authorities of the Contracting States shall notify each other of
any substantial changes which are made in their respective taxation laws.
Article 3
General Definitions
1. In this Agreement, unless the context otherwise requires:
(a) the term "the Russian Federation (Russia)" means
the territory of the Russian Federation and includes its internal waters,
territorial sea and air space above them as well as exclusive economic zone and
continental shelf within which the Russian Federation has and exercises
sovereign rights and jurisdiction in accordance with its national legislation
and international law including the 1982 United Nations Convention on the Law
of the Sea, and where its tax legislation is applicable;
(b) the term "India" means the territory of India and
includes its internal waters, territorial sea and air space above them as well
as exclusive economic zone and continental shelf within which the Republic of
India has and exercises sovereign rights and jurisdiction in accordance with
its national legislation and international law including the 1982 United
Nations Convention on the Law of the Sea, and where its tax legislation is applicable;
(c) the terms "a Contracting State", and "the
other Contracting State" mean the Russian Federation or India, as the
context requires;
(d) the term "person" includes an individual, an
enterprise, a company and any other entity which is treated as a taxable unit
under the taxation laws in force in a Contracting State;
(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 a Contracting State;
(f) the terms "enterprise of a Contracting State" and
"enterprise of the other Contracting State" mean respectively an
enterprise carried on by a resident of a Contracting State and an enterprise
carried on by a resident of the other Contracting State;
(g) the term "national" means:
(i) in the case of the Russian Federation,
any individual possessing the citizenship of the Russian Federation, and in the
case of India, any individual possessing the nationality of India;
(ii) any person, partnership and association
deriving its status as such from the laws in force in a Contracting State;
(h) the term "international traffic" means any
transportation 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 "tax" means Russian tax or Indian tax, as
the context requires, but shall not include any penalty or interest imposed
under the laws of either Contracting State in relation to the taxes which are
the subject of this Agreement;
(j) the term "fiscal year" means:
(i) in the case of the Russian Federation, the financial year,
beginning on the 1st of January;
(ii) in the
case of India, the financial year beginning on the 1st of April;
(k) the term "competent authority" means:
(i) in the case of the Russian Federation
-- the Ministry of Finance or its authorised representative;
(ii) in the case of India -- the Central
Government in the Ministry of Finance (Department of Revenue) or their
authorised representative.
2. As regards the
application of this Agreement by a Contracting State, any term not defined
therein shall, unless the context otherwise requires, have the meaning which it
has under the laws of that State primarily 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 registration, place of management or any
other similar criterion.
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 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 Contracting State, he shall be deemed to be a resident of the State in
which he has an habitual abode;
(c) if he has an habitual abode in both 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) an installation or structure used for the exploration or
exploitation of natural resources;
(h) a farm, plantation or other place where
agriculture, forestry, plantation or related activities are carried on;
(i) a
premises used as a sales outlet or for receiving or soliciting orders;
(j) a building site or construction,
installation or assembly project or supervisory activities in connection
therewith, but only if such site, project or activities continue for a period
of more than 12 months.
However, the competent
authorities of the Contracting States may, in particular cases, agree by mutual
agreement to consider the supervisory activities in connection with a building
site or construction, installation or assembly project as not constituting a
permanent establishment also in the cases in which the duration of works on a
building site or construction, installation or assembly project exceeds 12
months.
3. Notwithstanding the
preceding provisions of this Article, the term "permanent establishment"
shall be deemed not to include:
(a) the use of facilities solely for the purpose of storage or
display of goods or merchandise belonging to the enterprise;
(b) the maintenance of a stock of goods or merchandise belonging
to the enterprise solely for the purpose of storage or display;
(c) the maintenance of a stock of goods or merchandise belonging
to the enterprise solely for the purpose of processing by another enterprise;
(d) the maintenance of a fixed place of business solely for the
purpose of purchasing goods or merchandise or of collecting information, for
the enterprise;
(e) the maintenance of a fixed place of business solely for the
purpose of advertising, for the supply of information, for scientific research
or for similar activities which have a preparatory or an auxiliary character;
(f) the maintenance of a fixed place of business solely for any
combination of activities mentioned in sub-paragraphs (a) to (e).
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 Contrating 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
(a) he has, and habitually exercises in that State, an authority
to conclude contracts or carry on any business activities on behalf of the
enterprise, unless his activities are limited to those specified in paragraph 3
of this Article; or
(b) he habitually secures orders for the sale of goods or
merchandise in that State exclusively or almost exclusively on behalf of the
enterprise or other enterprises controlled by it or which have a controlling
interest in it; or
(c) 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
(d) in acting as described in (b) above he manufactures or
processes in that State for the enterprise, goods or merchandise belonging to
the enterprise.
5. An enterprise of a
Contracting State shall not be deemed to have a permanent establishment in the
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 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 also
taxed in that other State.
2. The term
"immovable property" shall have the meaning which it has under the
laws of the Contracting State in which the property in question is situated.
Ships, boats, aircraft and road vehicles shall not be regarded as immovable
property.
The term "immovable
property" shall in any case include property accessory to immovable
property, livestock and equipment used in agriculture and forestry, right to
which the provisions of 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.
3. The provisions of
paragraph 1 shall apply to income derived from the direct use, letting, or use
in any other form of immovable property.
4. The provisions of
paragraphs 1 and 3 shall also apply to the income from immovable property of an
enterprise and to income from immovable property used for the performance of
independent personal services.
Article 7
Business Profits
1. The profits derived in
a Contracting State by an enterprise of the other Contracting State may be
taxed in the first-mentioned State only if it is derived through a permanent
establishment situated therein and only so much of them as is attributable to
the activity of such permanent establishment.
2. Subject to the
provisions of paragraph 3, where an enterprise of a Contracting State carries in 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 enterprises of
which it is a permanent establishment.
3. In determining the
profits of a permanent establishment, there shall be allowed as deductions
expenses which are incurred for the purposes of the permanent establishment,
including executive and general administrative expenses, so incurred, whether
in the State in which the permanent establishment is situated or elsewhere in
accordance with the provisions of and subject to the limitations of the
taxation laws of that State.
4. No profits shall be
attributed to a permanent establishment by reason of the mere purchase by that
permanent establishment of goods or merchandise for the enterprise.
5. For the purposes of the
preceding paragraphs of this Article, the profits to be attributed for 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
Income from International
Transport
1. Income derived by an
enterprise of a Contracting State from the operation or rental of ships or
aircraft in international traffic and the rental of containers and related
equipment which is incidental to the operation of ships or aircraft in
international traffic shall be taxable only in that Contracting State.
2. The provisions of
paragraph 1 shall also apply to income from the participation in a pool, a
joint business or an international operating agency.
3. For the purposes of
this Article, interest on funds connected directly with the operation of ships
or aircraft in international traffic shall be regarded as income derived from
the operation of such ships or aircraft; and the provisions of Article II shall
not apply in relation to such interest, provided that such funds are incidental
to that operation.
4. Notwithstanding the
preceding provisions of this Article, income derived by an enterprise of a
Contracting State from the operation of ships between the ports of the other
Contracting State and the ports of third countries may be taxed in that other
Contracting State, but the tax imposed in that other State shall be reduced by
an amount equal to two third thereof.
Article 9
Associated Enterprises
Where:
(a) an enterprise of a Contracting State
participates directly or indirectly in the management, control or capital of an
enterprise of the other Contacting State, or
(b) the same persons participate directly or
indirectly in the management, control or capital of an enterprise of a
Contracting State and an enterprise of the other Contracting State,
and in either case
conditions are made or imposed between the two enterprises in their commercial
or financial relations which differ from those which would be made between
independent enterprises, then any profits which would, but for those
conditions, have accrued to one of the enterprises, but, by reason of those
conditions, have not so accrued, may be included in the profits of that
enterprise and taxed accordingly.
Article 10
Dividends
1. Dividends paid by a
company which is a resident of a Contracting State to a resident of the other
Contracting State may be taxed in that other State.
2. However, such dividends
may also be taxed in the Contracting State of which the company paying the
dividends is a resident and according to the laws of that State, but if the
beneficial owner of the dividends is subject to tax thereon in the other State,
the tax so charged shall not exceed 10 per cent of the gross amount of the
dividends.
This paragraph shall not
affect the taxation of the company in respect of the profits out of which the
dividends are paid.
3. The term
"dividends" as used in this Article means income from shares, or
other rights, not being debt-claims, participating in profits, as well as
income from other corporate rights which is subjected to the same taxation
treatment as income from shares by the laws of the State of which the company
making the distribution is a resident.
4. The provisions of
paragraph 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, or performs independent personal services
from a fixed base situated therein and the dividends are attributable to such
permanent establishment or fixed base. In such case the provisions of Article 7
or 14 of this Agreement, as the case may be, shall apply.
5. Where a company which
is a resident of a Contracting State derives profits or income from the other
Contracting State, that other State may not impose any tax on the dividends
paid by the company except in so far as such dividends are paid to a resident
of that other State or so far as the holding in respect of which the dividends
are paid is effectively connected with a permanent establishment or a fixed
base situated in that other State, nor subject the company's undistributed
profits to a tax on the company 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
Interest
1. Interest arising in a
Contracting State and paid to a resident of the other Contracting State may be
taxed in that other State.
2. However, such interest
may also be taxed in the Contracting State in which it arises and according to
the laws of that State, but if the recipient is the beneficial owner of the
interest the tax so charged shall not exceed 10 per cent of the gorss amount of
the interest.
3. Notwithstanding the
provisions of paragraph 2, interest arising in a Contracting State shall be
exempt from tax in that State provided it is derived and beneficially owned by:
(i) the Government, a political subdivision or a local authority
of the other Contracting State; or
(ii) the
Central Bank of the other Contracting State; or
(iii) the other governmental agencies or
financial institutions as may be specified and agreed to in an exchange of
notes between the competent authorities of the Contracting States.
4. The term
"interest" as used in this Article means income from debt-claims of
every kind, and in particular income from government securities, 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 or performs independent personal services from a fixed base
situated therein and the debt-claim in respect of which the interest is paid is
effectively connected with such permanent establishment or fixed base. In such
case the provisions of Article 7 or 14 of this Agreement, as the case may be,
shall apply.
6. Interest shall be
deemed to arise in a Contracting State when the payer is the Contracting State
itself, a political subdivision, a local authority thereof or a resident of
that Contracting State. Where, however, the person paying the interest, whether
he is a resident of a Contracting State or not, has in a Contracting State a
permanent establishment or a fixed base in connection with which the
indebtedness on which the interest is paid was incurred, and such interest is
borne by such permanent establishment or a 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 of interest or
between both of them and some other person, the amount of the interest, having
regard to the debt-claim for which it is paid, exceeds the amount which would
have been agreed upon by the payer and the beneficial owner in the absence of
such relationship, the provisions of this Article shall apply only to the
last-mentioned amount. In such case the excess part of the payments shall
remain taxable according to the laws of each Contracting State, due regard being
had to the other provisions of this Agreement.
Article 12
Royalties and Fees for
Technical Services
1. Royalties and fees for
technical services arising in a Contracting State and paid to a resident of the
other Contracting State may be taxed in 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 fees for technical services.
3. The term
"royalties" as used in this Article 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 recordings on any means of reproduction
for use in connection with radio or television broadcasting, any patent,
trademark, design or mode, plan, know-how, computer software programme, secret
formula or process, or for information concerning industrial, commercial or
scientific experience; and
(b) payments of any kind received as consideration for the use
of, or the right to use, any industrial, commercial, or scientific equipment.
4. For the purposes of
this Article, "fees for technical services" means payments of any
kind in consideration for the rendering of any managerial, technical or
consultancy services including the provision of services by technical or other
personnel but does not include payments for services mentioned in Articles 14
and 15 of this 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 political subdivision, a local authority or a
resident of that State. Where, however, the person paying the royalties or fees
for technical services, whether he is a resident of a Contracting State or not,
has in a Contracting State a permanent establishment or a fixed base in
connection with which the liability to pay the royalties or fees for technical
services was incurred, and such royalties or fees for technical services are
borne by such permanent establishment or fixed base, then such royalties or
fees for technical services shall be deemed to arise in the State in which the
permanent establishment or fixed base is situated.
7. Where, by reason of a
special relationship between the payer and the beneficial owner or between both
of them an some other person, the amount of royalties or fees for technical
services paid exceeds the amount which would have been paid in the absence of
such relationship, the provisions of this Article shall apply only to the
last-mentioned amount. In such case, the excess part of the payments shall
remain taxable according to the laws of each Contracting State, due regard
being had to the other provisions of this Agreement.
Article 13
Capital Gains
1. Gains derived by a
resident of a Contracting State from the alienation of immovable property
referred to in Article 6 and situated in the other Contracting State may also
be taxed in that other State.
2. Gains derived 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 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 derived from the
alienation of ships or aircraft operated in international traffic or movable
property pertaining to such operation shall be taxable only in the Contracting
Sate of which the alienator is a resident.
4. Gains from the
alienation of shares of 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 mentioned in paragraphs 1, 2, 3 and
4 shall be taxable only in the Contracting State of which the alienator is a
resident.
Article 14
Independent Personal
Services
1. Income derived by an
individual who is a resident of a Contracting State from the performance of
professional services or other activities of an independent character in
another Contracting State shall be taxable only in the first-mentioned State,
unless
(a) such services are performed or were performed in the other
Contracting State and the income is attributable to a fixed base which the
individual has or had regularly available to him in that other State;
or
(b) the recipient is present in the other Contracting State for a
period or periods exceeding in the aggregate 183 days in any 12-month period.
2. The term
"professional services" includes especially independent scientific,
literary, artistic, educational or teaching activities as well as the
independent activities of physicians, surgeons, dentists, engineers, architects,
lawyers and accountants.
Article 15
Dependent Personal
Services
1. Subject to the
provisions of Articles 16, 18 and 19 salaries, wages and other similar
remuneration derived by a resident of a Contracting State in respect of an
employment shall be taxable only in that State unless the employment is
exercised in the other Contracting State. If the employment is so exercised,
such remuneration as is derived there form 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 in the first-mentioned State if:
(a) the recipient is present in the other
Contracting State for a period or periods not exceeding in the aggregate 183
days in any 12-month period; 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 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 taxed in that State.
Article 16
Directors' Fees
Directors' fees and other
similar payments derived by a resident of a Contracting State in his capacity
as a member of the broad of directors of a company which is a resident of the
other Contracting State may be taxed in that other State.
Article 17
Income of Entertainers and
Sportsmen
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 sportsman, from his personal
activities as such exercised in the other Contracting State, may be taxed in
that other State.
2. Where income in respect
of personal activities exercised by an entertainer or a sportsman in his
capacity as such accrues not to the entertainer or a sportsman himself but to
another person, that income may, notwithstanding the provisions of Articles 7,
14 and 15, be taxed in the Contracting State in which the activities of the
entertainer or sportsman are exercised.
3. Notwithstanding the
provisions of paragraphs 1 and 2, income derived by an entertainer or a
sportsman 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 financed wholly or substantially by the first-mentioned Contracting
State, including any of its political subdivisions or local authorities.
Article 18
Income from Government
Service
1. (a) Remuneration,
other than a pension, paid by the Government of a Contracting State, a
political subdivision or local authority thereof to an individual in respect of
services rendered to that State, political subdivision or local authority
thereof shall be taxable only in that State.
(b) However,
such remuneration shall be taxable only in the other Contracting State if the
services are rendered in that State and the individual is a resident of that
State who:
(i) is a national of that State; or
(ii) did not become a resident of that State
solely for the purpose of rendering the services.
2. (a) Any pension
paid by, or out of funds created by a Contracting State or a political
subdivision or a local authority thereof to an individual in respect of
services rendered to that State or subdivision 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 19 shall apply to remuneration and pensions in respect of
services rendered in connection with a business carried on by a Contracting
State or a political subdivision or local authority thereof.
Article 19
Pensions and Annuities
1. Pensions, other than
those referred to in Article 18, and other similar remuneration paid in
consideration of past employment to a resident of a Contracting State and any
annuity paid to such a resident shall be taxable only in the State where such
income is derived.
2. The term
"annuity" means a stated sum payable periodically at stated times
during life or during a specified or ascertainable period of time under an
obligation to make the payment in return for adequate and full consideration in
money or money's worth.
Article 20
Students and trainees
1. A student or business
apprentice who, immediately before visiting a Contracting State, is or was a
resident of the other Contracting State and who is present in the
first-mentioned State solely for the purpose of his education or training shall
be exempted from tax in that first-mentioned State, provided that such payments
are received from outside that State.
2. An individual who
immediately before visiting a
Contracting State, is or was a resident of the other Contracting State and who
is present in the first-mentioned State for a period not exceeding two years
solely for the purpose of study, research or training as a recipient of a
grant, allowance or award from a scientific, educational religious or
charitable organisation or under a technical assistance programme entered into
by the Government of that other Contracting State shall, from the date of his
arrival in the first-mentioned State in connection with that visit, be exempt
from tax in the first-mentioned State.
Article 21
Professors, Teachers and
Researchers
1. A professor, teacher or
researcher who visits one of the Contracting States for the purpose of teaching
or engaging in research at a university or any other educational institution
approved by the Government in that State and who, immediately before that
visit, was a resident of the other Contracting State shall be exempted from tax
by the first-mentioned State in respect of any remuneration received for such
teaching or research for a period not exceeding two years from the date of his
first arrival in that State for such purpose.
2. This Article shall not
apply to income from research if such research is undertaken not in the public
interest but primarily for the benefit of a specific person or persons.
Article 22
Other Income
1. Items of income of a
resident of a Contracting State, wherever arising, which are not dealt with in
the foregoing Articles of this Agreement, shall be taxable only in that
Contracting State.
2. The provisions of
paragraph 1 shall not apply to income, other than income from immovable
property as defined in paragraph 2 of Article 6, if the beneficial owner of
such income, being a resident of a Contracting State, carries on business in
the other Contracting State through a permanent establishment situated therein,
or performs in that other State independent personal services from a fixed base
situated therein, and the right or property in respect of which the income is
paid is effectively connected with such permanent establishment or fixed base.
In such case, the provisions of Article 7 or Article 14, as the case may be,
shall apply.
3. Notwithstanding the
provisions of paragraphs 1 and 2 any income in the form of winnings or prizes
from lotteries, crossword puzzles, races including horse races, card games and
other games of any form or nature whatsoever may be taxed in the Contracting
State where they arise.
Article 23
Methods of Elimination of
Double Taxation
1. In the case of Russia
double taxation is eliminated as follows:
Where a resident of
Russian derives income which, in accordance with the provisions of this
Agreement, may be taxed in India, the amount of tax on that income payable in
India may be credited against the tax imposed on that resident of Russian. The
amount of credit, however, shall not exceed the amount of the tax on that
income computed in accordance with the taxation laws and regulations of Russia.
2. In the case of India
double taxation is eliminated as follows:
Where a resident of India
derives income which, in accordance with the provisions of this Agreement, may
be taxed in Russia, India shall allow as a deduction from the tax on the income
of that resident an amount equal to the income-tax paid in Russia whether
directly or by deduction at source. Such deduction in either case shall not,
however, exceed that part of the income tax (as computed before the deduction is
given) which is attributable to the income which may be taxed in Russia.
3. For the purposes of
this Article the term "tax" paid or payable as mentioned in
paragraphs 1 and 2 of this Article shall be deemed to include the tax which
would have been paid but for any exemption or reduction of tax granted under
incentive provisions contained in the law of a Contracting State designed to
promote economic development to the extent that such exemption or reduction is
granted for profits from industrial, construction, manufacturing or
agricultural activities provided that the activities have been carried out
within the Contracting State.
The competent authorities
may agree to extend the application of this provision also to other activities.
The provisions of this
paragraph shall apply only for the first ten years during which this Agreement
is effective. This period may be extended by a mutual agreement between the
competent authorities.
Article 24
Non-Discrimination
1. Nationals of a
Contracting State shall not be subjected in the other Contracting State to any
taxation or any requirement connected therewith, which is other or more
burdensome than the taxation and connected requirements to which nationals of
that other State in the same circumstances, in particular with respect to
residence, are or may be subjected. This provision shall, notwithstanding the
provisions of Article 1, also apply to persons who are not residents of one or
both of the Contracting States.
2. The taxation on a
permanent establishment which an enterprise of a Contracting State has in the
other Contracting State shall not be less favourably levied in that other State
than the taxation levied on enterprises of that other State carrying on the
same activities 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
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 9, paragraph 7 of Article 11, or paragraph 6 of Article
12, apply, interest, royalties and other disbursements paid by an enterprise of
a Contracting State to a resident of the other Contracting State shall, for the
purpose of determining the taxable profits of such enterprise, be deductible
under the same conditions as if they had been paid to a resident of the
first-mentioned State.
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 there with which is other or more
burdensome than the taxation and connected requirements to which other similar
enterprises of the first-mentioned State are or may be subjected in the same
circumstances and under the same conditions.
6. The provisions of this
Article shall apply to taxes which are the subject of this Agreement.
Article 25
Mutual Agreement Procedure
1. Where a person
considers that the actions of one or both of the Contracting States result or
will result for him in taxation not in accordance with the provisions of this
Agreement, he may, irrespective of the remedies provided by the domestic law of
those States, present this case to the competent authority of the Contracting
State of which he is a resident or a national. The case must be presented
within three years from the first notification of the action resulting in
taxation not in accordance with the provisions of the Agreement.
2. The competent authority
shall endeavour, if the objection appears to it to be justified and if it is
not itself able to arrive at a satisfactory solution, to resolve the case by
mutual agreement with the competent authority of the other Contracting State,
with a view to the avoidance of taxation which is not in accordance with the Agreement.
Any agreement reached shall be implemented notwithstanding any time limits
provided for in the domestic laws of the Contracting States.
3. The competent
authorities of the Contracting States shall endeavour to resolve by mutual
agreement any difficulties or doubts arising as to the interpretation or
application of the Agreement. They may also consult with each other 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.
Article 26
Exchange of Information
1. The competent
authorities of the Contracting States shall exchange such information (including
documents) as is necessary for carrying out the provisions of this Agreement or
of the domestic laws of the Contracting States concerning taxes covered by the
Agreement insofar as the taxation thereunder is not contrary to 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 confidential in
the same manner as information obtained under the domestic laws of that State
and shall be disclosed only to persons or authorities (including courts and
administrative bodies) involved in the assessment or collection of, the
enforcement or prosecution in respect of, or the determination of appeals in
relation to, the taxes covered by the 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.
2. The exchange of
information or documents shall be either on a routine basis or on request with
reference to particular cases or both. The competent authorities of the
Contracting States shall agree from time to time on the list of the information
or documents which shall be furnished on a routine basis.
3. In no case shall the
provisions of paragraph 1 be construed so as to impose on a Contracting State
the obligation:
(a) to carry out administrative measures at
variance with the laws and administrative practice of that or 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.
Article 27
Members of Diplomatic
Missions and Consular Posts
Nothing in this Agreement shall effect the fiscal privileges of members of diplomatic missions or consular posts or other persons for whom they are provided under the rules of international law or under the provisions of special agreements.
Article 28
Entry into Force
1. The Contracting States
shall notify each other in writing, through diplomatic channels, the completion
of the procedure required by the respective laws for the entry into force of
this Agreement.
2. This Agreement shall
enter into force thirty days after the receipt of the latter of the
notifications referred to in paragraph 1 of this Article.
3. The provisions of this
Agreement shall have effect:
(a) In Russia:
(i) in respect of taxes withheld at source,
to income arising on or after the first day of January in the calendar year
next following the year in which this Agreement enters into force;
(ii) in respect of other taxes on income, to
taxes arising for any fiscal year beginning on or after the first day of
January next following the calendar year in which this Agreement enters into
force.
(b) In India:
in respect of income
arising in any fiscal year beginning on or after the first day of April next
following the calendar year in which this Agreement enters into force.
4. The provisions of the
Agreement between the Government of the Union of the Soviet Socialist Republics
and the Government of the Republic of India for the avoidance of double
taxation of income signed in New Delhi on 20th of November, 1988 and
subsequently extended to the Russian Federation on the basis of mutual
agreement of the Contracting States shall cease to have effect on the date of
coming into force of this Agreement.
Article 29
Termination
1. This Agreement shall
remain in force unless terminated by a Contracting State. Either Contracting
State may terminate this Agreement, through diplomatic channels, by giving
notice of termination at least six months before the end of any calendar year
after the expiration of a period of five years from the date of its entry into
force.
2. This Agreement shall
cease to have effect:
(a) In Russia:
(i) in respect of taxes withheld at source,
to income arising on or after the first day of January in the calendar year
next following the year in which the notice of termination is given;
(ii) in respect of other taxes on income, to
taxes arising for any fiscal year beginning on or after the first day of
January in the calendar year next following the year in which the notice of
termination is given.
(b) 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 notice of termination is given.
Done at Moscow, this 25th
day of March 1997, in duplicate in the Russian, Hindi and English languages,
all three texts being equally authentic. In case of divergence between the
texts, the English Text shall be the operative one.
Protocol to the Agreement
between the Government of the Republic of India and the Government of the
Russian Federation for the avoidance of double taxation with respect to taxes
on income
The Government of the
Republic of India and the Government of the Russian Federation,
Having regard to the
Agreement between the Government of the Republic of India and the Government of
the Russian Federation for the avoidance of double taxation with respect to
taxes on income signed today (in this Protocol called "the Agreement"),
Have agreed as follows:
1. With reference to
paragraph 4 of Article 8 of the Agreement, the Contracting States agree that at
the end of three years from the date of entry into force of this Agreement, the
provisions of paragraphs 4 will cease to have effect.
2. With respect to clause
(j) of paragraph 2 of Article 5 of the Agreement, the competent authorities of
the Contracting States may invoke mutual agreement procedure referred to in the
aforesaid clause in particular cases of supervisory activities relating to a
project which satisfies the following conditions:
(a) the project has been approved by the Government of the
concerned Contracting State;
(b) it is a
turn-key project;
(c) the fees for supervisory activities do
not exceed 10 per cent of the total cost of the project, including the cost of
the machinery and the equipment mentioned in the contract;
(d) the total
cost of the project is not less than US $ 10 million;
(e) the duration of the project is for a
period extending from 12 months to five years or such longer period as has been
specified in the contract by the authority granting approval to the contract.
The said time will include the further period which may be extended by the
project approving authority in consultation with the competent authority of the
concerned Contracting State; and
(f) the enterprise is not involved in
avoidance or evasion of tax in the Contracting State in which supervisory
activities are being rendered.
Where aforementioned
conditions of sub-paragraphs (a) to (f) of this paragraph are fulfilled, the
enterprise shall be liable to pay in that Contracting State where the project
is situated, tax on its income by way of fees for supervisory activities at the
rate not exceeding 10 per cent of the gross amount of such fees as is
applicable under Article 12 in respect of royalties and fees for technical
services.
3. Notwithstanding the
provisions of paragraph 2 of Article 24 of this Agreement, either Contracting
State may tax the profits of a permanent establishment of an enterprise of the
other Contracting State at a rate which is higher than that applies to the
profits of a similar enterprise of the first-mentioned Contrating State. It is
also provided that in no case the differences in the two rates, referred to
above will exceed 12 percentage points.
The taxation of a
permanent establishment of an enterprises of one Contracting State in the other
Contracting State shall not, after the coming into force of this Agreement, be
less favourable than the tax treatment given by that other Contracting State to
a permanent establishment of an enterprise of any third country.
This Protocol shall form
an integral part of the Agreement.
Done at Moscow, this 25th
day of March 1997, in duplicate in the Russian, Hindi and English languages,
all three texts being equally authentic. In case of divergence between the
texts, the English text shall be the operative one.
Notification
No. G.S.R. 952(E), dated 30th December, 1992
Whereas the Agreements
mentioned in the Schedule hereto were entered into between the Government of
the Republic of India and the Government of the Union of the Soviet Socialist
Republics;
And whereas the Russian
Federation has expressed its desire to exercise the rights and fulfill the
obligations arising from the aforesaid Agreements concluded by the erstwhile
Union of the Soviet Socialist Republics and to remain a party to the aforesaid
Agreements;
And whereas the Government
of the Republic of India has accepted and confirmed that the aforesaid
Agreements shall remain in full force and effect between India and the Russian
Federation;
And whereas the Government
of the Republic of India and the Russian Federation have agreed that the
references in the aforesaid Agreements to "USSR", or "Union of
Soviet Socialist Republics", or "Soviet" or "Soviet
Union", wherever they occur, shall be construed as references to
"Russian Federation";
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
aforesaid Agreements between the Government of the Republic of India and the
Russian Federation shall be given effect to in the Union of India.
(i) Agreement between the Government of India and the Union of
Soviet Socialist Republics on Merchant Shipping signed at New Delhi on 19th
July, 1976, and notified vide Government of India, Ministry of Finance
(Department of Revenue) Notification Nos. 1588 [F. No. 501/1/73-FTD), GSR No.
943(E), dated 23rd December, 1976, and modified by Notification (F. No.
480/1/81-FTD), (GSR No. 419(E), dated 31st May, 1984)]; and
(ii) Agreement between the Government of the
Republic of India and the Government of the Union of Soviet Socialist Republics
for the avoidance of double taxation of income signed at New Delhi on 20th
November, 1988, and notified vide Government of India, Ministry of Finance
(Department of Revenue) (Foreign Tax Division) Notification No. 8442, (F. No.
503/1/88-FTD) (GSR No. 812(E), dated 4th September, 1989)].
(Sd.) T.S. Krishna Murthy,
Joint Secretary to the
Government of India.
Agreement between the
Government of India and the Union of Soviet Socialist Republic on merchant
shipping
Notification No. 1538 [F.
No. 501/73-FTD], dated 23 December, 1976
G.S.R. 943(E).--Whereas
the annexed Agreement between the Government of India and the Union of Soviet
Socialist Republics merchant shipping has been concluded:
And whereas Article 15 of
the said Agreement provides for the avoidance of double taxation in respect of
taxes on income derived from the carriage of cargo;
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 the provisions of the said article 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 Union of Soviet Socialist
Republics,
Being guided by the
provisions of the Treaty of Peace, Friendship and Co-operation between the
Republic of India and the Union of Soviet Socialist Republics, dated August 9,
1971.
Proceeding from the common
aspiration for all possible expansion
and deepening of mutually beneficial economic and trade co-operation between
the two countries as envisaged in the Agreement on the further development of
economic and trade co-operation, dated November 29, 1973 and
Desirous of developing
merchant shipping of the two countries,
Have agreed as follows:
ARTICLE I.-- For the
purposes of this Agreement:
1. The term
"vessel" of the Contracting Party shall mean any merchant vessel
plying under the national flag of the Party in accordance with its legislation.
This definition excludes warships and fishing vessels from the sphere of
application of this Agreement.
2. The term "member
of the crew" shall mean the master and any other person actually employed
for duties on board during a voyage in the working or service of a vessel and
included in the crew list.
ARTICLE II.--The
Contracting Parties shall grant all possible assistance to the vessels of the
two countries and shall refrain from taking any action which might cause harm
to the development of merchant shipping.
ARTICLE III.--The
Contracting Parties shall continue their efforts to maintain and develop
effective working relationships between the authorities responsible for
maritime affairs in their countries. In particular, the Contracting Parties
agree to carry on mutual consultations and reciprocal exchange of information
between these authorities and to encourage the development of contacts between
their respective shipping organizations or enterprises.
ARTICLE IV.--1. The
Contracting Parties agree to promote the participation of their vessels in the
carriage of all commercial cargoes between the ports of the two countries on
the principles of parity in cargo lifting and freight earnings and equality in
all other respects. In the calculations of parity, the shipments, to and from
all ports situated in the territory of the Contracting Parties shall be taken
into account.
2. In case the shipping
companies of one of the Contracting Parties are not able to undertake the
carriage in accordance with the provisions of paragraph 1, such carriage will
be offered to the vessels of the other Contracting Party. If the required
tonnage is not available with the other Contracting Party, the shipping
companies of the first-mentioned Contracting Party may use chartered vessels
from third countries for the carriage of the share of cargo of that Contracting
Party.
ARTICLE V.--The
Contracting Parties shall respect the right of each Party to utilise its
merchant fleet to the maximum in entering to its trades with third countries.
They further agreed that the national shipping companies of one Party will
co-operate with the national shipping companies of the other Party in the field
of the most efficient employment of their merchant vessels.
ARTICLE VI.--Each
Contracting Party shall grant to the other Contracting Party and its vessels
the most-favoured-nation treatment in all matters concerning merchant shipping
unless otherwise provided for in this Agreement.
ARTICLE VII.--1. Each
Contracting Party shall afford to vessels of the other Contracting Party the
same treatment as it affords to its own vessels engaged in international trade
in respect of free access to ports, use of ports for loading and unloading of
cargoes and for embarking and disembarking passengers, payment of tonnage and
other ports dues and taxes, use of services intended for navigation and normal
commercial operations.
2. The provisions of
paragraph 1 of this article:
(a) shall not apply to ports not open to the entry of foreign
vessels;
(b) shall not apply to the activities
reserved by each of the Contracting Parties for its organizations or
enterprises, including, in particular, national cabotage and ocean fishing;
(c) shall
not oblige a Contracting Party to extend to vessels of the other
Contracting Party exemptions from compulsory pilotage requirements granted to
its own vessels; and
(d) shall not
apply to the regulations concerning entry and stay of foreigners.
ARTICLE VIII.--The
Contracting Parties shall adopt, within the limits of their law and port
regulations, all appropriate measures to facilitate and expedite maritime
traffic, to prevent delays to vessels, and to expedite and simplify as much as
possible the carrying out of customs and other formalities applicable in ports.
ARTICLE IX.--1. The
documents relating to registration of vessels, certificates of tonnage and
survey and other ship's documents issued or recognised by one of the
Contracting Parties shall be recognised by the other Party.
2. The vessels of each of
the Contracting Parties holding legally issued certificates of tonnage shall
not be subjected to re-measurement in the ports of the other Party and the net
tonnage of the vessels noted in the certificates shall be taken as the basis
for calculation of the tonnage dues.
ARTICLE X.--Each of the
Contracting Parties shall recognise the seamen's identity documents issued by
the competent authorities of the other Contracting Party.
These identity documents
are,--
for seamen of the Soviet
vessels--a USSR Seaman's Passport;
for seaman of the Indian
vessels--an Indian Seaman's Continuous Discharge Certificate.
ARTICLE XI.-- Holders of
the seaman's identity documents specified in Article 10 of this Agreement shall
be permitted in the case of members of the crew of the vessel of the
Contracting Party which issued the seamen's identity documents, 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.
ARTICLE XII.--1. Holders
of the seaman's identity documents specified in Article 10 of this Agreement
shall be permitted to enter by any means of transport the territory of the
other Contracting Party or to pass through its territory in transit on the way
to their vessel or while going to another vessel, or on the way to their home
country, or for traveling for any other reason which will be approved by the
authorities of the other Contracting Party.
2. In all the cases
specified in paragraph 1 of this article the seaman must have appropriate visa
of the other Contracting Party which shall be granted by the competent
authorities within the shortest possible time.
3. If the holder of the
seaman's identity document specified in Article 10 of this Agreement is not a
citizen of either country, the visa specified in this article for entry into or
transit passage through the territory of the other Contracting Party shall be
granted provided that return to the territory of the Contracting Party, which
had issued the seaman's identity document, is guarantied to the holder of such
document.
ARTICLE XIII.--1. Subject
to the provisions of Articles 10 to 12 of this Agreement, the regulations in
respect of the entry, stay and departure of foreigners retain their force in
the territories of the Contracting Parties.
2. Each of the Contracting
Parties reserves the right to deny entry into its territory to any seaman whom
it considers undesirable. In that event the competent diplomatic or consular
official of the Contracting Party whose seaman has been denied entry shall be
informed of the decision.
ARTICLE XIV.--The judicial
authorities of a Contracting Party shall not entertain proceedings arising out
of a contract of service as a member of the crew of a vessel of the other
Contracting Party without the consent of the competent diplomatic or consular
official of the flag country of the vessel except in cases when the contract of
service was concluded within the territory of the former Contracting Party.
ARTICLE XV.--1. Shipping
companies established in the territory of one Contracting Party shall not be
charged by the other Contracting Party any tax on the income derived from the
carriage of cargo from the ports of the latter to the ports of the former.
2. Each Contracting Party
may levy tax on income derived by the shipping companies established in the
territory of the other Contracting Party from the carriage of cargo from its
ports to the ports of third countries provided that the tax leviable on such
income shall be reduced by an amount equivalent to two-thirds thereof.
ARTICLE XVI.-- 1. If a
vessel of one of the Contracting Party suffers shipwreck, runs aground, is cast
ashore or suffers any other accident within the national limits of the other
Contracting Party, the vessel, the crew, the passengers and the cargo shall
receive, in the territory of the latter Party, the same assistance which is
accorded by that Party to its national vessel, crew, passengers and cargo.
2. No customs duty shall
be levied by one Contracting Party against a shipwrecked vessel, its cargo or
stores of the other Contracting Party unless they are delivered for use in the
territory of the first-mentioned 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 XVII.-- 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
periodically. The parties will nominate their representatives to the Joint
Committee.
2. The Indo-Soviet
Shipping Service Secretariat (called as SOVINDSHIP), Bombay, managed by the
Shipping Corporation of India Ltd., Bombay, and JUZHFLOT, Moscow, will attend
to matters of normal day to day shipping operations, between the two countries.
Each party, may, if
necessary nominate any other organisation in place of the above by notifying to
the other party.
ARTICLE XVIII.--All the
previous arrangements and protocols between the two Parties relating to
merchant shipping will continue to remain in force so far as they are not
inconsistent with the provisions of this Agreement.
ARTICLE XIX.--Each of the
Contracting Parties shall notify the other Party about completion of necessary
procedures for this Agreement to enter into force. The Agreement shall enter
into force after thirty days from the date of the last notification.
This Agreement shall
remain in force for a period of five years and thereafter be automatically
extended for one year period at a time unless either of the Contracting Parties
expresses its desire to re-negotiate the Agreement or any of its provisions by
giving a written notice to the other Contracting Party to that effect six
months prior to the expiry of any of the above-mentioned periods.
In witness whereof, the
undersigned duly empowered by their respective Governments, have signed this
Agreement.
Done in New Delhi on this
19th day of July, 1976 in two original copies each in Hindi, Russian and
English languages, all texts being equally authentic.
For the Government of the For
the Government of the
Republic of India Union
of Soviet Socialist Republics
(Dr. G.S. Dhillon) (T.B. Guzhenko)
Agreement between the
Government of India and the Union of Soviet Socialist Republics modifying the
Agreement on merchant shipping
Notification No. G.S.R.
952(E), dated 30th December, 1992
Whereas the Agreements mentioned
in the Schedule hereto were entered into between the Government of the Republic
of India and the Government of the Union of the Soviet Socialist Republics;
And whereas the Russian
Federation has expressed its desire to exercise the rights and fulfil the
obligations arising from the aforesaid Agreements concluded by the erstwhile
Union of the Soviet Socialist Republics and to remain a party to the aforesaid
Agreements;
And whereas the Government
of the Republic of India has accepted and confirmed that the aforesaid
Agreements shall remain in full force and effect between India and the Russian
Federation;
And whereas the Government
of the Republic of India and the Russian Federation have agreed that the
references in the aforesaid Agreements to "USSR", or "Union of
Soviet Socialist Republics", or "Soviet" or "Soviet
Union", wherever they occur, shall be construed as references to
"Russian Federation";
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
aforesaid Agreements between the Government of the Republic of India and the
Russian Federation shall be given effect to in the Union of India.
(i) Agreement between the Government of India and the Union of
Soviet Socialist Republics on Merchant Shipping signed at New Delhi on 19th
July, 1976, and notified vide Government of India, Ministry of Finance
(Department of Revenue) Notification Nos. 1588 [F. No. 501/1/73-FTD), GSR No.
943(E), dated 23rd December, 1976, and modified by Notification (F. No.
480/1/81-FTD), (GSR No. 419(E), dated 31st May, 1984)]; and
(ii) Agreement between the Government of the
Republic of India and the Government of the Union of Soviet Socialist Republics
for the avoidance of double taxation of income signed at New Delhi on 20th
November, 1988, and notified vide Government of India, Ministry of Finance
(Department of Revenue) (Foreign Tax Division) Notification No. 8442, (F. No.
503/1/88-FTD) (GSR No. 812(E), dated 4th September, 1989)].
(Sd.) T.S. Krishna Murthy,
Joint Secretary to the
Government of India
Notification F. No.
480/1/81-FTD, dated 31 May, 1984
G.S.R. 419(E).--Whereas
the Government of India and the Union of Soviet Socialist Republics have
concluded an Agreement through exchange of letters as set out in the Annexure
hereto, for the modification of the Agreement entered into by the said
Government for the avoidance of double taxation in respect of taxes on income
derived from the carriage of cargo;
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 the provisions of the said
Agreement shall be given effect to in the Union of India.
New Delhi,
April 12, 1983
Excellency,
"The delegation of
the Government of the Republic of India and the Government of the Union of
Soviet Socialist Republics met at New Delhi on April 4-6-1983 and had detailed
discussions about the operation of two lighter-carriers "Tibor
Szemuely" and "Yulius Fuchik" owned by the Soviet Union but on time-charter to the Interlighter
International Shipping Company with headquarters at Budapest which is a joint
venture company of the Governments of Soviet Union, Czechoslovakia, Bulgaria
and Hungary. The ships fly the flag of the Soviet Union. Under the
inter-governmental agreement between the owner countries, the Interlighter
International Shipping Company can use only the Soviet vessels.
In view of the special
circumstances of the case and taking note of the growing Indo-Soviet
co-operation in industry and commerce including shipping, the two delegations
agreed that the operation of the above-named lighter-carriers owned by the
Soviet Union and flying the Soviet flag is covered by the Indo-Soviet Shipping
Agreement of 1976. It was further agreed:
(1) the cargoes handled by the "Interlighter" from and
to India will be subject to the existing bilateral shipping agreements between
the countries of origin and destination wherever they exist between India and
the co-owners of the "Interlighter" and, in the absence of such
agreements, the cargoes will not attract any special concessions;
(2) (a) disbursements
and port dues shall be paid in Indian rupees to the extent the ship is
carrying
cargo from and to rupee payment countries;
(b) disbursements and port dues shall be
paid in free foreign exchange for cargoes carried from and to the non-rupee payment
countries.
In case circumstances
change, the parties may by mutual consent review this Agreement.
Kindly confirm that the
above correctly sets out the Agreement reached between us in this regard.
Assuring you of my highest
consideration."
Yours sincerely,
Sd/-
Mohinder Singh
H.E. Mr. V.M. Nicolaichuk
Deputy Minister,
Soviet Ministry of
Merchant Marine,
Government of the U.S.S.R.
New Delhi
April 12, 1983
Excellency,
I acknowledge the receipt
of your letter of 12 April, 1983 which reads as follows:
"The delegations of
the Government of the Republic of India and the Government of the Union of
Soviet Socialist Republics met at New Delhi on April 4-6-1983, and had detailed
discussions about the operation of two lighter-carriers "Tibor Szemuely"
and "Yulius Fuchik" owned by the Soviet Union but on time-charter to
the Interlighter International Shipping Company with headquarters at Budapest,
which is a joint venture company of the Governments of Soviet Union,
Czechoslovakia, Bulgaria and Hungary. The ships fly the flag of the Soviet
Union. Under the inter-governmental agreement between the owner countries, the
Interlighter International Shipping Company can use only the Soviet vessels.
In view of the special
circumstances of the case and taking note of the growing Indo-Soviet
co-operation in industry and commerce including shipping, the two delegations
agreed that the operation of the above-named lighter-carriers owned by the
Soviet Union and flying the Soviet flag is covered by the Indo-Soviet Shipping
Agreement of 1976. It was further agreed:
(1) the cargoes handled by the "Interlighter" from and
to India will be subject to the existing bilateral shipping agreements between
the countries of origin and destination wherever they exist between India and
the co-owners of the "Interlighter" and, in the absence of such
agreements, the cargoes will not attract any special concessions;
(2) (a) disbursements
and port dues shall be paid in Indian rupees to the extent the ship is carrying
cargo from
and to rupee payment countries;
(b) disbursements and port dues shall be
paid in free foreign exchange for cargoes carried from and to the non-rupee
payment countries.
In case circumstances
change, the parties, may by mutual consent review this Agreement.
Kindly confirm that the
above correctly sets out the Agreement reached between us in this regard.
Assuring you of my highest
consideration."
I have the honour to
confirm that the contents of your letter correctly sets out the understanding
between us in this regard.
Assuring you of my highest
consideration.
Yours sincerely,
Sd/- V.M. Nicolaichuk
H.E. Mr. Mohinder Singh
Secretary to the
Government of India
Ministry of Shipping and
Transport
New Delhi
April 12, 1983
Excellency,
I have the honour to refer
to our discussions in connection with the operation of the two Soviet
lighter-carriers "Tibor Szemuely" and "Yulius Fuchik" and
the letter exchanged between the Indian and the Soviet delegations today, i.e.
April 12, 1983. It has been further agreed between the two delegations that the
above-mentioned vessels are to call only at the port of Bombay and may provide
upto 14 calls in a calendar year. Further, in case the circumstances change,
the parties may by mutual consent review this arrangement.
Kindly confirm that the
above correctly sets out the Agreement reached between us in this regard.
Assuring you of my highest
consideration.
Yours sincerely
Sd/- Mohinder Singh
H.E. Mr. V.M.
Nicholaichuk,
Deputy Minister,
Soviet Ministry of
Merchant Marine,
Government of the U.S.S.R.
New Delhi,
April 12, 1983
Excellency,
I acknowledge the receipt
of your letter of 12 April, 1983 which reads as follows:
"I have the honour to
refer to our discussions in connection with the operation of the two Soviet
lighter-carriers "Tibor Szemuely" and "Yulius Fuchik" and
the letter exchanged between the Indian and the Soviet delegations today, i.e.
April 12, 1983. It has been further agreed between the two delegations that the
above-mentioned vessels are to call only at the port of Bombay and may provide
upto 14 calls in a calendar year. Further, in case the circumstances change,
the parties may by mutual consent review this Agreement.
Kindly confirm that the
above correctly sets the Agreement reached between us in this regard.
Assuring of my highest
consideration."
I have the honour to
confirm that the contents of your letter correctly sets out the understanding
reached between us.
Assuring you of my highest
consideration.
Yours sincerely
Sd/- V.M. Nicolaichuk
H.E. Mr. Mohinder Singh,
Secretary to the
Government of India,
Ministry of Shipping and
Transport.
New Delhi.
Agreement between the Government of the Republic of India and the
Government of the Union of SovietSocialist Republics for the avoidance of
double taxation of income
Notification No. G.S.R.
952(E), dated 30th December, 1992
Whereas the Agreements
mentioned in the Schedule hereto were entered into between the Government of
the Republic of India and the Government of the Union of the Soviet Socialist
Republics;
And whereas the Russian
Federation has expressed its desire to exercise the rights and fulfil the
obligations arising from the aforesaid Agreements concluded by the erstwhile
Union of the Soviet Socialist Republics and to remain a party to the aforesaid
Agreements;
And whereas the Government
of the Republic of India has accepted and confirmed that the aforesaid
Agreements shall remain in full force and effect between India and the Russian
Federation;
And whereas the Government
of the Republic of India and the Russian Federation have agreed that the
references in the aforesaid Agreements to "USSR", or "Union of
Soviet Socialist Republics", or "Soviet" or "Soviet
Union", wherever they occur, shall be construed as references to
"Russian Federation";
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
aforesaid Agreements between the Government of the Republic of India and the
Russian Federation shall be given effect to in the Union of India.
Schedule
(i) Agreement between the Government of India and the Union of
Soviet Socialist Republics on Merchant Shipping signed at New Delhi on 19th
July, 1976, and notified vide Government of India, Ministry of Finance
(Department of Revenue) Notification Nos. 1588 [F. No. 501/1/73-FTD), GSR No.
943(E), dated 23rd December, 1976, and modified by Notification (F. No.
480/1/81-FTD), (GSR No. 419(E), dated 31st May, 1984)]; and
(ii) Agreement between the Government of the
Republic of India and the Government of the Union of Soviet Socialist Republics
for the avoidance of double taxation of income signed at New Delhi on 20th
November, 1988, and notified vide Government of India, Ministry of Finance
(Department of Revenue) (Foreign Tax Division) Notification No. 8442, (F. No.
503/1/88-FTD) (GSR No. 812(E), dated 4th September, 1989)].
(Sd.) T.S. Krishna Murthy,
Joint Secretary to the
Government of India
Notification F.No.
503/1/88-FTD, dated 4th September, 1989.
G.S.R. 812(E).--Whereas
the annexed Agreement between the Government of the Republic of India and the
Government of the Union of Soviet Socialist Republics for the avoidance of
double taxation of income has come into force on the 5th June, 1989, after the
notification by both the Contracting States to each other of the completion of
the procedures required under their laws for bringing into force of the said
Agreement in accordance with Article 28 of the said Agreement;
Now, therefore, in
exercise of the powers conferred by section 90 of the Income-tax Act, 1961 (43
of 1961), the Central Government hereby directs that all the provisions of the
said Agreement shall be given effect to in the Union of India.
ANNEXURE
The Government of the Republic of India and the Government of the
Union of Soviet Socialist Republics,
led by the desire to
strengthen and develop friendly relations in economic, industrial, technical
and cultural spheres,
have resolved to conclude
an Agreement for the avoidance of double taxation of income
and have agreed as
follows:
ARTICLE 1: Scope of the
agreement.--1. This Agreement shall apply to persons who for the purposes of
taxation are deemed to be residents of one or both of the Contracting States.
2 (a) This
Agreement shall apply to the territory of each Contracting State, including its
territorial sea, to its economic zone and its continental shelf, adjacent to
the limits of its territorial sea, in respect of which it exercises, in
conformity with international law, sovereign rights for the purpose of
exploration and exploitation of natural resources of such areas;
(b) For the purposes of this Agreement, any reference to either
Contracting State shall be deemed as reference to the territory of the
respective State, including its territorial sea, to its economic zone and the
regions of the continental shelf adjacent to the limits of the territorial sea
of this State, which are mentioned in sub-paragraph (a).
ARTICLE 2: Taxes covered.--1.
The taxes to which this Agreement shall apply are:
(a) in the Republic of India, the income-tax including any
surcharge thereon (hereinafter referred to as "Indian tax");
(b) in the Union of Soviet Socialist Republics:
(i) income-tax on foreign legal persons ;
(ii) income-tax
on population; and
(iii) tax on part of profits of a foreign
participant of a joint venture imposed when it is transferred abroad
(hereinafter referred to as "the USSR 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.
3. Taxes mentioned in this
article shall not include any penalty or interest imposed by either Contracting
State relating to the taxes covered by this Agreement.
ARTICLE 3: General
definitions.--1. In this Agreement, unless the context otherwise requires.--
(a) the terms "a Contracting State" and "the other
Contracting State" mean the Republic of India (India) or the Union of
Soviet Socialist Republics (the USSR), as the context requires;
(b) the term "person" means an individual, and
(i) in the case of India: also a company or
any other entity which is treated as a taxable unit under the taxation laws in
force in India;
(ii) in the case of the USSR: also any legal
person or other organisation, created under the laws of the USSR or any Union
Republic and treated as a legal person for the purposes of taxation in the
USSR;
(c) the term "competent authority" means:
(i) in the case of India: the Ministry of
Finance (Central Government, Department of Revenue) or its authorized
representative;
(ii) in the case of the USSR: the Ministry of
Finance of the USSR or its authorized representative;
(d) the term "national" means:
(i) in the case of India: any individual
possessing the nationality of India and any legal person, partnership or
association deriving its status from the laws in force in India;
(ii) in the case of the USSR: any individual
possessing the citizenship of the USSR and any legal person deriving its status
from the laws in force in the USSR;
(e) the term "international traffic" means any
transport by a ship or aircraft operated by a resident of a Contracting State
except when the ship or aircraft is operated solely between places in the other
Contracting State;
(f) the term "fiscal year" means:
(i) in the case of India: the "previous year", as
defined in the Income-tax Act, 1961;
(ii) in the case of the USSR: the period
commencing on the 1st January and ending on the 31st of December.
2. As regards the
application of the Agreement by a Contracting State, any term not defined
therein shall, unless the context otherwise requires, have the meaning which it
has under the law of that State concerning the taxes to which the Agreement
applies.
ARTICLE 4: Resident.--1.
For the purposes of this Agreement, the term "resident of a Contracting
State" means any person who, under the laws of that State, is liable to
tax therein by reason of his domicile, residence, place of management or any
other criterion of a similar nature.
2. Where, by reason of the
provisions of paragraph 1, an individual is a resident of both 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 each Contracting State regards him as a national of that
State or if he is a national 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 any fixed place of business through which a resident
of a Contracting State carries on, wholly or partly, business in the other
Contracting State.
2. The term
"Permanent establishment" includes especially:
(a) a place of management;
(b) a branch;
(c) an
office;
(d) a
factory;
(e) a
workshop;
(f) a mine, an oil or gas well, a quarry or any other place of
extraction of natural resources;
(g) a warehouse in relation to a person providing storage
facilities for others;
(h) a premise
used as a sales outlet or for receiving or soliciting orders;
(i) an
installation or structure used for the exploration or exploitation of natural
resources;
(j) a building site or construction,
installation or assembly project or supervisory activities in connection
therewith, where such site, project or activities (together with other such
sites, projects or activities, if any) continue for a period of more than 6
months or where such project or supervisory activity, being incidental to the
sale of machinery or equipment, continues for a period not exceeding six months
and the charges payable for the project or supervisory activity exceed 10 per
cent of the sale price of the machinery and equipment.
However, the competent
authorities of the Contracting States may in particular cases and by mutual
agreement consider such activities as not constituting a permanent
establishment also in cases when the duration of works on a building site or a
construction or assembly project exceeds six months :
Provided that for the
purpose of this paragraph a resident of a Contracting State shall be deemed to
have a permanent establishment in the other Contracting State and to carry on
business through that permanent establishment if it provides services or
facilities in connection with or supplies plant and machinery on hire used or
to be used in, the prospecting for, or extraction or production of mineral oils
in that other State.
3. Notwithstanding the
preceding provisions of this article, the term "permanent
establishment" shall not include:
(a) the use of facilities solely for the purpose of storage or
display of merchandise for the resident;
(b) the maintenance of a stock of goods belonging to the
resident, only for the purpose of storage or display;
(c) the maintenance of a stock of goods or merchandise, belonging
to the resident, solely for the purpose of processing by another person;
(d) the maintenance of a fixed place of business solely for the
purchase of goods or merchandise or for collecting information for the resident;
(e) subject to the provisions of sub-paragraph (j) of paragraph 2
of this article, carrying out of mere supervision for a period not exceeding
six months over construction and assembly works;
(f) the maintenance of a fixed place of business solely for the
purpose of carrying out of advertising or scientific research or any other
activity of a preparatory or an auxiliary character, for the resident;
(g) the maintenance of a fixed place of business for the display
of goods and merchandise, belonging to the resident, at occasional exhibitions;
(h) the maintenance of a fixed place of business solely for
carrying out, for the resident, of one or several kinds of activities
enumerated in sub-paragraphs (a) to (g), if the overall activity, being the result
of carrying out of these kinds of activities, is of a preparatory or an
auxiliary character.
However, the provisions of
sub-paragraphs (a) to (h) shall not be applicable where the resident of a
Contracting State 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 a resident of the other Contracting State, that resident
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 resident, unless his activities are limited
to the purchase of goods or merchandise for the resident;
(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 resident;
(c) he habitually secures orders in the first-mentioned State,
wholly or almost wholly for the resident itself or for the resident and other
residents controlling, controlled by, or subject to the same common control, as
that resident; or
(d) in so acting, he manufactures or processes in that State for
the resident goods or merchandise belonging to the resident.
5. A resident 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 person
(other than an individual) who is a resident of a Contracting State controls or
is controlled by a person (other than an individual), who is a resident of the
other Contracting State or who carries on business in that other State (either
through a permanent establishment or otherwise) shall not constitute one of
those persons 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, in the case of India, shall in any case include property accessory to
immovable property, livestock and equipment used in agricultural 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 a
resident and to income from immovable property used for the performance of
independent personal services.
ARTICLE 7: Business
profits.--The profits of a resident of a Contracting State shall be taxable
only in that State unless the resident carries on business in the other
Contracting State through a permanent establishment situated therein. If the
resident carries on business as aforesaid, the profits of the resident may be
taxed in the other State but only so much of them as is directly or indirectly
attributable to that permanent establishment.
2. Subject to the
provisions of paragraph 3, where a resident 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 resident engaged in the same or similar activities under
the same or similar conditions and dealing wholly independently with the
resident of which it is a permanent establishment.
3. In the determination of
the profits of a permanent establishment, there shall be allowed as deductions
expenses which are incurred for the purposes of the business of the permanent
establishment including executive and general administrative expenses so
incurred, whether in the State in which the permanent establishment is situated
or elsewhere, in accordance with the provisions of and subject to the limitations
of the taxation laws of that State.
4. No profits shall be
attributed to a permanent establishment by reason of the mere purchase by that
permanent establishment of goods of merchandise for the resident.
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.
7. Where--
(a) a resident of a Contracting State participates directly or
indirectly in the management, control or capital of a resident of the other
Contracting State, or
(b) the same persons participate directly or indirectly in the
management, control or capital of a resident of a Contracting State and a
resident of the other Contracting State,
and in either case conditions
are made or imposed between the two such residents in their commercial or
financial relations which differ from those which would be made between
independent residents, then any profits which would, but for those conditions,
have accrued to one of the residents, but, by reason of those conditions, have
not so accrued, may be included in the profits of that resident and taxed
accordingly.
ARTICLE 8: Air
transport.--1. Profits derived by a resident of a Contracting State from the
operation of aircraft in international traffic shall be taxable only in that
State.
2. The provisions of
paragraph 1 shall also apply to profits from the participation in a pool, a
joint business or an international operating agency.
3. For the purposes of
this article, interest on funds connected with the operation of aircraft in
international traffic shall be regarded as profits derived from the operation
of such aircraft, and the provisions of Article 11 shall not apply in relation
to such interest.
4. The term
"operation of aircraft" shall mean business of transportation by air
of passengers, mail, livestock or goods carried on by the owners or lessees or
charterers of aircraft, including the sale of tickets for such transportation
on behalf of other enterprises, the incidental lease of aircraft and any other
activity directly connected with such transportation.
ARTICLE 9: Shipping.--1.
Income derived by a resident of a Contracting State from the operation of ships
in international traffic shall be taxable only in that State.
2. Notwithstanding the
provisions of paragraph 1 of this article and Article 15 of the Agreement
between the Government of the Republic of India and the Government of the Union
of Soviet Socialist Republics on merchant shipping, dated 19th July, 1976, income
derived by a resident of a Contracting State from the operation of ships
between the ports of the other Contracting State and the ports of third countries (in both directions) may be
taxed in that other State, but the tax imposed in that other State shall be
reduced by an amount equal to two-thirds thereof.
3. The provisions of
paragraph 1 of this article shall also apply to income from participation in a
pool, a joint business or an international operating agency engaged in the
operation of ships.
4. For the purposes of
this article--
(a) interest on funds connected with the operation of ships in
international traffic shall be regarded as income from the operation of such
ships and the provisions of Article 11 shall not apply in relation to such interest
; and
(b) income from the operation of ships includes income derived
from the use, maintenance or rental of containers (including trailers and
related equipments for the transport of containers) in connection with the
transport of goods or merchandise in international traffic.
ARTICLE 10: Dividends.--1.
Dividends paid by a legal person (in the case of India, 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 legal person (in the
case of India, a company) paying the dividends is a resident and according to
the laws of that State, but if the recipient is the beneficial owner of the
dividends, the tax so charged shall not exceed 15 per cent of the gross amount
of the dividends.
This paragraph shall not
affect the taxation of the legal person (in the case of India, a 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 Sate of which the legal
person (in the case of India, a company) making the distribution is a resident.
In the case of the USSR, this term means especially part of profits of the joint venture established in conformity
with the laws of the USSR which is attributable to its participant who is a
resident of the India, transferred from the USSR.
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 legal person (in the case of India, a company)
paying the dividends is a resident, through a permanent establishment situated
therein, and the holding in respect of which the dividends are paid is effectively
connected with such permanent establishment. In such case, the provisions of
Article 7 shall apply.
ARTICLE 11: Interest.--1.
Interest arising in a Contracting State and paid to a resident of the other
Contracting State may be taxed in that other State.
2. However, such interest
may also be taxed in the Contracting State in which it arises and according to
the laws of that State, but if the recipient is the beneficial owner of the
interest, the tax so charged shall not exceed 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 sub-division or a local authority of the
other Contracting State; or
(ii) the
Central Bank of that other State;
(b) interest arising in a Contracting State shall be exempt from
tax in that 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 State.
4. The term
"interest" when used in this article means income from debut-claims
of every kind, bank deposits, government loans as well as any other income
which is treated as interest in accordance with the laws of the State where
such income arises. Penalty charges for late payment shall not be regarded as
interest for the purposes 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, and the debt-claim in respect of which the
interest is paid is effectively connected with such permanent establishment. In
such case the provisions of Article 7 shall apply.
6. Interest shall be
deemed to arise in a Contracting State when the payer is that Contracting State
itself, a 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 Contracting State in which the permanent establishment is
situated.
7. Where, by reason of a
special relationship between the payer and the beneficial owner or between both
of them and some other person, the amount of the interest, having regard to the
debt-claim for which it is paid, exceeds the amount which would have been
agreed upon by the payer and the beneficial owner in the absence of such
relationship, the provisions of this article shall apply only to the
last-mentioned amount, In such a case, the excess part of the payments shall
remain taxable according to the laws of each Contracting State, due regard
being had to the other provisions of this Agreement.
ARTICLE 12: Royalties and
fees for technical services.--1. Royalties and fees for technical services
arising in a Contracting State and paid to a resident of the other Contracting
State may be taxed in that other State.
2. However, such royalties
and fees for technical services may also be taxed in the Contracting State in
which they arise and according to the laws of that State, but if the recipient
is the beneficial owner of the royalties, or fees for technical services, the
tax so charged shall not exceed:
(a) fifteen per cent of the gross amount of the royalties
relating to copyrights of literary, artistic or scientific works, other than
cinematograph films or films or tapes used for radio or television broadcasting
; and
(b) twenty per cent of the gross amount of the royalties in all
other cases or fees for technical services.
3. The term
"royalties" as used in this article means payments of any kind
received as a consideration for the use of, or the right to use any copyright
of literary, artistic or scientific work, including cinematograph films or
films or tapes used for radio or television broadcasting, any patent, trade
mark, design or model, plan, 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 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,
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 7 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 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 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, then such
royalties or fees for technical services shall be deemed to arise in the State
in which the permanent establishment is situated.
7. Where, by reason of a
special relationship between the payer and the beneficial owner or between both
of them and some other person, the amount of royalties or fees for technical
services paid exceeds the amount which would have been paid in the absence of
such relationship, the provisions of this article shall apply only to the
last-mentioned amount. In such case the excess part of the payments shall
remain taxable according to the laws of each Contracting State, due regard
being had to be other provisions of this Agreement.
ARTICLE 13: Gains from
alienation of property.--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 a resident of a Contracting State has in the
other Contracting State including such gains from the alienation of such a
permanent establishment (alone or with the whole property) may be taxed in that
other State.
3. Gains from the alienation
or 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 legal person (in the case of
India, 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 mentioned in paragraphs 1, 2, 3 and
4 shall be taxable only in the Contracting State of which the alienator is a
resident.
ARTICLE 14: Independent
personal services.--1. Income derived by an individual who is a resident of a
Contracting State from the performance of professional services or other independent
activities of a similar character shall be taxable only in that State unless he
is present in the other Contracting State for a period or periods amounting to
or exceeding in the aggregate 90 days in the relevant fiscal year; in that
case, such income may also be taxed in that other State, but only so much of it
as is derived from his activities performed in that other State.
2. The term
"professional services" includes especially independent personal
services of an individual in his capacity as a physician, teacher, architect,
engineer and accountant.
ARTICLE 15: Income from
employment.--1. Subject to the provisions of Articles 16, 17 18, 19 and 20,
salaries, wages and other similar remuneration derived by a resident of a
Contracting State in respect of an employment shall be taxable only in that
State unless the employment is exercised in the other Contracting State. If the employment is so exercised, such
remuneration as is derived therefrom may be taxed in that other State.
2. Notwithstanding the
provisions of paragraph 1 remuneration derived by a resident of a Contracting
State in respect of an employment exercised in the other Contracting State
shall be taxable only in the first-mentioned State if:
(a) the recipient is present in the other State for a period or
periods not exceeding in the aggregate 183 days in the relevant fiscal year;
and
(b) the remuneration is paid by, or on behalf of, an employer who
is not a resident of the other State; and
(c) the remuneration is not borne by a permanent establishment
which the employer has in the other State.
3. Notwithstanding the
preceding provisions in this article, remuneration derived in respect of an
employment exercised aboard a ship or aircraft operated in international
traffic by a resident of a Contracting State may be taxed in that State.
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 or
similar body of a company or any other legal person which is a resident of the
other Contracting State may be taxed in that other State.
ARTICLE 17: Income earned
by entertainers and athletes.--1. Notwithstanding the provisions of Articles 14
and 15, income derived by a resident of a Contracting State as an entertainer
such as a theatre, motion picture, radio or television artiste or a musician or
as an athlete, from his personal activities as such exercised in the other
Contracting State may be taxed in that other State.
2. Where such 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,
14 and 15, 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 State, if more than 50 per cent of the expenses for such
activities are supported from the public funds of the first-mentioned State,
including any of its sub-divisions or local authorities.
4. Notwithstanding the
provisions of paragraph 2 and Articles 7, 14 and 15, where income in respect of
personal activities exercised by an entertainer or 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 more than 50 per cent of the expenses of such person are
supported from the public funds of that other State, including any of its
sub-divisions or local authorities.
ARTICLE 18: Remuneration
and pensions in respect of government services.--1. (a) Remuneration, other
than a pension, paid by a Contracting State, or a 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 purposes of rendering the
services.
2. (a) Any pension paid
by, or out of funds created by a Contracting State, or a sub-division or a
local authority thereof to an individual in respect of services rendered to
that State or sub-division or authority shall be taxable only in that State.
(b) However, such pension
shall be taxable only in the other Contracting State if the individual is a
resident of, and a national of that other State.
3. The provisions of
Articles 15, 16, and 19 shall apply to remuneration and pensions in respect of
services rendered in connection with commercial activities.
ARTICLE 19: Pensions.--Any
pension, other than a pension referred to in Article 18, derived by a resident
of a Contracting State from sources within the other Contracting State may be
taxed only in that first-mentioned State.
ARTICLE 20: Payments
received by students, apprentices, professors, teachers and research
scholars.--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 payments
derived from sources outside that other State for the purposes of his
maintenance, education or training.
2. Remuneration derived by
a professor, a teacher or a research scholar who was, immediately before the
visit to a Contracting State, a resident of the other Contracting State and
visits the first-mentioned State with the aim of promoting his education,
conducting research or teaching in an educational institution or a school shall
not be taxable in the first-mentioned State during the first two years of his
activity.
3. The provisions of
paragraph 2 shall not apply to income from research if such research is
undertaken primarily for the private benefit of a specific person or persons.
ARTICLE 21: Other
income.--Items of income of a resident of a Contracting State which are not
expressly dealt with in the foregoing articles of this Agreement shall be
taxable only in that State. However, such items of income arising in the other
Contracting State may also be taxed in that other State.
2. The provisions of
paragraph 1 shall not apply to income, other than income from immovable
property as defined in paragraph 2 of Article 6, if the recipient of such
income, being a resident of a Contracting State, carries on business in the
other Contracting State through a permanent establishment situated therein, and
the right of property in respect of which the income is paid is effectively
connected with such permanent establishment. In such cases, the provisions of
Article 7 shall apply.
ARTICLE 22: Elimination of
double taxation.--1. The laws in force in either of the Contracting States will
continue to govern the taxation of income in the respective Contracting States
except where provisions to the contrary are made in this Agreement.
2. In the case of India,
double taxation shall be avoided as follows:
(a) where a resident of India derives income which, in accordance
with the provisions of this Agreement, may be taxed in the USSR, 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 USSR, whether directly or by deduction.
Such deduction shall not, however, exceed that part of income-tax (as paid before
the deduction is given), which may be attributable to the income which may be
taxed in the USSR;
(b) where a resident of India derives income which, in accordance
with the provisions of this Agreement, shall be taxable only in the USSR. 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 the USSR.
3. In the USSR, double
taxation shall be eliminated in accordance with the laws of the USSR, due
regard being had to the taxes paid or spared in India.
ARTICLE 23:
Non-discrimination.--1. A Contracting State may not exercise in respect of a
resident of the other Contracting State a higher or more burdensome taxation
than taxation which that State would exercise in respect of a resident of a
third State with which it did not conclude an agreement for the avoidance of
double taxation.
2. In this article, the
term "taxation" means taxes covered by this Agreement.
ARTICLE 24: Mutual
agreement procedure.--1. Where a resident of a Contracting State considers that
the actions of one or both of the Contracting States result or will result for
him in taxation not in accordance with this Agreement, he may, notwithstanding
the remedies provided by the national laws of those States, present his case to
the competent authority of the Contracting State of which he is a resident.
This case must be presented within three years of the date of receipt of 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 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, under
the established procedure, for the purpose of reaching an agreement in the
sense of the preceding paragraphs. When it seems advisable in order to reach
agreement to have an oral exchange of opinions, such exchange may take place
through a Commission consisting of representatives of the competent authorities
of the Contracting States.
ARTICLE 25: Exchange of
information.--1. The competent authorities of the Contracting States shall
exchange, to the extent permitted by their domestic, laws, such information
(including documents) as is necessary for carrying out the provisions of this
Agreement or of the domestic laws of the Contracting States concerning taxes
covered by the Agreement, in so far as the taxation thereunder is not contrary
to the Agreement, in particular for the prevention of fraud or evasion of such
taxes, any information received by a Contracting State shall be treated as
confidential in the same manner as information obtained under the domestic laws of that State.
However, if the information is originally regarded as confidential 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 exchange of information or documents shall also be on request with
reference to particular cases.
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 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,
industrial, commercial or professional secret or trade process or information
the disclosure of which would be contrary to the interests of the
first-mentioned State.
3. The competent
authorities of the Contracting States shall notify each other of the changes
which are made in their tax laws.
ARTICLE 26: Diplomatic and
consular activities.--Nothing in this Agreement shall affect the fiscal
privileges of diplomatic or consular officials under the general rules of
international law or under the provisions of special agreements.
ARTICLE 27: Existing
agreements.--Nothing in this Agreement shall affect the provisions of existing
agreements between the Contracting States to the extent that they have effect
in respect of the taxes to which this Agreement applies. However, where any
greater relief from these taxes is afforded by any provision of this Agreement,
that provision shall apply.
ARTICLE 28: Entry into
force.--Each of the Contracting States shall notify each other of 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 receipt of the later 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 Agreement enters into force;
(b) in the USSR: in respect of income arising in any fiscal year
beginning on or after the first day of January next following the calendar year
in which the Agreement enters into force.
ARTICLE 29:
Termination.--1. This Agreement shall remain in force indefinitely, but either
of the Contracting States may, on or before the thirtieth day of June in any
calendar year beginning after the expiration of a period of five years from the
date of its entry into force, give the other Contracting State, through
diplomatic channels, written notice of termination, and in such event, this
Agreement shall cease to have effect:
(a) in India, in respect of income arising in any fiscal year
beginning on or after the first day of April, next following the calendar year
in which the notice of termination is given;
(b) in the USSR, in respect of income arising any fiscal year
beginning on or after the first day of January next following the calendar year
in which the notice of termination is given.
In witness whereof the
undersigned, being duly authorised thereto, have signed the present Agreement.
Done in duplicate at New
Delhi this 20th day of November, one thousand nine hundred and eighty-eight in
the Hindi, Russian and English languages, all the texts being equally
authentic. In case of divergence between any of the texts, the English text
shall be the operative one.
For the Government of
Republic of India, For the Government
of the Union of Soviet Socialist Republics,
(Sd.) S.B. Chavan. (Sd.)
V. M. Kamentsev