11A. Agreement
for Avoidance of Double Taxation and Prevention of Fiscal Evasion with foreign
countries - With Czech Republic
Whereas the annexed Convention between the Government
of the Republic of India and the Government of the Czech Republic for the
avoidance of double taxation and the prevention of fiscal evasion with respect
to taxes on income and on capital has come into force on the 27th day of
September, 1999, on the notification by both the Contracting States to each
other, under article 30 of the said Convention, of the completion of the
procedures required under their respective laws for bringing into force 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
44A of the Wealth-tax Act, 1957 (27 of 1957), the Central Government hereby
directs that all the provisions of the said Convention shall be given effect to
in the Union of
Notification : No.
GSR 811(E), dated 8-12-1999.
Annexure
Convention between
the Government of the Republic of India
and the Government of the Czech Republic For the avoidance of double taxation and the
prevention of fiscal evasion with respect
to taxes on income and on capital
The Government of the Republic of India and the Government of the Czech
Republic desiring to conclude a Convention for the avoidance of double taxation
and the prevention of fiscal evasion with respect to taxes on income and on
capital and with a view to promoting economic cooperation between the two
countries,
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. This Convention shall apply to taxes
on income and on capital imposed on behalf of a
2. There shall be regarded as taxes on income and on capital all taxes
imposed on total income, on total capital, or on elements of income or capital,
including taxes on gains from the alienation of movable or immovable property,
taxes on the total amounts of wages or salaries paid by enterprises, as well as
taxes on capital appreciation.
3. The existing taxes to which the Convention shall apply are in
particular:
(a) In
(i) the
income-tax, including any surcharge thereon;
(ii) the wealth-tax,
(hereinafter
referred to as “Indian tax”);
(b) In the
(i) the tax on
income of individuals;
(ii) the tax on income of legal persons;
(iii) the tax on immovable property,
(hereinafter
referred to as “Czech tax”).
4. The Convention shall apply also to any identical or substantially
similar taxes which are imposed after the date of signature of the Convention
in addition to, or in place of, the existing taxes referred to in paragraph 3.
The competent authorities of the Contracting States shall notify each other of
significant changes which have been made in their respective taxation laws.
Article 3 : General Definitions - 1.
For the purposes of this Convention, unless the context otherwise requires :
(a) the term “India” means the territory of India and
includes the territorial sea and airspace above it, as well as any other
maritime zone in which India has sovereign rights, other rights and
jurisdiction, according to the Indian law and in accordance with the
international law, including the U.N. Convention on the Law of the Sea;
(b) the term “the Czech Republic” means the
territory of the Czech Republic over which, under Czech Legislation and in
accordance with international law, the sovereign rights of the Czech Republic
are exercised;
(c) the term “person” includes an individual, a
company, a body of persons and any other entity which is treated as a taxable
unit under the taxation laws in force in the respective Contracting States;
(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 is a resident
of a
(g) the term “competent authority” means:
(i) in
(ii) in the
(h) the term “national” means :
(i) any
individual possessing the nationality of a
(ii) any legal person, partnership or association
deriving its status as such from the laws in force in a
(i) the term
“fiscal year” means :
(i) in the case
of
(ii) in the case of the
(j) the term “tax” means Indian tax or Czech 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 or fine imposed relating to
those taxes;
(k) the terms “a
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 : Resident - 1. For the purposes of this Convention, the
term “resident of a Contracting State” means any person who, under the laws of
that State, is liable to tax therein by reason of his domicile, residence,
place of management or any other criterion of a similar nature. But this term
does not include any person who is liable to tax in that State in respect only
of income from sources in that State or capital situated therein.
2. Where by reason of the provisions of paragraph 1 an individual is a
resident of both Contracting States, then his status shall be determined as
follows :
(a) he shall be deemed to be a resident of the
State in which he has a permanent home available to him, if he has a permanent
home available to him in both States, he shall be deemed to be a resident of
the State with which his personal and economic relations are closer (centre of
vital interests);
(b) if the State in which he has his centre of
vital interests cannot be determined, or if he has not a permanent home
available to him in either State, he shall be deemed to be a resident of the
State in which he has an habitual abode;
(c) if he has an habitual abode in both States or
in neither of them, he shall be deemed to be a resident of the State of which
he is a national;
(d) if he is a national of both States or of
neither of them, the competent authorities of the Contracting 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. If the State in which its place of effective management is situated
cannot be determined, then the competent authorities of the Contracting States
shall settle the question by mutual agreement.
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 any
other place of extraction of natural resources;
(g) a sales outlet;
(h) a warehouse in relation to a person providing
storage facilities for others; and
(i) a farm,
plantation or other place where agricultural, forestry, plantation or related
activities are carried on.
3. A building site or construction, assembly or installation project or
supervisory activities in connection therewith constitute a permanent
establishment only if such site, project or activities last more than six
months.
4. Notwithstanding the preceding provisions of this Article, the term
“permanent establishment” shall be deemed not to include :
(a) the use of facilities solely for the purpose
of storage or display of goods or merchandise belonging to the enterprise;
(b) the maintenance of a stock of goods or
merchandise belonging to the enterprise solely for the purpose of storage or
display;
(c) the maintenance of a stock of goods or
merchandise belonging to the enterprise solely for the purpose of processing by
another enterprise;
(d) the maintenance of a fixed place of business
solely for the purpose of purchasing goods or merchandise or of collecting
information, for the enterprise;
(e) the maintenance of a fixed place of business
solely for the purpose of carrying on, for the enterprise, any other activity
of a preparatory or auxiliary character;
(f) the maintenance of a fixed place of business
solely for any combination of activities mentioned in sub-paragraphs (a)
to (e), provided that the overall activity of the fixed place of
business resulting from this combination is of a preparatory or auxiliary
character.
5. Notwithstanding the provisions of paragraphs 1 and 2, where a
person-other than an agent of an independent status to whom paragraph 7 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 Contracting State in respect of any
activities which that person undertakes for the enterprise, if such a person—
(a) has and habitually exercises in that State an
authority to conclude contracts in the name of the enterprise, unless the
activities of such person are limited to those mentioned in paragraph 4 which,
if exercised through a fixed place of business, would not make this fixed place
of business a permanent establishment under the provisions of that paragraph;
or
(b) has no such authority, but habitually
maintains in the first-mentioned State a stock of goods or merchandise from
which he regularly delivers goods or merchandise on behalf of the enterprise.
6. Notwithstanding the preceding provisions of this Article, an insurance
enterprise of a Contracting State shall, except in regard to re-insurance, be
deemed to have a permanent establishment in the other Contracting State if it
collects premiums in the territory of that other State or insures risks
situated therein through a person other than an agent of an independent status
to whom paragraph 7 applies.
7. An enterprise shall not be deemed to have a permanent establishment in
a Contracting State merely because it carries on business in that State through
a broker, general commission agent or any other agent of an independent status,
provided that such persons are acting in
the ordinary course of their business. However, when the activities of
such an agent are devoted wholly or almost wholly on behalf of that enterprise,
he will not be considered an agent of an independent status within the meaning
of this paragraph.
8. The fact that a company which is a resident of a Contracting State
controls or is controlled by a company which is a resident of the other
Contracting State, or which carries on business in that other State (whether
through a permanent establishment or otherwise), shall not of itself constitute
either company 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 also be taxed in that other State.
2. The term “immovable property” shall have the meaning which it has under
the law of the Contracting State in which the property in question is situated.
The term shall in any case include property accessory to immovable property,
livestock and equipment used in agriculture and forestry, rights to which the
provisions of 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, aircraft and motor vehicles 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 also 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, whether in the State in which the permanent establishment
is situated or elsewhere, in accordance with the provisions of and subject to
the limitations of the tax laws of that State.
4. 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 : Shipping and Air Transport - 1. Profits derived by an
enterprise of a Contracting State from the operation of ships or aircraft in
international traffic shall be taxable only in that State.
2. Profits derived by a transportation enterprise which is a resident of a
Contracting State from the use, maintenance, or rental of containers (including
trailers and other equipment for the transport of containers) used for the
transport of goods or merchandise in international traffic shall be taxable
only in that Contracting State unless the containers are used solely within the
other Contracting State.
3. For the purposes of this Article, interest on funds directly connected
with the operations of ships or aircraft in international traffic shall be
regarded as profits derived from the operation of such ships or aircraft, and
the provisions of Article 11 shall not apply in relation to such interest.
4. The provisions of paragraph 1 shall also apply to profits from the
participation in a pool, a joint business or an international operating agency.
Article 9 : Associated Enterprises - Where :
(a) an enterprise of a
(b) the same persons
participate directly or indirectly in the management, control or capital of an
enterprise of a
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 a resident of
the other Contracting 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 rights which is subjected to the same taxation treatment as
income from shares by the laws of the State of which the company making the
distribution is a resident.
4. The provisions of paragraphs 1 and 2 shall not apply if the beneficial
owner of the dividends, being a resident of a Contracting State, carries on
business in the other Contracting State of which the company paying the
dividends is a resident, through a permanent establishment situated therein, or
performs in that other State independent personal services from a fixed base
situated therein, and the holding in respect of which the dividends are paid is
effectively connected with such permanent establishment or fixed base. In such
case the provisions of Article 7 or Article 14, as the case may be, shall
apply.
5. Where a company which is a resident of a Contracting State derives
profits or income from the other Contracting State, that other State may not
impose any tax on the dividends paid by the company, except insofar as such
dividends are paid to a resident of that other State or insofar as the holding
in respect of which the dividends are paid is effectively connected with a
permanent establishment or a fixed base situated in that other State, nor
subject the company’s undistributed profits to a tax on the company’s
undistributed profits, even if the dividends paid or the undistributed profits
consist wholly or partly or 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 beneficial
owner of the interest is a resident of the other Contracting State 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 shall be exempt from tax in that Contracting State provided
it is derived and beneficially owned by, or derived in connection with a loan
or credit extended or endorsed by :
(a) the Government, a political sub-division or a
local authority of the other Contracting State; or
(b) (i) in the case
of India, the Reserve Bank of India, the Industrial Finance Corporation of
India, the Industrial Development Bank of India, the Export Import Bank of
India, the National Housing Bank, the Small Industries Development Bank of
India and the Industrial Credit and Investment Corporation of India (ICICI);
and
(ii) in the case of the Czech Republic, the Czech
National Bank (CNB), the Czech Export Bank (CEB), the Export Guarantee and
Insurance Company (EGIC), and the Konsolidation Bank
(KB); or
(c) any other institution as may be agreed upon
from time to time 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, 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 14, as the case may be, shall apply.
6. Interest shall be deemed to arise in a Contracting State when the payer
is that State itself, a political sub-division, a local authority or a resident
of that State. Where, however, the person paying the interest, whether he is a
resident of a Contracting State or not, has in a Contracting State a permanent
establishment or a fixed base in connection with which the indebtedness on
which the interest is paid was incurred, and such interest is borne by such
permanent establishment or fixed base, then such interest shall be deemed to
arise in the 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 Convention.
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 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 State, but if the beneficial owner of the royalties or fees for
technical services is a resident of the other Contracting State the tax so
charged shall not exceed 10 per cent of the gross amount of the royalties or
fees for technical services.
3. (a) 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, and films or tapes for television or radio broadcasting, any patent,
trade mark, design or model, plan, secret formula or process, or any
industrial, commercial or scientific equipment or for information concerning
industrial, commercial or scientific experience.
(b) The term “fees for technical services” as used in this
Article means payments of any kind received as a 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 Convention.
4. 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 or property
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.
5. Royalties or fees for technical services shall be deemed to arise in a
Contracting State when the payer is that State itself, a political
sub-division, a local authority or a resident of that State. Where, however,
the person paying the royalties or fees for technical services, whether he is a
resident of a Contracting State or not, has in a Contracting State a permanent
establishment or a fixed base in connection with which the liability to pay the
royalties or fees for technical services was incurred, and such royalties or
fees for technical services are borne by such permanent establishment or fixed
base, then such royalties or fees for technical services shall be deemed to
arise in the Contracting State in which the permanent establishment or fixed
base is situated.
6. Where, by reason of a special relationship between the payer and the
beneficial owner or between both of them and some other person, the amount of
the 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 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 and situated in the other Contracting State may also 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
also be taxed in that other State.
3. Gains derived by an enterprise of a Contracting State 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
that State.
4. Gains from the alienation of shares of the capital stock of a company
the property of which consists directly or indirectly principally of immovable
property situated in a Contracting State may be taxed in that State.
5. Gains from the alienation of shares other than those mentioned in
paragraph 4 in a company which is a resident of a Contracting State may be
taxed in that State.
6. Gains from the alienation of any property other than that referred to
in paragraphs 1, 2, 3, 4 and 5 shall be taxable only in the Contracting State
of which the alienator is a resident.
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 except in the following
circumstances, when such income may also be taxed in the other Contracting
State :
(a) if he has a fixed base regularly available to
him in the other Contracting State for the purpose of performing his
activities; in that case, only so much of the income as is attributable to that
fixed base may be taxed in that other State; or
(b) if his stay in the other State is for a period
or periods aggregating 183 days or more in any 12-month period commencing or
ending in the fiscal year concerned; in that case, only so much of the income
as is derived from his activities performed in that other State may be taxed in
that other State.
2. The term “professional services” includes especially independent
scientific, literary, artistic, educational or teaching activities as well as
the independent activities of physicians, lawyers, engineers, architects,
surgeons, 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 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
all the following conditions are met :
(a) the recipient is present in the other State
for a period or periods not exceeding in the aggregate 183 days in any 12-month
period commencing or ending in the fiscal year concerned, and
(b) the remuneration is paid by, or on behalf of,
an employer who is not a resident of the other State, and
(c) the remuneration is not borne by a permanent
establishment or a fixed base which the employer has in the other State.
3. Notwithstanding the preceding provisions of this Article, remuneration
derived in respect of an employment exercised aboard a ship or aircraft
operated in international traffic, by an enterprise of a Contracting State may
be taxed in that State.
4. The term “employer” mentioned in paragraph 2(b) covers the
person having right on the work produced and bearing the responsibility and
risk connected with the performance of the work.
Article 16 : Directors’ Fees - Directors’ fees and
other similar payments derived by a resident of a
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 the other
Contracting State, may be taxed in that other State.
2. Where income in respect of personal activities exercised by an
entertainer or a sportsperson in his capacity as such accrues not to the
entertainer or sportsperson himself but to another person, that income may,
notwithstanding the provisions of Articles 7, 14 and 15, be taxed in the
Contracting State in which the activities of the entertainer or sportsperson
are exercised.
3. The provisions of paragraphs 1
and 2, shall not apply to income from activities performed in a
Contracting State by an entertainer or a sportsperson if the visit to that
State is substantially supported by public funds of the other Contracting State
or of political sub-divisions or local authorities thereof. In such case, the
income is taxable only in the Contracting State of which the entertainer or
sportsperson is a resident.
Article 18 : Pensions - Subject to the provisions of paragraph 2 of Article
19, pensions and other similar remuneration paid to a resident of a Contracting
State in consideration of past employment shall be taxable only in that State.
Article 19 : Government Service - 1. (a) Remuneration,
other than a pension, paid by a Contracting State or a political sub-division
or a local authority thereof to an individual in respect of services rendered
to that State or sub-division or authority shall be taxable only in that State.
(b) However, such remuneration shall be taxable only in the other
Contracting State if the services are rendered in that State and the individual
is a resident of that State who :
(i) is a
national of that State; or
(ii) did not become a resident of that State solely
for the purpose of rendering the services.
2. (a) Any pension paid by, or out of funds created by, a
Contracting State or a Political sub-division or a local authority thereof to
an individual in respect of services rendered to that State or sub-division or
authority shall be taxable only in that State.
(b) However, such pension shall be taxable only in the other
Contracting State if the individual is a resident of, and a national of, that
State.
3. The provisions of Articles 15, 16 and 18 shall apply to remuneration
and pensions in respect of services rendered in connection with a business
carried on by a Contracting State or a political sub-division or a local
authority thereof.
Article 20 : Students and Apprentices - 1. A student or
business apprentice who is or was a resident of a Contracting State immediately
before visiting the other Contracting State and who is present in that other Contracting
State solely for the purpose of his education or training shall, besides
grants, loans and scholarships, be exempt from tax in that other State on :
(a) payments made to him by persons residing
outside that other State for the purposes of his maintenance, education or
training; and
(b) remuneration from employment in that other
State, for an amount not exceeding the amount which is exempt from tax under
the laws of that other Contracting State for any fiscal year, provided that
such employment is directly related to his studies or is undertaken for the
purpose of his maintenance.
2. The benefit 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 seven consecutive years from the date of his first
arrival in that other Contracting State.
Article 21 : Professors,
Teachers and Research Scholars - 1. A professor or teacher who is or
was a resident of a Contracting State immediately before visiting the other
Contracting State for the purpose of teaching or engaging in research, or both,
at a university, college, school or other approved institution in that other
Contracting State shall be exempt from tax in that other State on any
remuneration for such teaching or research for a period not exceeding two years
from the date of his first 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 paragraph 1 the term “approved institution” means
an institution which has been approved in this regard by the competent
authority of the concerned 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 Convention shall be taxable only in that 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 14, as the case may be, shall apply.
3. Notwithstanding the provisions of paragraph 1, if a resident of a
Contracting State derives income from sources within the other Contracting
State in the form of lotteries, crossword puzzles, races including horse races,
card games and other games of any sort or gambling or betting of any form or
nature whatsoever, such income may be taxed in the other Contracting State.
Article 23 : Capital - 1. Capital represented by immovable property
referred to in Article 6, owned by a resident of a Contracting State and
situated in the other Contracting State, may be taxed in that other State.
2. Capital represented by movable property forming part of the business
property of a permanent establishment which an enterprise of a Contracting
State has in the other Contracting State or by movable property pertaining to a
fixed base available to a resident of a Contracting State in the other
Contracting State for the purpose of performing independent personal services,
may also be taxed in that other State.
3. Capital represented by ships or aircraft, operated in international
traffic or by movable property pertaining to the operation of such ships or
aircraft shall be taxable only in the Contracting State of which the enterprise
operating such ships, aircraft or property is a resident.
4. All other elements of capital of a resident of a Contracting State
shall be taxable only in that State.
Article 24 : Elimination of Double Taxation - 1. The laws in force
in either of the Contracting State will continue to govern the taxation of
income and of capital in the respective Contracting States except where
provisions to the contrary are made in this Convention.
2. In the case of India double taxation shall be eliminated as follows:
Where a resident of India derives income or owns capital which, in
accordance with the provisions of this Convention, may be taxed in the Czech
Republic, India shall allow as a deduction from the tax on the income or
capital of that resident an amount equal to the tax paid in the Czech Republic
whether directly or by deduction at source. Such amount shall not however
exceed that part of the tax, as computed before the deduction is given, which
is attributable to the income or capital which may be taxed in the Czech
Republic.
3. In the case of the Czech Republic double taxation shall be eliminated
as follows :
Where a resident of the Czech Republic derives income or owns capital
which, in accordance with the provisions of this Convention, may be taxed in
India, the Czech Republic shall allow as a deduction from the tax on the income
or capital of that resident an amount equal to the tax paid in India. Such
deduction shall not, however, exceed that part of the tax as computed before
the deduction is given, which is attributable to the income or capital which
may be taxed in India.
4. The tax payable in the Contracting State mentioned in paragraphs 2 and 3
of this Article shall be deemed to include the tax which would have been
payable but for the tax incentives granted under the laws of the Contracting
State and which are designed to promote economic development.
5. Where, in accordance with any provision of this Convention, income
derived or capital owned by a resident of a Contracting State is exempt from
tax in that State, such State may nevertheless, in calculating the amount of
tax on the remaining income or capital of such resident, take into account the
exempted income or capital.
Article 25 : 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. 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. This
provision shall not be construed as preventing a Contracting State from
charging the profits of a permanent establishment which a company of the other
Contracting State has in the first-mentioned State at a rate of tax which is
higher than that imposed on the profits of a similar company of the
first-mentioned Contracting State, nor as being in conflict with the provisions
of paragraph 3 of Article 7 of this Convention.
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 are or may be subjected.
4. Except where the provisions of Article 9, paragraph 7 of Article 11, or
paragraph 6 of Article 12, apply, interest, royalties and other disbursement
paid by an enterprise of a Contracting State to a resident of the other
Contracting State shall, for the purpose of determining the taxable profits of
such enterprise, be deductible under the same conditions as if they had been
paid to a resident of the first-mentioned State. Similarly, any debts of an
enterprise of a Contracting State to a resident of the other Contracting State
shall, for the purpose determining the taxable capital of such enterprise, be
deductible under the same conditions as if they had been contracted to a
resident of the first-mentioned State.
5. The provisions of this Article shall, notwithstanding the provisions of
Article 2, apply to taxes of every kind and description.
Article 26 : Mutual Agreement Procedure - 1. Where a person considers that
the actions of one or both of the Contracting States result or will result for
him in taxation not in accordance with the provisions of this Convention, he
may, irrespective of the remedies provided by the domestic law of those States,
present his case to the competent authority of the Contracting State of which
he is a resident or, if his case comes under paragraph 1 of Article 25, to that
of the Contracting State of which he is a national. The case must be presented
within three years from the first notification of the action resulting in
taxation not in accordance with the provisions of the Convention.
2. The competent authority shall endeavour, if
the objection appears to it to be justified and if it is not itself able to
arrive at a satisfactory solution, to resolve the case by mutual agreement with
the competent authority of the other Contracting State, with a view to the
avoidance of taxation which is not in accordance with the Convention. 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 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 27 : Exchange of
Information - 1. The
competent authorities of the Contracting States shall exchange such information
(including documents), as is necessary for carrying out the provisions of this
Convention or of the domestic laws of the Contracting States concerning taxes
covered by the Convention insofar as the taxation thereunder
is not contrary to the Convention in particular for the prevention of fraud or
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
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 Convention. Such persons or authorities
shall use the information only for such purposes. They may disclose the
information in public court proceedings or in judicial decisions.
2. In no case shall the provisions of paragraph 1 be construed so as to
impose on a Contracting State the obligation:
(a) to carry out administrative measures at
variance with the laws 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;
(c) to supply information or documents which would
disclose any trade, business, industrial, commercial or professional secret or
trade process, or information, or documents the disclosure of which would be contrary
to public policy.
Article 28 : Collection
Assistance - 1. The Contracting States undertake to lend assistance to each
other in the collection of taxes to which this Convention relates, together
with interests, costs, and civil penalties relating to such taxes, referred to
in this Article as a “revenue claim”.
2. Request for assistance by the competent authority of a Contracting
State in the collection of a revenue claim shall include a certification by
such authority that, under the laws of that State, the revenue claim has been
finally determined. For the purposes of this Article, a revenue claim is
finally determined when a Contracting State has the right under its internal
law to collect the revenue claim and the taxpayer has no further rights to restrain
collection.
3. 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.
4. Amount collected by the competent authority of a Contracting State
pursuant to this Article shall be forwarded to the competent authority of the
other Contracting State. However, the first-mentioned Contracting State shall
be entitled to reimbursement of costs, if any, incurred in the course of
rendering such assistance to the extent mutually agreed between the competent
authorities of the two States.
5. Nothing in this Article shall be construed as imposing on either
Contracting State the obligation to carry out administrative measures of a
different nature from those used in the collection of its own taxes on those
which would be contrary to its public policy.
6. Notwithstanding the provisions of Article 30 relating to entry into
force of this Convention, the application of this Article shall commence on a
date to be mutually agreed upon by the competent authorities of the Contracting
State.
Article 29 : Members of
Diplomatic Missions and Consular Posts - Nothing in this Convention
shall affect the fiscal privileges of members of diplomatic missions or
consular posts under the general rules of international law or under the
provisions of special agreements.
Article 30 : 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
Convention.
2. This Convention shall enter into force on the date of the later of the
notifications referred to in paragraph 1 of this Article.
3. The provisions of this Convention shall have effect:
(a) in India, in respect of income derived or
capital held in any fiscal year beginning on or after the first day of April
next following the calendar year in which the Convention enters into force; and
(b) in the Czech Republic:
(i) in respect
of taxes withheld at source, to income paid or credited on or after first
January in the calendar year next following that in which the Convention enters
into force;
(ii) in respect of other taxes on income and taxes
on capital, to income or capital in any taxable year beginning on or after
first January in the calendar year next following that in which the Convention
enters into force.
4. On the entry into effect of this Convention, the application of the
Agreement between the Government of the Czechoslovak Socialist Republic and the
Government of India for the avoidance of double taxation and the prevention of
fiscal evasion with respect to taxes on income signed at New Delhi on 27th
January, 1986 shall, in relation between the Czech Republic and India, cease to
have effect.
Article 31 : Termination - This Convention shall remain in force
indefinitely until terminated by a Contracting State. Either Contracting State
may terminate the Convention, through diplomatic channels, by giving notice of
termination at least six months before the end of any calendar year beginning
after the expiration of five years from the date of entry into force of the
Convention. In such event, the Convention shall cease to have effect:
(a) in India, in respect of income derived in any
previous year on or after the first April next following the calendar year in
which the notice is given and in respect of capital held at the expiry of any
previous year beginning on or after first April next following the calendar
year in which the notice of termination is given;
(b) in the Czech Republic,
(i) in respect
of taxes withheld at source, to income paid or credited on or after first
January in the calendar year next following that in which the notice is given;
(ii) in respect of other taxes on income and taxes
on capital, to income or capital in any taxable year beginning on or after
first January in the calendar year next following that in which the notice is
given.
In witness whereof the undersigned, being duly authorised
thereto, have signed this Convention.
Done in duplicate at PRAGUE this 1st day of October, 1998 in the Hindi,
English and Czech languages, all three texts being equally authentic. In case
of divergence between the texts the English text shall be the operative one.
Sd/- |
Sd/- |
|
For the
Government of the |
For the Government of the |
|
Republic
of India |
Czech Republic |