9. Agreement for avoidance of
double taxation of income and the prevention of fiscal evasion with China
Whereas the
annexed Agreement between the Government of the Republic of India and the
Government of the People’s Republic of China for the avoidance of double
taxation and the prevention of fiscal evasion with respect to taxes on income
has come into force on the 21st day of November, 1994 after the notification by
both the Contracting States to each other of the completion of the procedures
required under their laws for bringing into force of the said Agreement in
accordance with Article 28 of the said Agreement;
Now,
therefore, in exercise of the powers conferred by section 90 of the Income-tax
Act, 1961 (43 of 1961), the Central Government hereby directs that all the
provisions of the said Agreement shall be given effect to in the Union of
Notification : No. GSR 331(E), dated 5-4-1995.
annexure
AGREEMENT
BETWEEN THE GOVERNMENT OF THE REPUBLIC OF INDIA AND THE GOVERNMENT OF THE PEOPLE’S REPUBLIC OF
CHINA FOR THE AVOIDANCE OF DOUBLE
TAXATION AND THE PREVENTION OF FISCAL
EVASION WITH RESPECT TO TAXES ON INCOME
The Government
of the
Article 1 : Personal
scope - This Agreement shall apply to persons who are residents of one or
both of the Contracting States.
Article 2 : Taxes
covered - 1. This Agreement shall apply to taxes on income imposed
on behalf of a
2. There shall be regarded as taxes on income,
all taxes imposed on total income, or on elements of income, including taxes on
gains from the alienation of movable or immovable property, as well as taxes on
capital appreciation.
3. The existing taxes to which the Agreement
shall apply are :
(a) in
(i) the individual income-tax;
(ii) the income-tax for enterprises with foreign
investment and foreign enterprises;
(iii) the local income-tax;
(hereinafter referred to as “Chinese Tax”).
(b) in
the income-tax
including any surcharge thereon;
(hereinafter
referred to as “Indian Tax”).
4. This Agreement shall also apply to any
identical or substantially similar taxes which are imposed after the date of
signature of this Agreement in addition to, or in place of, the existing taxes
referred to in paragraph 3. The competent authorities of the Contracting States
shall notify each other of any substantial changes which have been made in
their respective taxation laws within a reasonable period of time after such
changes.
Article 3 : General definitions - 1. For
the purposes of this Agreement, unless the context otherwise requires,—
(a) the term “China” means the People’s Republic of China; when used in
geographical sense means all the territory of the People’s Republic of China,
including its territorial sea, in which the Chinese laws relating to taxation
apply, and any area beyond its territorial sea, within which the People’s
Republic of China has sovereign rights of exploration for any exploitation of
resources of the sea-bed and its sub-soil and superjacent water resources in
accordance with international law;
(b) the term “India” means the territory of the Republic of India and
includes the territorial sea and airspace above it, as well as any other
maritime zone in which India has sovereign rights, other rights and
jurisdictions, according to the Indian law and in accordance with international
law;
(c) the terms “a
(d) the term “tax” means Chinese tax or Indian tax, as the context
requires;
(e) the term “person” includes an individual, a company and any other
entity which is treated as a taxable unit under the taxation laws in force in
the respective Contracting States;
(f) the term “company” means any body corporate or any entity which is
treated as a body corporate for tax purposes;
(g) the terms “enterprise of a
(h) the term “nationals” means any individual possessing the
nationality of a
(i) the term “international traffic” means any
transport by a ship or aircraft operated by an enterprise which is a resident
of a
(j) the term “competent authority” means, in the case of
2. As regards the application of this Agreement
by a Contracting State, any term not defined therein shall, unless the context
otherwise requires, have the meaning which it has under the laws of that
Contracting State concerning the taxes to which this Agreement applies.
Article 4 : Resident
- 1. For the purposes of this Agreement, the term “resident of a
Contracting State” means any person who, under the laws of that Contracting
State, is liable to tax therein by reason of his domicile, residence, place of
head office or any other criterion of a similar nature.
2. Where by reason of the provisions of
paragraph 1 an individual is a resident of both
(a) He shall be deemed to be a resident of the Contracting State in
which he has a permanent home available to him; if he has a permanent home
available to him in both Contracting States, he shall be deemed to be a
resident of the Contracting State with which his personal and economic
relations are closer (centre of vital interests);
(b) If the State in which he has his centre of vital interests cannot
be determined, or if he has not a permanent home available to him in either
(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
(d) If he is a national of both Contracting States or of neither of
them, the competent authorities of the Contracting States shall settle the
question by mutual agreement.
3. Where by reason of the provisions of
paragraph 1 a person other than an individual is a resident of both Contracting
States, then it shall be deemed to be a resident of the
Article 5 : Permanent
establishment - 1. For the purposes of this Agreement, the term
“permanent establishment” means a fixed place of business through which the business
of an enterprise is wholly or partly carried on.
2. The term “permanent establishment” includes
especially :
(a) a place of management;
(b) a branch;
(c) an office;
(d) a factory;
(e) a workshop;
(f) a mine, an oil or gas well, a quarry or any other place of
extraction of natural resources;
(g) a warehouse, in relation to a person providing storage facilities
for others;
(h) a farm, plantation or other place where agriculture, forestry,
plantation or related activities are carried on;
(i) an installation or structure used for the
exploration or exploitation of natural resources, but only if so used for a
period of more than 183 days;
(j) a building site or construction, installation or assembly project
or supervisory activities in connection therewith, where such site, project or
activities (together with other such sites, projects or activities, if any)
continue for a period of more than 183 days;
(k) the furnishing of services other than technical services as defined
in Article 12 (Royalties and Fees for Technical Services), by an enterprise of
a Contracting State through employees or other personnel in the other
Contracting State, but only if activities of that nature continue within that
other Contracting State for a period or periods aggregating more than 183 days.
3. Notwithstanding the preceding provisions of
this Article, the term “permanent establishment” shall be deemed not to include
:
(a) the use of facilities solely for the purpose of storage, display or
delivery of goods or merchandise belonging to the enterprise;
(b) the maintenance of a stock of goods or merchandise belonging to the
enterprise solely for the purpose of storage, display or delivery;
(c) the maintenance of a sock of goods or merchandise belonging to the
enterprise solely for the purpose of processing by another enterprise;
(d) the maintenance of a fixed place of business solely for the purpose
of purchasing goods or merchandise or of collecting information, for the
enterprise;
(e) the maintenance of a fixed place of business solely for the purpose
of carrying on, for the enterprise, any other activity of a preparatory or
auxiliary character.
4. Notwithstanding the provisions of paragraphs
1 and 2, where a person - other than an agent of an independent status to whom
the provisions of paragraph 5 apply - is acting in a Contracting State on
behalf of an enterprise of the other Contracting State, has and habitually
exercises an authority to conclude contracts in the name of the enterprise,
that enterprise shall be deemed to have a permanent establishment in the
first-mentioned Contracting State in respect of any activities which that
person undertakes for the enterprise, unless the activities of such person are
limited to those mentioned in paragraph 3 which, if exercised through a fixed
place of business, would not make this fixed place of business a permanent
establishment under the provisions of that paragraph.
5. An enterprise of a Contracting State shall
not be deemed to have a permanent establishment in the other Contracting State
merely because it carries on business in that other Contracting State through a
broker, general commission agent or any other agent of an independent status,
provided that such persons are acting in the ordinary course of their business.
However, when the activities of such an agent are devoted wholly or almost
wholly on behalf of that enterprise, he will not be considered an agent of an
independent status within the meaning of this paragraph.
6. The fact that a company which is a resident
of a Contracting State controls or is controlled by a company which is a
resident of the other Contracting State, or which carries on business in that
other State (whether through a permanent establishment or otherwise), shall not
of itself constitute either company a permanent establishment of the other.
Article 6 : Income from immovable property - 1.
Income derived by a resident of a Contracting State from immovable property
situated in the other Contracting State may be taxed in that other Contracting
State.
2. The term “immovable property” shall have the
meaning which it has under the law of the Contracting State in which the
property in question is situated. The term shall in any case include property
accessory to immovable property, livestock and equipment used in agriculture
and forestry, rights to which the provisions of general law respecting landed
property apply, usufruct of immovable property and rights to variable or fixed
payments as consideration for the working of, or the right to work, mineral
deposits, sources and other natural resources. Ships and aircraft shall not be
regarded as immovable property.
3. The provisions of paragraph 1 shall apply to
income derived from the direct use, letting, or use in any other form of
immovable property.
4. The provisions of paragraphs 1 and 3 shall
also apply to the income from immovable property of an enterprise and to income
from immovable property used for the performance of independent personal
services.
Article 7 : Business
profits - 1. The profits of an enterprise of a Contracting State
shall be taxable only in that Contracting State unless the enterprise carries
business in the other Contracting State through a permanent establishment
situated therein. If the enterprise carries on business as aforesaid, the
profits of the enterprise may be taxed in the other Contracting State but only
so much of them as is directly or indirectly attributable to that permanent
establishment.
The provisions
of this paragraph shall, however, not apply if the enterprise proves that the
above activities could not have been undertaken by the permanent establishment
or have no relation with the permanent establishment.
2. Subject to the provisions of paragraph 3,
where an enterprise of a Contracting State carries on business in the other
Contracting State through a permanent establishment situated therein, there
shall in each Contracting State be attributed to that permanent establishment
the profits which it might be expected to make if it were a distinct and
separate enterprise engaged in the same or similar activities under the same or
similar conditions and dealing wholly independently with the enterprise of
which it is a permanent establishment.
3. Insofar as the tax law of a Contracting State
provides with respect to a specific business activity that the profits to be
attributed to a permanent establishment are to be determined on the basis of a
deemed profit, nothing in paragraph 2 shall preclude that Contracting State
from applying those provisions of its law, provided that the result is in
accordance with the principles contained in this Article.
4. In determining the profits of a permanent
establishment, there shall be allowed as deduction expenses which are incurred
for the purposes of the business of the permanent establishment, including
executive and general administrative expenses so incurred, whether in the
Contracting State in which the permanent establishment is situated or elsewhere
in accordance with the provisions of tax law of that Contracting State.
5. No profits shall be attributed to a permanent
establishment by reason of the mere purchase by that permanent establishment of
goods or merchandise for the enterprise.
6. For the purposes of paragraphs 1 to 5, the
profits to be attributed to the permanent establishment shall be determined by
the same method year by year unless there is good and sufficient reason to the
contrary.
7. Where profits include items of income which
are dealt with separately in other Articles of this Agreement, then the
provisions of those Articles shall not be affected by the provisions of this
Article.
Article 8 : Shipping and air transport - 1.
Profits derived by an enterprise which is a resident of a Contracting State
from the operation by that enterprise of ships or aircraft in international
traffic shall be taxable only in that Contracting State.
2. For the purposes of this Article, profits
from the operation of ships or aircraft in international traffic shall mean
profits derived by an enterprise described in paragraph 1 from the
transportation by sea or air respectively of passengers, mail, livestock or
goods carried on by the owners or lessees or charterers
of ships or aircraft including :
(a) the sale of tickets for such transportation ;
(b) the rental of ships or aircraft connected with such transportation;
and
(c) income from use, maintenance, or rental of containers (including
trailers, barges, and related equipment for the transport of containers)
operated in international traffic.
3. For the purposes of this Article, interest on
funds directly connected with the operation of ships or aircraft in
international traffic shall be regarded as profits described in this Article,
and the provisions of Article 11 (interest) shall not apply in relation to such
interest.
4. The provisions of paragraph 1 shall also
apply to profits from the participation in a pool, a joint business or an
international operating agency.
Article 9 : Associated
enterprises - 1. Where—
(a) an enterprise of a Contracting State participates directly or
indirectly in the management, control or capital of an enterprise of the other
Contracting State, or
(b) the same persons participate directly or indirectly in the
management, control or capital of an enterprise of a Contracting State and an
enterprise of the other Contracting State,
and in either
case conditions are made or imposed between the two enterprises in their
commercial or financial relations which differ from those which would be made
between independent enterprises, then any profits which would, but for those
conditions, have accrued to one of the enterprises, but, by the reason of those
conditions, have not so accrued, may be included in the profits of that
enterprise and taxed accordingly.
2. Where a Contracting State includes in the
profits of an enterprise of that Contracting State - and taxes accordingly -
profits on which an enterprise of the other Contracting State has been charged
to tax in that other Contracting State, and the profits so included are profits
which would have accrued to the enterprise of the first-mentioned Contracting
State if the conditions made between the two enterprises had been those which
would have been made between independent enterprises, then that other State
shall make an appropriate adjustment to the amount of tax charged therein on
those profits. In determining such adjustment, due regard shall be had to the
other provisions of this Agreement and the competent authorities of the
Contracting States shall, if necessary, consult each other.
Article 10 : Dividends
- 1. Dividends paid by a company which is a resident of a Contracting
State to a resident of the other Contracting State, may be taxed in that other
Contracting State.
2. However, such dividends may also be taxed in
the Contracting State of which the company paying the dividends is a resident
and according to the laws of that Contracting State, but if the recipient is
the beneficial owner of the dividends the tax so charged shall not exceed 10 per
cent of the gross amount of the dividends. The provisions of this paragraph
shall not affect the taxation of the company in respect of the profits out of
which the dividends are paid.
3. The term “dividends” as used in this Article
means income from shares, or other rights, not being debt claims, participating
in profits, as well as income from other corporate rights which is subjected to
the same taxation treatment as income from shares by the laws of the State of
which the company making the distribution is a resident.
4. The provisions of paragraphs 1 and 2 shall
not apply if the beneficial owner of the dividends, being a resident of a
Contracting State, carries on business in the other Contracting State of which
the company paying the dividends is a resident, through a permanent
establishment situated therein, or performs in that either Contracting State
independent personal services from a fixed base situated therein, and the
holding in respect of which the dividends are paid is effectively connected with
such permanent establishment or fixed base, in such case the provisions of
Article 7 or Article 14, as the case may be, shall apply.
5. Where a company which is a resident of a
Contracting State derives profits or income from the other Contracting State,
that other Contracting State may not impose any tax on the dividends paid by
the company, except insofar as such dividends are paid to a resident of that
other Contracting State or insofar as the holding in respect of which the
dividends are paid is effectively connected with a permanent establishment or a
fixed base situated in that other Contracting State, nor subject the company’s
undistributed profits to a tax on the company’s undistributed profits, even if
the dividends paid or the undistributed profits consist wholly or partly of
profits or income arising in such other Contracting State.
Article 11 : Interest
- 1. Interest arising in a Contracting State and paid to a resident of
the other Contracting State may be taxed in that other Contracting State.
2. However, such interest may also be taxed in
the Contracting State in which it arises and according to the laws of that
Contracting State, but if the recipient is the beneficial owner of the interest
the tax so charged shall not exceed 10 per cent of the gross amount of the
interest.
3. Notwithstanding the provisions of paragraph
2, interest arising in a Contracting State and derived by the Government of the
other Contracting State, a political sub-division, a local authority and the
Central Bank thereof or any financial institution wholly owned by that
Government, or by any other resident of that other Contracting State with
respect to debt claims indirectly financed by the Government of that other
Contracting State, a political sub-division, a local authority, and the Central
Bank thereof or any financial institution wholly owned by that Government shall
be exempt from tax in the first-mentioned Contracting State.
4. The term “interest” as used in this Article
means income from debt-claims of every kind, whether or not secured by mortgage
and whether or not carrying a right to participate in the debtor’s profits, and
in particular, income from Government securities and income from bonds or
debentures, including premiums and prizes attaching to such securities, bonds
or debentures. Penalty charges for late payment shall not be regarded as
interest for the purpose of this Article.
5. The provisions of paragraphs 1 and 2 shall
not apply if the beneficial owner of the interest, being a resident of a
Contracting State, carries on business in the other Contracting State in which
the interest arises, through a permanent establishment situated therein, or
performs in that other Contracting State independent personal services from a
fixed base situated therein, and the debt-claim in respect of which the
interest is paid is effectively connected with such permanent establishment or
fixed base. In such case the provisions of Article 7 or Article 14, as the case
may be, shall apply.
6. Interest shall be deemed to arise in a
Contracting State when the payer is the Government of that Contracting State, a
political sub-division, a local authority thereof or a resident of that
Contracting State. Where, however, the person paying the interest, whether he
is a resident of a Contracting State or not, has in a Contracting State a
permanent establishment or a fixed base in connection with which the
indebtedness on which the interest is paid was incurred, and such interest is
borne by such permanent establishment or fixed base. Then such interest shall
be deemed to arise in the Contracting State in which the permanent
establishment or fixed base is situated.
7. Where, by reason of a special relationship
between the payer and the beneficial owner or between both of them and some other
person, the amount of the interest, having regard to the debt-claim for which
it is paid, exceeds the amount which would have been agreed upon by the payer
and the beneficial owner in the absence of such relationship, the provisions of
this Article shall apply only to the last-mentioned amount. In such case, the
excess part of the payments shall remain taxable according to the laws of each
Contracting State, due regard being had to the other provisions of this
Agreement.
Article 12 : Royalties
and fees for technical services - 1. Royalties or fees for technical
services arising in a Contracting State and paid to a resident of the other
Contracting State may be taxed in that other Contracting State.
2. However, such royalties or fees for technical
services may also be taxed in the Contracting State in which they arise, and
according to the laws of that Contracting State, but if the recipient is the
beneficial owner of the royalties or fees for technical services, the tax so
charged shall not exceed 10 per cent of the gross amount of the royalties or
fees for technical services.
3. The term “royalties” as used in this Article
means payment of any kind received as a consideration for the use of, or the
right to use, any copyright of literary, artistic or scientific work including
cinematograph films and films or tapes for radio or television broadcasting,
any patent, trade mark, design or model, plan, secret formula or process, or
for the use of, or the right to use, industrial, commercial or scientific equipment,
or for information concerning industrial, commercial or scientific experience.
4. The term “fees for technical services” as
used in this Article means any payment for the provision of services of
managerial, technical or consultancy nature by a resident of a Contracting
State in the other Contracting State, but does not include payment for
activities mentioned in paragraph 2(k) of Article 5 and Article 15 of
the Agreement.
5. The provisions of paragraphs 1 and 2 shall
not apply if the beneficial owner of the royalties or fees for technical
services, being a resident of a Contracting State, carries on business in the
other Contracting State in which the royalties or fees for technical services
arise, through a permanent establishment situated therein, or performs in that
other Contracting State independent personal services from a fixed base
situated therein, and the right, property or contract in respect of which the
royalties or fees for the technical services are paid is effectively connected
with such permanent establishment or fixed base. In such case the provisions of
Article 7 or Article 14, as the case may be, shall apply.
6. Royalties or fees for technical services
shall be deemed to arise in a Contracting State when the payer is the
Government of that Contracting State, a political sub-division, a local
authority thereof or a resident of that Contracting State. Where, however, the
person paying the royalties or fees for technical services, whether he is a
resident of a Contracting State or not, has in a Contracting State a permanent
establishment or a fixed base in connection with which the liability to pay the
royalties or fees for technical services was incurred, and such royalties or
fees for technical services are borne by such permanent establishment or fixed
base, then such royalties or fees for technical services shall be deemed to
arise in the Contracting State in which the permanent establishment or fixed
base is situated.
7. Where, by reason of a special relationship
between the payer and the beneficial owner or between both of them and some
other person, the amount of the royalties or fees for technical services,
having regard to the use, right or information for which they are paid, exceeds
the amount which would have been agreed upon by the payer and the beneficial
owner in the absence of such relationship, the provisions of this Article shall
apply only to the last-mentioned amount. In such case, the excess part of the
payments shall remain taxable according to the laws of each Contracting State,
due regard being had to the other provisions of this Agreement.
Article 13 : Capital gains - 1. Gains
derived by a resident of a Contracting State from the alienation of immovable
property referred to in Article 6 and situated in the other Contracting State
may be taxed in that other Contracting State.
2. Gains from the alienation of movable property
forming part of business property of a permanent establishment which an
enterprise of a Contracting State has in the other Contracting State or of movable
property pertaining to a fixed base available to a resident of a Contracting
State in the other Contracting State for the purpose of performing independent
personal services, including such gains from the alienation of such a permanent
establishment (alone or together with the whole enterprise) or of such a fixed
base, may be taxed in that other Contracting State.
3. Gains from the alienation of ships or
aircraft operated in international traffic or movable property pertaining to
the operation of such ships or aircraft shall be taxable only in the
Contracting State of which the alienator is a resident.
4. Gains from the alienation of shares of the
capital stock of a company the property of which consists directly or
indirectly principally of immovable property situated in a Contracting State
may be taxed in that Contracting State.
5. Gains from the alienation of any property
other than that referred to in the preceding paragraphs of this Article,
arising in a Contracting State, may be taxed in that Contracting State.
Article 14 : Independent personal services - 1.
Income derived by a resident of a Contracting State in respect of professional
services or other activities of an independent character shall be taxable only
in that Contracting State except in one of the following circumstances, when
such income may also be taxed in the other Contracting State :
(a) if he has a fixed base regularly available to him in the other
Contracting State for the purpose of performing his activities; in that case,
only so much of the income as is attributable to that fixed base may be taxed
in that other Contracting State;
(b) if his stay in the other Contracting State is for a period or
periods exceeding in the aggregate 183 days in the taxable year concerned; in
that case, only so much of the income as is derived from his activities
performed in that other Contracting State may be taxed in that other
Contracting State.
2. The term “professional services” includes
especially independent scientific, literary, artistic, educational or teaching
activities as well as the independent activities of physicians, lawyers,
engineers, architects, dentists and accountants.
Article 15 : Dependent personal services - 1.
Subject to the provisions of Articles 16, 18, 19, 20 and 21, salaries, wages
and other similar remuneration derived by a resident of a Contracting State in
respect of an employment shall be taxable only in that Contracting State unless
the employment is exercised in the other Contracting State. If the employment
is so exercised, such remuneration as is derived therefrom
may be taxed in that other Contracting State.
2. Notwithstanding the provisions of paragraph
1, remuneration derived by a resident of a Contracting State in respect of an
employment exercised in the other Contracting State shall be taxable only in
the first-mentioned State if :
(a) the recipient is present in the other Contracting State for a
period or periods not exceeding in the aggregate 183 days in the taxable year
concerned; and
(b) the remuneration is paid by, or on behalf of, an employer who is
not a resident of the other Contracting State; and
(c) the remuneration is not borne by a permanent establishment or a
fixed base which the employer has in the other Contracting State.
3. Notwithstanding the provisions of paragraphs
1 and 2 of this Article, remuneration derived in respect of an employment
exercised aboard a ship or aircraft operated by an enterprise which is a
resident of a Contracting State in international traffic shall be taxable only
in that Contracting State.
Article 16 : Directors’ fees - Directors’ fees and
other similar payments derived by a resident of a Contracting State in his
capacity as member of the Board of Directors of a company which is resident of
the other Contracting State may be taxed in that other Contracting State.
Article 17 : Artistes and sportspersons - 1.
Notwithstanding the provisions of Articles 14 and 15, income derived by a
resident of a Contracting State as an entertainer, such as a theatre, motion
picture, radio or television artiste, or a musician, or as a sportsperson, from
his personal activities as such exercised in other Contracting State, may be
taxed in that other Contracting State.
2. Where income in respect of personal
activities exercised by an entertainer or a sportsperson in his capacity as
such accrues not to the entertainer or sportsperson himself but to another
person, that income may, notwithstanding the provisions of Articles 7, 14 and
15, be taxed in the Contracting State in which the activities of the
entertainer or sportsperson are exercised.
3. Notwithstanding the provisions of paragraphs
1 and 2, income derived by entertainers or sportsperson who are residents of a
Contracting State from the activities exercised in the other Contracting State
either as a part of culture exchange between the Contracting States or
supported wholly or substantially from the public funds in either of the
Contracting States or political sub-divisions or local authorities thereof,
shall be exempt from tax in that other Contracting State.
Article 18 : Pensions - 1. Subject to the
provisions of paragraph 2 of Article 19, pensions, annuity and other similar
remuneration paid to a resident of a Contracting State in consideration of past
employment shall be taxable only in that Contracting State.
2. Notwithstanding the provisions of paragraph
1, pensions, annuity paid and other similar payments made by the Government of
a Contracting State or a political sub-division or a local authority thereof
under a public welfare scheme of the special security system of that
Contracting State shall be taxable only in that Contracting State.
Article 19 : Remuneration and pensions in respect of
Government services - 1. (a)
Remuneration, other than pension, paid by the Government of a Contracting State
or a political sub-division or a local authority thereof to an individual in
respect of services rendered to the Government of that Contracting State or a
political sub-division or local authority thereof, in the discharge of
functions of a governmental nature, shall be taxable only in that Contracting
State.
(b)
However, such remuneration shall be taxable only in the other Contracting State
if the services are rendered in that other Contracting State and the individual
is a resident of that other Contracting State who :
(i) is a national of that other Contracting State;
or
(ii) did not become a resident of that other
Contracting State solely for the purpose of rendering the services.
2. (a) Any pension paid by, or out of
funds to which contributions are made by the Government of a Contracting State
or a political sub-division or a local authority thereof to an individual in
respect of services rendered to the Government of that Contracting State or a
political sub-division or a local authority thereof shall be taxable only in
the Contracting State.
(b)
However, such pension shall be taxable only in the other Contracting State if
the individual is a resident of, and a national of, that other Contracting
State.
3. The provisions of Articles 15, 16, 17 and 18
shall apply to remuneration and pensions in respect of services rendered in
connection with a business carried on by the Government of a Contracting State
or a political sub-division or a local authority thereof.
Article 20 : Payments received by professors, teachers
and research scholars - 1. An individual who is, or immediately
before visiting a Contracting State was, a resident of the other Contracting
State and is present in the first-mentioned Contracting State for the primary
purpose of teaching giving lectures or conducting research at a university,
college, school or educational institution or scientific research institution
approved by the Government of the first-mentioned Contracting State shall be
exempt from tax in the first mentioned Contracting State, for a period of three
years from the date of his arrival in the first-mentioned Contracting State, in
respect of remuneration for such teaching, lectures or research.
2. This Article shall not apply to income from
research if such research is undertaken primarily for the private benefit of a
specific person or persons.
Article 21 : Payments received by students, trainees
and apprentices - 1. A student, business apprentice or trainee who is or
was immediately before visiting a Contracting State a resident of the other
Contracting State and who is present in the first-mentioned State solely for
the purpose of his education, training shall be exempt from tax in that first-mentioned
State on the following payments or income received or derived by him for the
purpose of his maintenance, education or training :
(a) payments derived from sources outside that Contracting State for
the purpose of his maintenance, education, study, research or training;
(b) grants, scholarships or awards supplied by the Government or a
scientific, educational, cultural or other tax-exempt organization; and
(c) income derived from personal services performed in that Contracting
State for the purpose of maintenance.
2. The benefits of this Article shall extend
only for such period of time as may be reasonable or customarily required to
complete the education or training undertaken, but in no event shall any
individual have the benefits of this Article, for more than five consecutive
years from the date of his first arrival in that Contracting State.
Article 22 : Other income - 1. Items of income of
a resident of a Contracting State, wherever arising, not dealt with in the
foregoing Articles of this Agreement shall be taxable only in that Contracting
State.
2. The provisions of paragraph 1 shall not apply
to income, other than income from immovable property as defined in paragraph 2
of Article 6, if the recipient of such income, being a resident of a Contracting
State, carries on business in the other Contracting State through a permanent
establishment situated therein, or performs in that other Contracting State
independent personal services from a fixed base situated therein, and the right
or property in respect of which the income is paid is effectively connected
with such permanent establishment or fixed base. In such case the provisions of
Article 7 or Article 14, as the case may be, shall apply.
3. Notwithstanding the provisions of paragraphs
1 and 2, items of income of a resident of a Contracting State not dealt within
the foregoing Articles of this Agreement and arising in the other Contracting
State may be taxed in that other Contracting State.
Article 23 : Methods for the elimination of double taxation
- 1. In China, double taxation shall be eliminated as follows :
(a) Where a resident of China derives income from India the amount of
tax on that income payable in India in accordance with the provisions of this
Agreement, may be credited against the Chinese tax imposed on that resident.
The amount of credit, however, shall not exceed the amount of the Chinese tax
on that income computed in accordance with the taxation laws and regulations of
China.
(b) Where the income derived from India is a dividend paid by a company
which is a resident of India to a company which is a resident of China and
which owns not less than 10 per cent of the shares of the company paying the
dividend, the credit shall take into account the tax paid to India by the
company paying the dividend in respect of its income.
2. In India, double taxation shall be eliminated
as follows :
Where a
resident of India derives income which, in accordance with the provisions of
this Agreement, may be taxed in China, India shall allow as a deduction from
the tax on the income of that resident an amount equal to the income-tax paid
in China whether directly or by deduction. Such deduction shall not, however,
exceed that part of the income-tax (as computed before the deduction is given)
which is attributable, as the case may be, to the income which may be taxed in
China.
3. The tax paid in a Contracting State mentioned
in paragraphs 1 and 2 of this Article shall be deemed to include the tax which
would have been payable but for the legal provisions concerning tax reduction
exemption or other tax incentives of the Contracting States for the promotion
of economic development.
Article 24 : Non-discrimination - 1. Nationals of
a Contracting State shall not be subjected in the other Contracting State to
any taxation or any requirement connected therewith, which is other or more
burdensome than the taxation and connected requirements to which nationals of that other Contracting
State in the same circumstances are or may be subjected.
2. The taxation on a permanent establishment
which an enterprise of a Contracting State has in the other Contracting State
shall not be less favourably levied in that other
Contracting State than the taxation levied on enterprises of that other
Contracting State carrying on the same activities in the same circumstances or
under the same conditions.
3. Where a Contracting State charges the profits
of a permanent establishment which an enterprise of the other Contracting State
has in the first-mentioned Contracting State at a rate of tax which is
different from that imposed on the profits of a similar enterprise of the
first-mentioned Contracting State, it shall not be construed as discrimination
under this Article.
4. Nothing contained in this Article shall be
construed as obliging a Contracting State to grant to residents of the other
Contracting State any personal allowances, reliefs
and deductions for taxation purposes on account of civil status or family
responsibilities which it grants to its own residents.
5. Except where the provisions of paragraphs 1
of Article 9, paragraph 7 of Article 11, or paragraph 7 of Article 12, apply,
interest, royalties and other disbursements paid by an enterprise of a
Contracting State to a resident of the other Contracting State shall, for the
purpose of determining the taxable profits of such enterprise, be deductible
under the same conditions as if they had been paid to a resident of the
first-mentioned State subject to the provisions of domestic laws of that
Contracting State.
6. Enterprises of a Contracting State, the
capital of which is wholly or partly owned or controlled, directly or
indirectly, by one or more residents of the other Contracting State, shall not
be subjected in the first-mentioned State to any taxation or any requirement
connected therewith which is other or more burdensome than the taxation and
connected requirements to which other similar enterprises of the
first-mentioned State are or may be subjected in the same circumstances and
under the same conditions.
7. In this Article, the term “taxation” means
taxes which are the subject of this Agreement.
Article 25 : Mutual agreement procedure - 1. Where
a person considers that the actions of one or both of the Contracting States result
or will result for him in taxation not in accordance with the provisions of
this Agreement, he may, irrespective of the remedies provided by the domestic
law of those States, present his case to the competent authority of the
Contracting State of which he is a resident or, if his case comes under
paragraph 1 of Article 24, to that of the Contracting State of which he is a
national. The case must be presented within three years from the first
notification of the action resulting in taxation not in accordance with the
provisions of the Agreement.
2. The competent authority shall endeavour, if the objection appears to it to be justified
and if it is not itself able to arrive at a satisfactory solution, to resolve,
the case by mutual agreement with the competent authority of the other
Contracting State, with a view to the avoidance of taxation which is not in
accordance with the provisions of this Agreement. Any agreement reached shall
be implemented notwithstanding any time limits in the domestic law of the
Contracting States.
3. The competent authorities of the Contracting
States shall endeavour to resolve by mutual agreement
any difficulties or doubts arising as to the interpretation or application of
the Agreement. They may also consult together for the elimination of double
taxation in cases not provided for in this Agreement.
4. The competent authorities of the Contracting
States may communicate with each other directly for the purpose of reaching an
agreement in the sense of paragraphs 2 and 3. When it seems advisable for
reaching agreement, representatives of the competent authorities of the
Contracting States may meet together for an oral exchange of opinions.
Article 26 : Exchange of information - 1. The
competent authorities of the Contracting States shall exchange such information
(including documents) as is necessary for carrying out the provisions of this
Agreement or of the domestic laws of the Contracting States concerning taxes
covered by the Agreement, insofar as the taxation thereunder
is not contrary to this Agreement, in particular for the prevention of evasion
of such taxes. The exchange of information is not restricted by Article 1. Any
information received by a Contracting State shall be treated as secret and
shall be disclosed only to persons or authorities (including courts and
administrative bodies) involved in the assessment or collection of, the
enforcement or prosecution in respect of, or the determination of appeals in
relation to, the taxes covered by the Agreement. Such persons or authorities
shall use the information only for such purposes. They may disclose the
information in public court proceedings or in judicial decisions.
2. In no case shall the provisions of paragraph
1 be construed so as to impose on a Contracting State the obligation :
(a) to carry out administrative measures at variance with the laws and
administrative practice of that or of the other Contracting State;
(b) to supply information or documents which is not obtainable under
the laws or in the normal course of the administration of that or of the other
Contracting State; and
(c) to supply information or documents which would disclose any trade,
business, industrial, commercial or professional secret or trade process, or
information, the disclosure of which would be contrary to public policy (ordre public).
Article 27 : Diplomatic agents and consular officers -
Nothing in this Agreement shall affect the fiscal privileges of diplomatic
agents or consular officers under the general rules of international law or
under the provisions of special agreements.
Article 28 : Entry into force - This Agreement
shall enter into force on the thirtieth day after the date on which diplomatic
notes indicating the completion of internal legal procedures necessary in each
country for the entry into force of this Agreement have been exchanged. This
Agreement shall have effect :
(a) in China, in respect of income arising in any taxable year
beginning on or after the first day of January next following the calendar year
in which this Agreement enters into force;
(b) in India, in respect of income arising in any previous year
beginning on or after the first day of April next following the calendar year
in which this Agreement enters into force.
Article 29 : Termination - This Agreement shall
remain in force indefinitely but either of the Contracting States may, on or
before the thirtieth day of June in any calendar year beginning after the
expiration of a period of five years from the date of its entry into force,
give written notice of termination to the other Contracting State through the
diplomatic channels. In such event this Agreement shall cease to have effect :
(a) in China, in respect of income arising in any taxable year
beginning on or after the first day of January next following the calendar year
in which the notice of termination is given;
(b) in India, in respect of income arising in any previous year
beginning on or after the first day of April next following the calendar year
in which the notice is given;
In witness
whereof, the undersigned, being duly authorized thereto, have signed the
present Agreement.
Done in
duplicate at New Delhi on this eighteenth day of July, one thousand nine
hundred and ninety-four in the Hindi, Chinese and English languages, all three
texts being equally authentic. In case of any divergence the English text shall
prevail.
Sd/- |
Sd/- |
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For the
Government of the |
For the Government of the |
|
Republic
of India |
People’s Republic of China |
Protocol
At the signing
of the Agreement between the Government of the Republic of India and the
Government of the People’s Republic of China for the Avoidance of Double
Taxation and the Prevention of Fiscal Evasion with respect to taxes on income
(hereinafter referred to as “The Agreement”) both sides have agreed upon the
following which form an integral part of the Agreement :
1. With reference to paragraph (1d) of Article 3 :
It is understood that the term
“tax” should not include any penalty imposed for non-compliance of the laws and
regulations relating to the taxes to which this Agreement applies.
2. With reference to Article 8, the exemption shall also include:
(i) in China, the business tax;
(ii) in India, any tax similar to the business tax
in China which may be imposed in India after signing of the Agreement.
3. With reference to Article 26:
The competent
authorities of the Contracting States shall agree from time to time on the
information or documents which shall be necessarily furnished on a routine
basis.
In witness
whereof, the undersigned, being duly authorized thereto, have signed the
present Protocol.
Done in
duplicate at New Delhi on this eighteenth day of July, one thousand nine hundred
and ninety-four in the Hindi, Chinese and English languages, all three texts
being equally authentic. In case of any divergence, the English text shall
prevail.
Sd/- |
Sd/- |
For the Government of the |
For the Government of the |
|
Republic of
India |
People’s Republic of China |