Union of Soviet Socialist Republics
AGREEMENT BETWEEN THE GOVERNMENT OF THE
REPUBLIC OF INDIA AND THE
GOVERNMENT OF THE UNION OF SOVIET SOCIALIST REPUBLICS FOR THE AVOIDANCE OF DOUBLE TAXATION OF INCOME [CD1]
Notification No. G. S.
R. 812(E), dated 4th September, 1989.
Whereas the annexed Agreement between the
Government of the Republic of India and the Government of the Union of Soviet
Socialist Republics for the avoidance of double taxation of income has come
into force on the 5th June, 1989, after the notification by both the
Contracting States to each other of the completion of the procedures required
under their laws for bringing into force of the said Agreement in accordance with
article 28 of the said Agreement;
Now, therefore, in exercise of the powers
conferred by section 90 of the Income-tax Act, 1961 (43 of 1961), the Central
Government hereby directs that all the provisions of the said Agreement shall
be given effect to in the Union of India.
ANNEXURE
AGREEMENT BETWEEN THE GOVERNMENT OF THE REPUBLIC OF INDIA AND
THE GOVERNMENT OF THE UNION OF SOVIET SOCIALIST REPUBLICS FOR THE AVOIDANCE OF
DOUBLE TAXATION OF INCOME.
The Government of the Republic of India and
the Government of the Union of Soviet Socialist Republics,
led by the desire to strengthen and develop
friendly relations in economic, industrial, technical and cultural spheres,
have
resolved to conclude an Agreement for the avoidance of double taxation of income and have agreed
as follows:
Article 1 SCOPE OF THE
AGREEMENT
1.
This Agreement shall apply to persons who for the purposes
of taxation are deemed to be residents of one or both of the Contracting
States.
2.
a.
This Agreement shall apply to the territory of each
Contracting State, including its territorial sea, to its economic zone and its
continental shelf, adjacent to the limits of its territorial sea, in respect of
which it exercises, in conformity' with international law, sovereign rights for
the purpose of exploration and exploitation of natural resources of such areas;
b.
For the purposes of this Agreement, any reference to
either Contracting State shall be deemed as reference to the territory of the
respective State, including its territorial sea, to its economic zone and the
regions of the continental shelf adjacent to the limits of the territorial sea
of this State, which are mentioned in sub-paragraph (a).
Article 2 TAXES COVERED
1.
The taxes to which this Agreement shall apply are:
a.
in the Republic of India, the income-tax including any
surcharge thereon (hereinafter referred to as " Indian tax ");
b.
in the Union of Soviet Socialist Republics;
i. income-tax on foreign legal
persons; ii. income-tax on population; and
iii. tax on part of profits of a
foreign participant of a joint venture imposed when it is transferred abroad
(hereinafter referred to as " the USSR tax ").
2.
The Agreement shall also apply to any identical or
substantially similar taxes which are imposed by either Contracting State after
the date of signature of the present Agreement in addition to, or in place of,
the taxes referred to in paragraph 1.
3.
Taxes mentioned in this article shall not include any
penalty or interest imposed by either Contracting State relating to the taxes
covered by this Agreement.
Article 3 GENERAL DEFINITIONS
1.
In this Agreement, unless the context otherwise requires:
a.
the terms " a Contracting State " and "
the other Contracting State " mean the Republic of India (India) or the
Union of Soviet Socialist Republics (the USSR), as the context requires;
b.
the term " person " means an individual, and
i.
in the case of India, also a company or any
other entity which is treated as a taxable unit under the taxation laws in
force in India;
ii.
in the case of the USSR, also any legal person
or other organisation, created under the laws of the USSR or any Union Republic
and treated as a legal person for the purposes of taxation in the USSR;
c.
the term " competent authority " means;
i.
in the case of India, the Ministry of Finance
(Central Government, Department of Revenue) or its authorized representative;
ii.
in the case of the USSR, the Ministry of Finance
of the USSR or its authorized representative;
d.
the term " national " means:
i.
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;
ii.
in the case of the USSR, any individual
possessing the citizenship of the USSR and any legal person deriving its status
from the laws in force in the USSR;
e.
the term " international traffic " means any
transport by a ship or aircraft operated by a resident of a Contracting State
except when the ship or aircraft is operated solely between places in the other
Contracting State;
f.
the term " fiscal year " means:
i.
in the case of India, the " previous year
", as defined in the Income-tax Act, 1961;
ii.
in the case of the USSR, the period commencing
on the 1st January and ending on the 31st of December.
g.
As regards the application of the Agreement by a
Contracting State, any term not defined therein shall, unless the context
otherwise requires, have the meaning which it has under the law of that State
concerning the taxes to which the Agreement applies. Article
4
RESIDENT
1.
For the purposes of this Agreement, the term "
resident of a Contracting State " means any person who, under the laws of
that State, is liable to tax therein by reason of his domicile, residence,
place of management or any other criterion of a similar nature.
2.
Where, by reason of the provisions of paragraph 1, an
individual is a resident of both Contracting States, then his status shall be
determined as follows:
a.
he shall be deemed to be a resident of the State in
which he has a permanent home available to him; if he has a permanent home
available to him in both States, he shall be deemed to be a resident of the
State 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 is a
national;
d.
if each Contracting State regards him as a national of
that State or if he is a national 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 Agreement, the term "
permanent establishment " means any fixed place of business through which
a resident of a Contracting State carries on, wholly or partly, business in the
other Contracting State.
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 extrac tion of natural resources;
g.
a warehouse in relation to a person providing storage
facilities for others;
h.
a premises used as a sales outlet or for receiving or
soliciting orders;
i.
an installation or structure used for the exploration
or exploitation of natural resources;
j.
a building site or construction, installation or
assembly project or supervisory activities in connection therewith, where such
site, project or activities (together with other such sites, projects or activities,
if any) continue for a period of more than 6 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 and equipment.
However, the competent authorities of the
Contracting States may in particular cases and by mutual agreement consider
such activities as not constituting a permanent establishment also in cases
when the duration of works on a building site or a construction or assembly
project exceeds six months:
Provided that for the purpose of this
paragraph a resident of a Contracting State shall be deemed to have a permanent
establishment in the other Contracting State and to carry on business through
that permanent establishment if it provides services or facilities in
connection with or supplies plant and machinery on hire used or to be used in,
the prospecting for, or extraction or production of mineral oils in that other
State.
3.
Notwithstanding the preceding provisions of this
article, the term " permanent establishment " shall not include:
a.
the use of facilities solely for the purpose of storage
or display of merchandise for the resident;
b.
the maintenance of a stock of goods belonging to the
resident, only for the purpose of storage or display;
c.
the maintenance of a stock of goods or merchandise,
belonging to the resident, solely for the purpose of processing by another person;
d.
the maintenance of a fixed place of business solely for
the purchase of goods or merchandise or for collecting information for the
resident;
e.
subject to the provisions of sub-paragraph (j) of
paragraph 2 of this article, carrying out of mere supervision for a period not
exceeding six months over construction and assembly works;
f.
the maintenance of a fixed place of business solely for
the purpose of carrying out of advertising or scientific research or any other
activity of a preparatory or an auxiliary character, for the resident;
g.
the maintenance of a fixed place of business for the
display of goods and merchandise, belonging to the resident, at occasional
exhibitions;
h.
the maintenance of a fixed place of business solely for
carrying out, for the resident, of one or several kinds of activities
enumerated in sub-paragraphs (a) to (g), if the overall activity, being the
result of carrying out of these kinds of activities, is of a preparatory or an
auxiliary character.
However, the provisions of sub-paragraphs (a)
to (h) shall not be applicable where the resident of a Contracting State
maintains any other fixed place of business in the other Contracting State for
any purposes other than the purpose; specified in the said sub-paragraphs.
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 Contracting State on behalf of a resident of the
other Contracting State, that resident shall be deemed to have a permanent
establishment in the first-mentioned State, if
a.
he has and habitually exercises in that State an
authority to conclude contracts on behalf of the resident, unless his
activities are limited to the purchase of goods or merchandise for the resident
b.
he has no such authority, but habitually maintains in
the firstmentioned State a stock of goods or merchandise from which he
regularly delivers goods or merchandise on behalf of the resident;
c.
he habitually secures orders in the first-mentioned
State, wholly or almost wholly for the resident itself or for the resident and
other residents controlling, controlled by, or subject to the same common
control, as that resident; or
d.
in so acting, he manufactures or processes in that
State for the resident goods or merchandise belonging to the resident.
5.
A resident of a Contracting State shall not be deemed
to have a permanent establishment in the other Contracting State merely because
it carries on business in that other 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.
6.
The fact that a person (other than an individual) who
is a resident of a Contracting State controls or is controlled by a person
(other than an individual), who is a resident of the other Contracting State or
who carries on business in that other State (either through a permanent
establishment or otherwise) shall not constitute one of those persons 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 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, in the case of India, 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, boats and
aircraft shall not be regarded as immovable property.
3.
The provisions of paragraph 1 shall also apply to
income derived from the direct use, letting, or use in any other form of immovable
property.
4.
The provisions of paragraphs 1 and 3 shall also apply
to the income from immovable property of a resident and to income from
immovable property used for the performance of independent personal services.
Article 7
BUSINESS PROFITS
1.
The profits of a resident of a Contracting State shall
be taxable only in that State unless the resident carries on business in the
other Contracting State through a permanent establishment situated therein. If
the resident carries on business as aforesaid, the profits of the resident may
be taxed in the other State but only so much of them as is directly or
indirectly attributable to that permanent establishment.
2.
Subject to the provisions of paragraph 3, where a
resident 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 resident
engaged in the same or similar activities under the same or similar conditions
and dealing wholly independently with the resident of which it is a permanent
establishment.
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 and subject to the limitations of the taxation 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 of merchandise for the resident.
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 Agreement, then the provisions of
those articles shall not be affected by the provisions of this article.
7.
Where:
a.
a resident of a Contracting State participates directly
or indirectly in the management, control or capital of a resident of the other
Contracting State, or
b.
the same persons participate directly or indirectly in
the management, control or capital of a resident of a Contracting State and a
resident of the other Contracting State,
and in either case conditions are made or
imposed between the two such residents in their commercial or financial
relations which differ from those which would be made between independent
residents, then any profits which would, but for those conditions, have accrued
to one of the residents, but, by reason of those conditions, have not so
accrued, may be included in the profits of that resident and taxed accordingly.
Article 8 AIR TRANSPORT
1.
Profits derived by a resident of a Contracting State
from the operation of aircraft in international traffic shall be taxable only
in that State.
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 11 shall not apply in relation to such interest.
4.
The term " operation of aircraft " shall mean
business of transportation by air of passengers, mail, livestock or goods
carried on by the owners or lessees or charterers of aircraft, including the
sale of tickets for such transportation on behalf of other enterprises, the
incidental lease of aircraft and any other activity directly connected with
such transportation.
Article 9 SHIPPING
1.
Income derived by a resident of a Contracting State
from the operation of ships in international traffic shall be taxable only in
that State.
2.
Notwithstanding the provisions of paragraph 1 of this
article and article 15 of the Agreement between the Government of the Republic
of India and the Government of the Union of Soviet Socialist Republics on
merchant shipping, dated 19th July, 1976, income derived by a resident of a
Contracting State from the operation of ships between the ports of the other
Contracting State and the ports of third countries (in both directions) may be
taxed in that other State, but the tax imposed in that other State shall be
reduced by an amount equal to two thirds thereof.
3.
The provisions of paragraph 1 of this article shall
also apply to income from 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:
a.
interest on funds connected with the operation of ships
in international traffic shall be regarded as income from the operation of such
ships and the provisions of article 11 shall not apply in relation to such
interest; and
b.
income from the operation of ships includes income
derived from the use, maintenance or rental of containers (including trailors
and related equipment for the transport of containers) in connection with the
transport of goods or merchandise in international traffic. Article 10
DIVIDENDS
1.
Dividends paid by a legal person (in the case of India,
a company) which is 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 legal person (in the case of India, a 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 15% of the gross amount of the dividends.
This paragraph shall not affect the taxation
of the legal person (in the case of India, a 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 legal person (in the case of India, a company) making
the distribution is a resident. In the case of the USSR, this term means
especially part of profits of a joint venture established in conformity with
the laws of the USSR which is attributable to its participant who is a resident
of India, transferred from the USSR.
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 legal person
(in the case of India, a company) paying the dividends is a resident, through a
permanent establishment situated therein, and the holding in respect of which
the dividends are paid is effectively connected with such permanent
establishment. In such case, the provisions of article 7 shall apply.
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 15 per cent. of the gross amount of the interest.
3.
Notwithstanding the provisions of paragraph 2,--
a.
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 sub-division or a local
authority of the other Contracting State; or
ii.
the central bank of that other State;
b.
interest arising in a Contracting State shall be exempt
from tax in that State to the extent approved by the Government of that State
if it is derived and beneficially owned by any person (other than a person
referred to in sub-paragraph (a)) who is a resident of the other Contracting
State provided that the transaction giving rise to the debt-claim has been
approved in this regard by the Government of the first-mentioned State.
4.
The term " interest " when used in this
article means income from debt-claims of every kind, bank deposits, government
loans as well as any other income which is treated as interest in accordance
with the laws of the State where such income arises. 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, and the debt-claim
in respect of which the interest is paid is effectively connected with such
permanent establishment. In such case the provisions of article 7 shall apply.
6.
Interest shall be deemed to arise in a Contracting
State when the payer is that Contracting State itself, a sub-division, a local
authority or a resident of that State. Where, however, the person paying the
interest, whether he is a resident of a Contracting State or not, has in a
Contracting State a permanent establishment in connection with which the
indebtedness on which the interest is paid was incurred, and such interest is
borne by such permanent establishment, then such interest shall be deemed to
arise in the Contracting State in which the permanent establishment 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 a 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
Agreement.
Article 12 ROYALTIES AND FEES
FOR TECHNICAL SERVICES
1.
Royalties and 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 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:
a.
Fifteen per cent. of the gross amount of the royalties
relating to copyrights of literary, artistic or scientific works, other than
cinematograph films or films or tapes used for radio or television
broadcasting; and
b.
Twenty per cent. of the gross amount of the royalties
in all other cases 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, 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 kind 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 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. In such case the
provisions of article 7 shall apply.
6.
Royalties and fees for technical services shall be
deemed to arise in a Contracting State when the payer is that State itself, a
sub-division, a 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 a Contracting State a permanent
establishment 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, then such
royalties or fees for technical services shall be deemed to arise in the State
in which the permanent establishment 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 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 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
Agreement.
Article 13 GAINS FROM
ALIENATION OF PROPERTY
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 a resident of
a Contracting State has in the other Contracting State including such gains
from the alienation of such a permanent establishment (alone or with the whole
property) may be taxed in that other State.
3.
Gains from the alienation of ships or aircraft operated
in international traffic or movable property pertaining to the operation of
such ships or aircraft shall be taxable only in the Contracting State of which
the alienator is a resident.
4.
Gains from the alienation of shares of the capital
stock of a legal person (in the case of India, a company) which is a resident
of a Contracting State may be taxed in that State.
5.
Gains from the alienation of any property other than
that mentioned in paragraphs 1, 2, 3 and 4 shall be taxable only in the
Contracting State of which the alienator is a resident.
Article 14 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 unless he is present in the other Contracting State for a period or
periods amounting to or exceeding in the aggregate 90 days in the relevant
fiscal year: in that case, such income may also be taxed in that other State,
but only so much of it as is derived from his activities performed in that
other State.
2.
The term " professional services " includes
especially independent personal services of an individual in his capacity as a
physician, teacher, architect, engineer and accountant.
Article 15
INCOME FROM EMPLOYMENT
1.
Subject to the provisions of articles 16, 17, 18, 19
and 20, 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 firstmentioned State if:
a.
the recipient is present in the other State for a
period or periods not exceeding in the aggregate 183 days in the relevant
fiscal year; 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 which the employer has in the other State.
3.
Notwithstanding the preceding provisions in this article,
remuneration derived in respect of an employment exercised aboard a ship or
aircraft operated in international traffic by a resident of a Contracting State
may be taxed in that State.
Article 16 DIRECTOR'S FEES
Director's fees and similar payments derived
by a resident of a Contracting State in his capacity as a member of the board
of directors or similar body of a company or any other legal person which is a
resident of the other Contracting State may be
taxed in that other State.
Article 17 INCOME EARNED BY
ENTERTAINERS AND ATHLETES
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 an
athlete, from his personal activities as such exercised in the other
Contracting State may be taxed in that other State.
2.
Where such 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, 14 and 15, be taxed in the
Contracting State in which the activities of the entertainer or athlete are
exercised.
3.
Notwithstanding the provisions of paragraph 1, income
derived by an entertainer or an athlete who is a resident of a Contracting
State from his personal activities as such exercised in the other Contracting
State shall be taxable only in the first-mentioned State, if more than 50 per cent.
of the expenses for such activities are supported from the public funds of the
first-mentioned State, including any of its sub-divisions or local authorities.
4.
Notwithstanding the provisions of paragraph 2 and
articles 7, 14 and 15, 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 more than 50
per cent. of the expenses of such person are supported from the public funds of
that other State, including any of its sub-divisions or local authorities.
Article 18 REMUNERATION AND PENSIONS IN RESPECT OF GOVERNMENT
SERVICES
1.
a.
Remuneration, other than a pension, paid by a
Contracting State, or a sub-division or a local authority thereof to an
individual in respect of services rendered to that State or sub-division or
authority shall be taxable only in that State.
b.
However, such remuneration shall be taxable only in the
other Contracting State, if the services are rendered in that other State and
the individual is a resident of that State who: i. is a national of that State, or ii. did not become a resident of
that State solely for the purposes of rendering the services.
2.
a.
Any pension paid by, or out of funds created by a
Contracting State, or a 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 pension shall be taxable only in the
other Contracting State if the individual is a resident of, and a national of
that other State.
3.
The provisions of articles 15, 16 and 19 shall apply to
remuneration and pensions in respect of services rendered in connection with
commercial activities.
Article 19 PENSIONS
Any pension, other than a pension referred to
in article 18, derived by a resident of a Contracting State from sources within
the other Contracting State may be taxed only in the first-mentioned State.
Article 20 PAYMENTS RECEIVED
BY STUDENTS, APPRENTICES, PROFESSORS, TEACHERS AND RESEARCH SCHOLARS
1.
A student or business apprentice who is or was a
resident of one of the Contracting States immediately before visiting the other
Contracting State and who is present in that other State solely for the purpose
of his education or training, shall be exempt from tax in that other State on payments
derived from sources outside that other State for the purposes of his
maintenance, education or training.
2.
Remuneration derived by a professor, a teacher or a
research scholar who was, immediately before the visit to a Contracting State,
a resident of the other Contracting State and visits the firstmentioned State
with the aim of promoting his education, conducting research or teaching in an
educational institution or a school shall not be taxable in the first-mentioned
State during first two years of his activity.
3.
The provisions of paragraph 2 shall not apply to income
from research if such research is undertaken primarily for the private benefit
of a specific person or persons.
Article 21 OTHER INCOME
1.
Items of income of a resident of a Contracting State
which are not expressly dealt with in the foregoing articles of this Agreement
shall be taxable only in that State. However, such items of income arising in
the other Contracting State may also be taxed in that other 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, and the right or property in respect of which
the income is paid is effectively connected with such permanent establishment.
In such cases, the provisions of article 7 shall apply.
Article 22 ELIMINATION OF
DOUBLE TAXATION
1.
The laws in force in either of the Contracting States
will continue to govern the taxation of income in the respective Contracting
States except where provisions to the contrary are made in this Agreement.
2.
In the case of India, double taxation shall be avoided
as follows:
a.
where a resident of India derives income which, in
accordance with the provisions of this Agreement, may be taxed in the USSR,
India, shall allow as a deduction from the tax on the income of that resident
an amount equal to the income-tax paid in the USSR, whether directly or by
deduction. Such deduction shall not, however, exceed that part of income-tax
(as paid before the deduction is given), which may be attributable to the
income which may be taxed in the USSR;
b.
where a resident of India derives income which, in
accordance with the provisions of this Agreement, shall be taxable only in the
USSR. India may include this income in the tax base but shall allow as a
deduction from the income-tax that part of the income-tax which is attributable
to the income derived from the USSR.
3.
In the USSR, double taxation shall be eliminated in
accordance with the laws of the USSR, due regard being had to the taxes paid or
spared in India.
Article 23 NON-DISCRIMINATION
1.
A Contracting State may not exercise in respect of a
resident of the other Contracting State a higher or more burdensome taxation
than taxation which that State would exercise in respect of a
resident of a third State with which it did not conclude
an agreement for the avoidance of double taxation.
2.
In this article, the term " taxation " means
taxes covered by this Agreement.
Article 24 MUTUAL AGREEMENT
PROCEDURE
1.
Where a resident of a Contracting State considers that
the actions of one or both of the Contracting States result or will result for
him in taxation not in accordance with this Agreement, he may, notwithstanding
the remedies provided by the national laws of those States, present his case to
the competent authority of the Contracting State of which he is a resident. This
case must be presented within three years of the date of receipt of notice of
the action which gives rise to taxation not in accordance with the Agreement.
2.
The competent authority shall endeavour, if the
objection appears to it to be justified and if it is not itself able to arrive
at an appropriate solution, to resolve the case by mutual agreement with the
competent authority of the other Contracting State, with a view to the
avoidance of taxation not in accordance with the Agreement. Any agreement reached
shall be implemented notwithstanding any time limits in the national laws of
the Contracting States.
3.
The competent authorities of the Contracting States
shall endeavour to resolve by mutual agreement any difficulties or doubts
arising as to the interpretation or application of the Agreement. They may also
consult together for the elimination of double taxation in cases not provided
for in the Agreement.
4.
The competent authorities of the Contracting States may
communicate with each other, under the established procedure, 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 25
EXCHANGE OF
INFORMATION
1.
The competent authorities of the Contracting States
shall exchange, to the extent permitted by their domestic laws, such
information (including documents) as is necessary for carrying out the
provisions of this Agreement or of the domestic laws of the Contracting States
concerning taxes covered by the Agreement, in so far as the taxation thereunder
is not contrary to the Agreement, in particular for the prevention of fraud or
evasion of such taxes. Any information received by a Contracting State shall be
treated as confidential in the same manner as information obtained under the
domestic laws of that State. However, if the information is originally regarded
as confidential in the transmitting State, it 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 which are the subject
of the Agreement. Such persons or authorities shall use the information only
for such purposes but may disclose the information in public court proceedings
or in judicial decisions. The exchange of information or documents shall also
be on request with reference to particular cases.
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 or administrative practice of that or of the other Contracting State;
b.
to supply information which is not obtainable under the
laws or in the normal course of the administration of that or the other
Contracting State;
c.
to supply information which would disclose any trade,
industrial, commercial or professional secret or trade process or information
the disclosure of which would be contrary to the interests of the
first-mentioned State.
3.
The competent authorities of the Contracting States
shall notify each other of the changes which are made in their tax laws.
Article 26 DIPLOMATIC AND
CONSULAR ACTIVITIES
Nothing in this Agreement shall affect the
fiscal privileges of diplomatic or consular officials under the general rules
of international law or under the provisions of special agreements.
Article 27 EXISTING AGREEMENTS
Nothing in this Agreement shall affect the
provisions of existing agreements between the Contracting States to the extent
that they have effect in respect of the taxes to which this Agreement applies.
However, where any greater relief from these taxes is afforded by any provision
of this Agreement, that provision shall apply.
Article 28 ENTRY INTO FORCE
Each of the Contracting States shall notify
each other of the completion of the procedures required by its law for the
bringing into force of this Agreement. This Agreement shall enter into force on
the date of receipt of the later of these notifications and shall thereupon
have effect:
a.
in India, in respect of income arising in any fiscal
year beginning on or after the first day of April next following the calendar
year in which the agreement enters into force;
b.
in the USSR, in respect of income arising in any fiscal
year beginning on or after the first day of January next following the calendar
year in which the Agreement enters into force. Article
29
TERMINATION
1.
This Agreement shall remain in force indefinitely, but
either of the Contracting States may, on or before the thirtieth day of June in
any calendar year beginning after the expiration of a period of five years from
the date of its entry into force, give the other Contracting State, through
diplomatic channels, written notice of termination, and, in such event, this
Agreement shall cease to have effect:
a.
in India, in respect of income arising in any fiscal
year beginning on or after the first day of April next following the calendar
year in which the notice of termination is given;
b.
in the USSR, in respect of income arising in any fiscal
year beginning on or after the first day of January next following the calendar
year in which the notice of termination is given.
In
witness whereof the undersigned, being duly authorised thereto, have signed
the present Agreement.
Done in
duplicate at New Delhi this 20th day of November one thousand nine hundred and
eighty-eight in the Hindi, Russian and English languages, all the texts being
equally authentic. In case of divergence between any of the texts, the English
text shall be the operative one.
For the Government of the Republic of India
(Sd.) P. K. Appachoo
Joint Secretary to the Government of India.
For
the Government of the Union of Soviet Socialist Republics, (Sd.) V. M.
Kamentsev.
[No. 8442/F.No.503/1/88-FTD] ANNEXURE
TEXT OF NOTIFICATION NO. GSR 952(E) DATED 30TH
DECEMBER, 1992 GIVING EFFECT TO THE DECISION THAT THE AGREEMENTS CONCLUDED BY
THE ERESTWHILE USSR WILL REMAIN IN FULL FORCE BETWEEN INDIA AND THE RUSSIAN
FEDERATION.
WHEREAS the agreements mentioned in the
Schedule hereto were entered into between the Government of the Republic of
India and the Government of the Union of the Soviet Socialist Republics;
AND WHEREAS the Russian Federation has
expressed its desire to exercise the rights and fulfil the obligations arising
from the aforesaid Agreements concluded by the erstwhile Union of the Soviet
Socialist Republics and to remain a party to the aforesaid Agreements;
AND WHEREAS the Government of the Republic of
Indiahas accepted and confirmed that the aforesaid Agreements shall remain in
full force and effect between India and the Russian Federation;
AND WHEREAS the Government of the Republic of
India and the Russian Federation have agreed that the references in the
aforesaid Agreements to "USSR", or "Union of Soviet Socialist
Republics", or "SOVIET UNION", wherever they occur, shall be
construed as references to "Russian Federation";
NOW, THEREFORE, in exercise of the powers
conferred by section 90 of the Income-tax Act, 1961 (43 of 1961), the Central
Government hereby directs that all the provisions of the aforesaid Agreements
between the Government of the Republic of India and the Russian Federation
shall be given effect to in the Union of India.
SCHEDULE
i.
Agreement between the Government of India and
the Union of Soviet Socialist Republics on
Merchant Shipping signed at New Delhi on
19th July, 1976, and notified vide Government of India, Ministry of Finance
(Department of Revenue) Notification No. 1588 [F. No. 501/1/7373-FTD]/GSR No.
943(E), dated 23rd December, 1976, and modified by Notification F. No.
480/1/81-FTD/GSR No. 419(E), dated 31st May, 1984; and
ii.
Agreement between the Government of the Republic
of India and the Government of the Union of Soviet Socialist Republics for the
avoidance of double taxation of income signed at New Delhi on 20th November,
1988 and notified vide Government of India, Ministry of Finance (Department of
Revenue) (Foreign Tax Division) Notification No. 8442 [F. No. 503/1/88FTD]/GSR
No. 812(E) dated 4th September 1989.
AGREEMENT FOR AVOIDANCE OF DOUBLE TAXATION OF
INCOME FROM MERCHANT SHIPPING WITH RUSSIAN FEDERATION
Whereas the annexed Agreement between the
Government of India and the Union of Soviet Socialist Republics on merchant
shipping has been concluded; And where as Article XV of the said Agreement
provides for the avoidance of double taxation in respect of taxes on income
derived from the carriage of cargo;
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 the provisions of the said Article of the said
Agreement shall be given effect to in the Union of India.
Notification: No. GSR
943(E), dated 23rd December, 1976 as modified by GSR 419(E), dated 31 st May,
1984.
TEXT OF AGREEMENT DATED 19TH JULY, 1976 REFERRED
TO ABOVE
The Government of the Republic of India and
the Government of the Union of the Soviet Socialist Republics, being guided by
the provisions of the Treaty of Peace, Friendship and Co-operation between the
Republic of India and the Union of Soviet Socialist Republics, dated 9th
August, 1971, proceedings from the common aspiration for all possible expansion
and deepening of mutually beneficial economic and trade co-operation between
the two countries as envisaged in the Agreement on the further Development of
Economic and Trade Co-operation, dated 29th November, 1973, and desirous of
developing merchant shipping of the two countries, have agreed as follows:
ARTICLE I
For the purposes of this Agreement,----
1.
the term " vessel " of the Contracting party
shall mean any merchant vessel playing under the national flag of the Party in
accordance with its legislation. This definition excludes warships and fishing
vessels from the sphere of application of this Agreement;
2.
the term " member of the crew " shall mean
the master and any other person actually employed for duties on board during a
voyage in the working or service of a vessel and included in the crew list.
ARTICLE 2
The Contracting Parties shall grant all
possible assistance to the vessels of the two countries and shall refrain from
taking any action which might cause harm to the development of merchant
shipping.
ARTICLE 3
The Contracting Parties shall continue their
efforts to maintain and develop effective working relationships between the
authorities responsible for maritime affairs in their countries. In particular,
the Contracting
[CD1]AGREEMENT BETWEEN THE GOVERNMENT OF THE
REPUBLIC OF INDIA AND THE
GOVERNMENT OF THE UNION
OF SOVIET SOCIALIST REPUBLICS FOR THE AVOIDANCE OF DOUBLE TAXATION OF INCOME
0 Comments
Thank you for your response. It will help us to improve in the future.