Turkmenistan
Notification No. G. S. R. 567(E), dated
25th September, 1997. [CD1]
Whereas the annexed Convention between the
Government of the Republic of India and the Government of Turkmenistan for the
avoidance of double taxation and the prevention of fiscal evasion with respect
to taxes on income and on capital has entered into force on the seventh day of
July, 1997, after the notification by the Contracting States to each other of
the completion of procedures required by its law for bringing into force of the
said Convention in accordance with Article 30 of the said Convention;
Now, therefore, in exercise of the powers
conferred by section 90 of the Income-tax Act, 1961 (43 of 1961), and section
44A of the Wealth-tax Act, 1957 (27 of 1957), the Central Government hereby
directs that all the provisions of the said Convention shall be given effect to
in the Union of India.
ANNEXURE
CONVENTION BETWEEN THE GOVERNMENT OF REPUBLIC
OF INDIA AND THE GOVERNMENT OF TURKMENISTAN FOR THE AVOIDANCE OF DOUBLE
TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME
AND ON CAPITAL
The Government of the Republic of India and
the Government of Turkmenistan desiring to conclude a Convention for the
avoidance of double taxation and the prevention of fiscal evasion with respect
to taxes on income and on capital and with a view to promoting economic
cooperation between the two countries.
Have agreed as follows:
Article 1 PERSONAL SCOPE
This
Convention shall apply to persons who are residents of one or both of the
Contracting States.
Article 2
TAXES COVERED
1.
This Convention shall apply to taxes on income and on
capital imposed on behalf of a Contracting State or of its political
sub-divisions or local authorities, irrespective of the manner in which they
are levied.
2.
There shall be regarded as taxes on income and on
capital all taxes imposed on total income, on total capital, or on elements of
income or of capital, including taxes on gains from the alienation of movable
or immovable property, taxes on the total amounts of wages or salaries paid by
enterprises, as well as taxes on capital appreciation.
3.
The taxes to which the Convention shall apply are in
particular:
a. In Turkmenistan;
i.
the profits (income) tax;
ii.
the personal income-tax from the individuals; iii. the tax on natural resources;
iv.
the tax on the property of the enterprises;
v.
the payment for the lands,
(hereinafter referred to as "Turkmen
tax");
b. In
India:
i.
the income-tax including any surcharge thereon;
ii.
the wealth-tax;
(hereinafter referred to as "Indian
tax").
4.
The Convention shall apply also to any identical or
substantially similar taxes which are imposed after the date of signature of
the Convention in addition to, or in place of, the taxes referred to in
paragraph 3. The competent authorities of the Contracting States shall notify
each other of significant changes which have been made in their respective
taxation laws.
Article 3 GENERAL DEFINITIONS
1.
For the purposes of this Convention, unless the context
otherwise requires:--
a.
the term "Turkmenistan" means Turkmenistan
and, when used in a geographical sense, includes any area beyond the
territorial waters of Turkmenistan which in accordance with international law
and the laws of Turkmenistan is an area within which Turkmenistan may exercise
rights with respect to the sea bed and subsoil and their natural resources;
b.
the term "India" means the territory of India
and includes the territorial sea and airspace above it, and other maritime
zones in which India has sovereign rights, other rights and jurisdictions,
according to the Indian law and in accordance with international law, including
the UN Convention on the Law of the Sea;
c.
the term "person" includes an individual, a
company, a body of persons and any other entity which is treated as a taxable
unit under the taxation laws in force in the respective Contracting States;
d.
the term "company" means any body corporate or
any entity which is treated as a body corporate for tax purposes;
e.
the terms "enterprise of a Contracting State"
and "enterprise of the other Contracting State" mean respectively an
enterprise carried on by a resident of a Contracting State and an enterprise
carried on by a resident of the other Contracting State;
f.
the term "international traffic" means any
transport by a ship or aircraft operated by an enterprise of a Contracting
State, except when the ship or aircraft is operated solely between places in
the other Contracting State;
g.
the term "competent authority" means:--
i.
in Turkmenistan, the Head of the Main State Tax
Inspectorate or his authorised representative;
ii.
in India, the Central Government in the Ministry
of Finance (Department of Revenue) or their authorised representative;
h.
the term "national" means:
i.
any individual possessing the nationality of a
Contracting State;
ii. any legal person, partnership or
association deriving its status as such from the laws in force in a Contracting
State;
i.
the term "fiscal year" means:
i.
in the case of Turkmenistan, the calendar year
from 1st of January to 31st of December of the year under review;
ii.
in the case of India, the "previous
year" as defined under section 3 of the Income-tax Act, 1961;
j.
the term "tax" means Indian tax or Turkmen
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.
2.
As regards the application of the Convention by a
Contracting State any term not defined therein shall, unless the context
otherwise requires, have the meaning which it has under the law of that State
concerning the taxes to which the Convention applies.
Article 4 RESIDENT
1.
For the purposes of this Convention, the term
"resident of a Contracting State" means any person who, under the
laws of that State, is liable to tax therein by reason of his domicile, residence,
place of management or any other criterion of a similar nature. But this term
does not include any person who is liable to tax in that State in respect only
of income from sources in that State or capital situated therein.
2.
Where by reason of the provisions of paragraph 1, an
individual is a resident of both Contracting
States, then his status shall be determined
as follows:--
a.
he shall be deemed to be a resident of the State in
which he has a permanent home available to him; if he has a permanent home
available to him in both States, he shall be deemed to be a resident of the
State with which his personal and economic relations are closer (centre of
vital interests);
b.
if the State in which he has his centre of vital
interests cannot be determined, or if he has not a permanent home available to
him in either State, he shall be deemed to be a resident of the State in which
he has an habitual abode;
c.
if he has an habitual abode in both States or in
neither of them, he shall be deemed to be a resident of the State of which he
is a national;
d.
if he is a national of both States or of neither of
them, the competent authorities of the Contracting States shall settle the
question by mutual agreement.
3.
Where by reason of the provisions of paragraph 1 a
person other than an individual is a resident of both Contracting States, then
it shall be deemed to be a resident of the State in which its place of
effective management is situated.
Article 5 PERMANENT
ESTABLISHMENT
1.
For the purposes of this Convention, the term
"permanent establishment" means a fixed place of business through
which the business of an enterprise is wholly or partly carried on.
2.
The term "permanent establishment" includes
especially:
a.
a place of management;
b.
a branch;
c.
an office;
d.
a factory;
e.
a workshop;
f.
a mine, an oil or gas well, a quarry or any other place
of extraction of natural resources; g. sales
outlet;
h.
warehouse in relation to a person providing storage
facilities for others.
3.
The term "permanent establishment" likewise
encompasses a building site, a construction, assembly or installation project
or supervisory activities in connection therewith, but only when such site,
project, or activities continue for a period of more than six months.
4.
Notwithstanding the preceding provisions of this
article, the term "permanent establishment" shall be deemed not to
include:--
a.
the use of facilities solely for the purpose of storage
or display of goods or merchandise belonging to the enterprise;
b.
the maintenance of a stock of goods or merchandise
belonging to the enterprise solely for the purpose of storage or display;
c.
the maintenance of a stock of goods or merchandise
belonging to the enterprise solely for the purpose of processing by another
enterprise;
d.
the maintenance of a fixed place of business solely for
the purpose of purchasing goods or merchandise or of collecting information,
for the enterprise;
e.
the maintenance of a fixed place of business solely for
the purpose of carrying on, for the enterprise, any other activity of a preparatory
or auxiliary character;
f.
the maintenance of a fixed place of business solely for
any combination of activities mentioned in sub-paragraphs (a) to (e), provided
that the overall activity of the fixed place of business resulting from this
combination is of a preparatory or auxiliary character.
5.
Notwithstanding the provisions of paragraphs 1 and 2,
where a person -- other than an agent of an independent status to whom
paragraph 7 applies -- is acting in a Contracting State on behalf of an
enterprise of the other Contracting State, that enterprise shall be deemed to
have a permanent establishment in the first-mentioned Contracting State in
respect of any activities which that person undertakes for the enterprise, if
such a person:--
a.
has and habitually exercises in that State an authority
to conclude contracts in the name of the enterprise, unless the activities of
such person are limited to those mentioned in paragraph 4 which, if exercised
through a fixed place of business, would not make this fixed place of business
a permanent establishment under the provisions of that paragraph; or
b.
has no such authority, but habitually maintains in the
first-mentioned State a stock of goods or merchandise from which he regularly
delivers goods or merchandise on behalf of the enterprise.
6.
Notwithstanding the preceding provisions of this
article, an insurance enterprise of a Contracting State shall, except in regard
to reinsurance, be deemed to have a permanent establishment in the other
Contracting State if it collects premiums in the territory of that other State
or insures risks situated therein through a person other than an agent of an
independent status to whom paragraph 7 applies.
7.
An enterprise shall not be deemed to have a permanent
establishment in a Contracting State merely because it carries on business in
that State through a broker, general commission agent or any other agent of an
independent status, provided that such persons are acting in the ordinary
course of their business. However, when the activities of such an agent are
devoted wholly or almost wholly on behalf of that enterprise, he will not be
considered an agent of an independent status within the meaning of this
paragraph.
8.
The fact that a company which is a resident of a
Contracting State controls or is controlled by a company which is a resident of
the other Contracting State, or which carries on business in that other State
(whether through a permanent establishment or otherwise), shall not of itself
constitute either company a permanent establishment of the other.
Article 6 INCOME FROM
IMMOVABLE PROPERTY
1.
Income derived by a resident of a Contracting State
from immovable property (including income from agriculture or forestry)
situated in the other Contracting State may also be taxed in that other State.
2.
The term "immovable property" shall have the
meaning which it has under the law of the Contracting State in which the
property in question is situated. The term shall in any case include property
accessory to immovable property, livestock and equipment used in agriculture
and forestry, rights to which the provisions of general law respecting landed
property apply, usufruct of immovable property and rights to variable or fixed
payments as consideration for the working of, or the right to work, mineral
deposits, sources and other natural resources; ships and aircraft shall not be
regarded as immovable property.
3.
The provisions of paragraph 1 shall apply to income
derived from the direct use, letting, or use in any other form of immovable
property.
4.
The provisions of paragraphs 1 and 3 shall also apply
to the income from immovable property of an enterprise and to income from
immovable property used for the performance of independent personal services.
Article 7 BUSINESS PROFITS
1.
The profits of an enterprise of a Contracting State
shall be taxable only in that State unless the enterprise carries on business
in the other Contracting State through a permanent establishment situated
therein. If the enterprise carries on business as aforesaid, the profits of the
enterprise may be taxed in the other State but only so much of them as is
attributable to that permanent establishment.
2.
Subject to the provisions of paragraph 3, where an
enterprise of a Contracting State carries on business in the other Contracting
State through a permanent establishment situated therein, there shall in each
Contracting State be attributed to that permanent establishment the profits
which it might be expected to make if it were a distinct and separate
enterprise engaged in the same or similar activities under the same or similar
conditions and dealing wholly independently with the enterprise of which it is
a permanent establishment.
3.
In determining the profits of a permanent
establishment, there shall be allowed as deductions expenses which are incurred
for the purposes of the permanent establishment, including executive and
general administrative expenses so incurred, whether in the State in which the
permanent establishment is situated or elsewhere, in accordance with the provisions
of and subject to the limitations of the tax laws of that State.
4.
No profits shall be attributed to a permanent
establishment by reason of the mere purchase by that permanent establishment of
goods or merchandise for the enterprise.
5.
For the purposes of the preceding paragraphs, the
profits to be attributed to the permanent establishment shall be determined by
the same method year by year unless there is good and sufficient reason to the
contrary.
6.
Where profits include items of income which are dealt with
separately in other articles of this Convention, then the provisions of those
articles shall not be affected by the provisions of this article.
Article 8 SHIPPING AND AIR
TRANSPORT
1.
Profits derived by an enterprise of a Contracting State
from the operation of ships or aircraft in international traffic shall be
taxable only in that State.
2.
Profits derived by a transportation enterprise which is
a resident of a Contracting State from the use, maintenance, or rental of
containers (including trailers and other equipment for the transport of
containers) used for the transport of goods or merchandise in international
traffic shall be taxable only in that Contracting State unless the containers
are used solely within the other Contracting State.
3.
The provisions of paragraph 1 shall also apply to
profits from the participation in a pool, a joint business or an international
operating agency.
Article 9 ASSOCIATED
ENTERPRISES
1.
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.
2.
Where a Contracting State includes in the profits of an
enterprise of that State--and taxes accordingly--profits on which an enterprise
of the other Contracting State has been charged to tax in that other State and
the profits so included are profits which would have accrued to the enterprise
of the first-mentioned State if the conditions made between the two enterprises
had been those which would have been made between independent enterprises, then
that other State shall make an appropriate adjustment to the amount of the tax
charged therein on those profits. In determining such adjustment, due regard
shall be had to the other provisions of this Convention and the competent
authorities of the Contracting States shall if necessary consult each other. Article 10
DIVIDENDS
1.
Dividends paid by a company which is a resident of a
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 10 per cent. of the
gross amount of the dividends. The competent authorities of the Contracting
States shall by mutual agreement settle the mode of application of this
limitation. 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 14, as the case may
be, shall apply.
5.
Where a company which is a resident of a Contracting
State derives profits or income from the other Contracting State, that other
State may not impose any tax on the dividends paid by the company, except in so
far as such dividends are paid to a resident of that other State or in 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 11
INTEREST
1.
Interest arising in a Contracting State and paid to a
resident of the other Contracting State may be taxed in that other State.
2.
However, such interest may also be taxed in the
Contracting State in which it arises and according to the laws of that State,
but if the recipient is the beneficial owner of the interest the tax so charged
shall not exceed 10 per cent. of the gross amount of the interest. The
competent authorities of the Contracting States shall by mutual agreement
settle the mode of application of this limitation.
3.
Notwithstanding the provisions of paragraph 2, interest
arising in a Contracting State shall be exempt from tax in that State provided
it is derived and beneficially owned by:--
i.
the Government, a political sub-division or a
local authority of the other Contracting State; or
ii.
the Central Bank of the other Contracting State,
or any other bank that may be mutually agreed upon between the two Contracting
States.
4.
The term "interest" as used in this article
means income from debt-claims of every kind, whether or not secured by mortgage
and whether or not carrying a right to participate in the debtor's profits, and
in particular, income from Government securities and income from bonds or
debentures, including premiums and prizes attaching to such securities, bonds
or debentures. Penalty charges for late payment shall not be regarded as
interest for the purpose of this article.
5.
The provisions of paragraphs 1 and 2 shall not apply if
the beneficial owner of the interest, being a resident of a Contracting State,
carries on business in the other Contracting State in which the interest
arises, through a permanent establishment situated therein, or performs in that
other State independent personal services from a fixed base situated therein,
and the debt-claim in respect of which the interest is paid is effectively
connected with such permanent establishment or fixed base. In such case the
provisions of Article 7 or Article 14, as the case may be, shall apply.
6.
Interest shall be deemed to arise in a Contracting
State when the payer is that State itself, a political sub-division, a local
authority or a resident of that State. Where, however, the person paying the
interest, whether he is a resident of a Contracting State or not, has in a
Contracting State a permanent establishment or a fixed base in connection with
which the indebtedness on which the interest is paid was incurred, and such
interest is borne by such permanent establishment or fixed base, then such
interest shall be deemed to arise in the State in which the permanent
establishment or fixed base is situated.
7.
Where, by reason of a special relationship between the
payer and the beneficial owner or between both of them and some other person,
the amount of the interest, having regard to the debt-claim for which it is
paid, exceeds the amount which would have been agreed upon by the payer and the
beneficial owner in the absence of such relationship, the provisions of this
article shall apply only to the last-mentioned amount. In such case, the excess
part of the payments shall remain taxable according to the laws of each
Contracting State, due regard being had to the other provisions of this
Convention.
Article 12 ROYALTIES AND FEES
FOR TECHNICAL SERVICES
1.
Royalties or fees for technical services arising in a
Contracting State and paid to a resident of the other Contracting State may be
taxed in that other State.
2.
However, such royalties or fees for technical services
may also be taxed in the Contracting State in which they arise and according to
the laws of that State, but if the recipient is the beneficial owner of the
royalties or fees for technical services the tax so charged shall not exceed 10
per cent. of the gross amount of the royalties or fees for technical services.
3.
a.
The term "royalties" as used in this article
means payments of any kind received as a consideration for the use of, or the
right to use, any copyright of literary, artistic or scientific work including
cinematograph films, or recordings on any means of reproduction for use in
connection with radio or television broadcasting, computer software, 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;
b.
The term "fees for technical services" means
payments of any kind in consideration for the rendering of any managerial,
technical or consultancy services including the provision of services by
technical or other personnel but does not include payments for services
mentioned in Articles 14 and 15 of this Convention.
4.
The provisions of paragraphs 1 and 2 shall not apply if
the beneficial owner of the royalties or fees for technical services, being a
resident of a Contracting State, carries on business in the other Contracting
State in which the royalties or fees for technical services arise, through a
permanent establishment situated therein, or performs in that other State
independent personal services from a fixed base situated therein, and the right
or property in respect of which the royalties or fees for technical services
are paid is effectively connected with such permanent establishment or fixed
base. In such case the provisions of Article 7 or Article 14, as the case may
be, shall apply.
5.
Royalties or fees for technical services shall be
deemed to arise in a Contracting State when the payer is that State itself, a
political subdivision, or local authority or a resident of that State. Where,
however, the person paying the royalties or fees for technical services,
whether he is a resident of a Contracting State or not, has in any State a
permanent establishment or a fixed base in connection with which the liability
to pay the royalties or fees for technical services was incurred, and such
royalties or fees for technical services are borne by such permanent
establishment or fixed base, then such royalties or fees for technical services
shall be deemed to arise in the State in which the permanent establishment or
fixed base is situated.
6.
Where, by reason of a special relationship between the
payer and the beneficial owner or between both of them and some other person,
the amount of the royalties or fees for technical services, having regard to
the use, right or information for which they are paid, exceeds the amount which
would have been agreed upon by the payer and the beneficial owner in the
absence of such relationship, the provisions of this article shall apply only
to the last mentioned amount. In such case, the excess part of the payments
shall remain taxable according to the laws of each Contracting State, due
regard being had to the other provisions of this Convention. Article 13
CAPITAL GAINS
1.
Gains derived by a resident of a Contracting State from
the alienation of immovable property referred to in Article 6 and situated in
the other Contracting State may be taxed in that other State.
2.
Gains from the alienation of movable property forming
part of the business property of a permanent establishment which an enterprise
of a Contracting State has in the other Contracting State or of movable
property pertaining to a fixed base available to a resident of a Contracting
State in the other Contracting State for the purpose of performing independent
personal services, including such gains from the alienation of such a permanent
establishment (alone or with the whole enterprise) or of such fixed base, may
be taxed in that other State.
3.
Gains derived by an enterprise of a Contracting State
from the alienation of ships or aircraft operated in international traffic, or
movable property pertaining to the operation of such ships or aircraft shall be
taxable only in that State.
4.
Gains from the alienation of shares of the capital
stock of a company the property of which consists directly or indirectly
principally of immovable property situated in a Contracting State may be taxed
in that State.
5.
Gains from the alienation of shares other than those
mentioned in paragraph 4 in a company which is a resident of a Contracting
State may be taxed in that State.
6.
Gains from the alienation of any property other than
that referred to in paragraphs 1, 2, 3, 4 and 5 shall be taxable only in the
Contracting State of which the alienator is a resident.
Article 14
INDEPENDENT PERSONAL SERVICES
1.
Income derived by a resident of a Contracting State in
respect of professional services or other activities of an independent
character shall be taxable only in that State except in the following circumstances,
when such income may also be taxed in the other Contracting State:
a.
if he has a fixed base regularly available to him in
the other Contracting State for the purpose of performing his activities; in
that case, only so much of the income as is attributable to that fixed base may
be taxed in that other State; or
b.
if his stay in the other Contracting State is for a
period or periods aggregating 183 days or more in any 12-month period
commencing or ending in the fiscal year concerned; in that case only so much of
the income as is derived from his activities performed in that other State in
the year may be taxed in that other State.
2.
The term "professional services" includes
especially independent scientific, literary, artistic, educational or teaching
activities as well as the independent activities of physicians, lawyers,
engineers, architects, surgeons, dentists and accountants.
Article 15 DEPENDENT PERSONAL
SERVICES
1.
Subject to the provisions of Articles 16, 18 and 19,
salaries, wages and other similar remuneration derived by a resident of a
Contracting State in respect of an employment shall be taxable only in that
State unless the employment is exercised in the other Contracting State. If the
employment is so exercised, such remuneration as is derived therefrom may be
taxed in that other State.
2.
Notwithstanding the provisions of paragraph 1,
remuneration derived by a resident of a Contracting State in respect of an
employment exercised in the other Contracting State shall be taxable only in
the first-mentioned State if:--
a.
the recipient is present in the other State for a
period or periods not exceeding in the aggregate 183 days in any 12-month
period commencing or ending in the fiscal year concerned, and
b.
the remuneration is paid by, or on behalf of, an
employer who is not a resident of the other State, and
c.
the remuneration is not borne by a permanent
establishment or a fixed base which the employer has in the other State.
3.
Notwithstanding the preceding provisions of this
article, remuneration derived in respect of an employment exercised aboard a
ship or aircraft operated in international traffic by an enterprise of a
Contracting State may be taxed in that State.
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 State.
Article 17 ARTISTES AND
SPORTSMEN
1.
Notwithstanding the provisions of Articles 14 and 15,
income derived by a resident of a Contracting State as an entertainer, such as
a theatre, motion picture, radio or television artiste, or a musician, or as a
sportsman, from his personal activities as such exercised in the other Contracting
State, may be taxed in that other State.
2.
Where income in respect of personal activities
exercised by an entertainer or a sportsman in his capacity as such accrues not
to the entertainer or sportsman himself but to another person, that income may,
notwithstanding the provisions of Articles 7, 14 and 15, be taxed in the
Contracting State in which the activities of the entertainer or sportsman are
exercised.
3.
The provisions of paragraphs 1 and 2 shall not apply to
income derived from activities performed in a Contracting State by entertainers
or sportsmen if the visit to that State is substantially supported by public
funds of one or both of the Contracting States or of political sub-divisions or
local authorities thereof. In such a case, the income is taxable only in the
Contracting State of which the entertainer or sportsman is a resident.
Article 18 PENSIONS
Subject to the provisions of
paragraph 2 of Article 19, pensions and other similar remuneration paid to a
resident of a Contracting State in consideration of past employment shall be
taxable only in that State. Article 19
GOVERNMENT SERVICE
1.
a.
Remuneration, other than a pension, paid by a
Contracting State or a political sub-division or a local authority thereof to
an individual in respect of services rendered to that State or subdivision or
authority shall be taxable only in that State.
b.
However, such remuneration shall be taxable only in the
other Contracting State if the services are rendered in that State and the
individual is a resident of that State who:-- i. is a national of that State; or ii. did not become a resident of
that State solely for the purpose of rendering the services.
2.
.
a.
Any pension paid by, or out of funds created by, a
Contracting State or a political sub-division or a local authority thereof to
an individual in respect of services rendered to that State or sub-division or
authority shall be taxable only in that State.
b.
However, such pension shall be taxable only in the
other Contracting State if the individual is a resident of, and a national of,
that State.
3.
The provisions of Articles 15, 16 and 18 shall apply to
remuneration and pensions in respect of services rendered in connection with a
business carried on by a Contracting State or a political sub-division or a
local authority thereof.
Article 20 STUDENTS AND
APPRENTICES
1.
A student or business apprentice who is or was a
resident of a Contracting State immediately before visiting the other
Contracting State and who is present in that other Contracting State solely for
the purpose of his education or training shall 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 US Dollar 500 or its equivalent amount during any fiscal
year,
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 or teacher who is or was a resident of the
Contracting State immediately before visiting the other Contracting State for
the purpose of teaching or engaging in research, or both, at a university,
college, school or other approved institution in that other Contracting State
shall be exempt from tax in that other State on any remuneration for such
teaching or research for a period not exceeding two years from the date of his
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 20, an
individual shall be deemed to be a resident of a Contracting State if he is a
resident in that State in the fiscal year in which he visits the other
Contracting State or in the immediately preceding fiscal 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 Contracting State. Article 22
OTHER INCOME
1.
Subject to the provisions of paragraph 2, 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 State.
2.
The provisions of paragraph 1 shall not apply to
income, other than income from immovable property as defined in paragraph 2 of
Article 6, if the recipient of such income, being a resident of a Contracting
State, carries on business in the other Contracting State through a permanent
establishment situated therein, or performs in that other State independent
personal services from a fixed base situated therein, and the right or property
in respect of which the income is paid is effectively connected with such permanent
establishment or fixed base. In such case the provisions of Article 7 or
Article 14, as the case may be, shall apply.
3.
Notwithstanding the provisions of 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 23 CAPITAL
1.
Capital represented by immovable property referred to
in Article 6, owned by a resident of a Contracting State and situated in the
other Contracting State, may be taxed in that other State.
2.
Capital represented by movable property, forming part
of the business property of a permanent establishment which an enterprise of a
Contracting State has in the other Contracting State or by movable property
pertaining to a fixed base available to a resident of a Contracting State in
the other Contracting State for the purpose of performing independent personal
services, may be taxed in that other State.
3.
Capital owned by an enterprise of a Contracting State
and represented by ships and aircraft operated in international traffic, and by
movable property pertaining to the operation of such ships and aircraft, shall
be taxable only in that State.
4.
All other elements of capital of a resident of a
Contracting State shall be taxable only in that State.
Article 24 ELIMINATION OF
DOUBLE TAXATION
1.
The laws in force in either of the Contracting States
will continue to govern the taxation of income and capital in the respective
Contracting States except where provisions to the contrary are made in this
Convention.
2.
Where a resident of India derives income or owns
capital which, in accordance with the provisions of this Convention, may be
taxed in Turkmenistan, India shall allow as a deduction from the tax on the
income of that resident, an amount equal to the income-tax paid in
Turkmenistan, whether directly or by deduction; and as a deduction from the tax
on the capital of that resident, an amount equal to the capital tax paid in
Turkmenistan. Such deduction in either case shall not, however, exceed that
part of income-tax or tax on capital (as paid before the deduction is given),
which is attributable to the income or the capital which may be taxed in
Turkmenistan.
3.
In the case of Turkmenistan, the double taxation shall
be avoided by a method which is identical to that mentioned in paragraph 2.
4.
For the purposes of paragraphs 2 and 3 of this article,
the tax payable in the Contracting State shall be deemed to include the tax
which would have been payable but for the tax incentives according to which
such tax is not payable under the laws of the Contracting State and which are
designed to promote economic development.
5.
Income which in accordance with the provisions of this
Convention, is not to be subjected to tax in a Contracting State, may be taken
into account for calculating the rate of tax to be imposed in that Contracting
State.
Article 25 NON-DISCRIMINATION
1.
Nationals of a Contracting State shall not be subjected
in the other Contracting State to any taxation or any requirement connected
therewith, which is other or more burdensome than the taxation and connected
requirements to which nationals of that other State in the same circumstances,
in particular with respect to residence, are or may be subjected. This
provision shall, notwithstanding the provisions of Article 1, also apply to
persons who are not residents of one or both of the Contracting States.
2.
The taxation on a permanent establishment which an
enterprise of a Contracting State has in the other Contracting State shall not
be less favourably levied in that other State than the taxation levied on
enterprises of that other State carrying on the same activities. This provision
shall not be construed as obliging a Contracting State to grant to residents of
the other Contracting State any personal allowances, reliefs and reductions for
taxation purposes on account of civil status or family responsibilities which
it grants to its own residents. This provision shall not be construed as preventing
a Contracting State from charging the profits of a permanent establishment
which an enterprise of the other Contracting State has in the first-mentioned
Contracting State at a rate higher than that imposed on the profits of a
similar enterprise of the first-mentioned State, nor as being in conflict with
the provisions of paragraph 3 of Article 7 of this Convention.
3.
Except where the provisions of paragraph 1 of Article
9, paragraph 6 of Article 11, or paragraph 6 of Article 12, apply, interest, royalties,
fees for technical services and other disbursements paid by an enterprise of a
Contracting State to a resident of the other Contracting State shall, for the
purpose of determining the taxable profits of such enterprise, be deductible
under the same conditions as if they had been paid to a resident of the
first-mentioned State. Similarly, any debts of an enterprise of a Contracting
State to a resident of the other Contracting State shall, for the purpose of
determining the taxable capital of such enterprise, be deductible under the
same conditions as if they had been contracted to a resident of the
first-mentioned State.
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 State to any taxation or any requirement connected therewith
which is other or more burdensome than the taxation and connected requirements
to which other similar enterprises of the first-mentioned State are or may be
subjected.
5.
The provisions of this article shall, notwithstanding
the provisions of Article 2, apply to taxes of every kind and description.
Article 26
MUTUAL AGREEMENT
PROCEDURE
1.
Where a person considers that the actions of one or
both of the Contracting States result or will result for him in taxation not in
accordance with the provisions of this Convention, he may, irrespective of the
remedies provided by the domestic law of those States, present his case to the
competent authority of the Contracting State of which he is a resident or, if
his case comes under paragraph 1 of Article 25, to that of the Contracting
State of which he is a national. The case must be presented within three years
from the first notification of the action resulting in taxation not in
accordance with the provisions of the Convention.
2.
The competent authority shall endeavour, if the
objection appears to it to be justified and if it is not itself able to arrive
at a satisfactory solution, to resolve the case by mutual agreement with the
competent authority of the other Contracting State, with a view to the
avoidance of taxation which is not in accordance with the Convention. Any
agreement reached shall be implemented notwithstanding any time limits in the
domestic law of the Contracting States.
3.
The competent authorities of the Contracting States
shall endeavour to resolve by mutual agreement any difficulties or doubts
arising as to the interpretation or application of the Convention. They may
also consult together for the elimination of double taxation in cases not
provided for in the Convention.
4.
The competent authorities of the Contracting States may
communicate with each other directly for the purpose of reaching an agreement
in the sense of the preceding paragraphs. When it seems advisable in order to
reach agreement to have an oral exchange of opinions, such exchange may take
place through a Commission consisting of representatives of the competent
authorities of the Contracting States.
Article 27 EXCHANGE OF
INFORMATION
1.
The competent authorities of the Contracting States
shall exchange such information (including documents) as is necessary for
carrying out the provisions of this Convention or of the domestic laws of the
Contracting States concerning taxes covered by the Convention in so far as the
taxation thereunder is not contrary to the Convention. The exchange of
information is not restricted by Article 1. Any information received by a
Contracting State shall be treated as secret in the same manner as information
obtained under the domestic laws of that State and shall be disclosed only to
persons or authorities (including courts and administrative bodies) involved in
the assessment or collection of, the enforcement or prosecution in respect of,
or the determination of appeals in relation to, the taxes covered by the
Convention. Such persons or authorities shall use the information only for such
purposes. They may disclose the information in public court proceedings or in
judicial decisions.
2.
In no case shall the provisions of paragraph 1 be
construed so as to impose on a Contracting
State the obligation:--
a.
to carry out administrative measures at variance with
the laws and administrative practice of that or of the other Contracting State;
b.
to supply information or documents which 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 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 28 COLLECTION
ASSISTANCE
1.
The Contracting States undertake to lend assistance to
each other in the collection of taxes to which this Convention relates,
together with interest, costs, and civil penalties relating to such taxes,
referred to in this article as a "revenue claim".
2.
Request for assistance by the competent authority of a
Contracting State in the collection of a revenue claim shall include a
certification by such authority that, under the laws of that State, the revenue
claim has been finally determined. For the purposes of this article, a revenue
claim is finally determined when a Contracting State has the right under its
internal law to collect the revenue claim and the taxpayer has no further
rights to restrain collection.
3.
Amounts collected by the competent authority of a
Contracting State pursuant to this article shall be forwarded to the competent
authority of the other Contracting State. However, the firstmentioned
Contracting State shall be entitled to reimbursement of costs, if any, incurred
in the course of rendering of such assistance to the extent mutually agreed
between the competent authorities of the two States.
4.
Nothing in this article shall be construed as imposing
on either Contracting State the obligation to carry out administrative measures
of a different nature from those used in the collection of its own taxes or
those which would be contrary to its public policy.
Article 29 DIPLOMATIC AGENTS
AND CONSULAR OFFICERS
Nothing in this Convention shall affect the
fiscal privileges of diplomatic agents or consular officers under the general
rules of international law or under the provisions of special agreements.
Article 30 ENTRY INTO FORCE
1.
Each of the Contracting States shall notify to the other
the completion of the procedures required by its law for the bringing into
force of this Convention. This 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 or capital arising in any
fiscal year beginning on or after the first day of April next following the
calendar year in which the Convention enters into force; and
b.
in Turkmenistan, in respect of income or capital
arising in any fiscal year beginning on or after the first day of January next
following the calendar year in which the Convention enters into force.
Article 31 TERMINATION
This Convention shall remain in force
indefinitely until terminated by a Contracting State. Either Contracting State
may terminate the Convention, through diplomatic channels, by giving notice of
termination at least six months before the end of any calendar year beginning
after the expiration of five years from the date of entry into force of the
Convention. In such event, the Convention shall cease to have effect:--
a.
in India, in respect of income arising in any previous
year beginning on or after the 1st April next following the calendar year in
which the notice is given in respect of capital which is held at the expiry of
any previous year beginning on or after the 1st April next following the
calendar year in which the notice of termination is given;
b.
in Turkmenistan, in respect of income arising in any
year of income beginning on or after the 1st January next following the
calendar year in which the notice is given and in respect of capital which is
held at the expiry of any year of income next following the calendar year in
which the notice of termination is given.
In
witness whereof, the undersigned, being duly authorised thereto, have
signed this Convention.
Done
in duplicate at New Delhi this 25th day of February, 1997, in the Turkmen,
Hindi and English languages, all three texts being equally authentic. In case
of divergence between the texts, the English text shall be the operative one.
For the Government of the Republic of India
(I. K. Gujral)
For the Government of Turkmenistan
(Shikhiev Ilaman)
PROTOCOL
At the signing of the Convention between the Government of the
Republic of India and the Government of Turkmenistan for the Avoidance of
Double Taxation and for the Prevention of Fiscal Evasion with Respect to Taxes
on Income and on Capital, the undersigned have agreed that the following shall
form an integral part of the Convention.
With reference of Article 7:
In respect of paragraphs 1 and 2 of Article 7,
where an enterprise of one of the Contracting States sells goods or merchandise
or carries on business in the other Contracting State through a permanent
establishment situated therein, the profits of that permanent establishment shall
not be determined on the basis of the total amount received by the enterprise,
but shall be determined only on the basis of the remuneration which is
attributed to the actual activity of the permanent establishment for such sales
or business. For instance, in the case of contracts for the survey, supply,
installation or construction of industrial, commercial or scientific equipment
or premises, or of public works, when the enterprise has a permanent
establishment, the profits of such permanent establishment shall not be
determined on the basis of the total amount of the contract, but shall be
determined only on the basis of that part of the contract which is effectively
carried out by the permanent establishment in the Contracting State where the
permanent establishment is situated.
In
witness whereof the undersigned, being duly authorised thereto, have signed
this Protocol.
Done
in duplicate at New Delhi this 25th day of February, 1997 in the
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