29. Agreement for avoidance of
double taxation and prevention of fiscal evasion with Mauritius
Whereas the
annexed Convention between the Government of the Republic of India and the
Government of Mauritius for the avoidance of double taxation and the prevention
of fiscal evasion with respect to taxes on income and capital gains and for the
encouragement of mutual trade and investment has come into force on the
notification by both the Contracting States to each other on completion of the
procedures required by their respective laws, as required by Article 28 of the
said Convention ;
Now,
therefore, in exercise of the powers conferred by section 90 of the Income-tax
Act, 1961 (43 of 1961) and section 24A of the Companies (Profits) Surtax Act,
1964 (7 of 1964), the Central Government hereby directs that all the provisions
of the said Convention, shall be given effect to in the Union of India.
Notification : GSR No. 920(E), dated 6-12-1983.
TEXT OF ANNEXED CONVENTION, DATED 24-8-1982
The Government
of the
Chapter I - Scope of the convention
ARTICLE 1 - Personal scope - This Convention
shall apply to persons who are residents of one or both of the Contracting
States.
ARTICLE 2 - Taxes covered - 1. The
existing taxes to which this Convention shall apply are :
(a) in the case of
(i) the income-tax including any surcharge thereon
imposed under the Income-tax Act, 1961 (43 of 1961) ;
(ii) the surtax imposed under the Companies
(Profits) Surtax Act, 1964 (7 of 1964) ;
(hereinafter referred to as
“Indian tax”) ;
(b) in the case of
2. This Convention shall also apply to any
identical or substantially similar taxes which are imposed by either
3. The competent authorities of the Contracting
States shall notify to each other any significant changes which are made in
their respective taxation laws.
Chapter II - Definitions
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 air space above it as well as any other maritime zone
referred to in the Territorial Waters, Continental Shelf, Exclusive Economic
Zone and other Maritime Zones Act, 1976 (Act No. 80 of 1976), in which India
has certain rights and to the extent that these rights can be exercised therein
as if such maritime zone is a part of the territory of India ;
(b) the term “
(i) the territorial
(ii) any area outside the territorial sea of
Mauritius which in accordance with international law has been or may hereafter
be designated, under the laws of Mauritius concerning the Continential
Shelf, as an area within which the rights of Mauritius with respect to the sea
bed and sub-soil and their natural resources may be exercised ;
(c) the terms “a
(d) the term “tax” means Indian tax or Mauritius tax as the context
requires, but shall not include any amount which is payable in respect of any
default or omission in relation to the taxes to which this Convention applies
or which represents a penalty imposed relating to those taxes ;
(e) the term “person” includes an individual, a company and any other
entity, corporate or non-corporate, which is treated as a taxable unit under
the taxation laws in force in the respective Contracting States ;
(f) the term “company” means any body corporate or
any entity which is treated as a company or a body corporate under the taxation
laws in force in the respective Contracting States ;
(g) the terms “enterprise of a Contracting State” and “enterprise of
the other Contracting State” mean respectively an industrial, mining,
commercial, plantation or agricultural enterprise or similar undertaking
carried on by a resident of a Contracting State and an industrial, mining,
commercial, plantation or agricultural enterprise or similar undertaking
carried on by a resident of the other Contracting State ;
(h) the term “competent authority” means in the case of India, the
Central Government in the Ministry of Finance (Department of Revenue) or their authorised representative; and in the case of Mauritius,
the Commissioner of Income-tax or his authorised
representative ;
(i) the term “national” means any individual
possessing the nationality of a
(j) the term “international traffic” means any
transport by a ship or aircraft operated by an enterprise which has its place
of effective management in a
2. In the application of the provisions of this
Convention by a Contracting State, any term not defined therein shall, unless
the context otherwise requires, have the meaning which it has under the laws in
force of that Contracting State relating to the areas which are the subject of
this Convention.
ARTICLE 4 - Residents - 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 taxation therein by
reason of his domicile, residence, place of management or any other criterion
of similar nature. The terms “resident of
2. Where by reason of the provisions of
paragraph (1), an individual is a resident of both Contracting States,
then his residential status for the purposes of the Convention shall be
determined in accordance with the following rules :
(a) he shall be deemed to be a resident of the Contracting State in
which he has a permanent home available to him; if he has a permanent home
available to him in both Contracting States, he shall be deemed to be a
resident of the Contracting State with which his personal and economic
relations are closer (hereinafter referred to as his “centre of vital
interests”) ;
(b) if the Contracting State in which he has his centre of vital
interests cannot be determined, or if he does not have a permanent home
available to him in either Contracting State, he shall be deemed to be a
resident of the Contracting State in which he has an habitual abode ;
(c) if he has an habitual abode in both Contracting States or in
neither of them, he shall be deemed to be a resident of the
(d) if he is a national of both Contracting States or of neither of
them, the competent authorities of the Contracting States shall settle the
question by mutual agreement.
3. Where by reason of the provisions of
paragraph (1), a person other than an individual is a resident of both
the Contracting States, then it shall be deemed to be a resident of the
ARTICLE 5 - Permanent establishment - 1.
For the purposes of this Convention, the term “permanent establishment” means a
fixed place of business through which the business of the enterprise is wholly
or partly carried on.
2. The term “permanent establishment” shall
include—
(a) a place of management ;
(b) a branch ;
(c) an office ;
(d) a factory ;
(e) a workshop ;
(f) a warehouse, in relation to a person providing
storage facilities for others ;
(g) a mine, an oil or gas well, a quarry or any other place of
extraction of natural resources ;
(h) a firm, plantation or other place where agricultural, forestry,
plantation or related activities are carried on ;
(i) a building site or construction or assembly
project or supervisory activities in connection therewith, where such site, project
or supervisory activity continues for a period of more than nine months.
3. Notwithstanding the preceding provisions of
this article, the term “permanent establishment” shall be deemed not to include
:
(a) the use of facilities solely for the purpose of storage or display
of merchandise belonging to the enterprise ;
(b) the maintenance of a stock of goods or merchandise belonging to the
enterprise solely for the purpose of storage or display ;
(c) the maintenance of a stock of goods or merchandise belonging to the
enterprise solely for the purpose of processing by another enterprise ;
(d) the maintenance of a fixed place of business solely for the purpose
of purchasing goods or merchandise or for collecting information for the
enterprise ;
(e) the maintenance of a fixed place of business solely—
(i) for the purpose of advertising,
(ii) for the supply of information,
(iii) for scientific research, or
(iv) for similar activities,
which have a preparatory
or auxiliary character for the enterprise.
4. Notwithstanding the provisions of paragraphs
(1) and (2) of this article, a person acting in a Contracting
State for or on behalf of an enterprise of the other Contracting State [other
than an agent of an independent status to whom the provisions of paragraph (5)
apply] shall be deemed to be a permanent establishment of that enterprise in
the first-mentioned State if :
(i) he has and habitually exercises in that
first-mentioned State, an authority to conclude contracts in the name of the
enterprise, unless his activities are limited to the purchase of goods or
merchandise for the enterprise ; or
(ii) he habitually maintains in that
first-mentioned State a stock of goods or merchandise belonging to the
enterprise from which he regularly fulfils orders on behalf of the enterprise.
5. An enterprise of a
6. The fact that a company, which is a resident
of a Contracting State controls or is controlled by a company which is a resident
of the other Contracting State, or which carries on business in that other
Contracting 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 from immovable property may be taxed in the
2. The term “immovable property” shall be defined
in accordance with the law and usage of the
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
2. Subject to the provisions of paragraph (3)
of this article, 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. Where the correct amount
of profits attributable to a permanent establishment cannot be readily
determined or the determination thereof presents exceptional difficulties, the
profits attributable to the permanent establishment may be estimated on a
reasonable basis.
3. In determining the profits of a permanent
establishment, there shall be allowed as deductions expenses which are incurred
for the purposes of the business of the permanent establishment including
executive and general administrative expenses so incurred, whether in the State
in which the permanent establishment is situated or elsewhere.
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 from the operation of ships or aircraft in international traffic shall
be taxable only in the
2. If the place of effective management of a
shipping enterprise is aboard a ship, then it shall be deemed to be situated in
the
3. The provisions of paragraph (1) of
this article shall also apply to profits from the participation in a pool, a
joint business or an international operating agency.
4. For the purposes of paragraph (1),
interest on funds connected with the operation of ships or aircraft in
international traffic shall be regarded as profits from the operation of such
ships or aircraft, and the provisions of Article 11 shall not apply in relation
to such interest.
5. The term “operation of ships or aircraft”
shall mean business of transportation of persons, mail, livestock or goods, carried
on by the owners or lessees or charterers of the
ships or aircraft, including the sale of tickets for such transportation on
behalf of other enterprises, the incidental lease of ships or aircraft and any
other activity directly connected with such transportation.
ARTICLE 9 - Associated enterprises - Where
(a) an enterprise of a Contracting State participates, directly or
indirectly, in the management, control or capital of an enterprise of the other
Contracting State, or
(b) the same persons participate, directly or indirectly, in the
management, control or capital of an enterprise of a Contracting State and an
enterprise of the other Contracting State,
and in either
case conditions are made or imposed between the two enterprises in their
commercial or financial relations which differ from those which would be made
between independent enterprises, then any profits which would, but for those
conditions, have accrued to one of the enterprises, but, by reason of those
conditions have not so accrued, may be included in the profits of that
enterprise and taxed accordingly.
ARTICLE 10 - Dividends - 1. Dividends paid
by a company which is a resident of a Contracting State to a resident of the
other Contracting State may be taxed in that other State.
2. However, such dividends may also be taxed in
the Contracting State of which the company paying the dividends is a resident
and according to the laws of that State, but if the recipient is the beneficial
owner of the dividends the tax so charged shall not exceed—
(a) five per cent of the gross amount of the dividends if the
beneficial owner is a company which holds directly at least 10 per cent of the
capital of the company paying the dividends ;
(b) fifteen per cent of the gross amount of the dividends in all other
cases.
This paragraph
shall not affect the taxation of the company in respect of the profits out of
which the dividends are paid.
3. Notwithstanding the provisions of paragraph (2),
dividends paid by a company which is a resident of Mauritius to a resident of
India may be taxed in Mauritius and according to the laws of Mauritius, as long
as dividends paid by companies which are residents of Mauritius are allowed as
deductible expenses for determining their taxable profits. However, the tax
charged shall not exceed the rate of the Mauritius tax on profit of the company
paying the dividends.
4. The term “dividends” as used in this Article
means income from shares or other rights, not being debt-claims, participating
in profits, as well as income from other corporate rights which is subjected to
the same taxation treatment as income from shares by the laws of the
Contracting State of which the company making the distribution is a resident.
5. The provisions of paragraphs (1), (2)
and (3) shall not apply if the beneficial owner of the dividends, being
a resident of the 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 14, as the case may be, shall apply.
6. Where a company which is a resident of a
Contracting State derives profits or income from the other Contracting State,
that other State may not impose any tax on the dividends paid by the company,
except insofar as such dividends are paid to a resident of that other State or
insofar as the holding in respect of which the dividends are paid is
effectively connected with a permanent establishment 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 of profits or income arising in
such other State.
ARTICLE 11 - Interest - 1. Interest arising
in a Contracting State and paid to a resident of the other Contracting State
may be taxed in that other State.
2. However, subject to the provisions of
paragraphs (3) and (4) of this article, such interest may also be
taxed in the Contracting State in which it arises and according to the laws of
that State.
3. Interest arising in a Contracting State shall
be exempt from tax in that State provided it is derived and beneficially owned
by :
(a) the Government or a local authority of the other Contracting State
;
(b) any agency or entity created or organised
by the Government of the other Contracting State ; or
(c) any bank carrying on a bona fide banking business which is a
resident of the other Contracting State.
4. Interest arising in a Contracting State shall
be exempt from tax in that Contracting State to the extent approved by the
Government of that State if it is derived and beneficially owned by any person [other
than a person referred to in paragraph (3)] who is a resident of the
other Contracting State provided that the transaction giving rise to the
debt-claim has been approved in this regard by the Government of the
first-mentioned Contracting State.
5. 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.
6. The provisions of paragraphs (1), (2),
(3) and (4) shall not apply if the recipient 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.
7. Interest shall be deemed to arise in a
Contracting State when the payer is that Contracting State itself, a political
sub-division, a local authority or a resident of that State. Where, however,
the person paying the interest, whether he is a resident of a Contracting State
or not, has in a Contracting State a permanent establishment in connection with
which the indebtedness on which the interest is paid was incurred, and such
interest is borne by that permanent establishment, then such interest shall be
deemed to arise in the Contracting State in which the permanent establishment
is situated.
8. 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 interest paid, 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 recipient in the absence of such relationship, the provisions of
this article shall apply only to the last-mentioned amount. In that case, the
excess part of the payments shall remain taxable according to the law of each
Contracting State, due regard being had to the other provisions of this
Convention.
ARTICLE 12 - Royalties - 1. Royalties
arising in a Contracting State and paid to a resident of the other Contracting
State may be taxed in that other State.
2. However, such royalties may also be taxed in
the Contracting State in which they arise, and according to the law of that
State, but the tax so charged shall not exceed 15 per cent of the gross amount
of the royalties.
3. The term “royalties” as used in this Article
means payments of any kind received as a consideration for the use of, or the
right to use, any copyright of literary, artistic or scientific work (including
cinematograph films, and films or tapes for radio or television broadcasting),
any patent, trade mark, design or model, plan, secret formula or process or for
the use of, or the right to use, industrial, commercial or scientific
equipment, or for information concerning industrial, commercial or scientific
experience.
4. The provisions of paragraphs (1) and (2)
shall not apply if the recipient of the royalties, being a resident of a
Contracting State carries on business in the other Contracting State in which
the royalties arise, through a permanent establishment situated therein, 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
are paid is effectively connected with such permanent establishment or fixed
base. In such a case, the provisions of article 7 or article 14, as the case
may be, shall apply.
5. Royalties shall be deemed to arise in a
Contracting State when the payer is that Contracting State itself, a political
sub-division, a local authority or a resident of that State, where, however,
the person paying the royalties whether he is a resident of a Contracting
State, or not, has in a Contracting State a permanent establishment in
connection with which the liability to pay the royalties was incurred, and such
royalties are borne by such permanent establishment, then such royalties shall
be deemed to arise in the Contracting State in which the permanent establishment
is situated.
6. Where, by reason of a special relationship
between the payer and the recipient or between both of them and some other
person, the amount of royalties paid, 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 recipient in the absence of such relationship,
the provisions of this article shall apply only to the last-mentioned amount.
In that 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 from
the alienation of immovable property, as defined in paragraph (2) of
article 6, may be taxed in the Contracting State in which such property is
situated.
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 together with the whole enterprise) or of
such a fixed base, may be taxed in that other State.
3. Notwithstanding the provisions of paragraph (2)
of this article, gains from the alienation of ships and aircraft operated in
international traffic and movable property pertaining to the operation of such
ships and aircraft, shall be taxable only in the Contracting State in which the
place of effective management of the enterprise is situated.
4. Gains derived by a resident of a Contracting
State from the alienation of any property other than those mentioned in
paragraphs (1), (2) and (3) of this article shall be
taxable only in that State.
5. For the purposes of this article, the term
“alienation” means the sale, exchange, transfer, or relinquishment of the
property or the extinguishment of any rights therein or the compulsory
acquisition thereof under any law in force in the respective Contracting
States.
ARTICLE 14 - Independent personal services - 1.
Income derived by a resident of a Contracting State in respect of professional
services or other independent activities of a similar character shall be
taxable only in that State unless he has a fixed base regularly available to
him in the other Contracting State for the purpose of performing his activities.
If he has such a fixed base, the income may be taxed in the other Contracting
State but only so such of it as is attributable to that fixed base.
2. The term “professional services” includes
especially independent scientific, literary, artistic, educational or teaching
activities, as well as the independent activities of physicians, lawyers,
engineers, architects, dentists and accountants.
ARTICLE 15 - Dependent personal services - 1.
Subject to the provisions of articles 16, 17, 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 Contracting State.
2. Notwithstanding the provisions of paragraph (1)
of this article, remuneration derived by a resident of a Contracting State in
respect of an employment exercised in the other Contracting State shall be
taxable only in the first mentioned State, if—
(a) the recipient is present in the other State for a period or periods
not exceeding in the aggregate 183 days in the relevant “previous year” or
“year of income”, 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 in respect of an employment exercised aboard a ship
or aircraft in international traffic, may be taxed only in the Contracting
State in which the place of effective management of the enterprise is situated.
ARTICLE 16 - Directors’ fees - Directors’ fees and
other similar payments derived by a resident of a Contracting State in his
capacity as a member of the board of directors of a company which is a resident
of the other Contracting State may be taxed in that other Contracting State.
ARTICLE 17 - Artistes and athletes - 1.
Notwithstanding the provisions of articles 14 and 15, income derived by public
entertainers such as theatre, motion picture, radio or television artistes and musicians,
and by athletes, from their personal activities as such may be taxed in the
Contracting State in which these activities are exercised.
2. Where income is derived from personal
activities exercised by an entertainer or an athlete in his capacity as such,
and accrues not to the entertainer or athlete himself but to another person,
that income may, notwithstanding the provisions of articles 7, 14 and 15, be
taxed in the State in which the activities of the entertainer or athlete are
exercised.
3. Notwithstanding the provisions of paragraph (1)
of this article, 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 those 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)
of this article and articles 7, 14 and 15, where income is derived from
personal activities exercised by an entertainer or an athlete in his capacity
as such in a Contracting State and accrues not to the entertainer or athlete
himself but to another person, that income shall be taxable only in the
Contracting State, if that other person is supported wholly or substantially
from the public funds of that other Contracting State, including any of its
political sub-divisions or local authorities.
ARTICLE 18 - Governmental functions - 1.
Remuneration, other than pension, paid by the Government of a Contracting
State, to an individual who is a national of that State in respect of services
rendered to that State shall be taxable only in that State.
2. Any pension paid by the Government of a
Contracting State to an individual who is a national of that State, shall be
taxable only in that Contracting State.
3. The provisions of paragraphs (1) and (2)
of this article shall not apply to remuneration and pensions in respect of
services rendered in connection with any business carried on by the Government
of either of the Contracting States for the purpose of profit.
4. The provisions of paragraph (1) of
this article shall likewise apply in respect of remuneration paid under a
development assistance programme of a Contracting
State, out of funds supplied by that State, to a specialist or volunteer
seconded to the other Contracting State with the consent of that other State.
5. For the purposes of this article, the term
“Government” shall include any State Government or local or statutory authority
of either Contracting State and, in particular, the Reserve Bank of India and
the Bank of Mauritius.
ARTICLE 19 - Non-Government pensions and annuities
- 1. Any pension, other than a pension referred to in article 18, or any
annuity derived by a resident of a Contracting State from sources within the
other Contracting State shall be taxed only in the first-mentioned Contracting
State.
2. The term “pension” means a periodic payment
made in consideration of past services or by way of compensation for injuries
received in the course of performance of services.
3. The term “annuity” means a stated sum payable
periodically at stated times during life or during a specified or ascertainable
period of time, under an obligation to make the payments in return for adequate
and full consideration in money or money’s worth.
ARTICLE 20 - Students and apprentices - 1.
A student or business apprentice who is or was a resident of one of the
Contracting States immediately before visiting the other Contracting State and
who is present in that other Contracting State solely for the purpose of his
education or training, shall be exempt from tax in that other Contracting State
on—
(a) payments made to him from sources outside that other Contracting
State for the purposes of his maintenance, education or training, and
(b) remuneration from employment in that other Contracting State, in an
amount not exceeding Rs. 15,000 in Indian currency or
its equivalent in Mauritius rupees at the parity rate of exchange during any
“previous year” or “year of income”, as the case may be, provided that such
employment is directly related to his studies or is undertaken for the purpose
of his maintenance.
2. The benefits of this article shall extend
only for such period of time as may be reasonable or customarily required to
complete the education or training undertaken, but in no event shall any
individual have the benefits of this article for more than five consecutive
years from the date of his first arrival in that other Contracting State.
ARTICLE 21 - Professors, teachers and research
scholars - 1. A professor, teacher and research scholar who is or
was a resident of one of the Contracting States immediately before visiting the
other Contracting State at the invitation of that other Contracting State or of
a university, college, school or other approved institution in that other
Contracting State for the purpose of teaching or engaging in research, or both,
at the university, college, school or other approved institution, shall be
exempt from tax in that other Contracting State on any remuneration for such
teaching or research for a period not exceeding two years from the date of his
arrival in that other Contracting State.
2. This article shall not apply to income from
research if the research is undertaken primarily for the private benefit of a
specific person or persons.
3. For the purposes of this article and article 20
an individual shall be deemed to be resident of a Contracting State if he is a
resident in that Contracting State in the “previous year” or the “year of
income”, as the case may be, in which he visits the other Contracting State or
in the immediately preceding “previous year” or the “year of income”.
4. For the purpose of paragraph (1),
“approved institution” means an institution which has been approved in this
regard by the competent authority of the concerned Contracting State.
ARTICLE 22 - Other income - 1. Subject to
the provisions of paragraph (2) of this article, items of income of a
resident of a Contracting State, wherever arising, which are not expressly
dealt with in the foregoing articles of this Convention, shall be taxable only
in that Contracting State.
2. The provisions of paragraph (1) shall
not apply to income, other than income from immovable property as defined in
paragraph (2) of article 6, if the recipient of such income, being a
resident of a Contracting State, carries on business in the other Contracting
State through a permanent establishment situated therein, or performs in that
other State independent personal services from a fixed base situated therein
and the right or property in respect of which the income is paid is effectively
connected with such permanent establishment or fixed base. In such case, the
provisions of article 7 or article 14, as the case may be, shall apply.
Chapter IV - methods for elimination of double
taxation
ARTICLE 23 - 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
provisions to the contrary are made in this Convention.
2. (a) The amount of Mauritius tax
payable, under the laws of Mauritius and in accordance with the provisions of
this Convention, whether directly or by deduction, by a resident of India, in
respect of profits or income arising in Mauritius, which has been subjected to
tax both in India and in Mauritius, shall be allowed as a credit against the
Indian tax payable in respect of such profits or income provided that such
credit shall not exceed the Indian tax (as computed before allowing any such
credit) which is appropriate to the profits or income arising in Mauritius.
Further, where such resident is a company by which surtax is payable in India,
the credit aforesaid shall be allowed in the first instance against income-tax
payable by the company in India and as to the balance, if any, against surtax
payable by it in India.
(b) In
the case of a dividend paid by a company which is a resident of Mauritius to a
company which is a resident of India and which owns at least 10 per cent of the
shares of the company paying the dividend, the credit shall take into account
[in addition to any Mauritius tax for which credit may be allowed under the
provisions of sub-paragraph (a) of this paragraph] the Mauritius tax
payable by the company in respect of the profits out of which such dividend is
paid.
3. For the purposes of the credit referred to in
paragraph (2) the term “Mauritius tax payable” shall be deemed to
include any amount which would have been payable as Mauritius tax for any year
but for an exemption or reduction of tax granted for that year or any part
thereof under :
(i) sections 33, 34, 34A and 34B of the Mauritius
Income-tax Act, 1974 (41 of 1974) ;
(ii) any other provision which may subsequently be
made granting an exemption or reduction of tax which the competent authorities
of the Contracting States agree to be for the purposes of economic development.
4. (a) The amount of Indian tax payable
under the laws of India and in accordance with the provisions of this
Convention, whether directly or by deduction, by a resident of Mauritius, in
respect of profits or income arising in India, which has been subjected to tax
both in India and Mauritius shall be allowed as a credit against Mauritius tax
payable in respect of such profits or income provided that such credit shall
not exceed the Mauritius tax (as computed before allowing any such credit) is
appropriate to the profits or income arising in India.
(b) In
the case of a dividend paid by a company which is a resident of India to a
company which is a resident of Mauritius and which owns at least 10 per cent of
the shares of the company paying the dividend, the credit shall take into
account [in addition to any Indian tax for which credit may be allowed under
the provisions of sub-paragraph (a) of this paragraph] the Indian tax
payable by the company in respect of the profits out of which such dividend is
paid.
5. For the purposes of the credit referred to in
paragraph (4), the term “Indian tax payable” shall be deemed to include
any amount by which tax has been reduced by the special incentive measures
under—
(i) section 10(4), 10(4A), 10(6)(viia), 10(15)(iv), 10(28), 10A,
32A, 33A, 35B, 54E, 80HH, 80HHA, 80-I or 80L of the Income-tax Act, 1961 (43 of
1961);
(ii) any other provision which may subsequently be
enacted granting a reduction of tax which the competent authorities of the
Contracting States agree to be for the purposes of economic development.
6. Where under this Convention a resident of a
Contracting State is exempt from tax in that Contracting State in respect of
income derived from the other Contracting State, then the first-mentioned
Contracting State may, in calculating tax on the remaining income of that
person, apply the rate of tax which would have been applicable if the income
exempted from tax in accordance with this Convention had not been so exempted.
Chapter V - Special provisions
ARTICLE 24 - Non-discrimination - 1. The
nationals of a Contracting State shall not be subjected in the other
Contracting State to any taxation or any requirement connected therewith which
is other or more burdensome than the taxation and connected requirements to
which nationals of that other State in the same circumstances are or may be
subjected.
2. The taxation on a permanent establishment
which an enterprise of a Contracting State has in the other Contracting State
shall not be less favourably levied in that other
State than the taxation levied on enterprises of that other State carrying on
the same activities in the same circumstances.
3. Nothing contained in this Article shall be
construed as obliging a Contracting State to grant persons not resident in that
State any personal allowances, reliefs, reductions
and deductions for taxation purposes which are by law available only to persons
who are so resident.
4. Enterprises of a Contracting State, the
capital of which is wholly or partly owned or controlled, directly or
indirectly, by one or more residents of the other Contracting State, shall not
be subjected in the first-mentioned Contracting State to any taxation or any
requirement connected therewith which is other or more burdensome than the
taxation and connected requirements to which other similar enterprises of that
first-mentioned State are or may be subjected in the same circumstances.
5. In this article, the term “taxation” means
taxes which are the subject of this Convention.
ARTICLE 25 - Mutual agreement procedure - 1.
Where a resident of a Contracting State considers that the actions of one or
both of the Contracting States result or will result for him in taxation not in
accordance with this Convention, he may, notwithstanding the remedies provided
by the national laws of those States, present his case to the competent
authority of the Contracting State of which he is a resident. This case must be
presented within three years of the date of receipt of notice of the action
which gives rise to taxation not in accordance with the Convention.
2. The competent authority shall endeavour, if the objection appears to it to be justified
and if it is not itself able to arrive at an appropriate solution, to resolve
the case by mutual agreement with the competent authority of the other
Contracting State, with a view to the avoidance of taxation not in accordance
with the Convention. Any agreement reached shall be implemented notwithstanding
any time limits in the laws of the Contracting States.
3. The competent authorities of the Contracting
States shall endeavour to resolve by mutual agreement
any difficulties or doubts arising as to the interpretation or application of
the Convention. They may also consult together for the elimination of double
taxation in cases not provided for in the Convention.
4. The competent authorities of the Contracting
States may communicate with each other directly for the purpose of reaching an
agreement in the sense of the preceding paragraphs. When it seems advisable in
order to reach agreement to have an oral exchange of opinions, such exchange
may take place through a Commission consisting of representatives of the
competent authorities of the Contracting States.
ARTICLE 26 - Exchange of information or document -
1. The competent authorities of the Contracting States shall exchange
such information or document as is necessary for carrying out the provisions of
this Convention or for prevention of evasion of taxes which are the subject of
this Convention. Any information or document so exchanged shall be treated as
secret but may be disclosed to persons (including courts or other authorities)
concerned with the assessment, collection, enforcement, investigation or
prosecution in respect of the taxes which are the subject of this Convention,
or to persons with respect to whom the information or document relates.
2. The exchange of information or documents
shall be either on a routine basis or on request with reference to particular
cases or both. The competent authorities of the Contracting States shall agree
from time to time on the list of the information or documents which shall be
furnished on a routine basis.
3. The provisions of paragraph (1) shall not
be construed so as to impose on a Contracting State the obligation—
(a) to carry out administrative measures at variance with the laws or
administrative practice of that or of the other Contracting State ;
(b) to supply information or documents which are not obtainable under
the laws or in the normal course of the administration of that or of the other
Contracting State ;
(c) to supply information or documents which would disclose any trade,
business, industrial, commercial or professional secret or trade process or
information the disclosure of which would be contrary to public policy.
ARTICLE 27 - Diplomatic and consular activities -
Nothing in this Convention shall affect the fiscal privileges of diplomatic or
consular officials under the general rules of international law or under the
provisions of special agreements.
Chapter VI - Final provisions
ARTICLE 28 - Entry into force - Each of the
Contracting State shall notify to the other completion of the procedures
required by its law for the bringing into force of this Convention. The
Convention shall enter into force on the date of the later of these
notifications and shall thereupon have effect—
(a) in India, in respect of income and capital gains assessable for any
assessment year commencing on or after 1st April, 1983 ;
(b) in Mauritius, in respect of income and capital gains assessable for
any assessment year commencing on or after 1st July, 1983.
ARTICLE 29 - Termination - This Convention shall
remain in force indefinitely but either of the Contracting States may, on or
before the thirtieth day of June in any calendar year beginning after the
expiration of a period of five years from the date of its entry into force,
give the other Contracting State through diplomatic channels, written notice of
termination and, in such event, this Convention shall cease to have effect—
(a) in India, in respect of income and capital gains assessable for the
assessment year commencing on 1st day of April in the second calendar year next
following the calendar year in which the notice is given, and subsequent years
;
(b) in Mauritius, in respect of income and capital gains assessable for
the assessment year commencing on 1st day of July in the second calendar year
next following the calendar year in which the notice is given, and subsequent
years.
In witness
whereof the undersigned, being duly authorised
thereto, have signed the present Convention.
Done on this
24th day of August, 1982 at Port Louis on two original copies each in Hindi and
English languages, both the texts being equally authentic. In case of
divergence between the two texts, the English text shall be the operative one.
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Clarification regarding agreement for
avoidance of double taxation with Mauritius
1. A Convention for the avoidance of double
taxation and prevention of fiscal evasion with respect to taxes of income and
capital gains was entered into between the Government of India and the
Government of Mauritius and was notified on 6-12-1983. In respect of India, the
Convention applies from the assessment year 1983-84 and onwards.
2. Article 13 of the Convention deals with
taxation of capital gains and it has five paragraphs. The first paragraph gives
the right of taxation of capital gains on the alienation of immovable property
to the country in which the property is situated. The second and third
paragraphs deal with right of taxation of capital gains on the alienation of
movable property linked with business or professional enterprises and ships and
aircrafts.
3. Paragraph 4 deals with taxation of capital
gains arising from the alienation of any property other than those mentioned in
the preceding paragraphs and gives the right of taxation of capital gains only
to that State of which the person deriving the capital gains is a resident. In
terms of paragraph 4, capital gains derived by a resident of Mauritius by
alienation of shares of companies shall be taxable only in Mauritius according
to Mauritius tax law. Therefore, any resident of Mauritius deriving income from
alienation of shares of Indian companies will be liable to capital gains tax
only in Mauritius as per Mauritius tax law and will not have any capital gains
tax liability in India.
4. Paragraph 5 defines ‘alienation’ to mean the
sale, exchange, transfer or relinquishment of the property or the
extinguishment of any rights in it or its compulsory acquisition under any law
in force in India or in Mauritius.
Circular : No. 682, dated 30-3-1994.
Judicial Analysis
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Companies Incorporated in