32. Agreement for avoidance of
double taxation and prevention of fiscal evasion with
Whereas the
annexed Agreement between the Government of the Republic of India and His
Majesty’s Government of Nepal for the avoidance of double taxation and the
prevention of fiscal evasion with respect to taxes on income has come into
force on 1st November, 1988, on the notification by both the Contracting States
to each other, under Article 27 of the said Agreement, of the completion of
procedures required under their respective laws for bringing the Agreement into
force ;
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 Agreement shall be given effect to in the Union of
Notification : No. GSR 1146(E), dated 5-12-1988.
SAARC Limited Multilateral Agreement
(For detail click here)
Annexure
Agreement between the Government of the
republic of India and his majesty’s Government of Nepal for the avoidance of
double taxation and the prevention of fiscal evasion with respect to taxes on
income
The Government
of the
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 taxes
to which this Agreement 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
(i) income-tax imposed under the Income-tax Act,
2031 (hereinafter referred to as “
2. The Agreement shall also apply to any
identical or substantial similar taxes which are imposed by either
Chapter II - Definitions
ARTICLE 3 - General definitions - 1. In
this Agreement, unless the context otherwise requires:
(a) the terms “a
(b) the term “tax” means Indian tax or Nepal 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 ;
(c) the term “person” includes an individual, a company and any other
entity which is treated as a taxable unit, under the taxation laws in force in
the respective Contracting States ;
(d) the term “company” means any body corporate or any entity which is
treated as a company or body corporate under the taxation laws in force in the
respective Contracting States ;
(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 “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 Nepal, His
Majesty’s Government, Ministry of Finance or their authorised representative ;
(g) the term “national” means any individual, possessing the
nationality of a
(h) the term “international traffic” means any transport by an aircraft
operated by an enterprise of a
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 the 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 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 in which his
economic activities are concentrated ;
(b) if he has not a permanent home available to him in either State, he
shall be deemed to be 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 in which his economic
activities are concentrated ;
(d) in case of dispute, the competent authorities of the Contracting
States shall settle the question by mutual agreement.
3. Where by reason of the provisions of
paragraph 1, a person other than an individual is a resident of both
Contracting States, then it shall be deemed to be a resident of the State in
which its place of effective management is situated.
ARTICLE 5 - Permanent establishment - 1.
For the purposes of this 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, a quarry or any
other place of extraction of natural resources ;
(g) a building site or construction or assembly project, but only where
such site, project or activity continues for a period or periods aggregating to
more than 183 days in any twelve-month period ;
(h) the furnishing of services by an enterprise through employees or
other personnel, where activities continue within the country for a period or
periods aggregating to more than 183 days in any twelve-month period.
3. Notwithstanding the preceding provisions of
the article, the term “permanent establishment” shall be deemed not to include
:
(a) the use of facilities solely for the purpose of storage or display
of goods or merchandise belonging to the enterprise ;
(b) the maintenance of a stock of goods or merchandise belonging to the
enterprise solely for the purpose of storage or display ;
(c) the maintenance of a stock of goods or merchandise belonging to the
enterprise solely for the purpose of processing by another enterprise ;
(d) the maintenance of a fixed place of business solely for the purpose
of purchasing goods or merchandise, or of collecting information, for the
enterprise ;
(e) the maintenance of a fixed place of business solely for the purpose
of carrying on, for the enterprise, any other activity of a preparatory or
auxiliary character.
4. Notwithstanding the provisions of paragraphs
1 and 2, where a person - other than an agent of independent status - to whom
paragraph 5 applies is acting on behalf of an enterprise and has, and
habitually exercises, in a Contracting State an authority to conclude contracts
on behalf of the enterprise, that enterprise shall be deemed to have a
permanent establishment in that State in respect of 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.
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 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.
3. (a) In the determination of the
profits of a permanent establishment, there shall be allowed as deductions,
expenses of the enterprise which are incurred for the purpose of the permanent
establishment, including only those executive and general administrative
expenses incurred, whether in the State in which the permanent establishment is
situated or elsewhere which are allowed under the provisions of the domestic
law of the Contracting State in which the permanent establishment is situated.
(b)
However, no such deduction shall be allowed in respect of amounts, if any, paid
(otherwise than towards reimbursement of actual expenses) by the permanent
establishment to the head office of the enterprise or any of its other offices,
by way of royalties, fees or other similar payments, in return for the use of
patents or other rights, or by way of commission, for specific services
performed or for management, or, except in the case of a banking enterprise, by
way of interest on monies lent to the permanent establishment. Likewise, no
account shall be taken in the determination of the profits of a permanent
establishment of amounts charged (otherwise than towards reimbursement of
actual expenses) by the permanent establishment to the head office of the
enterprise or any of its other offices, by way of royalties, fees or other
similar payments in return for the use of patents or other rights, or by way of
commission for specific services performed or for management, or, except in the
case of a banking enterprise by way of interest on monies lent to the head
office of the enterprise or any of its other offices.
4. Insofar as it has been customary in a
Contracting State to determine the profits to be attributed to a permanent
establishment on the basis of an apportionment of the total profits of the
enterprise to its various parts, nothing in paragraph 2 shall preclude that
Contracting State from determining the profits to be taxed by such an
apportionment as may be customary, the method of apportionment adopted shall,
however, be such that the result shall be in accordance with the principles
contained in 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. 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 - Air transport - 1. Profits
derived by an enterprise of a
2. The provisions of paragraph 1 shall also
apply to profits from the participation in a pool, a joint business or an
international operating agency.
3. For the purposes of this Article, interest on
funds connected with the operation of aircraft in international traffic shall
be regarded as income/profits derived from the operation of such aircraft, and
the provisions of Article 11 shall not apply in relation to such interest.
4. The term “operation of aircraft” shall mean business
of transportation by air of passengers, mail, livestock or goods carried on by
the owners or lessees or charterers of aircraft, including the sale of tickets
for such transportation on behalf of other enterprises, the incidental lease of
aircraft and any other activity directly connected with such transportation.
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
2. However, such dividends may also be taxed in
the
(a) 10 per cent of the gross amount of the dividends if the beneficial
owner is a company which owns at least ten per cent of the shares of the
company paying the dividends ;
(b) 15 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. The term “dividends” as used in this Article
means income from shares or other rights, not being debt-claims, participating
in profits, as well as income from other corporate rights which is subjected to
the same taxation treatment as income from shares by the laws of the State of
which the company making the distribution is a resident.
4. The provisions of paragraphs 1 and 2 shall
not apply if the beneficial owner of the dividends, being a resident of a
Contracting State, carries on business in the other Contracting State of which
the company paying the dividends is a resident, through a permanent
establishment situated therein or performs in that 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 13, 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 of profits or income arising in
such other State.
ARTICLE 11 - Interest - 1. Interest arising
in a
2. However, such interest may also be taxed in
the
Provided however, that where the interest is paid to a
bank carrying on bona fide banking business, which is a resident of the
other Contracting State and is the beneficial owner of the interest, the tax
charged in the Contracting State in which the interest arises shall not exceed
10 per cent of the gross amount of the interest.
3. Notwithstanding the provisions of paragraph
2, interest arising in a
(i) the Government, a political sub-division or a
local authority of the other
(ii) the Central Bank of the other
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 13, 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 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 - 1. Royalties
arising in a
2. However, such royalties may also be taxed in
the
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 or films or tapes used 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 beneficial owner of the royalties, being a resident of a
Contracting State, carries on business in the other Contracting State in which
the royalties arise, through a permanent establishment situated therein, 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 case, the provisions of Article 7 or Article 13, as the case may
be, shall apply.
5. Royalties shall be deemed to arise in a
6. Where, by reason of special relationship
between the payer and the beneficial owner or between both of them and some
other person, the amount of royalties, having regard to the use, right or
information for which they are paid, exceeds the amount which would have been
agreed upon by the payer and the beneficial owner in the absence of such
relationship, the provisions of this article shall apply only to the
last-mentioned amount. In such case, the excess part of the payments shall
remain taxable according to the laws of each
ARTICLE 13 - 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 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
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 183 days in the relevant
“previous year” or “year of income”, as the case may be; 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
independent scientific, literary, artistic, educational or teaching activities,
as well as the independent activities of physicians, surgeons, lawyers,
engineers, architects, dentists and accountants.
ARTICLE 14 - Dependent personal services - 1.
Subject to the provisions of Articles 15, 16, 17, 18, 19 and 20, 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 relevant “previous year” or
“year of income”, as the case may be ; and
(b) the remuneration is paid by, or on behalf of, an employer who is
not 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
an aircraft operated in international traffic by an enterprise of a
ARTICLE 15 - Directors’ fees - Directors’ fees and
similar payments derived by a resident of a
ARTICLE 16 - Income earned by entertainers and
athletes - 1. Notwithstanding the provisions of Articles 13 and 14,
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 State.
2. While 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, 13 and 14, 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, 13 and 14, 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 17 - Remuneration and pensions in respect of
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 other
3. The provisions of Articles 14, 15 and 16
shall apply to remuneration and pensions in respect of services rendered in
connection with a business carried on by a
Article 18 - Non-Government
pensions and annuities - 1. Any pension, other than a pension
referred to in Article 17, or any annuity derived by a resident of a
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 19 - Payments
received by 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 State solely for the purpose of his education or training, shall 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, in an amount not
exceeding Rs. 18,000 (Indian currency) or its equivalent in Nepalese currency
during any “previous year” or the “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 three consecutive
years from the date of his first arrival in that other
Article 20 - Payment
received by professors, teachers and research scholars - 1. A
professor or teacher who is or was resident of one of the Contracting States
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 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 this article and article
19, an individual shall be deemed to be a resident of a Contracting State if he
is 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 “year of income”.
4. For the purposes of paragraph 1, “approved
institution” means an institution which has been approved in this regard by the
competent authority of the concerned
Article 21 - Other
income - 1. Subject to the provisions of paragraph 2, 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 13, as the case may be, shall apply.
Chapter IV - Methods of elimination of double
taxation
Article 22 - 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
Agreement. Where income is subject to tax in both Contracting States, relief
from double taxation shall be given in accordance with this article.
2. Subject to the provisions of the law of Nepal
regarding the allowance as a credit against Nepal’s tax or tax payable in
territory outside Nepal (which shall not affect the general principle hereof)
Indian tax payable under the law of India and in accordance with the provisions
of this Agreement, whether directly or by deduction, on income from sources
within India shall be allowed as a credit against any Nepal tax computed by
reference to the same items of income by reference to which the Indian tax is
computed.
3. For the purpose of the credit referred to in
paragraph 2, 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) sections 10(4), 10(4A), 10(6)(viia),
10(15)(iv), 10(28), 10A, 32A, 33A, 80HH, 80HHA, 80-I and
80L of the Income-tax Act, 1961 (43 of 1961) ; and
(ii) any other provisions, 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.
4. Subject to the provisions of the law of India
regarding the allowance as a credit against Indian tax of tax payable in a
territory outside India (which shall not affect the general principle hereof)
Nepal tax payable under the law of Nepal and in accordance with the provisions
of this Agreement whether directly or by deduction, on income from sources
within Nepal shall be allowed as a credit against any Indian tax computed by
reference to the same items of income by reference to which Nepal tax is
computed :
Provided that such credit shall not exceed Indian tax
(as computed before allowing any such credit), which is appropriate to the
income derived from sources within Nepal, so however, that 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 payable by it in India.
5. For the purpose of paragraph 4 of this
article the term ‘Nepal tax payable’ shall be deemed to include any amount
which would have been payable as Nepal tax for any year but for an exemption or
reduction of tax granted for that year or any part thereof under :
(a) sub-section (2) of section 42 of the Nepal Income-tax Act, 2031
(1974), so far as they were in force on, and have 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 subsequently be made granting an
exemption or reduction of tax which is agreed by the competent authorities to
be of a substantially similar character, 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 under this Agreement 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 the Agreement had not been so exempted.
Chapter V - special provisions
Article 23 - Non-discrimination
- 1. The nationals of a
2. The taxation on a permanent establishment
which an enterprise of a
3. Nothing contained in this article shall be
construed as obliging
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 Agreement.
Article 24 - Mutual
agreement procedure - 1. Where a resident of a Contracting State
considers that the actions of one or both of the Contracting States results or
will result for him in taxation not in accordance with this Agreement, 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 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
Article 25 - Exchange
of information - 1. The competent authorities of the Contracting
States shall exchange such information (including documents) as is necessary
for carrying out the provisions of the 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. 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. In no case, shall the provisions of paragraph
1 be construed so as to impose on a
(a) to carry out administrative measures at variance with the laws or
administrative practices of that or of the other
(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
(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 26 - Diplomatic
and consular activities - Nothing in this Agreement shall affect the fiscal
privileges of diplomatic or consular officials under the general rules of
international law or under the provisions of special agreement.
Chapter VI - final provisions
Article 27 - Entry
into force - Each of the
(a) in India, in respect of income arising in any previous year
beginning on or after the first day of April next following the calendar year
in which the later of the notifications is given ;
(b) in
Article 28 - Termination
- This Agreement shall remain in force indefinitely but either of the
Contracting States may, on or before the thirtieth day of June in any calendar
year beginning after the expiration of a period of five years from the date of
its entry into force, give the other Contracting State through diplomatic
channel, written notice of termination and, in such event, this Agreement shall
cease to have effect :
(a) in
(b) in
In witness whereof the
undersigned, being duly authorised thereto, have signed the present Agreement.
Done in duplicate at
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