6. Agreement for avoidance of
double taxation and prevention of fiscal evasion with
Whereas the
annexed Convention between the Government of the Republic of India and the
Government of the Federative Republic of Brazil for avoidance of double
taxation and prevention of fiscal evasion with respect to taxes on income has
been ratified and the instruments of ratification exchanged at Brasilia on 11th
March, 1992 as required by Article 28 of the said Convention :
Now,
therefore, in exercise of the powers conferred by section 90 of the Income-tax
Act, 1961 (43 of 1961) 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
Notification : No. GSR 381(E), dated 31-3-1992.
ANNEXURE
CONVENTION BETWEEN THE GOVERNMENT OF THE REPUBLIC OF INDIA AND THE
GOVERNMENT OF THE FEDERATIVE REPUBLIC OF BRAZIL FOR THE AVOIDANCE OF DOUBLE
TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME
The Government
of the
Desiring to
conclude a Convention for the avoidance of double taxation and the prevention
of fiscal evasion with respect to taxes on income.
Have agreed as
follows :
Article 1 : Personal scope -
This Convention shall apply to persons who are residents of one or both of the
Contracting States.
Article 2 : Taxes covered -
1. The taxes to which the Convention shall apply are :
(a) in the case of
- the federal income-tax,
excluding the supplementary income-tax and the tax on activities of minor
importance;
(hereinafter referred to as
“Brazilian tax”);
(b) in the case of
(i) the income-tax including any surcharge
thereon;
(ii) the surtax;
(hereinafter referred to as
“Indian tax”).
2. The Convention shall also apply to any
identical or substantially similar taxes which are imposed after the date of
signature of the Convention in addition to, or in place of the above-mentioned
taxes. The competent authorities of the Contracting States shall notify each
other of any substantial changes which have been made in their respective
taxation laws.
Article 3 : General
definitions - 1. For the purposes of this Convention, unless the
context otherwise requires :
(a) the term “nationals” means :
I. all individuals
possessing the nationality of a
II. all legal
persons, partnerships and associations deriving their status as such from the
law in force in a
(b) the terms “a Contracting State” and “the other Contracting State”
mean Brazil or India, as the context requires;
(c) the term “person” includes an individual, a company and any other
entity which is treated as a taxable unit under the taxation laws in force in
the respective Contracting States;
(d) the
term “company” means any body corporate or any entity which is treated as a
body corporate for tax purposes;
(e) the
terms “enterprise of a Contracting State” and “enterprise of the other
Contracting State” mean respectively an enterprise carried on by a resident of
a Contracting State and an enterprise carried on by a resident of the other
Contracting State;
(f) the term “international traffic” means any transport by a ship or
aircraft operated by an enterprise which has its place of effective management
in a Contracting State, except when the ship or aircraft is operated solely
between places in the other Contracting State;
(g) the
term “tax” means Brazilian tax or Indian tax, as the context requires;
(h) the
term “competent authority” means :
I. in Brazil : the
Minister of Finance, the Secretary of Federal Revenue or their authorized
representative;
II. in India : the
Central Government in the Ministry of Finance (Department of Revenue) or their
authorized representative.
2. As regards the application of the Convention
by a Contracting State; any term not defined therein shall, unless the context otherwise
requires, have the meaning which it has under the law of that State concerning
the taxes to which the Convention applies.
Article 4 : Fiscal domicile -
1. For the purposes of this Convention, the term “resident of a
Contracting State” means any person who, under the law of that State, is liable
to tax therein by reason of his domicile, residence, place of management or any
other criterion of a similar nature.
2. Where by reason of the provisions of
paragraph 1 an individual is a resident of both Contracting States, then his
status shall be determined as follows :
(a) he
shall be deemed to be a resident of the State in which he has a permanent home
available to him; if he has a permanent home available to him in both States,
he shall be deemed to be a resident of the State with which his personal and
economic relations are closer (centre of vital interests);
(b) if the
State in which he has his centre of vital interests cannot be determined, or if
he has not a permanent home available to him in either State, he shall be
deemed to be a resident of the State in which he has an habitual abode;
(c) if he
has an habitual abode in both States or in neither of them, he shall be deemed
to be a resident of the State of which he is a national;
(d) if he
is a national of both States or of neither of them, the competent authorities
of the Contracting States shall settle the question by mutual agreement.
3. Where by reason of the provisions of
paragraph 1 a person other than an individual is a resident of both Contracting
States, then it shall be deemed to be a resident of the State in which its
place of effective management is situated.
Article 5 : Permanent
establishment - 1. For the purposes of this Convention, the term “permanent
establishment” means a fixed place of business through which the business of an
enterprise is wholly or partly carried on.
2. The term “permanent establishment” includes
especially :
(a) a place
of management;
(b) a
branch;
(c) an
office;
(d) a
factory;
(e) a
workshop;
(f) a mine, an oil or gas well, a quarry or other place of extraction
of natural resources;
(g) a
building site or construction or assembly project which exists for more than
six months;
(h) an
installation, drilling rig or ship used for the exploration or exploitation of
natural resources, but only if so used for a period of more than six months.
3. Notwithstanding the preceding provisions of
this Article, the term “permanent establishment” shall be deemed not to include
:
(a) the use
of facilities solely for the purpose of storage or display of goods or
merchandise belonging to the enterprise;
(b) the
maintenance of a stock of goods or merchandise belonging to the enterprise
solely for the purpose of storage or display;
(c) the
maintenance of a stock of goods or merchandise belonging to the enterprise
solely for the purpose of processing by another enterprise;
(d) the
maintenance of a fixed place of business solely for the purpose of purchasing
goods or merchandise or of collecting information, for the enterprise;
(e) the
maintenance of a fixed place of business solely for the purpose of carrying on,
for the enterprise, any other activity of a preparatory or auxiliary character.
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 on behalf of an enterprise and has, and
habitually exercises, in a Contracting State an authority to conclude contracts
in the name of the enterprise, that enterprise shall be deemed to have a
permanent establishment in that State in respect of any activities which that
person undertakes for the enterprise, unless the activities of such person are
limited to those mentioned in paragraph 3 which, if exercised through a fixed
place of business, would not make this fixed place of business a permanent
establishment under the provisions of that paragraph.
5. An enterprise of a Contracting State shall
not be deemed to have a permanent establishment in the other Contracting State
merely because it carries on business in that other State through a broker,
general commission agent or any other agent of an independent status, provided
that such persons are acting in the ordinary course of their business. However,
when the activities of such an agent are devoted wholly or almost wholly on
behalf of that enterprise 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 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 terms shall in any case include property
accessory to immovable property, livestock and equipment used in agriculture
and forestry, rights to which the provisions of general law respecting landed
property apply, usufruct of immovable property and rights to variable or fixed
payments as consideration for the working of, or the right to work, mineral
deposits, sources and other natural resources; ships and aircraft shall not be
regarded as immovable property.
3. The provisions of paragraph 1 shall apply to
income derived from the direct use, letting, or use in any other form of
immovable property.
4. The provisions of paragraphs 1 and 3 shall
also apply to the income from immovable property of an enterprise and to income
from immovable property used for the performance of independent personal
services.
Article 7 : Business profits
- 1. The profits of an enterprise of a Contracting State shall be
taxable only in that State unless the enterprise carries on business in the
other Contracting State through a permanent establishment situated therein. If
the enterprise carries on business as aforesaid, the profits of the enterprise
may be taxed in the other State but only so much of them as is attributable to
that permanent establishment.
2. Subject to the provisions of paragraph 3,
where an enterprise of a Contracting State carries on business in the other
Contracting State through a permanent establishment situated therein, there
shall in each Contracting State be attributed to that permanent establishment
the profits which it might be expected to make if it were a distinct and
separate enterprise engaged in the same or similar activities under the same or
similar conditions and dealing wholly independently with the enterprise of
which it is a permanent establishment.
3. In determining the profits of a permanent
establishment, there shall be allowed as deductions expenses which are incurred
for the purposes of the permanent establishment, including executive and
general administrative expenses so incurred, in accordance with the provisions
of and subject to the limitations of the taxation laws of the Contracting State
concerned.
4. No profits shall be attributed to a permanent
establishment by reason of the mere purchase by that permanent establishment of
goods or merchandise for the enterprise.
5. Where profits include items of income which
are dealt with separately in other Articles of this Convention, then the
provisions of those Articles shall not be affected by the provisions of this
Article.
Article 8 : Shipping and air
transport - 1. Profits from the operation of ships or aircraft in
international traffic shall be taxable only in the Contracting State in which
the place of effective management of the enterprise is situated.
2. If the place of effective management of a
shipping enterprise is aboard a ship, then it shall be deemed to be situated in
the Contracting State in which the home harbour of
the ship is situated, or, if there is no such home harbour,
in the Contracting State of which the operator of the ship is a resident.
3. The provisions of paragraph 1 shall also
apply to profits from the participation in a pool, a joint business or an
international operating agency.
4. The term “operation of ships or aircraft”
shall mean business of transportation of persons, mail, livestock or goods
carried on by the owners or lessees or charterers of
the ships or aircraft, including the sale of tickets for such transportation on
behalf of other enterprises.
Article 9 : Associated
enterprises - Where—
(a) an
enterprise of a Contracting State participates directly or indirectly in the
management, control or capital of an enterprise of the other Contracting State,
or
(b) the
same persons participate directly or indirectly in the management, control or
capital of an enterprise of a Contracting State and an enterprise of the other
Contracting State,
and in either
case conditions are made or imposed between the two enterprises in their commercial
or financial relations which differ from those which would be made between
independent enterprises, then any profits which would, but for those
conditions, have accrued to one of the enterprises, but, by reason of those
conditions, have not so accrued, may be included in the profits of that
enterprise and taxed accordingly.
Article 10 : Dividends - 1.
Dividends paid by a company which is a resident of a Contracting State to a resident
of the other Contracting State may be taxed in that other State.
2. However, such dividends may also be taxed in
the Contracting State of which the company paying the dividends is a resident
and according to the laws of that State, but if the recipient is a company
which 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 effect the taxation of the company in respect of the profits out of
which the dividends are paid.
3. The term “dividends” as used in this Article
means income from shares, “jouissance” shares or “jouissance” rights, mining shares, founders’ shares or
other rights, not being debt-claims, participating in profits, as well as
income from other corporate rights which is subjected to the same taxation
treatment as income from shares by the laws of the State of which the company
making the distribution is a resident.
4. The provisions of paragraphs 1 and 2 shall
not apply if the beneficial owner of the dividends, being a resident of a
Contracting State, carries on business in the other Contracting State of which
the company paying the dividends is a resident, through a permanent
establishment situated therein, and the holding by virtue of which the
dividends are paid is effectively connected with such permanent establishment.
In such case the provisions of Article 7 shall apply.
5. Where a resident of India has a permanent
establishment in Brazil, this permanent establishment may be subject to a tax
withheld at source in accordance with Brazilian law. However, such a tax cannot
exceed 15 per cent of the gross amount of the profits of that permanent
establishment determined after the payment of the corporate tax related to such
profits.
6. Where a company which is a resident of a
Contracting State derives profits or income from the other Contracting State,
that other State may not impose any tax on the dividends paid by the company,
except insofar as such dividends are paid to a resident of that other State or
insofar as the holding in respect of which the dividends are paid is
effectively connected with a permanent establishment situated in that other
State, nor subject the company’s undistri-buted
profits to a tax on the company’s undistributed profits, even if the dividends
paid or the undistributed profits consist wholly or partly of profits or income
arising in such other State.
Article 11 : Interest - 1.
Interest arising in a Contracting State and paid to a resident of the other
Contracting State may be taxed in that other State.
2. However,
such interest may also be taxed in the Contracting State in which it arises and
according to the laws of that State, but if the recipient is the beneficial
owner of the interest the tax so charged shall not exceed 15 per cent of the
gross amount of the interest.
3. Notwithstanding the provisions of paragraphs
1 and 2 :
(a) interest
arising in a Contracting State and paid to the Government of the other
Contracting State, a political sub-division thereof or any agency (including a
financial institution) wholly owned by that Government, or political
sub-division shall be exempt from tax in the first-mentioned State, unless
sub-paragraph (b) applies;
(b) interest from securities,
bonds or debentures issued by the Government of a Contracting State, a
political sub-division thereof or any agency (including a financial
institution) wholly owned by that Govemment or
political sub-division shall be taxable only in that State.
4. The term “interest” as used in this Article
means income from Government securities, bonds or debentures, whether or not
secured by mortgage and whether or not carrying a right to participate in
profits, and debt-claims of every kind as well as other income assimilated to
income from money lent by the taxation law of the Contracting State in which
the income arises.
5. The provisions of paragraphs 1 and 2 shall
not apply if the 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. The tax rate limitation provided for in
paragraph 2 shall not apply to interest arising in a Contracting State and paid
to a permanent establishment of an enterprise of the other Contracting State
which is situated in a third State.
7. Interest shall be deemed to arise in a
Contracting State when the payer is that State itself, a political
sub-division, a local authority or a resident of that State. Where, however,
the person paying the interest, whether he is a resident of a Contracting State
or not, has in a Contracting State a permanent establishment in connection with
which the indebtedness on which the interest is paid was incurred, and such
interest is borne by such permanent establishment, then such interest shall be
deemed to arise in the State in which the permanent establishment is situated.
8. Where, by a reason of a special relationship
between the payer and the beneficial owner or between both of them and some
other person, the amount of the interest, having regard to the debt-claim for
which it is paid, exceeds the amount which would have been agreed upon by the
payer and the beneficial owner in the absence of such relationship, the
provisions of this Article shall apply only to the last-mentioned amount. In
such case, the excess part of the payments shall remain taxable according to
the laws of each Contracting State, due regard being had to the other
provisions of this Convention.
Article 12 : Royalties - 1.
Royalties arising in a Contracting State and paid to a resident of the other Contracting
State may be taxed in that other State.
2. However, such royalties may also be taxed in
the Contracting State in which they arise and according to the laws of that
State, but if the recipient is the beneficial owner of the royalties the tax so
charged shall not exceed :
(a) 25 per cent of
the gross amount of the royalties arising from the use or the right to use
trade marks;
(b) 15 per cent of
the gross amount of the royalties in all other cases.
3. The term “royalties” as used in this Article
means payments of any kind received as a consideration for the use of, or the
right to use, any copyright of literary, artistic or scientific work (including
cinematography films, films or tapes for television or radio broadcasting), any
patent, trade mark, design or model, plan, secret formula or process, or for
the use of, or the light to use, industrial, commercial, or scientific
equipment, or for information concerning industrial, commercial or scientific
experience.
4. The provisions of paragraphs 1 and 2 shall
not apply if the beneficial owner of the royalties, being a resident of a
Contracting State, carries on business in the other Contracting State in which
the royalties arise, through a permanent establishment situated therein, and
the right of property in respect of which the royalties are paid is effectively
connected with such permanent establishment. In such case the provisions of
Article 7 shall apply.
5. Royalties shall be deemed to arise in a
Contracting State when the payer is that State itself, a political
sub-division, a local authority or a resident of that State. Where, however,
the person paying the royalties, whether he is a resident of a Contracting
State or not, has in a Contracting State a permanent establishment in
connection with which the obligation to pay the royalties was incurred, and
such royalties are borne by such permanent establishment, then such royalties
shall be deemed to arise in the State in which the permanent establishment is
situated.
6. Where, by reason of a special relationship
between the payer and the beneficial owner or between both of them and some
other person, the amount of the royalties, having regard to the use, right or
information for which they are paid, exceeds the amount which would have been
agreed upon by the payer and the beneficial owner in the absence of such
relationship, the provisions of this Article shall apply only to the
last-mentioned amount. In such case, the excess part of the payments shall
remain taxable according to the laws of each Contracting State, due regard
being had to the other provisions of this Convention.
Article 13 : Capital gains -
1. Gains derived by a resident of a Contracting State from the
alienation of immovable property referred to in Article 6, which is 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, including
such gains from the alienation of such a permanent establishment (alone or with
the whole enterprise), may be taxed in the other State. However, gains from the
alienation of ships or aircraft operated in international traffic or movable
property pertaining to the operation of such ships or aircraft, shall be
taxable only in the Contracting State in which the place of effective
management of the enterprise is situated.
3. Gains from the alienation of any property other
than that referred to in paragraphs 1 and 2, may be taxed in both Contracting
States.
Article 14 : Independent
personal services - 1. Income derived by a resident of a Contracting
State in respect of professional services or other activities of an independent
character shall be taxable only in that State, unless the remuneration for such
services or activities is paid by a resident of the other Contracting State or
is borne by a permanent establishment situated therein. In such case, the
income may be taxed in that other State.
2. The term “professional services” includes
especially independent scientific, technical, literary, artistic, educational
or teaching activities of physicians, lawyers, engineers, architects, dentists
and accountants.
Article 15 : Dependent
personal services - 1. Subject to the provisions of Articles 16, 18,
19 and 20, salaries, wages and other similar remuneration derived by a resident
of a Contracting State in respect of an employment shall be taxable only in
that State unless the employment is exercised in the other Contracting State.
If the employment is so exercised, such remuneration as is derived therefrom may be taxed in that other State.
2. Notwithstanding the provisions of paragraph
1, remuneration derived by a resident of a Contracting State in respect of an
employment exercised in the other Contracting State shall be taxable only in
the first-mentioned State if :
(a) the
recipient is present in the other State for a period or periods not exceeding
in the aggregate 183 days in the fiscal year concerned, and
(b) the
remuneration is paid by, or on behalf of, an employer who is not a resident of
the other State, and
(c) the
remuneration is not borne by a permanent establishment which the employer has
in the other State.
3. Notwithstanding the preceding provisions of
this Article, remuneration derived in respect of an employment exercised aboard
a ship or aircraft operated in international traffic may be taxed in the
Contracting State in which the place of effective management of the enterprise
is situated.
Article 16 : Directors’ fees -
Directors’ fees and other similar payments derived by a resident of a
Contracting State in his capacity as a member of the board of directors or of
any council of a company which is a resident of the other Contracting State may
be taxed in that other State.
Article 17 : Artists 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
theatre, motion picture, radio or television artists, or a musician, or as an
athlete, from his personal activities as such exercised in the other
Contracting State, may be taxed in that other State.
2. Where income in respect of personal
activities exercised by an entertainer or an athlete in his capacity as such
accrues not to the entertainer or athlete himself but to another person, that
income may, notwithstanding the provisions of Articles 7, 14 and 15, be taxed
in the Contracting State in which the activities of the entertainer or athlete
are exercised.
3. The provisions of paragraphs 1 and 2 of this
Article shall not apply to income derived from activities performed in a
Contracting State by an entertainer or an athlete if the visit to that
Contracting State is substantially supported by public funds of, or sponsored
by the other Contracting State, including those of any political sub-division
or local authority.
Article 18 : Pensions and
social security payments - 1. Subject to the provisions of paragraph
2 of Article 19, pensions and other similar remuneration, alimony and annuities
paid to a resident of a Contracting State may be taxed in that State.
2. However, such pensions and other similar
remuneration, alimony and annuities may also be taxed in the other Contracting
State if the payment is made by a resident of that other State or a permanent
establishment situated therein.
3. Notwithstanding the provisions of paragraphs
1 and 2, pensions paid and other payments made under a public scheme which is
part of the social security system of a Contracting State or a political
sub-division or a local authority thereof shall be taxable only in that State.
4. As used in this Article :
(a) the
term ‘pensions and other similar remuneration’ means periodic payments made in
consideration of past employment or by way of compensation for injuries in
connection with past employment;
(b) the
term “annuities” means stated sums payable periodically at stated times during
life, or during a specified or ascertainable period of time, under an
obligation to make the payments in return for adequate and full consideration
in money or money’s worth.
Article 19 : Government
payments - 1. Remuneration not including pensions, paid by a Contracting
State, a political sub-division or a local authority thereof to an individual
in respect of services rendered to that State, to a political sub-division or
local authority shall be taxable only in that State.
However, such
remuneration shall be taxable only in the Contracting State of which the
recipient is a resident if the services are rendered in that State and the
recipient of the remuneration is a resident of that State who:
(a) is a national of
that State, or
(b) did not become a
resident of that State solely for the purpose of performing the services.
2. Pensions paid by, or out of funds created by,
a Contracting State, a political sub-division or a local authority thereof to
an individual in respect of services rendered to that State, to a political
sub-division or a local authority thereof may be taxed in that State.
3. The provisions of Articles 15, 16 and 18
shall apply to remuneration and pensions paid in respect of services rendered
in connection with any business carried on by a Contracting State, a political
sub-division or a local authority thereof.
Article 20 : Teachers and
researchers - 1. An individual who is or was immediately before
visiting a Contracting State a resident of the other Contracting State and who,
at the invitation of the Government of the first-mentioned State or of a
university, college, school, museum or other cultural institution of that
first-mentioned State or under an official programme
of cultural exchange, is present in that State for a period not exceeding two
consecutive years solely for the purpose of teaching, giving lectures or
carrying out research at such institution shall be exempt from tax in that
State on his remuneration for such activity, provided that the payment of such
remuneration is derived by him from outside that State.
2. This Article shall not apply to income from
research if such research is undertaken primarily for the private benefit of a
specific person or persons.
Article 21 : Students and
apprentices - 1. Payments which a student or business apprentice who
is or was immediately before visiting a Contracting State a resident of the
other Contracting State and who is present in the first-mentioned State solely
for the purpose of his education or training receives for the purpose of his
maintenance, education or training shall not be taxed in that State, provided
that such payments arise from sources outside that State.
2. In respect of grants, scholarships and
remuneration from employment not covered by paragraph 1, a student or business
apprentice described in paragraph 1 shall, in addition, be entitled during such
education or training to the same exemptions, reliefs
or reductions in respect of taxes available to residents of the State which he
is visiting.
3. The benefits of this Article shall extend
only for such period of time as may be reasonable or customarily required to
complete the education or training undertaken, but in no event shall any
individual have the benefits of this Article, for more than five consecutive
years from the date of his first arrival in that State.
Article 22 : Other income -
Items of income of a resident of a Contracting State, arising in the other
Contracting State and not dealt with in the foregoing Articles of this
Convention, may be taxed in that other State.
Article 23 : Methods for the
elimination of double taxation - 1. Subject to the provisions of
paragraphs 3 and 4, where a resident of a Contracting State derives income
which, in accordance with the provisions of this Convention may be taxed in the
other Contracting State, the first-mentioned State shall allow as a deduction
from the tax on the income of that resident an amount equal to the tax paid in
that other State.
Such deduction
shall not, however, exceed that part of the tax, as computed before the
deduction is given, which is attributable to the income which may taxed in that
other State.
2. For the deduction mentioned in paragraph 1,
the tax paid in that other State shall always be deemed to have been paid at
the rate of 25 per cent of the gross amount of interest referred to in
paragraph 2 of Article 11 and of royalties referred to in paragraph 2(b)
of Article 12, provided however, that the tax so deemed to have been paid shall
not exceed the tax leviable on that income in the
first-mentioned State.
3. Where a company which is a resident of a
Contracting State derives dividends which, in accordance with the provisions of
paragraph 2 of Article 10 may be taxed in the other Contracting State, the
first-mentioned State shall exempt such dividends from tax.
4. Where a resident of India derives profits
which, in accordance with the provisions of paragraph 5 of Article 10 may be
taxed in Brazil, India shall exempt such profits from tax.
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 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. This provision shall not be construed as obliging a
Contracting State to grant to residents of the other Contracting State any
personal allowances, reliefs and reductions for
taxation purposes on account of civil status or family responsibilities which
it grants to its own residents.
3. Enterprises of a Contracting State, the
capital of which is wholly or partly owned or controlled, directly or
indirectly, by one or more residents of the other Contracting State, shall not
be subjected in the first-mentioned State to any taxation or any requirement
connected therewith which is other or more burdensome than the taxation and
connected requirements to which other similar enterprises of the first-mentioned
State, the capital of which is wholly or partly owned or controlled, directly
or indirectly, by one or more residents of a third State, are or may be
subjected.
4. In this Article the term “taxation” means
taxes to which this Convention applies.
Article 25 : Mutual agreement
procedure - 1. Where a resident of a Contracting State considers
that the actions of one or both of the Contracting States result or will result
for him in taxation not in accordance with 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 five 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 or opinions, such exchange
may take place through a Commission consisting of representatives of the
competent authorities of the Contracting States.
Article 26 : Exchange of
information - 1. The competent authorities of the Contracting States
shall exchange such information (including documents) as is necessary for
carrying out the provisions of the Convention or of the domestic laws of the
Contracting States concerning taxes covered by the Convention, in so far as the
taxation thereunder is not contrary to the
Convention, in particular for the prevention of fraud or evasion of such taxes.
Any information received by a Contracting State shall be treated as secret in
the same manner as information obtained under the domestic laws of that state:
However, if the information is originally regarded as secret in the
transmitting State, it shall be disclosed only to persons or authorities
(including courts and administrative bodies) involved in the assessment or
collection of, the enforcement or prosecution in respect of, or the
determination of appeals 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. In no case shall the provisions of paragraph
1 be construed so as to impose on a Contracting State the obligation :
(a) to
carry out administrative measures at variance with the laws or administrative
practice of that or of the other Contracting State;
(b) to
supply information or documents which are not obtainable under the laws or in
the normal course of the administration of that or of the other Contracting
State;
(c) to
supply information or documents which would disclose any trade, business,
industrial, commercial or professional secret or trade process or information
the disclosure of which would be contrary to public policy.
Article 27 : Diplomatic
agents and consular officers - Nothing in this Convention shall affect the
fiscal privileges of diplomatic agents or consular officers under the general
rules of international law or under the provisions of special agreements.
Article 28 : Entry into force
- 1. This Convention shall be ratified and the instruments of
ratification shall be exchanged at Brasilia as soon as possible.
2. This Convention shall enter into force upon
the exchange of instruments of ratification and its provisions shall have
effect for the first time :
(a) in Brazil :
I. in respect of
taxes withheld at source, to amounts paid or credited on or after the first day
of January of the calendar year immediately following that in which the
Convention enters into force;
II. in
respect of other taxes covered by the Convention, for the taxable year
beginning on or after the first day of January of the calendar year immediately
following that in which the Convention enters into force;
(b) in India :
in respect of income
arising in any previous year beginning on or after the first day of April
immediately following the calendar year in which the Convention enters into
force.
Article 29 : Termination -
Either Contracting State may terminate this Convention after a period of five
years from the date on which the Convention enters into force by giving to the
other Contracting State, through diplomatic channels, a written notice of
termination, provided that any such notice shall be given only on or before the
thirtieth day of June in any calendar year.
In such case,
the Convention shall cease to have effect :
(a) in Brazil :
I. in
respect of taxes withheld at source, to amounts paid or cedited
on or after the first day of January of the calendar year immediately following
that in which the notice of termination is given :
II in
respect of other taxes, for taxable years beginning on or after the first day of
January of the calendar year immediately following that in which the notice of termnination is given;
(b) in India :
in respect of income
arising in any previous year beginning on or after the first day of April
immediately following the calendar year in which the notice is given.
In witness whereof the
undersigned being duly authorised thereto have signed
this Convention.
Done at New Delhi this
26th day of April, 1988, in duplicate in Hindi, Portuguese and English
languages, all three texts being equally authentic. In case of any divergence
of interpretation the English text shall prevail.
PROTOCOL
At the moment
of the signature of the Convention between the Republic of India and the
Federative Republic of Brazil for the avoidance of double taxation and the
prevention of fiscal evasion with respect to taxes on income the undersigned,
being duly authorised thereto, have agreed upon the
following provisions which constitute an integral part of the Convention :
1. With
reference to Article 3, paragraph I, item (q) - It is understood that the term “tax” shall
not include any amount which is payable in respect of any default or omission
in relation to the taxes to which this Convention applies or which represents a
penalty imposed relating to those taxes.
2. With
reference to Article 12, paragraph 3 - It is understood that the provisions of paragraph 3 of Article 12
shall apply to payments of any kind to any person, other than payments to an
employee of a person making such payments, in consideration for the rendering
of assistance or services of a managerial, administrative, scientific,
technical or consultancy nature.
3. With
reference to Article 20 - It
is understood that the term “museum or other cultural institution” shall refer
only to such organisations which have been approved
in this regard by the competent authority of the Contracting State concerned.
4. With
reference to Article 24, paragraph 2 - It is understood that the provisions of paragraph 5 of Article 10 are
not in conflict with the provisions of paragraph 2 of Article 24.
5. It is understood that either
In witness whereof the undersigned being duly authorised thereto have signed this Protocol.
Done at New Delhi this 26th day of April, 1988, in
duplicate, in Hindi, Portuguese and English languages, all three texts being
equally authentic. In case of any divergence of interpretation the English text
shall prevail.