Australia - Legal Draft
Home Forms ViewCategory : Agreements Double Taxation Agreements With Different Countries
Double Taxation
Avoidance AgreementAgreement between the
Government of the Republic of India and the Government of Australia for the
avoidance of double taxation and the prevention of fiscal evasion with respect
to taxes on IncomeNotification No. G.
S. R. 60(E), dtd. 22.01.1992.Whereas
the annexed Agreement between the Government of the Republic of India and the
Government of Australia for the avoidance of double taxation and the prevention
of fiscal evasion with respect to taxes on income has entered into force on the
30th day of December, 1991, on the exchange of notes notifying each other that
the last of such things has been done as is necessary to give the said
Agreement the force of law in India and in Australia, in accordance with paragraph
(1) of 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), and section 24A of the Companies (Profits) Surtax Act,
1964 (7 of 1964), the Central Government hereby directs that all the provisions
of the said Agreement shall be given effect to in the Union of India.ANNEXUREAGREEMENT
BETWEEN THE GOVERNMENT OF THE REPUBLIC OF INDIA AND THE GOVERNMENT OF AUSTRALIA
FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH
RESPECT TO TAXES ON INCOMEThe
Government of the Republic of India and the Government of Australia,Desiring
to conclude an Agreement for the avoidance of double taxation and the
prevention of fiscal evasion with respect to taxes on income,Have
agreed as follows:Article
1PERSONAL
SCOPEThis
Agreement shall apply to persons who are residents of one or both of the
Contracting States.Article
2TAXES
COVERED1. The existing taxes to
which this Agreement shall apply are:a. in Australia:the
income-tax, and the resource rent tax in respect of offshore projects relating
to exploration for or exploitation of petroleum resources, imposed under the
federal law of the Commonwealth of Australia;b. in India:i.
the
income-tax including any surcharge thereon; andii.
the
surtax imposed on chargeable profits of companies.2. This Agreement shall
also apply to any identical or substantially similar taxes which are imposed
under the federal law of the Commonwealth of Australia or the law of the
Republic of India after the date of signature of this Agreement in addition to,
or in place of, the existing taxes. The competent authorities of the
Contracting States shall notify each other of any substantial changes which
have been made in the laws of their respective States relating to the taxes to
which this Agreement applies.Article
3GENERAL
DEFINITIONS1. For the purposes of
this Agreement, unless the context otherwise requires:a. the term
"Australia", when used in a geographical sense, excludes all external
territories other than:i.
the
Territory of Norfolk Island;ii.
the
Territory of Christmas Island;iii.
the
Territory of Cocos (Keeling) Islands;iv.
the
Territory of Ashmore and Cartier Islands;v.
the
Territory of Heard Island and McDonald Islands; andvi.
the
Coral Sea Islands Territory,and includes any area adjacent to the territorial limits of Australia
(including the Territories specified in sub-paragraphs (i) to (vi) inclusive)
in respect of which there is for the time being in force, consistently with
international law, a law of Australia dealing with the exploitation of any of
the natural resources of the sea-bed and sub-soil of the continental shelf;a.b. the term
"India" means the territory of India and includes the territorial sea
and the air space above it, as well as any other maritime zone in which India
has sovereign rights, other rights and jurisdictions, according to the Indian
law and in accordance with international law;c. the terms
"Contracting State", "one of the Contracting States" and
"other Contracting State" mean, as the context requires, Australia or
India, the Governments of which have concluded this Agreement;d. the term
"person" includes an individual, a company, any other body of persons
and any other entity which is treated as a taxable unit for tax purposes;e. the term
"company" means any body corporate or any entity which is treated as
a company or body corporate for tax purposes;f. the terms
"enterprise of one of the Contracting States" and "enterprise of
the other Contracting State" mean an enterprise carried on by a resident
of Australia or an enterprise carried on by a resident of India, as the context
requires;g. the term
"tax" means Australian tax or Indian tax, as the context requires;h. the term:i.
"Australian
tax" means tax imposed by Australia; andii.
"Indian
tax" means tax imposed by India,being tax to which this Agreement applies by virtue of Article 2, but neither
term includes any amount which represents a penalty or fine or interest imposed
under the law of either Contracting State relating to its tax;a.b.c.d.e.f.g.h.i. the term
"competent authority" -means, in the case of Australia, the
Commissioner of Taxation or an authorised representative of the Commissioner
and, in the case of India, the Central Government in the Ministry of Finance
(Department of Revenue) or their authorised representative; andj. the term "year
of income", in relation to Indian tax, means "previous year" as
defined in the Income-tax Act, 1961.2. In the application of
this Agreement by a Contracting State, any term not defined in this Agreement
shall, unless the context there wise requires, have the meaning which it has
under the laws of that State from time to time in force relating to the taxes
to which this Agreement applies.Article
4RESIDENCE1.
For
the purposes of this Agreement, a person is a resident of one of the
Contracting States if the person is a resident of that Contracting State for
the purposes of its tax. However, a person is not a resident of a Contracting
State for the purposes of this Agreement if the person is liable to tax in that
State in respect only of income from sources in that State.2.
Where,
by reason of the provisions of paragraph (1), an individual is a resident of
both Contracting States, then the status of that person shall be determined in
accordance with the following rules:a. the person shall be
deemed to be a resident solely of the Contracting State in which a permanent
home is available to the person;b. if a permanent home
is available to the person in both Contracting States, or in neither of them,
the person shall be deemed to be a resident solely of the Contracting State
with which the person's personal and economic relations are closer (centre of
vital interests).For
the purposes of this paragraph, an individual's citizenship of a Contracting
State as well as that person's habitual abode shall be factors in determining
the degree of the person's personal and economic relations with that
Contracting State.'1.2.3.
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 solely of the Contracting State in which its place of effective
management is situated.Article
5PERMANENT
ESTABLISHMENT1.
For
the purposes of this Agreement, 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" shall include especially:a. a place of
management;b. a branch;c. an office;d. a factory;e. a workshop;f. a mine, an oil or gas
well, a quarry or any other place of extraction of natural resources;g. a warehouse in
relation to a person providing storage facilities for others;h. a farm, plantation or
other place where agricultural, pastoral, forestry or plantation activities are
carried on;i. premises used as a
sales outlet or for receiving or soliciting orders;j. an installation or
structure, or plant or equipment, used for the exploration for or exploitation
of natural resources;k. a building site or
construction, installation or assembly project, or supervisory activities in
connection with such a site or project, where that site or project exists or
those activities are carried on (whether separately or together with other
sites, projects or activities) for more than six months.1.2.3.
An
enterprise shall be deemed to have a permanent establishment in one of the
Contracting States And to carry on business through that permanent
establishment if:a. substantial equipment is being used in
that State by, for or under a contract with the enterprise;b.it carries on
activities in that State in connection with the exploration for or exploitation
of natural resources in that State; orc. it furnishes services, including
managerial services and those mentioned in sub-paragraphs (3)(h) to (k) of
Article 12 but not those services in respect of which payments or credits that
are royalties as defined in Article 12 are made, within one of the Contracting
States through employees or other personnel, but only if those services are
furnished within that State:i.
for
a period or periods aggregating to more than 90 days within any 12-month
period; orii.
for
another enterprise, if both enterprises are within either of the relationships
described in sub-paragraphs (1)(a) and (b) of Article 9.i.1.2.3.4. An enterprise shall
not be deemed to have a permanent establishment merely by reason of: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; ore. the maintenance of a
fixed place of business solely for the purpose of advertising, for the supply
of information, for scientific research, or for similar activities which have a
preparatory or auxiliary character, for the enterprise.However,
the preceding provisions of this paragraph shall not apply where an enterprise
of one of the Contracting States maintains in the other Contracting State a
fixed place of business for any purpose other than those specified in this
paragraph.1.2.3.4.5. A person acting in
one of the Contracting States on behalf of an enterprise of the other
Contracting State--other than an agent of an independent status to whom
paragraphapplies--shall be deemed to be a permanent establishment of that
enterprise in the first-mentioned State if:a.
the
person has, and habitually exercises in that State, an authority to conclude
contracts on behalf of the enterprise, unless the person's activities are
limited to the purchase of goods or merchandise for the enterprise;b.
the
person has no such authority, but habitually maintains in that State a stock of
goods or merchandise from which the person regularly delivers goods or
merchandise on behalf of the enterprise;c.
the
person habitually secures orders in that State, wholly or principally for the
enterprise itself or for the enterprise and other enterprises controlling, or
controlled by or subject to the same common control as, that enterprise; ord.
in
so acting, the person manufactures or processes in that State for the
enterprise goods or merchandise belonging to the enterprise.1.2.3.4.5.6. An enterprise of one
of the Contracting States 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, where that person is acting in the ordinary course of the
person's business as such a broker or agent. However, when the activities of
such a broker or agent are carried on wholly or principally on behalf of that
enterprise itself or on behalf of that enterprise and other enterprises
controlling, or controlled by or subject to the same common control as, that
enterprise, the person will not be considered a broker or agent of an
independent status within the meaning of this paragraph.7. The fact that a
company which is a resident of one of the Contracting States 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 make either company a
permanent establishment of the other.8. The principles set
forth in the preceding paragraphs of this Article shall be applied
indetermining for the purposes of paragraph (5) of Article 11 and paragraph (5)
of Article 12 of this Agreement whether there is a permanent establishment
outside both Contracting States, and whether an enterprise, not being an
enterprise of one of the Contracting States, has a permanent establishment in
one of the Contracting States.Article
6INCOME
FROM REAL PROPERTY (IMMOVABLE PROPERTY)1.
Income
from real property may be taxed in the Contracting State in which that property
is situated.2.
For
the purposes of this Article, the term "real property":a. in the case of
Australia, has the meaning which it has under the laws of Australia and shall
include:i.
a
lease of land and any other interest in or over land, whether improved or not;
andii.
a
right to receive variable or fixed payments either as consideration for the
working of or the right to work or explore for, or in respect of the
exploitation of, mineral or other deposits, oil or gas wells, quarries or other
places of extraction or exploitation of natural resources; anda.b. in the case of India,
means such property which, according to the laws of India, is immovable
property and shall include:i.
property
accessory to immovable property;ii.
rights
to which the provisions of the general law respecting landed property apply;
andiii.
usufruct
of immovable property and rights to receive variable or fixed payments either
as consideration for the working of or the right to work or explore for, or in
respect of exploitation of, mineral or other deposits, oil or gas wells,
quarries or other places of extraction or exploitation of natural resources.1.2.3.
A
lease of land, any other interest in or over land and any rights or property
referred to in any of the sub-paragraphs of paragraph (2) shall be regarded as
situated where the land; mineral or other deposits, oil or gas wells, quarries,
natural resources or property, as the case may be, are situated or where the
exploration may take place.4.
The
provisions of paragraph (1) shall apply to income derived from the direct use,
letting or use in any other form of real property.5.
The
provisions of paragraphs (1), (3) and (4) shall also apply to the income from
real property of an enterprise and to income from real property used for the
performance of independent personal services.Article
7BUSINESS
PROFITS1.
The
profits of an enterprise of one of the Contracting States 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:a. that permanent
establishment; orb. sales within that
other Contracting State of goods or merchandise of the same or a similar kind
as those sold, or other business activities of the same or a similar kind as
those carried on, through that permanent establishment.1.2.
Subject
to the provisions of paragraph (3), where an enterprise of one of the
Contracting States 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
or with other enterprises with which it deals.3.
In
the determination of the profits of a permanent establishment, there shall be
allowed as deductions, in accordance with and subject to the limitations of the
law relating to tax in the Contracting State in which the permanent
establishment is situated, expenses of the enterprise, being expenses which are
incurred for the purposes of the business of the permanent establishment
(including executive and general administrative expenses so incurred), whether
incurred in the Contracting State in which the permanent establishment is
situated or elsewhere.4.
No
profits shall be attributed to a permanent establishment by reason of the mere
purchase by that permanent establishment of goods or merchandise for the enterprise.5.
Where
the correct amount of profits attributable to a permanent establishment is
incapable of determination by the taxation authority of one of the Contracting
States or the ascertaining thereof by that authority presents exceptional
difficulties nothing in this Article shall affect the application of any law of
that State relating to the determination of the tax liability of a person,
provided that the law shall be applied, so far as the information available to
that authority permits, in accordance with the principles of this Article.6.
For
the purposes of the preceding paragraphs of this Article, the profits to be
attributed to the permanent establishment shall be determined by the same
method year by year unless there is good and sufficient reason to the contrary.7.
Where
profits include items of income which are dealt with separately in other
Articles of this Agreement, then the provisions of those Articles shall not be
affected by the provisions of this Article.8.
Nothing
in this Article shall affect the operation of any law of a Contracting State
relating to tax imposed on profits from insurance with nonresidents provided
that if the relevant law in force in either Contracting State at the date of
signature of this Agreement is varied (otherwise than in minor respects so as
not to affect its general character) the Contracting States shall consult with
each other with a view to agreeing to any amendment of this paragraph that may
be appropriate.9.
Where:a. a resident of one of
the Contracting States is beneficially entitled, whether directly or through
one or more -interposed trust estates, to a share of the business profits of an
enterprise carried on in the other Contracting State by the trustee of a trust
estate other than a trust estate which is treated in that other State as a
company for tax purposes; andb. in relation to that
enterprise, that trustee would, in accordance with the principles of Article 5,
have a permanent establishment in that other Contracting State, the enterprise
carried on by the trustee shall be deemed to be a business carried on in that
other Contracting State by that resident through a permanent establishment
situated therein and that share of business profits shall be attributed to that
permanent establishment.Article
8SHIPS
AND AIRCRAFT1. Profits from the
operation of ships or aircraft, including interest on funds connected with that
operation, derived by a resident of one of the Contracting States shall be
taxable only in that State2. Notwithstanding the
provisions of paragraph (1), such profits may be taxed in the other Contracting
State where they are profits from the operations of ships or aircraft confined
solely to places in that other State.3. The provisions of
paragraphs (1) and (2) shall apply in relation to the share of the profits from
the operation of ships or aircraft derived by a resident of one of the
Contracting States through participation in a pool service, in a joint
transport operating organisation or in an international operating agency.4. For the purposes of
this Article, profits derived from the carriage by ships or aircraft of
passengers, livestock, mail, goods or merchandise shipped in a Contracting
State for discharge at another place in that State shall be treated as profits
from operations of ships or aircraft confined solely to places in that State.Article
9ASSOCIATED
ENTERPRISES1.
Where:a. an enterprise of one
of the Contracting States participates directly or indirectly in the
management, control or capital of an enterprise of the other Contracting State;
orb. the same persons
participate directly or indirectly in the management, control or capital of an
enterprise of one of the Contracting States and an enterprise of the other
Contracting State,and
in either case conditions operate between the two enterprises in their
commercial or financial relations which differ from those which might be
expected to operate between independent enterprises dealing wholly
independently with one another, then any profits which, but for those
conditions, might have been expected to accrue 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.1.2. Nothing in this
Article shall affect the application of any law of a Contracting State relating
to the determination of the tax liability of a person, including determinations
in cases where the information available to the taxation authority of that
State is inadequate to determine the income to be attributed to an enterprise,
provided that that law shall be applied, so far as it is practicable to do so,
consistently with the principles of this Article.3. Where profits on
which an enterprise of one of the Contracting States has been charged to tax in
that State are also included, by virtue of paragraph (1) or (2), in the profits
of an enterprise of the other Contracting State and charged to tax in that
other State, and the profits so included are profits which might have been
expected to have accrued to that enterprise of the other State if the conditions
operative between the enterprises had been those which might have been expected
to have operated between independent enterprises dealing wholly independently
with one another, then the first-mentioned State shall make an appropriate
adjustment to the amount of tax charged on those profits in the first-mentioned
State. In determining such an adjustment, due regard shall be had to the other
provisions of this Agreement and for this purpose the competent authorities of
the Contracting States shall if necessary consult each other.Article
10DIVIDENDS1. Dividends paid by a
company which is a resident of one of the Contracting States for the purposes
of its tax, being dividends to which a resident of the other Contracting State
is beneficially entitled, may be taxed in that other State.2. Such dividends may
also be taxed in the Contracting State of which the company paying the
dividends is a resident for the purposes of its tax, and according to the law
of that State, but the tax so charged shall not exceed 15 per cent. of the
gross amount of the dividends.3. The term
"dividends" in this Article means income from shares and other income
which is subjected to the same taxation treatment as income from shares by the
laws of the Contracting State of which the company making the distribution is a
resident for the purposes of its tax.4. The provisions of
paragraphs (1) and (2) shall not apply if the person beneficially entitled to
the dividends, being a resident of one of the Contracting States, 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 any
such case, the provisions of Article 7 or Article 14, as the case may be, shall
apply.5. Dividends paid by a
company which is a resident of one of the Contracting States, being dividends
to which a person who is not a resident of the other Contracting State is
beneficially entitled, shall be exempt from tax in that other State except
insofar as the holding in respect of which the dividends are paid is
effectively connected with a permanent establishment or fixed base situated in
that other State: Provided that this paragraph shall not apply in relation to
dividends paid by any company which is a resident of Australia for the purposes
of Australian tax and which is also a resident of India for the purposes of
Indian tax.Article
11INTEREST1. Interest arising in
one of the Contracting States, being interest to which a resident of the other
Contracting State is beneficially entitled, may be taxed in that other State.2. Such interest may
also be taxed in the Contracting State in which it arises, and according to the
law of that State, but the tax so charged shall not exceed 15 per cent. of the
gross amount of the interest.3. The term
"interest" in this article includes interest from Government
securities or from bonds or debentures, whether or not secured by mortgage and
whether or not c arrying a right to participate in profits, and interest from
any other form of indebtedness as well as all other income assimilated to
income from money lent by the law, relating to tax, of the Contracting State in
which the income arises, but does not include interest referred to in paragraph
(1) of Article 8.4. The provisions of
paragraphs (1) and (2) shall not apply if the person beneficially entitled to
the interest, being a resident of one of the Contracting States, 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
indebtedness in respect of which the interest is paid is effectively connected
with such permanent establishment or fixed base. In such a case, the provisions
of Article 7 or Article 14, as the case may be, shall apply.5. Interest shall be
deemed to arise in a Contracting State when the payer is that State itself or a
political sub-division or local authority of that State or a person who is a
resident of that State for the purposes of its tax. Where, however, the person
paying the interest, whether the person is a resident of one of the Contracting
States or not, has in one of the Contracting States or outside both Contracting
States a permanent establishment or 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.6. Where, owing to a
special relationship between the payer and the person beneficially entitled to
the interest, or between both of them and some other person, the amount of the
interest paid, having regard to the indebtedness for which it is paid, exceeds
the amount which might have been expected to have been agreed upon by the payer
and the person so entitled in the absence of such relationship, the provisions
of this Article shall apply only to the last mentioned amount. In that case,
the excess part of the amount of the interest paid shall remain taxable
according to the law, relating to tax, of each Contracting State, but subject
to the other provisions of this Agreement.Article
12ROYALTIES1. Royalties arising in
one of the Contracting States, being royalties to which a resident of the other
Contracting State is beneficially entitled, may be taxed in that other State.2. Such royalties may
also be taxed in the Contracting State in which they arise, and according to
the law of that State, but the tax so charged shall not exceed:a. in the case of:i.
royalties
referred to in sub-paragraph (3)(b);ii.
payments
or credits for services referred to in sub-paragraph (3)(d), subject to
sub-paragraphs (3)(h) to (1), that are ancillary and subsidiary to the
application or enjoyment of equipment for which payments or credits are made
under sub-paragraph (3)#(b); oriii.
royalties
referred to in sub-paragraph (3)(f) that relate to equipment mentioned in
sub-paragraph (3)(b):10 per cent. of the gross amount of the royalties; anda.b. in the case of other
royalties:i.
during
the first five years of income for which this Agreement has effect:A. where the payer is
the Government or a political sub-division of that State or a public sector
company: 15 per cent. of the gross amount of the royalties; andB. in all other cases:
20 per cent. of the gross amount of the royalties; andi.ii.
during
all subsequent years of income: 15 per cent. of the gross amount of the
royalties.1.2.3. The term
"royalties" in this article means payments or credits, whether
periodical or not, and, however described or computed, to the extent to which
they are made as consideration for:a. the use of, or the right to use, any
copyright, patent, design or model, plan, secret formula or process, trade
mark, or other like property or right;b.the use of, or the
right to use, any industrial, commercial or scientific equipment;c. the supply of scientific, technical,
industrial or commercial knowledge or information;d.the rendering of any
technical or consultancy services (including those of technical or other
personnel) which are ancillary and subsidiary to the application or enjoyment
of any such property or right as is mentioned in sub-paragraph (a), any such
equipment as is mentioned in sub-paragraph (b) or any such knowledge or
information as is mentioned in sub-paragraph (c);e. the use of, or the right to use:i.
motion
picture films;ii.
films
or video tapes for use in connection with television; oriii.
tapes
for use in connection with radio broadcasting;a.b.c.d.e.a.a.b.c.d.e.f. total or partial forbearance in
respect of the use or supply of any property or right referred to in
sub-paragraphs (a) to (e); org.the rendering of any
services (including those of technical or other personnel) which make available
technical knowledge, experience, skill, knowhow or processes or consist of the
development and transfer of a technical plan or design; but that term does not
include payments or credits relating to services mentioned in sub-paragraphs
(d) and (g) that are made:h. for services that are ancillary and
subsidiary, and inextricably and essentially linked, to a sale of property;i. for services that are
ancillary and subsidiary to the rental of ships, aircraft, containers or other
equipment used in connection with the operation of ships or aircraft in
international traffic;j. for teaching in or by
an educational institution;k. for services for the personal use of
the individual or individuals making the payments or credits; orl. to an employee of the
person making the payments or credits or to any individual or firm of
individuals (other than a company) for professional services as defined in
article 14.a.1.2.3.4. The provisions of
paragraphs (1) and (2) shall not apply if the person beneficially entitled to
the royalties, being a resident of one of the Contracting States, carries on
business in the other Contracting State, in which the royalties arise, through
a permanent establishment situated therein, or performs in that other State
independent personal services from a fixed base situated therein, and the property,
right or services in respect of which the royalties are paid or credited are
effectively connected with such permanent establishment or fixed base. In such
a case, the provisions of Article 7 or Article 14, as the case may be, shall
apply.5. (5) Royalties shall
be deemed to arise in a Contracting State when the payer is that State itself
or a political sub-division or local authority of that State or a person who is
a resident of that State for the purposes of its tax. Where, however, the
person paying the royalties, whether the person is a resident of one of the
Contracting States or not, has in one of the Contracting States or outside both
Contracting States a permanent establishment or fixed base in connection with
which the liability to pay the royalties was incurred, and the royalties are
borne by the permanent establishment or fixed base, then the royalties shall be
deemed to arise in the State in which the permanent establishment or fixed base
is situated.6. (6) Where, owing to a
special relationship between the payer and the person beneficially entitled to
the royalties, or between both of them and some other person, the amount of the
royalties paid or credited, having regard to what they are paid or credited
for, exceeds the amount which might have been expected to have been agreed upon
by the payer and the person so entitled in the absence of such relationship,
the provisions of this article shall apply only to the last mentioned amount.
In that case, the excess part of the amount of the royalties paid or credited
shall remain taxable according to law, relating to tax, of each Contracting
State, but subject to the other provisions of this Agreement.Article
13ALIENATION
OF PROPERTY1. Income or gains
derived by a resident of one of the Contracting States from the alienation of
real property referred to in Article 6 and, as provided in that article,
situated in the other Contracting State may be taxed in that other State.2. Income or gain
derived from the alienation of property, other than real property referred to
in Article 6, that forms part of the business property of a permanent
establishment which an enterprise of one of the Contracting States has in the
other Contracting State or pertains to a fixed base available to a resident of
the first-mentioned State in that other State for the purpose of performing
independent personal services, including income or gains from the alienation of
such a permanent establishment (alone or with the whole enterprise) or of such
a fixed base, may be taxed in that other State.3. Income or gains
derived from the alienation of ships or aircraft operated in international
traffic, or of property other than real property referred to in Article 6
pertaining to the operation of those ships or aircraft, shall be taxable only
in the Contracting State of which the enterprise which operated those ships or
aircraft is a resident.4. Income or gains
derived from the alienation of shares or comparable interest in a company, the
assets of which consist wholly or principally of real property referred to in
Article 6 and, as provided in that article, situated in one of the Contracting
States, may be taxed in that State.5. Income or gains
derived from the alienation of shares or comparable interests in a company,
other than those referred to in paragraph (4), may be taxed in the Contracting
State of which the company is a resident.6. Nothing in this
Agreement affects the application. of a law of a Contracting State relating to
the taxation of gains of a capital nature derived from the alienation of
property other than that to which any of the paragraphs (1), (2), (3), (4) and
(5) apply.Article
14INDEPENDENT
PERSONAL SERVICES1. Income derived by an
individual or a firm of individuals (other than a company) who is a resident of
one of the Contracting States in respect of professional services or other
independent activities of a similar character shall be taxable only in that
State unless:a. the individual or firm has a fixed
base regularly available to the individual or firm in the other Contracting State
for the purpose of performing the individual's or the firm's activities, in
which case the income may be taxed in that other State but only so much of it
as is attributable to activities exercised from that fixed base; orb.the stay by the
individual or, in the case of a firm, by one or more members of the firm (alone
or together) in the other Contracting State is for a period or periods
amounting to or exceeding 183 days in a year of income, in which case only so
much of the income as is derived from the activities of the individual, that
member or those members, as the case may be, in that other State may be taxed
in that other State.a.1.2. The term
"professional services" includes services performed in the exercise
of independent scientific, literary, artistic, educational or teaching
activities as well as in the exercise of the independent activities of
physicians, surgeons, lawyers, engineers, architects, dentists and accountants.Article
15DEPENDENT
PERSONAL SERVICES1. Subject to the
provisions of Articles 16, 17, 18, 19 and 20, salaries, wages and other similar
remuneration derived by an individual who is a resident of one of the
Contracting States 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 from that exercise
may be taxed in that other State.2. Notwithstanding the
provisions of paragraph (1), remuneration derived by an individual who is a
resident of one of the Contracting States 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 that other
State for a period or periods not exceeding in the aggregate 183 days in a year
of income of that other State;b.the remuneration is
paid by, or on behalf of, an employer who is not a resident of that other
State; andc. the remuneration is not deductible in
determining taxable profits of a permanent establishment or a fixed base which
the employer has in that other State.1.2.3. Notwithstanding the
preceding provisions of this article, remuneration in respect of an employment
exercised aboard a ship or aircraft operated in international traffic by a
resident of one of the Contracting States may be taxed in that State.Article
16DIRECTORS'
FEESDirectors'
fees and similar payments derived by a resident of one of the Contracting States
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
17ENTERTAINERS1.
Notwithstanding
the provisions of Articles 14 and 15, income derived by residents of one of the
Contracting States as entertainers, such as theatre, motion picture, radio or
television artistes, musicians and athletes, from their personal activities as
such exercised in the other Contracting State, may be taxed in that other
State.2.
Where
income in respect of the personal activities of an entertainer as such accrues
not to that entertainer 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 are exercised.3.
Notwithstanding
the provisions of paragraph (1), income derived by an entertainer who is a
resident of one of the Contracting States, from the entertainer's personal
activities as such exercised in the other Contracting State, shall be taxable
only in the first-mentioned Contracting State if the activities in the other
Contracting State are supported wholly or substantially from the public funds
of the first-mentioned Contracting State, including any of its political
sub-divisions or local authorities.4.
Notwithstanding
the provisions of paragraph (2) and Articles 7, 14 and 15, where income in
respect of personal activities exercised by an entertainer in the entertainer's
capacity as such in one of the Contracting States accrues not to the
entertainer but to another person, that income shall be taxable only in the
other Contracting State if that other person is supported wholly or
substantially from the public funds of that other State, including any of its
political sub-divisions or local authorities.4.Article 18PENSIONS
AND ANNUITIES1.
Pensions
(not including pensions referred to in Article 19) and annuities paid to a
resident of one of the Contracting States shall be taxable only in that State.2.
The
term "annuity" means a stated sum payable periodically at stated
times during life or during a specified or ascertainable period of time under
an obligation to make the payments in return for adequate and full
consideration in money or money's worth.Article
19GOVERNMENT
SERVICE1.
Remuneration,
other than a pension or annuity paid by one of the Contracting States or a
political sub-division or local authority of that State to any individual in
respect of services rendered in the discharge of Governmental functions, shall
be taxable only in that State. However, such remuneration shall be taxable only
in the other Contracting State if the services are rendered in that other State
and the recipient is, a resident of that other State who:a. is a citizen of that
State; orb. did not become a
resident of that State solely for the purpose of performing the services.2.
Any
pension paid by, or out of funds created by, one of the Contracting States 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. However, such pension shall be taxable only in
other Contracting State if the recipient is a resident and a citizen of that
other State.3.
The
provisions of Articles 15, 16 and 18 shall apply, as appropriate in the
circumstances, to remuneration and pensions in respect of services rendered in
connection with a business carried on by one of the Contracting States or a
political sub-division or local authority thereof.Article
20PROFESSORS
AND TEACHERS1.
Where
a professor or teacher who is a resident of one of the Contracting States
visits the other Contracting State for a period not exceeding two years for the
purpose of teaching or carrying out advanced study or research at a university,
college, school or other educational institution, any remuneration that person
receives for such teaching, advanced study or research shall be exempt from tax
in that other State to the extent to which such remuneration is, or upon the
application of this article will be, subject to tax in the first-mentioned
State.2.
This
article shall not apply to remuneration which a professor of teacher receives
for conducting research if the research is undertaken primarily for the private
benefit of a specific person or persons.Article
21STUDENTS
AND TRAINEESWhere
a student or trainee, who is a resident of one of the Contracting States or who
was a resident of that State immediately before visiting the other Contracting
State and who is temporarily present in that other State solely for the purpose
of the student's or trainee's education or training, receives payments from
sources outside that other State for the purpose of the student's or trainee's
maintenance, education or training, those payments shall be exempt from tax in
that other State.Article
22INCOME
NOT EXPRESSLY
MENTIONED1.
Items
of income of a resident of one of the Contracting States which are not
expressly mentioned in the foregoing articles of this Agreement shall be
taxable only in that State.2.
However,
any such income derived by a resident of one of the Contracting States from
sources in the other Contracting State may also be taxed in that other State.3.
The
provisions of paragraph (1) shall not apply to income derived by a resident of
one of the Contracting States where that income is effectively connected with a
permanent establishment or fixed base situated in the other Contracting State.
In such a case, the provisions of Article 7 or Article 14, as the case may be,
shall apply.Article
23SOURCE
OF INCOME1. Income, profits or
gains derived by a resident of one of the Contracting States which, under any
one or more of Articles 6 to 8, Articles 10 to 20 and Article 22 may be taxed
in the other Contracting State, shall for the purposes of the law of that other
State relating to its tax be deemed to be income from sources in that other
State.2. Income, profits or
gains derived by a resident of one of the Contracting States which, under any
one or more of Articles 6 to 8, Articles 10 to 20 and Article 22 may be taxed
in the other Contracting State, shall for the purposes of Article 24 and of the
law of the first-mentioned State relating to its tax be deemed to be income
from sources in that other State.Article
24METHODS
OF ELIMINATION OF DOUBLE TAXATION1.a. Subject to the
provisions of the law of Australia from time to time in force which relate to
the allowance of a credit against Australian tax of tax paid in a country
outside Australia (which shall not affect the general principle hereof), Indian
tax paid under the law of India and in accordance with this Agreement, whether
directly or by deduction, in respect of income derived by a person who is a
resident of Australia from sources in India shall be allowed as a credit
against Australian tax payable in respect of that income.b. Where a company which
is a resident of India and is not a resident of Australia for the purposes of
Australian tax pays a dividend to a company which is a resident of Australia
and which controls directly or indirectly not less than 10 per cent. of the
voting power of the first-mentioned company, the credit referred to in
sub-paragraph (a) shall include the Indian tax paid by that first-mentioned
company in respect of that portion of its profits out of which the dividend is
paid.1.2. In paragraph (1),
Indian tax paid shall include:a. subject to
sub-paragraphb. an amount equivalent
to the amount of any Indian tax forgone which, under the law of India relating
to Indian tax and in accordance with this Agreement, would have been payable as
Indian tax on income but for an exemption from, or reduction of, Indian tax on
that income in accordance with:i. section 10(4),
10(15)(iv), 10A, 10B, 80HHC, 80HHD or 80-I of the Income-tax Act, 1961, insofar
as those provisions were in force on, and have not been modified since, the
date of signature of this Agreement, or have been modified only in minor
respects so as not to affect their general character; orii. any other provision
which may subsequently be made granting an exemption from or reduction of
Indian tax which the Treasurer of Australia and the Ministry of Finance of
India agree from time to time in letters exchanged for this purpose to be of a
substantially similar character, if that provision has not been modified
thereafter or has been modified only in minor respects so as not to affect its
general character; andi.a.b.c. in the case of
interest derived by a resident of Australia which is exempted from Indian tax
under the provisions referred to in sub-paragraph (a), the amount which would
have been payable as Indian tax if the interest had not been so exempt and if
the tax referred to in paragraph (2) of Article 11 did not exceed 10 per cent.
of the gross amount of the interest.1.2.3. Paragraph (2) shall
apply only in relation to income derived in any of the first ten years of
income in relation to which this Agreement has effect under sub-paragraph
(1)(a)(ii) of Article 28 or in any later year of income that may be agreed by
the Contracting States in letters exchanged for this purpose.4. In the case of India,
double taxation shall be avoided as follows:a. the amount of
Australian tax paid under the laws of Australia and in accordance with the
provisions of this Agreement, whether directly or by deduction, by a resident
of India in respect of income from sources within Australia which has been
subjected to tax both in India and Australia shall be allowed as a credit
against the Indian tax payable in respect of such income but in an amount not
exceeding that proportion of Indian tax which such income bears to the entire
income chargeable to Indian tax; andb. for the purposes of
the credit referred to in sub-paragraph (a) above, where the resident of India
is a company by which surtax is payable, the credit to be allowed against
Indian tax shall be allowed in the first instance against the income-tax
payable by the company in India and, as to the balance, if any, against the
surtax payable by it in India.1.2.3.4.5. Where a resident of
one of the Contracting States derives income which, in accordance with the
provisions of this Agreement, shall be taxable only in the other Contracting
States, the first-mentioned State may take that income into account in
calculating the amount of its tax payable on the remaining income of that
resident.Article
25MUTUAL
AGREEMENT PROCEDURE1. Where a person who is
a resident of one of the Contracting States considers that the actions of the
taxation authority of one or both of the Contracting States result or will
result for the person in taxation not in accordance with this Agreement, the
person may, notwithstanding the remedies provided by the national laws of those
States, present a case to the competent authority of the Contracting State of
which the person is a resident. The case must be presented within three years
from the first notification of the action giving rise to taxation not in
accordance with this Agreement.2. The competent
authority shall end eavour, if the claim appears to it to be justified and if
it is not itself able to arrive at an appropriate solution, to resolve the case
with the competent authority of the other Contracting State, with a view to the
avoidance of taxation not in accordance with this Agreement. The solution so
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 jointly endeavour to resolve any
difficulties or doubts arising as to the application of this Agreement.4. The competent
authorities of the Contracting States may communic ate with each other directly
for the purpose of giving effect to the provisions of this Agreement.Article
26EXCHANGE
OF INFORMATION1.
The
competent authorities of the Contracting States shall exchange such information
as is necessary for the carrying out of this Agreement or of the domestic laws
of the Contracting States concerning the taxes to which this Agreement applies
insofar as the taxation thereunder is not contrary to this Agreement, or for
the prevention of evasion or avoidance of, or fraud in relation to, such taxes.
The exchange of information is not restricted by Article 1. Any information
received by the competent authority of 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) concerned with the assessment or collection
of, enforcement or prosecution in respect of, or the determination of appeals
in relation to, the taxes to which this Agreement applies and shall be used
only for such purposes. They may disclose the information in public court
proceedings or in judicial decisions.2.
The
competent authorities may, through consultation, develop appropriate
conditions, methods and techniques concerning the matters in respect of which
such exchange of information shall be made. The exchange of information shall
be either on a routine basis or on request with reference to particular cases,
or both. The competent authorities of the Contracting States may agree from
time to time on the list of the information which shall be furnished on a
routine basis.3.
In
no case shall the provisions of paragraph (1) be construed so as to impose on
the competent authority of a Contracting State the obligation:i. to carry out
administrative measures at variance with the laws or the administrative
practice of that or of the other Contracting State;ii. to supply information
which is not obtainable under the laws or in the normal course of the
administration of that or of the other Contracting State;iii. to supply information
which would disclose any trade, business, industrial, commercial or
professional secret or trade process, or to supply information, the disclosure
of which would be contrary to public policy.Article
27DIPLOMATIC
AND CONSULAR OFFICIALSNothing
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 international Agreements.Article
28ENTRY
INTO FORCE1.
This
Agreement shall enter into force on the date on which the Contracting States
exchange notes through the diplomatic channel notifying each other that the
last of such things has been done as is necessary to give this Agreement the
force of law in Australia and in India, as the case may be, and thereupon this
Agreement shall have effect:a. In Australia:i.
in
respect of withholding tax on income that is derived by a non-resident, in
relation to income derived on or after 1st July in the calendar year next
following that in which the Agreement enters into force; andii.
in
respect of other Australian tax, in relation to income, profits or gains of any
year of income beginning on or after 1st July, in the calendar year next
following that in which the Agreement enters into force;a.b. In India:in respect of income, profits or gains arising in any year of income beginning
on or after 1st April, in the calendar year next following that in which the
Agreement enters into force.1.2.3. The Agreement made
between the Government of Australia and the Government of the Republic of India
for the avoidance of double taxation of income derived from International air
transport signed at Canberra on 31st May, 1983 (in this article called
"1983 Agreement") shall cease to have effect with respect to taxes to
which this Agreement applies when the provisions of this Agreement become
effective in accordance with paragraph (1).4. The 1983 Agreement
shall terminate on the expiration of the last date on which it has effect in
accordance with the foregoing provisions of this Article.Article
29