39. Agreement for avoidance of
double taxation with
Whereas the
annexed Convention between the Government of the Republic of India and the
Government of the Socialist Republic of Romania for the avoidance of double
taxation and the prevention of fiscal evasion with respect to taxes on income
has come into force on the 14th November, 1987 on the exchange of the
Instruments of Ratification by both the Contracting States, as required by
paragraph (1) of article 31 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
Notification: No. GSR 80(E), dated 8-2-1988.
TEXT OF ANNEXED AGREEMENT, DATED 10-3-1987
The Government
of the Republic of India and the Government of the Socialist Republic of
Romania desiring to conclude a Convention for the avoidance of double taxation
and the prevention of fiscal evasion with respect to taxes on income and to
promote and strengthen the economic relations between the two countries on the
basis of equality in rights and reciprocal advantage, have agreed as follows :
Article 1 - Personal
scope - This Convention shall apply to persons who are residents of one or
both the Contracting States.
Article 2 - Taxes
covered - 1. The taxes to which this Convention shall apply are :
(a) In the case of
(1) Income-tax and any surcharge thereon ; and
(2) Surtax ;
(hereinafter
referred to as “Indian tax”).
(b) In the case of
(1) the tax on incomes derived by individuals
and corporate bodies ;
(2) the tax on the profits of joint companies
constituted with the participation of some Romanian economic organisations and some foreign partners ; and
(3) the tax on income realised
from agricultural activities ;
(hereinafter referred to as “Romanian tax”).
2. The 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 which are the subject of this Convention and
furnish copies of relevant enactments and regulations.
Article 3 - General
definitions - 1. In 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 in
which India has sovereign rights, other rights and jurisdictions, according to
the Indian law and in accordance with international law ;
(b) the term “Romania” used in a geographical sense, means the
territory of the Socialist Republic of Romania including the territorial sea
and the continental shelf as well as any other area beyond the territorial
waters of Romania where Romania exercises sovereign rights, in accordance with
the international law and with its own law concerning the exploration and
exploitation of the natural, biological and mineral resources existing in the
sea, waters, seabed and sub-soil of these waters ;
(c) the terms “a
(d) the term “tax” means Indian tax or Romanian 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” shall have the meaning
assigned to it in the taxation laws in force in the respective Contracting
States ;
(f) the term “company” means any body
corporate including a joint company which is incorporated under the Romanian
law or any entity which is treated as a company under the taxation laws of the
respective Contracting States ;
(g) 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 ;
(h) the term “competent authority” means in
the case of
(i) the term “national”
means :—
- in the case of India, any individual possessing the nationality of India and any legal person, partnership or association deriving its status from the laws in force in India ;
- in the case
of Romania, any individual possessing the citizenship of Romania and any legal
person, partnership or association deriving its status from the laws in force
in Romania ;
(j) the term “a political sub-division” means
a political sub-division in
(k) the term “an administrative territorial
unit” means an administrative territorial unit in
(l) the term
“international traffic” means any transport by a ship or aircraft operated by
an enterprise of a
2. In the application of the provisions of this
Convention by one of the Contracting States, any term not defined herein shall,
unless the context otherwise requires, have the meaning which it has under the
laws in force in that State relating to the taxes which are the subject of this
Convention.
Article 4 - Fiscal
domicile - 1. For the purposes of this Convention, the term “resident of a
2. Where by reason of the provision of paragraph
(1), an individual is a resident of both the Contracting States, then
his residential status for the purposes of this Convention shall be determined
in accordance with the following rules :—
(a) He shall be deemed to be a resident of the
(b) If the Contracting States 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 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” includes especially :
(a) a place of management ;
(b) a branch ;
(c) an office ;
(d) a factory ;
(e) a workshop ;
(f) a mine, an oil or gas well, a quarry or
any other place of extraction of natural resources ;
(g) a warehouse in relation to a person
providing storage facilities for others ;
(h) a farm, plantation or other place where
agriculture, forestry, plantation or related activities are carried on ;
(i) a premises used as a
sales outlet or for receiving or soliciting orders ;
(j) an installation or structure used for the
exploration of natural resources ;
(k) a building site or construction, installation or assembly project
or supervisory activities in connection therewith, where such site, project or
supervisory activity (together with other such sites, projects or activities,
if any) continues for a period of more than six months, or where such project
or supervisory activity, being incidental to the sale of machinery or
equipment, continues for a period not exceeding six months and the charges
payable for the project or supervisory activity exceed 10 per cent of the sale
price of the machinery or equipment.
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 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 for
collecting information, for the enterprise ;
(e) the maintenance of a fixed place of
business solely for the purpose of advertising, for the supply of information,
for scientific research, or for similar activities which have a preparatory or
auxiliary character, for the enterprise ;
(f) the selling of goods or merchandise belonging to the enterprise
displayed in an occasional temporary fair or exhibition in the process of
closing down of such fair or exhibition ;
(g) project or supervisory activity, being incidental to sale of
machinery or equipment, carried on by an enterprise other than the seller of
machinery or equipment and not continuing for a period exceeding six months.
However,
the provisions of sub-paragraphs (a) to (g) shall not be
applicable where the enterprise maintains any other fixed place of business in
the other
4. Notwithstanding the provisions of paragraphs
(1) and (2) where a person - other than an agent of an
independent status to whom paragraph 5 applies - is acting in a
(a) he has and habitually exercises in that
State an authority to conclude contracts on behalf of the enterprise, unless
his activities are limited to the purchase of goods or merchandise for the
enterprise ;
(b) he has no such authority, but habitually maintains in the first
mentioned State a stock of goods or merchandise from which he regularly
delivers goods or merchandise on behalf of the enterprise ; or
(c) he habitually secures orders in the
first-mentioned State, wholly or almost wholly for the enterprise itself or for
the enterprise and other enterprises controlling, controlled by, or subject to
the same common control as, that 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 carried 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.
Article 6 - Income
from immovable property - 1. Income from immovable property may be taxed
only 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),
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. In any case where the correct amount of
profits attributable to a permanent establishment is incapable of determination
or the determination thereof presents exceptional difficulties, the profits
attributable to the permanent establishment may be estimated on a reasonable
basis.
3. In the determination of 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, in
accordance with the provisions of the taxation laws of that State. 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,
know-how or other rights, or by way of commission or other charges, for
specific services performed or for management, or, except in the case of a banking
enterprise, by way of interest on moneys lent to the permanent establishment.
Likewise, no account shall be taken, in the determination of the profits of a
permanent establishment, for 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, know-how or other
rights, or by way of commission or other charges for specific services
performed or for management, or, except in the case of a banking enterprise, by
way of interest on moneys lent to the head office of the enterprise or any of
its other offices.
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 - 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 profits derived from the operation of such aircraft, and the
provisions of Article 12 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 - Shipping - 1. Profits derived by an enterprise of a
2. Notwithstanding the provisions of paragraph (1),
such profits may also be taxed in the other Contracting State if the shipping
activities connected with the operation of ships in international traffic are
carried on in that other State, but the tax so charged shall not exceed 2.50
per cent of the gross amount payable in respect of operation of ships in that
other State.
3. The provisions of paragraphs (1) and (2)
shall also apply to profits from the participation in a pool, a joint business
or an international operating agency engaged in the operation of ships.
4. For the purposes of this Article, the gross
amount payable in respect of operation of ships in a Contracting State shall
mean the aggregate of the following amounts, namely :—
(a) the gross amount payable on account of
carriage of passengers, livestock, mail or goods shipped at a port or ports in
that
(b) interest arising in that
(c) the gross amount payable in that State on
account of the use, maintenance or rental of containers (including trailers and
related equipment for the transport of containers) in connection with the
transport of goods or merchandise in international traffic.
The provisions
of Article 12 shall not apply in relation to interest referred to in (b)
above.
5. In determining the income of an enterprise of
a
Article 10 - 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 only the 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 11 - Dividends - 1. Dividends paid by a company which is resident of a
2. However, such dividends may also be taxed in
the
(a) 15 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 ;
(b) 20 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. In this context, the
profits distributed by Romanian Joint Companies to the capital subscribers are
assimilated to dividends.
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 16, 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
so far 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 12 - Interest - 1. Interest arising in a
2. However, such interest may also be taxed in
the
3. Notwithstanding the provisions of paragraph (2),—
(a) interest arising in a
(i) the Government, a
political sub-division, an administrative territorial unit, or a local
authority of the other
(ii) the Central Bank of
the other
(b) interest arising in a
(i) in the case of
Socialist Republic of Romania, BANCA
ROMANA DE COMERT EXTERIOR to the
extent such interest is attributable to financing of exports and imports only;
(ii) in the case of
(iii) any institution of a
(iv) any other person provided that the loan or
credit is approved by the Government of the first-mentioned
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 cases, the provisions of Article 7 or Article 16, 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
cases, the excess part of the payments shall remain taxable according to the
laws of each
Article 13 - Commission - 1. Commission arising in a
2. However, such commission may be taxed in the
3. The term “commission” as used in this Article
means a payment made to a broker, a general commission agent or to any other
person assimilated to such a broker or agent by the taxation law of the
4. The provisions of paragraphs (1) and (2)
shall not apply if the recipient of the commission, being a resident of a
Contracting State, has in the other Contracting State in which the commission
arises a permanent establishment with which the activity giving rise to the
commission is effectively connected. In such a case, the provisions of Article
7 shall apply.
5. Commission 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 commission, having regard to the transaction 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 such cases, the
excess part of the payment shall remain taxable according to the laws of each
Article 14 - Royalties and fees for technical services - 1. Royalties and fees for technical services
arising in a
2. However, such royalties and fees for
technical services may also be taxed in the Contracting State in which they
arise and according to the laws of that State, but if the recipient is the
beneficial owner of the royalties, or fees for technical services, the tax so
charged shall not exceed 22.5 per cent of the gross amount of the royalties or
fees for technical services.
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 term “fees for technical services” as
used in this Article means payments of any amount to any person other than
payments to an employee of a person making payments, in consideration for the
services of a managerial, technical or consultancy nature, including the
provision of services of technical or other personnel.
5. The provisions of paragraphs (1) and (2)
shall not apply if the beneficial owner of the royalties or fees for technical
services, being a resident of a Contracting State, carries on business in the
other Contracting State in which the royalties or fees for technical services
arise, through a permanent establishment situated therein, and performs in that
other State independent personal services from a fixed base situated therein,
and the right, property or contract in respect of which the royalties or fees for
technical services are paid is effectively connected with such permanent
establishment or fixed base. In such cases, the provisions of Article 7 or
Article 16, as the case may be, shall apply.
6. Royalties and fees for technical services
shall be deemed to arise in a
7. 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 or fees for technical services paid
exceeds the amount which would have been paid in the absence of such
relationship, the provisions of this Article shall apply only to the
last-mentioned amount. In such cases, the excess part of the payments shall
remain taxable according to the laws of each
Article 15 - Capital gains - 1. Gains derived by a resident of a
2. Gains from the alienation of movable property
forming part of the business property of a permanent establishment which an
enterprise of a Contracting State has in the other Contracting State or of
movable property pertaining to a fixed base available to a resident of a Contracting
State in the other Contracting State for the purpose of performing independent
personal services, including such gains from the alienation of such a permanent
establishment (alone or with the whole enterprise) or of such fixed base, may
be taxed in that other State.
3. Gains arising from a capital asset being
ships or aircraft operated in international traffic or movable property
pertaining to the operation of such ships or aircraft by an enterprise of a
4. Gains from the alienation of shares of the
capital stock of a company the property of which consists directly or
indirectly principally of immovable property situated in a
5. Gains from the alienation of any property
other than that referred to in paragraphs (1), (2), (3)
and (4) shall be taxable only in the
ARTICLE 16 - Independent personal services - 1. Income derived by an individual who is a resident of a
Contracting State from the performance 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 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 “calendar year”, 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 17 - Dependent
personal services - 1. Subject to the provisions of Articles 18, 19,
20, 21, 22 and 23, 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
“calendar year”, as the case may be ;
(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 18 - Directors’
fees and remuneration of top level managerial officials - 1. Directors’ fees and other similar payments
derived by a resident of a
2. Salaries, wages and other similar
remuneration derived by a resident of a
ARTICLE 19 - Artistes
and athletes - 1.
Notwithstanding the provisions of Articles 16 and 17, 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. Where income in respect of personal
activities exercised by an entertainer or 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, 16 and 17, be taxed in the
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, administrative territorial units
or local authorities.
4. Notwithstanding the provisions of paragraph (2)
and Articles 7, 16 and 17, 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,
administrative territorial units or local authorities.
ARTICLE 20 - Remuneration and pensions in respect of
Government service - 1. (a) Remuneration, other than a
pension, paid by a Contracting State, a political sub-division, an
administrative territorial unit or a local authority thereof to an individual
in respect of services rendered to that State, sub-division, unit 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, a political sub-division, an
administrative territorial unit or a local authority thereof to an individual
in respect of services rendered to that State, sub-division, unit 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 17, 18 and 19
shall apply to remuneration and pensions in respect of services rendered in
connection with a business carried on by a Contracting State, a political
sub-division, an administrative territorial unit or a local authority thereof.
ARTICLE 21 - Non-Government
pensions and annuities - 1. Any pension, other than a pension referred to in Article 20, 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 22 - Students, apprentices and persons sent
for specialisation - 1. An individual who
is or was resident of one of the Contracting States and who is temporarily
present in the other
(a) as a student at a recognised
university, college or school in that other State ; or
(b) as a business apprentice ; or
(c) as the recipient of a grant, allowance or
award for the primary purpose of study from a religious, charitable, scientific
or educational organisation,
shall be exempt from
tax in that other State for a period of six years from his arrival in that
other
(i) the remittance from
abroad for the purposes of his maintenance, education, study or training ;
(ii) the grant, allowance
or award ; or
(iii) any remuneration from
abroad.
2. The same exemption shall apply to income
derived by the above-mentioned individual from an employment which he exercises
in the other Contracting State in order to supplement his means for
maintenance, education, training and other expenses for specialisation,
for the period limited to two years from his arrival in that other State.
3. A resident of one of the Contracting States
present in the other Contracting State under arrangements with the Government
of that other State or any agency or instrumentality thereof solely for the
purpose of training, study or orientation shall be exempt from tax for a period
not exceeding two years from his arrival in that other Contracting State in respect
of remuneration received by him on account of such training or study.
4. For the purposes of paragraph (1), the
term “recognised university, college or school” means
a university, college or school which has been recognised
in this regard by the competent authority of the concerned
ARTICLE 23 - Professors,
teachers and research scholars - 1. A professor or teacher who is or was a
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
22, 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 “calendar
year”, as the case may be, in which he visits the other Contracting State or in
the immediately preceding “previous year” or the “calendar year”.
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 24 - 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 cases,
the provisions of Article 7 or Article 16, 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.
ARTICLE 25 - Avoidance 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 the Convention.
2. The amount of Romanian tax payable, under the
laws of Romania 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 Romania, which has been subjected to tax both in India and
in Romania, shall be allowed as a credit against Indian tax payable in respect
of such profits or income provided that such credit shall not exceed Indian tax
(as computed before allowing any such credit) which is appropriate to the
profits or income arising in Romania. Further, where such resident is a company
by which surtax is payable in
3. 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 Romania, in respect of profits or
income arising in India, which has been subjected to tax both in India and in
Romania, shall be allowed as a credit against Romanian tax payable in respect
of such profits or income provided that such credit that shall not exceed
Romanian tax (as computed before allowing any such credit) which is appropriate
to the profits or income arising in India.
For the
purposes of this paragraph, profits paid by the
4. For the purposes of the credit referred to in
paragraph (3), the term “Indian tax payable” shall be deemed to include
any amount which would have been payable as Indian tax for any assessment year
but for an exemption or reduction of tax granted for that year or any part
thereof by the special incentive measures under the provisions of the
Income-tax Act, 1961 (43 of 1961), which are designed to promote economic
development, or which may be introduced hereafter in modification of, or in
addition to, the existing provisions for promoting economic development in
India.
5. 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.
ARTICLE 26 - 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 a
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 and
under the same conditions.
5. In this Article, the term “taxation” means
taxes which are the subject of this Convention.
ARTICLE 27 - 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
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 28 - 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 Convention or of the domestic laws of the Contracting States
concerning taxes covered by the Convention, insofar as the taxation thereunder is not contrary to the Convention, in particular
for the prevention of fraud or evasion of such taxes. Any information received
by a
The competent
authorities shall, through consultation, develop appropriate conditions,
methods and techniques concerning the matters in respect of which such exchange
of information shall be made, including, where appropriate, exchange of
information regarding tax avoidance.
2. The exchange of information or documents
shall be either on 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 practice 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 29 - Assistance in collection - 1.
The Contracting States undertake to lend assistance and support to each other,
in the collection of the taxes to which this Convention relates, in the cases where
the taxes are definitely due according to the laws of the State making the
request.
2. In the case of a request for enforcement of
collection, tax claims of either of the Contracting States which have been
finally determined will be accepted for enforcement by the other Contracting
State to which the request is made and collected in that State in accordance
with the laws applicable to the enforcement and collection of its taxes.
3. In the case of Indian tax, the request will
be sent by the Central Board of Direct Taxes, Department of Revenue, to the
Ministry of Finance of the Socialist Republic of Romania and will be
accompanied by such certificate as is required by the laws of India to
establish that the taxes have been finally determined and are due from the
taxpayer.
4. In the case of Romanian tax, the request will
be sent by the Ministry of Finance of the Socialist Republic of Romania to the
Central Board of Direct Taxes, Department of Revenue, in India and will be
accompanied by such certificate as is required by the laws of Romania to
establish that the taxes have been finally determined and are due from the
taxpayer.
5. Where the tax claim has not become final by
reason of its being subject to appeal or any other proceeding, a
6. A request for assistance in collection of
taxes due from a taxpayer shall be made only if adequate assets of that
taxpayer are not available for recovering the taxes from him in the
7. The Contracting State in which tax is
recovered in pursuance of paragraphs (1), (2) and (5) of
this Article shall immediately thereafter remit the amount so recovered to the
Contracting State which made the request but it shall be entitled to
reimbursement of any reasonable costs incurred in the course of rendering
assistance in the recovery of such tax.
ARTICLE 30 - Diplomatic and consular activities -
Nothing in this Convention shall affect the fiscal privileges and diplomatic or
consular officials under the general rules of international law or under the
provisions of special agreements.
ARTICLE 31 - Entry into force - 1. This
Convention shall be ratified and the instruments of ratification shall be
exchanged at
2. This Convention shall enter into force upon
the exchange of instruments of ratification and its provisions shall thereupon
have effect :
(a) in
(b) in
3. The existing agreement for the avoidance of
double taxation of income of enterprises operating aircraft and ships in
international traffic dated the 25th September, 1968 shall cease to have effect
upon the entry into force of this Convention.
ARTICLE 32 - 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
(b) in
in witness whereof the
undersigned, being duly authorised thereto, have
signed the present Convention.
Done in duplicate at
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