28. Agreement for Avoidance of
Double Taxation and Prevention of Fiscal Evasion with Malta
Whereas the
annexed Agreement between the Government of the Republic of India and the Republic
of Malta for the avoidance of double taxation and the prevention of fiscal
evasion with respect to taxes on income has entered into force on 8th February,
1995, 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 paragraph 1 of Article 29 of the
said Agreement;
Now,
therefore, in exercise of the powers conferred by section 90 of the Income-tax
Act, 1961 (43 of 1961), the Central Government hereby directs that all the
provisions of the said Agreement shall be given effect to in the Union of
Notification : No. SO 761(E), dated 22-11-1995.
Annexure
Agreement between the
Desiring to
conclude an Agreement for the avoidance of double taxation and the prevention
of fiscal evasion with respect to taxes on income, have agreed as follows :
CHAPTER I -
SCOPE OF THE AGREEMENT
Article 1 - Personal
scope - This Agreement shall apply to persons who are residents of one or
both of the Contracting States.
Article 2 - Taxes
covered - 1. The existing taxes to which this Agreement shall apply
are :
(a) in
the income-tax including
any surcharge thereon ;
(hereinafter referred to as
“Indian tax”) ;
(b) in
the income-tax ;
(hereinafter referred to as
“
2. This Agreement shall also apply to any
identical or substantially similar taxes which are imposed by either
3. Notwithstanding the other provisions of this Article,
this Agreement shall not apply to tax paid or payable in Malta in accordance
with the provisions of sub-section (11) of section 31 of the Income-tax Act
(Cap. 123), concerning the chargeable income of any person engaged in the
production of petroleum produced in Malta, or any substantially similar
provision which is imposed after the date of signature of this Agreement.
CHAPTER II
- DEFINITIONS
Article 3 - General
definitions - 1. For the purposes of this Agreement, unless the
context otherwise requires :
(a) the term “India” means the territory of India and includes the
territorial sea and airspace above it, as well as any other maritime zone in
which India has sovereign rights, other rights and jurisdictions, according to
the Indian law and in accordance with international law/the U.N. Convention on
the Law of the Sea ;
(b) the term “Malta” when used in a geographical sense, means the
Island of Malta, the Island of Gozo and the other Islands of the Maltese
archipelago including the territorial waters thereof, and any area outside the
territorial sea of Malta which, in accordance with international law, has been
or may hereafter be designated, under the law of Malta concerning the
Continental Shelf, as an area within which the rights of Malta with respect to
the seabed and subsoil and their natural resources may be exercised ;
(c) the term “company” means any body corporate or any entity which is
treated as a body corporate for tax purposes ;
(d) the term “competent authority” means in the case of India, the
Central Government in the Ministry of Finance (Department of Revenue) or their
authorised representative; and in the case of Malta, the Minister responsible
for finance or his authorised representative ;
(e) the terms “a
(f) the terms “enterprise of a Contracting State” and “enterprise of
the other Contracting State” mean respectively an enterprise carried on by a
resident of a Contracting State and an enterprise carried on by a resident of
the other Contracting State ;
(g) the term “fiscal year” in relation to Indian tax means “previous
year” as defined in the Income-tax Act, 1961 (43 of 1961) and in relation to
Malta tax means the year immediately preceding the “year of assessment” as
defined in the Income-tax Act (Cap. 123) ;
(h) the term “international traffic” means any transport by a ship or
aircraft operated by an enterprise of a
(i) the term “national” means any individual
possessing the nationality of a
(j) the term “person” includes an individual, a company, a body of
persons and any other entity which is treated as a taxable unit under the
taxation laws in force in the respective Contracting States ;
(k) the term “tax” means Indian tax or Malta tax, as the context
requires, but shall not include any amount which is payable in respect of any
default or omission in relation to the taxes to which this Agreement applies or
which represents a penalty imposed relating to those taxes.
2. As regards the application of the Agreement
by a Contracting State, any term not defined therein shall, unless the context
otherwise requires, have the meaning which it has under the law of that State
concerning the taxes to which 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 State, is
liable to tax therein by reason of his domicile, residence, place of management
or any other criterion of a similar nature.
2. Where by reason of the provisions of
paragraph (1), an individual is a resident of both Contracting States, then his
status shall be determined as follows :
(a) he shall be deemed to be a resident of the Contracting State in which
he has a permanent home available to him; if he has a permanent home available
to him in both States, he shall be deemed to be a resident of the 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 no permanent home available to him in either State,
he shall be deemed to be a resident of the Contracting State in which he has an
habitual abode ;
(c) if he has an habitual abode in both States or in neither of them,
he shall be deemed to be a resident of the
(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) of 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 the enterprise is wholly or partly carried on.
2. The term “permanent establishment” includes
especially :
(a) a place of management ;
(b) a branch ;
(c) an office ;
(d) a factory ;
(e) a workshop ;
(f) a mine, an oil or gas well, quarry or any other place of extraction
of natural resources including an offshore drilling site ;
(g) a building site or construction 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) continues for
a period of more than six months.
3. Notwithstanding the preceding provisions of
this Article, the term “permanent establishment” shall be deemed not to
include:
(a) the use of facilities solely for the purpose of storage, display or
delivery of goods or merchandise belonging to the enterprise ;
(b) the maintenance of a stock of goods or merchandise belonging to the
enterprise solely for the purpose of storage, display or delivery ;
(c) the maintenance of a stock of goods or merchandise belonging to the
enterprise solely for the purpose of processing by another enterprise ;
(d) the maintenance of a fixed place of business solely for the purpose
of purchasing goods or merchandise, or for 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. A person engaged in a Contracting State in
exploration of the seabed and its subsoil or in exploitation of natural
resources situated there as well as in activities which are complementary or
auxiliary to such activities, is deemed to exercise such activities through a
permanent establishment in that State.
5. An enterprise of a
(a) substantial equipment is in that other State being used or
installed by, for or under contract with the enterprise ;
(b) it carries on supervisory activities in that State in connection
with the use of equipment referred to in sub-paragraph (a).
6. 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 on behalf of an enterprise and has, and
habitually exercises, in a Contracting State an authority to conclude contracts
in the name of the enterprise, that enterprise shall be deemed to have a
permanent establishment in that State in respect of any activities which that
person undertakes for the enterprise, unless the activities of such person are
limited to the purchase of goods or merchandise for the enterprise.
7. An enterprise of a
However, when
the activities of such an agent are devoted wholly or almost wholly on behalf
of the enterprise, he shall not be considered as agent of an independent status
if the transactions between the agent and the enterprise were not made under
arm’s length conditions.
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.
CHAPTER III
- TAXATION OF INCOME
Article 6 - Income
from immovable property - 1. Income derived by a resident of a
2. The term “immovable property” shall have the
meaning which it has under the law of the
3. The provisions of paragraph (1) shall also
apply to income derived from the direct use, letting, or use in any other form
of immovable property.
4. The provisions of paragraphs (1) and (3) shall
also apply to the income from immovable property of an enterprise and to income
from immovable property used for the performance of independent personal
services.
Article 7 - Business
profits - 1. The profits of an enterprise of a
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 or with other associated enterprises with
which it deals.
3. In the determination of the profits of a
permanent establishment, there shall be allowed as deductions expenses of the
enterprise, being expenses which are incurred for the purposes of the permanent
establishment (including executive and general administrative expenses so
incurred) and which would be deductible if the permanent establishment were an
independent entity which paid those expenses, whether incurred in the
Contracting State in which the permanent establishment is situated or elsewhere
in accordance with the provisions of and subject to the limitation of the
taxation laws of that State.
4. Nothing in this Article shall affect the
application of any law of a Contracting State relating to the determination of
the tax liability of a person, including the determination of such liability by
the exercise of discretion or the making of an estimate by the competent
authority of that State in cases in which, from the information available to
the competent authority of that State, it is not possible or not practicable to
ascertain the profits to be attributed to a permanent establishment, provided
that law shall be applied, so far as the information available to the competent
authority permits, consistently with the principles of this Article.
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 the preceding paragraphs,
the profits to be attributed to the permanent establishment shall be determined
by the same method year by year unless there is good and sufficient reason to
the contrary.
7. The provisions of this Article shall not
affect the provisions of the law of a
8. 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 of a
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 on behalf of other
enterprises ;
(b) other activity directly connected with such transportation ; and
(c) the rental of ships or aircraft incidental to any activity directly
connected with such transportation.
3. Profits of an enterprise of a Contracting
State described in paragraph (1) from the use, maintenance, or rental of
containers (including trailers, barges and related equipment for the transport
of containers) used in connection with the operation of ships or aircraft in
international traffic shall be taxable only in that State.
4. The provisions of paragraphs (1) and (3)
shall also apply to profits from participation in a pool, a joint business, or an
international operating agency.
5. For the purposes of this Article, interest on
funds connected with the operation 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 (Interest) shall not apply in
relation to such interest.
Article 9 - Associated
enterprises - 1. 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
land 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.
2. Nothing in this Article shall affect the
application of any law of a Contracting State relating to the determination of
such liability by the exercise of a discretion or the making of an estimate by
the competent authority of that State in cases which, from the information
available to the competent authority of that State, it is not possible or not
practicable to determine the income to be attributed to an enterprise, provided
that law shall be applied, so far as the information available to the competent
authority permits, consistently with the principles of this Article.
3. Where a Contracting State includes in the
profits of an enterprise of that State, and taxes accordingly, profits on which
an enterprise of the other Contracting State has been charged to tax in that
other State and the profits so included are profits which would have accrued to
that enterprise of the first-mentioned 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 the 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
2. However, such dividends may also be taxed in
the
(a) where the dividends are paid by a company resident of
(i) 10 per cent of the gross amount of the
dividends if the beneficial owner is a company which owns at least 25 per cent
of the shares of the company paying the dividends ; and
(ii) 15 per cent of the gross amount of the
dividends in all other cases,
(b) where the dividends are paid by a company which is a resident 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, “jouissance” shares or “jouissance” rights, mining
shares, founders’ shares or other rights, not being debt-claims, participating
in profits, as well as income from other corporate rights which is subjected to
the same taxation treatment as income from shares by the laws of the State of
which the company making the distribution is a resident.
4. The provisions of paragraphs (1) and (2)
shall not apply if the beneficial owner of the dividends, being a resident of a
Contracting State, carries on business in the other Contracting State of which
the company paying the dividends is a resident, through a permanent
establishment situated therein, 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 a case the provisions of Article 7 or
Article 15, 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
2. However, such interest may be taxed in the
3. Notwithstanding the provisions of paragraph
(2), interest arising in a
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.
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 15, as the case may be, shall
apply.
6. Interest shall be deemed to arise in a
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
Article 12 - Royalties
and fees for included services - 1. Royalties and fees for included
services arising in a
2. However, such royalties and fees for included
services may also be taxed in the Contracting State in which they arise and
according to the laws of that State, but if the recipient is the beneficial owner
of the royalties or fees for included services the tax so charged shall not
exceed 15 per cent of the gross amount of the royalties or fees for included
services.
3. The term “royalties” in this Article means
payments or credits, whether periodical or not, and however described or
computed to the extent to which they are made as consideration for :
(a) the use of, or the right to use any copyright, patent, design or
model, plan, secret formula or process, trademark or other like property or
right ;
(b) the use of, or the right to use, any industrial, commercial or
scientific equipment ;
(c) the supply of scientific, technical, industrial or commercial
knowledge or information ;
(d) the use of, or the right to use :
(i) motion picture films ;
(ii) films or video tapes for use in connection
with television ; or
(iii) tapes for use in connection with radio
broadcasting ; or
(e) total or partial forbearance in respect of the use or supply of any
property or right referred to in this paragraph.
4. The term “fees for included services” in this
Article means payments or credits, whether periodical or not, and however
described or computed, to the extent to which they are made as consideration
for :
(a) the supply of any assistance that is ancillary and subsidiary to,
and is furnished as a means of enabling the application or enjoyment of, any
such property or right as is mentioned in sub-paragraph (a) of paragraph
(3), or any such equipment as is mentioned in sub-paragraph (b) of
paragraph (3); or any such knowledge or information as is mentioned in
sub-paragraph (c) of paragraph (3) ;
(b) rendering of any technical or consultancy services (including the
provision of technical or other personnel) if such services make available
technical knowledge, (experience, skill, know-how or process or consist of the
development and transfer of a technical plan or technical design).
5. The provisions of paragraphs (1) and (2)
shall not apply if the beneficial owner of the royalties or fees for included
services, being a resident of a Contracting State, carries on business in the
other Contracting State in which the royalties or fees for included services
arise, through a permanent establishment situated therein, or performs in that
other State independent personal services from fixed base situated therein, and
the right or property in respect of which the royalties or fees for included
services are paid is effectively connected with such permanent establishment or
fixed base. In such case, the provisions of Article 7 or Article 15, as the
case may be, shall apply.
6. Royalties and fees for included services
shall be deemed to arise in a
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 included 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
Article 13 - Technical
fees - 1. Technical fees arising in a
2. However, such technical fees may also be
taxed in the
3. The term “technical fees” as used in this
Article means payments of any kind to any person, other than to an employee of
the person making the payments, in consideration for any services of a
technical, managerial or consultancy nature.
4. The provisions of paragraphs (1) and (2)
shall not apply if the beneficial owner of the technical fees, being a resident
of a Contracting State, carries on business in the other Contracting State in
which the technical fees arise through a permanent establishment situated
therein, or performs in that other State independent personal services, and the
technical fees are effectively connected with such permanent establishment or
such services. In such case, the provisions of Article 7 or Article 15, as the
case may be, shall apply.
5. Technical fees shall be deemed to arise in a
6. Where, by reason of a special relationship
between the payer and the recipient or between both of them and some other
person, the amount of the technical fees paid exceeds, for whatever reason, the
amount which would have been agreed upon by the payer and the beneficial owner
in the absence of such relationship, the provisions of 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 law of each
Article 14 - Alienation
of property - 1. Income from gains from the alienation of immovable
property, as defined in paragraph (2) of Article 6, may be taxed in the
2. Income from gains from the alienation of
shares or comparable interests in a company, the assets of which consist wholly
or principally of immovable property, may be taxed in the Contracting State in
which the assets or the principal assets of the company are situated.
3. Income from 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 income or
gains arising from the alienation of such a permanent establishment (alone or
together with the whole enterprise) or of such fixed base, may be taxed in the
other State.
4. Income from 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
5. Income from gains from the alienation of
shares other than those mentioned in paragraph (2) in a company which is a
resident of a
6. Income from 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
Article 15 - 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. However, such income may be
taxed in the other
(a) if he has a fixed base regularly available to him in the other
Contracting State for the purpose of performing his activities in which case
only so much of the income as is attributable to that fixed base may be taxed
in that other Contracting State ; or
(b) if his stay in the other Contracting State is for a period or
periods amounting to or exceeding in the aggregate 90 days during any fiscal
year.
2. The term “professional services” includes
especially independent scientific, literary, artistic, educational or teaching
activities as well as the independent activities of physicians, surgeons,
lawyers, engineers, architects, dentists and accountants.
Article 16 - Dependent
personal services - 1. Subject to the provisions of Articles 17, 19,
20 and 21, salaries, wages and other similar remuneration derived by a resident
of a
2. Notwithstanding the provisions of paragraph
(1), remuneration derived by a resident of a
(a) the recipient is present in the other State for a period or periods
not exceeding in the aggregate 183 days in the fiscal year concerned, and
(b) the remuneration is paid by, or on behalf of, an employer who is
not a resident of the other State, and
(c) the remuneration is not borne by a permanent establishment 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
Article 17 - Directors'
fees - Directors’ fees and similar payments derived by a resident of one of
the Contracting States in his capacity as a member of the Board of Directors,
or other comparable body however described, of a company which is a resident of
the other Contracting State, may be taxed in that other State.
Article 18 - Income
earned by artistes and athletes - 1. Notwithstanding the provisions
of Articles 15 and 16, income derived by a resident of a Contracting State as
an entertainer such as a theatre, motion picture, radio or television artiste
or a musician or as an athlete, from his personal activities as such exercised
in the other Contracting State, may be taxed in that other Contracting State.
2. Where income in respect of personal
activities exercised by an entertainer or an athlete in his capacity as such
accrues not to the entertainer or athlete himself but to another person, that
income may, notwithstanding the provisions of Articles 7, 15 and 16, be taxed
in the Contracting State in which the activities of the entertainer or athlete
are exercised.
3. Notwithstanding the provisions of paragraph
1, income derived by an entertainer or an athlete who is a resident of a
Contracting State from his personal activities as such exercised in the other
Contracting State, shall be taxable only in the first-mentioned Contracting
State, if the activities in the other Contracting State are supported wholly or
substantially from the public funds of the first-mentioned Contracting State,
including any of its political sub-divisions or local authorities.
4. Notwithstanding the provisions of paragraph 2
and Articles 7, 15 and 16, where income in respect of personal activities
exercised by an entertainer or an athlete in his capacity as such in a
Contracting State accrues not to the entertainer or athlete himself but to
another person, that income shall be taxable only in the other Contracting
State, if that other person is supported wholly or substantially from the
public funds of that other State, including any of its political sub-divisions
or local authorities.
Article 19 - Pensions
- 1. Subject to the provisions of paragraph (2) of Article 20,
pensions and other similar remuneration paid to a resident of a
2. Notwithstanding the provisions of paragraph
(1), pensions and other payments made under the social security legislation of
a
Article 20 - 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 other State and the individual is a resident of
that State who :
(i) is a national of that State ; or
(ii) did not become a resident of that State solely
for the purpose of rendering the services.
2. (a) Any pension paid by, or out of
funds created by a Contracting State 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
3. The provisions of Articles 16, 17 and 19 shall
apply to remuneration and pensions in respect of services rendered in
connection with any business carried on by a
Article 21 - Remuneration
received by teachers - 1. Remuneration which a professor or teacher
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 for a
period not exceeding two years for the purpose of carrying out advanced study
or research or for teaching at a university, college, school or other
educational institution receives for such work shall not be taxed in that
State, provided that such remuneration is derived by him from outside that
State.
2. This Article shall not apply to income from
research if such research is undertaken primarily for the private benefit of a
specific person or persons.
Article 22 - Payments
received by students and trainees - An individual who is a resident of a
(a) As a student at a recognised university, college, school or other
similar recognised educational institution in that other State ; or
(b) as a business or technical apprentice ; or
(c) as a recipient of a grant, allowance or award for the primary
purpose of study, research or training from the Government of either State or
from a scientific, educational, religious, or charitable organisation or under
a technical assistance programme entered into by the Government of either
State,
shall be
exempt from tax in that other State on :
(a) all remittances from abroad for the purposes of his maintenance,
education, study, research or training ;
(b) the amount of such grant, allowance or award ; and
(c) any remuneration not exceeding an amount equivalent to US $3,000
during any fiscal year in respect of services in that other State provided the
services are performed in connection with his study, research or training or
are necessary for the purpose of his maintenance.
Article 23 - Other
income - 1. Items of income of a resident of a
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 15, as the case may be, shall apply.
3. Notwithstanding the provisions of paragraphs
(1) and (2) items of income of a resident of a Contracting State not dealt with
in the foregoing articles of this Convention and arising in the other
Contracting State may also be taxed in that other State.
Chapter IV - Elimination of double taxation
Article 24 - Elimination
of double taxation - 1. The laws in force in either of the
Contracting States shall continue to govern the taxation of income in the
respective Contracting States except where express provision to the contrary is
made in this Agreement.
2. In the case of
Where a
resident of
3. For the purposes of paragraph (2), the term
“income-tax paid in Malta” shall be deemed to include the amount of Malta tax
which would, under the laws of Malta and in accordance with this Agreement,
have been payable on any income derived from sources in Malta had the income
not been taxed at a reduced rate or exempted from Malta tax in accordance with
:
(a) the Aids to Industries Ordinance, 1959 and the Industrial
Development Act, 1988 insofar as they were in force on, and have not been
modified since, the date of signature of this Agreement or have been modified
only in minor respects so as not to affect their general character ; or
(b) any other provisions in the Income-tax Act (Cap. 123) or in any
other legislation which may subsequently be introduced in
4. In the case of
Subject to the
provisions of the law of Malta regarding the allowance of a credit against
Malta tax in respect of foreign tax, where in accordance with the provisions of
this Agreement, there is included in a Malta assessment income from sources
within India the Indian tax on such income shall be allowed as a credit against
the relative Malta tax payable thereon.
5. For the purposes of the deduction referred to
in paragraph (4), the term “Indian tax on such income” shall be deemed to
include any amount which would have been payable as Indian tax under the laws
of India and in accordance with this Agreement for any year but for an
exemption from, or reduction of, tax granted for that year under :
(a) sections 10(4), 10(4B), 10(6)(viia),
10(15)(iv), 10A, 10B, 80(1A), 80HHC, 80HHD, 80HHE of the
Income-tax Act, 1961 (43 of 1961), so far as they were in force on, and have
not been modified since, the date of the signature of this Agreement, or have
been modified only in minor respects so as not to affect their general
character ; or
(b) any other provisions which may be enacted hereafter granting a
deduction in computing the taxable income or an exemption or reduction from tax
which the competent authorities of the Contracting States agree to be for the
purposes of the economic development of India, if it has not been modified
thereafter or has been modified only in minor respects so as not to affect its
general character.
6. Where the Agreement provides that income
arising in a Contracting State shall be relieved from tax in that State, either
in full or in part, and, under the law in force in the other Contracting State,
such income is subject to tax by reference to the amount thereof which is
remitted to or received in that other State and not by reference to the full
amount thereof, then the relief to be allowed in the first-mentioned State
shall apply only to so much of the income as is remitted to or received in the
other State.
7. Income which, in accordance with the
provisions of this Agreement, is not to be subjected to tax in a
Chapter V - Special provisions
Article 25 - Non-discrimination
- 1. Nationals of a
2. The taxation on a permanent establishment
which an enterprise of a
3. Except where the provisions of paragraph (1)
of Article 9, paragraph (7) of Article 11, or paragraph (6) of Article 12
apply, interest, royalties and fees for included services 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.
4. Enterprises of a Contracting State, the
capital of which is wholly or partly owned or controlled, directly or
indirectly, by one or more residents of the other Contracting State, shall not
be subjected in the first-mentioned Contracting State to any taxation or any
requirements connected therewith which is other or more burdensome than the
taxation and connected requirements to which other similar enterprises of that
first-mentioned State are or may be subjected in the same circumstances.
5. Nothing in this Article shall be construed as
obliging a
6. In this Article, the term “taxation” means
taxes which are the subject of this Agreement.
Article 26 - Mutual
agreement procedure - 1. Where a person considers that the actions
of one or both of the Contracting State 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 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 Agreement.
2. The competent authority shall endeavour, if
the objection appears to it to be justified and if it is not itself able to
arrive at an appropriate solution, to resolve the case by mutual agreement with
the competent authority of the other
3. The competent authorities of the Contracting
States shall endeavour to resolve by mutual agreement any difficulties or
doubts arising as to the interpretation or application of the Agreement. They
may also consult together for the elimination of double taxation in cases not
provided for in the Agreement.
4. The competent authorities of the Contracting
States may communicate with each other 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 as is necessary for carrying out the
provisions of this Agreement or of the domestic laws of the Contracting States
concerning taxes covered by the Agreement insofar as the taxation thereunder is
not contrary to the Agreement in particular for the prevention of fraud or
evasion of such taxes. Any information received by a
2. In no case shall provisions of paragraph (1)
be construed so as to impose on a
(a) to carry out administrative measures at variance with the laws and
administrative practice of that or of the other
(b) to supply information which is not obtainable under the laws or in
the normal course of the administration of that or of the other
(c) to supply information which would disclose any trade, business,
industrial, commercial or professional secret or trade process, or information,
the disclosure of which would be contrary to public policy (ordre public).
Article 28 - Diplomatic
and consular officials - Nothing in this Agreement shall affect the fiscal
privileges of diplomatic agents or consular officials under the general rules
of international law or under the provisions of special agreements.
Chapter VI - Final provisions
Article 29 - Entry
into force - 1. The Governments of the Contracting States shall
notify each other that the legal requirements for the entry into force of this
Agreement have been complied with.
2. The Agreement shall enter into force thirty
days after the date of the later of the noti-fications referred to in paragraph
(1) and its provisions shall have effect :
(a) in
as regards income for any
“fiscal year” beginning on or after the first day of April of the calendar year
next following that in which this Agreement enters into force ;
(b) in
as regards income for any
“fiscal year” beginning on or after the first day of January of the calendar
year next following that in which this Agreement enters into force.
Article 30 - Termination
- This Agreement shall remain in force until terminated by a
(a) in
as regards income for any
“fiscal year” beginning on or after the first day of April of the calendar year
next following that in which the notice of termination is given ;
(b) in
as regards income for any
“fiscal year” beginning on or after the first day of January of the calendar
year next following that in which the notice of termination is given.
In witness
whereof the undersigned, being duly authorised thereto by their respective
Governments, have signed this Agreement.
Done at
Valetta, Malta this twenty-eighth day of September, 1994, in duplicate in the
English and Hindi languages, both texts being equally authentic. In case of
divergence between the two texts the English text shall be the operative one.