Brazil - Legal Draft

Double Taxation

Avoidance AgreementConvention Between

the Government of the Republic of India and the Government of the Federative

Republic of Brazil for the avoidance of double taxation and the prevention of

fiscal evasion with respect to taxes on income.Notification

No. G. S. R. 381(E), dtd. 31.03.1992.Whereas

the annexed Convention between the Government of the Republic of India and the

Government of the Federative Republic of Brazil for avoidance of double

taxation and prevention of fiscal evasion with respect to taxes on income has

been ratified and the Instruments of Ratification exchanged at Brasilia on 11th

March, 1992, as required by Article 28 of the said Convention:Now,

therefore, in exercise of the powers conferred by section 90 of the Income-tax

Act, 1961 (43 of 1961) and section 24A of the Companies (Profits) Surtax Act,

1964 (7 of 1964), the Central Government hereby directs that all the provisions

of the said Convention shall be given effect to in the Union of India.The

Government of the Republic of India and the Government of the Federative

Republic of Brazil.Desiring

to conclude a Convention 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

Convention shall apply to persons who are residents of one or both of the

Contracting States.Article

2TAXES

COVERED1. The taxes to which

the Convention shall apply are:a. in the case of

Brazil:the federal income-tax, excluding the supplementary income-tax and the tax on

activities of minor importance; (hereinafter referred to as "Brazilian

tax");a.b. in the case of India:i.

the

income-tax including any surcharge thereon;ii.

the

surtax; (hereinafter referred to as "Indian tax").1.2. The Convention shall

also apply to any identical or substantially similar taxes which are imposed

after the date of signature of the Convention in addition to, or in place of,

the above-mentioned taxes. The competent authorities of the Contracting States

shall notify each other of any substantial changes which have been made in

their respective taxation laws.Article

3GENERAL

DEFINITIONS1. For the purposes of

this Convention, unless the context otherwise requires:a. the term

"nationals" means:i.

all

individuals possessing the nationality of a Contracting State;ii.

all

legal persons, partnerships and associations deriving their status as such from

the law in force in a Contracting State;a.b. the terms "a

Contracting State" and "the other Contracting State" mean Brazil

or India, as the context requires;c. the term

"person" includes an individual, a company and any other entity which

is treated as a taxable unit under the taxation laws in force in the respective

Contracting States;d. the term

"company" means any body corporate or any entity which is treated as

a body corporate for tax purposes;e. the terms

"enterprise of a Contracting State" and "enterprise of the other

Contracting State" mean respectively an enterprise carried on by a

resident of a Contracting State and an enterprise carried on by a resident of

the other Contracting State;f. the term

"international traffic" means any transport by a skip or aircraft

operated by an enterprise which has its place of effective management in a

Contracting State, except when the ship or aircraft is operated solely between

places in the other Contracting State;g. the term

"tax" means Brazilian tax or Indian tax, as the context requires;h. the term

"competent authority" means:i.

in

Brazil: the Minister of Finance, the Secretary of Federal Revenue or their

authorized representative;ii.

in

India: the Central Government in the Ministry of Finance (Department of

Revenue) or their authorized representative.1.2. As regards the

application of the Convention by a Contracting State, any term not defined

therein shall, unless the context otherwise requires, have the meaning which it

has under the law of that State concerning the taxes to which the Convention

applies.Article

4FISCAL

DOMICILE1. For the purposes of

this Convention, the term "resident of a Contracting State" means any

person who, under the law 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 he is a national;d. if he is a national

of both States or of neither of them, the competent authorities of the

Contracting States shall settle the question by mutual agreement.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 of the

State in which its place of effective management is situated.Article

5PERMANENT

ESTABLISHMENT1. For the purposes of

this Convention the term "permanent establishment" means a fixed

place of business through which the business of an enterprise is wholly or

partly carried on.2. The term

"permanent establishment" includes especially:a. a place of management;b.a branch;c. an office;d.a factory;e. a workshop;f. a mine, an oil or gas well, a quarry

or other place of extraction of natural resources;g.a building site or

construction or assembly project which exists for more than six months;h. an installation, drilling rig or ship

used for the exploration or exploitation of natural resources, but only if so

used for a period of more than six months.a.1.2.3. Notwithstanding the

preceding provisions of this Article, the term "permanent

establishment" shall be deemed not to include:a. the use of facilities solely for the

purpose of storage or display of goods or merchandise belonging to the

enterprise;b.the maintenance of a

stock of goods or merchandise belonging to the enterprise solely for the

purpose of storage or display;c. the maintenance of a stock of goods or

merchandise belonging to the enterprise solely for the purpose of processing by

another enterprise;d.the maintenance of a

fixed place of business solely for the purpose of purchasing goods or

merchandise or of collecting information, for the enterprise;e. the maintenance of a fixed place of

business solely for the purpose of carrying on, for the enterprise, any other

activity of a preparatory or auxiliary character.1.2.3.1.2.3.4. 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 on behalf of an

enterprise and has, and habitually exercises, in a Contracting State an

authority to conclude contracts in the name of the enterprise, that enterprise

shall be deemed to have a permanent establishment in that State in respect of

any activities which that person undertakes for the enterprise, unless the

activities of such person are limited to those mentioned in paragraph (3)

which, if exercised through a fixed place of business, would not make this

fixed place of business a permanent establishment under the provisions of that

paragraph.An

enterprise 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. However, when the activities of such an

agent are devoted wholly or almost wholly on behalf of that enterprise itself

or on behalf of that enterprise and other enterprises controlling, controlled

by, or subject to the same common control, as that enterprise, he will not be

considered an agent of an independent status within the meaning of this

paragraph.5.

The

fact that a company which is a resident of a Contracting State controls or is

controlled by a company which is a resident of the other Contracting State, or

which carries on business in that other State (whether through a permanent

establishment or otherwise), shall not of itself constitute either company a

permanent establishment of the other.Article

6INCOME

FROM IMMOVABLE PROPERTY1. 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 shall in any case include property accessory to immovable property,

livestock and equipment used in agriculture and forestry, rights to which the

provisions of general law respecting landed property apply, usufruct of

immovable property and rights to variable or fixed payments as consideration

for the working of, or the right to work, mineral deposits, sources and other

natural resources; ships and aircraft shall not be regarded as immovable

property.3. The provisions of

paragraph (1) shall apply to income derived from the direct use, letting, or

use in any other form of immovable property.4. The provisions of

paragraphs (1) and (3) shall also apply to the income from immovable property

of an enterprise and to income from immovable property used for the performance

of independent personal services.Article

7BUSINESS

PROFITS1. The profits of an

enterprise of a Contracting State shall be taxable only in that State unless

the enterprise carries on business in the other Contracting State through a

permanent establishment situated therein. If the enterprise carries on business

as aforesaid, the profits of the enterprise may be taxed in the other State but

only so much of them as is attributable to that permanent establishment.2. Subject to the

provisions of paragraph (3), where an enterprise of a Contracting State carries

on business in the other Contracting State through a permanent establishment

situated therein, there shall in each Contracting State be attributed to that

permanent establishment the profits which it might be expected to make if it were

a distinct and separate enterprise engaged in the same or similar activities

under the same or similar conditions and dealing wholly independently with the

enterprise of which it is a permanent establishment.3. In determining the

profits of a permanent establishment, there shall be allowed as deductions

expenses which are incurred for the purposes of the permanent establishment,

including executive and general administrative expenses so incurred, in

accordance with the provisions of and subject to the limitations of the

taxation laws of the Contracting State concerned.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 profits include

items of income which are dealt with separately in other Articles of this

Convention, then the provisions of those Articles shall not be affected by the

provisions of this Article.Article

8SHIPPING

AND AIR TRANSPORT1. Profits from the

operation of ships or aircraft in international traffic shall be taxable only

in the Contract State in which the place of effective management of the

enterprise is situated.2. If the place of

effective management of a shipping enterprise is aboard a ship, then it shall

be deemed to be situated in the Contracting State in which the home harbour of

the ship is situated, or, if there is no such home harbour, in the Contracting

State of which the operator of the ship is a resident.3. The provisions of

paragraph 1 shall also apply to profits from the participation in a pool, a

joint business, or an international operating agency.4. The term

"operation of ships or aircraft" shall mean business of

transportation of persons, mail, livestock or goods carried on by the owners or

lessees or charterers of the ships or aircraft, including the sale of tickets

for such transportation on behalf of other enterprises.Article

9ASSOCIATED

ENTERPRISESWherea. an enterprise of a

Contracting State 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 a Contracting State and an enterprise of the other Contracting

State,and

in either case conditions are made or imposed between the two enterprises in

their commercial or financial relations which differ from those which would be

made between independent enterprises, then any profits which would, but for

those conditions, have accrued to one of the enterprises, but, by reason of

those conditions, have not so accrued, may be included in the profits of that

enterprise and taxed accordingly.Article

10DIVIDENDS1. Dividends paid by a

company which is a resident of a Contracting State to a resident of the other

Contracting State may be taxed in that other State.2. However, such

dividends may also be taxed in the Contracting State of which the company

paying the dividends is a resident and according to the laws of that State, but

if the recipient is a company which is the beneficial owner of the dividends

the tax so charged shall not exceed 15 per cent. of the gross amount of the

dividends.This

paragraph shall not affect the taxation of the company in respect of the

profits out of which the dividends are paid.1.2.3. The term

"dividends" as used in this Article means income from shares,

"jouissance" shares or "jouissance" rights, mining shares,

founders' shares or other rights, not being debt-claims, participating in

profits, as well as income from other corporate rights which is subjected to

the same taxation treatment as income from shares by the laws of the State of

which the company making the distribution is a resident.4. The provisions of

paragraphs (1) and (2) shall not apply if the beneficial owner of the

dividends, being a resident of a Contracting State, carries on business in the

other Contracting State of which the company paying the dividends is a

resident, through a permanent establishment situated therein, and the holding

by virtue of which the dividends are paid is effectively connected with such

permanent establishment. In such case the provisions of Article 7 shall apply.5. Where a resident of

India has a permanent establishment in Brazil, this permanent establishment may

be subject to a tax withheld at source in accordance with Brazilian law.

However, such a tax cannot exceed 15 per cent. of the gross amount of the

profits of that permanent establishment determined after the payment of the

corporate tax related to such profits.6. Where a company which

is a resident of a Contracting State derives profits or income from the other

Contracting State, that other State may not impose any tax on the dividends

paid by the company, except in so far as such dividends are paid to a resident

of that other State or in so far as the holding in respect of which the

dividends are paid is effectively connected with a permanent establishment

situated in that other State, nor subject the company's undistributed profits

to a tax on the company's undistributed profits, even if the dividends paid or

the undistributed profits consist wholly or partly of profits or income arising

in such other State.Article

11INTEREST1. 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 paragraphs (1) and (2):a. interest arising in a Contracting

State and paid to the Government of the other Contracting State, a political

sub-division thereof or any agency (including a financial institution) wholly

owned by that Government, or political sub-division shall be exempt from tax in

the first-mentioned State, unless sub-paragraph (b) applies;b.interest from

securities, bonds or debentures issued by the Government of a Contracting

State, a political sub-division thereof or any agency (including a financial

institution) wholly owned by that Government or political sub-division shall be

taxable only in that State.1.2.3.4. The term

"interest" as used in this Article means income from Government

securities, bonds or debentures, whether or not secured by mortgage and whether

or not carrying a right to participate in profits, and debt-claims of every

kind as well as other income assimilated to income from money lent by the

taxation law of the Contracting State in which the income arises.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 debtclaim 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. The tax rate

limitation provided for in paragraph (2) shall not apply to interest arising in

a Contracting State and paid to a permanent establishment of an enterprise of

the other Contracting State which is situated in a third State.7. Interest shall be

deemed to arise in a Contracting State when the payer is that State itself, a

political sub-division, a local authority or a resident of that State. Where,

however, the person paying the interest, whether he is a resident of a

Contracting State or not, has in a Contracting State a permanent establishment

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 State in which the permanent

establishment is situated.8. Where, by a reason of

a special relationship between the payer and the beneficial owner or between

both of them and some other person, the amount of the interest, having regard

to the debt-claim for which it is paid, exceeds the amount which would have

been agreed upon by the payer and the beneficial owner in the absence of such

relationship, the provisions of this Article shall apply only to the last-mentioned

amount. In such case, the excess part of the payments shall remain taxable

according to the laws of each Contracting State, due regard being had to the

other provisions of this Convention.Article

12ROYALTIES1. Royalties 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 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, the tax so charged shall not exceed:a. 25 per cent. of the gross amount of

the royalties arising from the use or the right to use trade marks;b.15 per cent. of the

gross amount of the royalties in all other cases.1.2.3. 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 cinematography films, films or tapes for television

or radio broadcasting), any patent, trade mark, design or model, plan, secret

formula or process, or for the use of, or the right to use, industrial,

commercial, or scientific equipment, or for information concerning industrial,

commercial or scientific experience.4. The provisions of

paragraphs (1) and (2) shall not apply if the beneficial owner of the

royalties, being a resident of a Contracting State, carries on business in the

other Contracting State in which the royalties arise, through a permanent

establishment situated therein, and the right or property in respect of which

the royalties are paid is effectively connected with such permanent

establishment. In such cases, the provisions of Article 7 shall apply.5. Royalties shall be

deemed to arise in a Contracting State when the payer is that State itself, a

political sub-division, a local authority or a resident of that State. Where,

however, the person paying the royalties, whether he is a resident of a

Contracting State or not, has in a Contracting State a permanent establishment

in connection with which the obligation to pay the royalties was incurred, and

such royalties are borne by such permanent establishment, then such royalties

shall be deemed to arise in the State in which the permanent establishment is

situated.6. Where, by reason of a

special relationship between the payer and the beneficial owner or between both

of them and some other person, the amount of the royalties, having regard to

the use, right or information for which they are paid, exceeds the amount which

would have been agreed upon by the payer and the beneficial owner in the

absence of such relationship, the provisions of this Article shall apply only

to the lastmentioned amount. In such cases, the excess part of the payments

shall remain taxable according to the laws of each Contracting State, due

regard being had to the other provisions of this Convention.Article

13CAPITAL

GAINS1. Gains derived by a

resident of a Contracting State from the alienation of immovable property

referred to in Article 6, which is situated in the other Contracting State, may

be taxed in that other State.2. Gains from the

alienation of movable property forming part of the business property of a

permanent establishment which an enterprise of a Contracting State has in the

other Contracting State, including such gains from the alienation of such a

permanent establishment (alone or with the whole enterprise), may be taxed in

the other State. However, 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 in which the place of effective management of the enterprise is situated.3. Gains from the

alienation of any property other than that referred to in paragraphs (1) and

(2), may be taxed in both Contracting StatesArticle

14INDEPENDENT

PERSONAL SERVICES1. Income derived by a

resident of a Contracting State in respect of professional services or other

activities of an independent character shall be taxable only in that State,

unless the remuneration for such services or activities is paid by a resident

of the other Contracting State or is borne by a permanent establishment

situated therein. In such case, the income may be taxed in that other State.2. The term

"professional services" includes especially independent scientific,

technical, literary, artistic, educational or teaching activities of

physicians, lawyers, engineers, architects, dentists and accountants.Article

15DEPENDENT

PERSONAL SERVICES1. Subject to the

provisions of Articles 16, 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 there from may be taxed in that other State.2. Notwithstanding the

provisions of paragraph 1, remuneration derived by a resident of a Contracting

State in respect of an employment exercised in the other Contracting State

shall be taxable only in the first mentioned State if:a. the recipient is present in the other

State for a period or periods not exceeding in the aggregate 183 days in the

fiscal year concerned, andb.the remuneration is

paid by, or on behalf an employer who is not a resident of the other State, andc. the remuneration is not borne by a

permanent establishment which the employer has in the other State.1.2.3. Notwithstanding the

preceding provisions of this Article, remuneration derived in respect of an

employment exercised aboard a ship or aircraft operated in international

traffic may be taxed in the Contracting State in which the place of effective

management of the enterprise is situated.Article

16DIRECTORS'

FEESDirectors'

fees and other similar payments derived by a resident of a Contracting State in

his capacity as a member of the board of directors or of any council of a

company which is a resident of the other Contracting State may be taxed in that

other State.Article

17ARTISTES

AND ATHLETES1. Notwithstanding the

provisions of Articles 14 and 15, income derived by a resident of a Contracting

State as an entertainer, such as theatre, motion picture, radio or television

artiste, or a musician, or as an, athlete, from his personal activities as such

exercised in the other Contracting State, may be taxed in that other State.2. Where income in

respect of personal activities exercised by an entertainer or an athlete in his

capacity as such accrues not to the entertainer or athlete himself but to

another person, that income may, notwithstanding the provisions of Articles 7,

14 and 15, be taxed in the Contracting State in which the activities of the

entertainer or athlete are exercised.3. The provisions of paragraphs

1 and 2 of this Article shall not apply to income derived from activities

performed in a Contracting State by an entertainer or an athlete if the visit

to that Contracting State is substantially supported by public funds of, or

sponsored by, the other Contracting State, including those of any political

sub-division or local authority.Article

18PENSIONS

AND SOCIAL SECURITY PAYMENTS1. Subject to the

provisions of paragraph 2 of Article 19, pensions and other similar

remuneration, alimony and annuities paid to a resident of a Contracting State

may be taxed in that State.2. However, such

pensions and other similar remuneration, alimony and annuities may also be

taxed in the other Contracting State if the payment is made by a resident of

that other State or a permanent establishment situated therein.13. Notwithstanding the

provisions of paragraphs 1 and 2, pensions paid and other payments made under a

public scheme which is part of the social security system of a Contracting

State or a political sub-division or a local authority thereof shall be taxable

only in that State.4. As used in this

Article:a. the term "pensions and other

similar remuneration" means periodic payments made in consideration of

past employment or by way of compensation for injuries in connection with past

employment;b.the term

"annuities" means stated sums 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

19GOVERNMENTAL

PAYMENTS1.

Remuneration

not including pensions, paid by a Contracting State, a political sub-division

or a local authority thereof to an individual in respect of services rendered

to that State, to a political sub-division or local authority shall be taxable

only in that State.However,

such remuneration shall be taxable only in the Contracting State of which the

recipient is a resident if the services are rendered in that State and the

recipient of the remuneration is a resident of that State who--a. is a national of that State, orb.did not become a

resident of that State solely for the purpose of performing the services.1.1.1.2. Pensions paid by, or

out of funds created by, a Contracting State, a political sub-division or a

local authority thereof to an individual in respect of services rendered to

that State, to a political sub-division or a local authority thereof may be

taxed in that State.3. The provisions of

Articles 15, 16 and 18 shall apply to remuneration and pensions paid in respect

of services rendered in connection with any business carried on by a

Contracting State, a political sub-division or a local authority thereof.Article

20TEACHERS

AND RESEARCHERS1. An individual who is

or was immediately before visiting a Contracting State a resident of the other

Contracting State and who, at the invitation of the Government of the

first-mentioned State or of a university, college, school, museum or other

cultural institution of that first-mentioned State or under an official

programme of cultural exchange, is present in that State for a period not

exceeding two consecutive years solely for the purpose of teaching, giving

lectures or carrying out research at such institution shall be exempt from tax

in that State on his remuneration for such activity, provided that the payment

of such remuneration is derived by him from outside that State.2. This Article shall

not apply to income from research if such research is undertaken primarily for

the private benefit of a specific person or persons.Article

21STUDENTS

AND APPRENTICES1. Payments which a

student or business apprentice who is or was immediately before visiting a

Contracting State a resident of the other Contracting State and who is present

in the first-mentioned State solely for the purpose of his education or

training receives for the purpose of his maintenance, education or training

shall not be taxed in that State, provided that such payments arise from

sources outside that State.2. In respect of grants,

scholarships and remuneration from employment not covered by paragraph 1, a

student or business apprentice described in paragraph 1 shall, in addition, be

entitled during such education or training to the same exemptions, reliefs or

reductions in respect of taxes available to residents of the State which he is

visiting.3. The benefits of this

Article shall extend only for such period of time as may be reasonable or

customarily required to complete the education or training undertaken, but in

no event shall any individual have the benefits of this Article, for more than

five consecutive years from the date of his first arrival in that State.Article

22OTHER

INCOMEItems

of income of a resident of a Contracting State, arising in the other

Contracting State and not dealt with in the foregoing Articles of this

Convention, may be taxed in that other State.Article

23METHODS

FOR THE ELIMINATION OF DOUBLE TAXATION1.

Subject

to the provisions of paragraphs 3 and 4, where a resident of a Contracting

State derives income which, in accordance with the provisions of this

Convention, may be taxed in the other Contracting State, the first-mentioned

State shall allow as a deduction from the tax on the income of that resident an

amount equal to the tax paid in that other State.Such

deduction shall not, however, exceed that part of the tax, as computed before

the deduction is given, which is attributable to the income which may be taxed

in that other State.1.2. For the deduction

mentioned in paragraph 1, the tax paid in that other State shall always be

deemed to have been paid at the rate of 25 per cent. of the gross amount of

interest referred to in paragraph 2 of Article 11 and of royalties referred to

in paragraph 2b of Article 12, provided, however, that the tax so deemed to

have been paid shall not exceed the tax livable on that income in the

first-mentioned State.3. Where a company which

is a resident of a Contracting State derives dividends which, in accordance

with the provisions of paragraph 2 of Article 10, may be taxed in the other

Contracting State, the first-mentioned State shall exempt such dividends from

tax.4. Where a resident of

India derives profits which, in accordance with the provisions of paragraph 5

of Article 10 may be taxed in Brazil, India, shall exempt such profits from

tax.Article

24NON-DISCRIMINATION1. Nationals of a

Contracting State shall not be subjected in the other Contracting State to any

taxation or any requirement connected therewith, which is other or more

burdensome than the taxation and connected requirements to which nationals of

that other State in the same circumstances are or may be subjected.2. The taxation on a

permanent establishment which an enterprise of a Contracting State has in the

other Contracting State shall not be less favourably levied in that other State

than the taxation levied on enterprises of that other State carrying on the

same activities. This provision shall not be construed as obliging a

Contracting State to grant to residents of the other Contracting State any

personal allowances, reliefs and reductions for taxation purposes on account of

civil status or family responsibilities which it grants to its own residents.3. Enterprises of a

Contracting State, the capital of which is wholly or partly owned or

controlled, directly or indirectly, by one or more residents of the other

Contracting State, shall not be subjected in the first mentioned State to any

taxation or any requirement connected therewith which is other or more

burdensome than the taxation and connected requirements to which other similar

enterprises of the first-mentioned State, the capital of which is wholly or

partly owned or controlled, directly or indirectly, by one or more residents of

a third State, are or may be subjected.4. In this Article, the

term "taxation" means taxes to which this Convention applies.Article

25MUTUAL

AGREEMENT PROCEDURE1. Where a resident of a

Contracting State considers that the actions of one or both of the Contracting

States result or will result for him in taxation not in accordance with this

Convention, he may, notwithstanding the remedies provided by the national laws

of those States, present his case to the competent authority of the Contracting

State of which he is a resident. This case must be presented within five years

of the date of receipt of notice of the action which gives rise to taxation not

in accordance with this Convention.2. The competent

authority shall endeavour, if the objection appears to it to be justified and

if it is not itself able to arrive at an appropriate solution, to resolve the

case by mutual agreement with the competent authority of the other Contracting

State, with a view to avoidance of taxation not in accordance with the

Convention. 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 Convention. They may also consult together for the

elimination of double taxation in cases not provided for in the Convention.4. The competent

authorities of the Contracting States may communicate with each other directly

for the purpose of reaching an agreement in the sense of the preceding

paragraphs. When it seems advisable in order to reach agreement to have an oral

exchange of opinions, such exchange may take place through a commission

consisting of representatives of the competent authorities of the Contracting

States.Article

26EXCHANGE

OF INFORMATION1. The competent

authorities of the Contracting States shall exchange such information

(including documents) as is necessary for carrying out the provisions of the

Convention or of the domestic laws of the Contracting States concerning taxes

covered by the Convention, in so far as the taxation thereunder is not contrary

to the Convention, in particular for the prevention of fraud or evasion of such

taxes. Any information received by a Contracting State shall be treated as

secret in the same manner as information obtained under the domestic laws of

that State. However, if the information is originally regarded as secret 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

Convention. 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 competent authorities shall, through consultation,

develop appropriate conditions, methods and techniques concerning the matters

in respect of which such exchange of information shall be made, including,

where appropriate, exchange of information regarding tax avoidance.2. 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

or documents which are not obtainable under the laws or in the normal course of

the administration of that or of the other Contracting State;c. to supply information or documents

which would disclose any trade, business, industrial, commercial or

professional secret or trade process or information the disclosure of which

would be contrary to public policy.Article

27DIPLOMATIC

AGENTS AND CONSULAR OFFICERSNothing

in this Convention shall affect the fiscal privileges of diplomatic agents or

consular officers under the general rules of international law or under the

provisions of special agreements.Article

28ENTRY

INTO FORCE1. This Convention shall

be ratified and the instruments of ratification shall be exchanged at Brasilia

as soon as possible.2. This Convention shall

enter into force upon the exchange of instruments of ratification and its

provisions shall have effect for the first time: 1a. In Brazil:i.

in

respect of taxes withheld at source, to amounts paid or credited on or after

the first day of January of the calendar year immediately following that in which

the Convention enters into force;ii.

in

respect of other taxes covered by the Convention, for the taxable year

beginning on or after the first day of January of the calendar year immediately

following that in which the Convention enters into force.a.b. In India:In respect of income arising in any previous year beginning on or after the

first day of April immediately following the calendar year in which the

Convention enters into force.Article

29TERMINATIONEither

Contracting State may terminate this Convention after a period of five years

from the date on which the Convention enters into force by giving to the other

Contracting State, through diplomatic channels, a written notice of

termination, provided that any such notice shall be given only on or before the

thirtieth day of June in any calendar year.In

such case, the Convention shall cease to have effect:a. In Brazil:I. in respect of taxes

withheld at source, to amounts paid or credited on or after the first day of

January of the calendar year immediately following that in which the notice of

termination is given;II. in respect of other

taxes, for taxable years beginning on or after the first day of January of the

calendar year immediately following that in which the notice of termination is

given.a.b. In India:In respect of income arising in any previous year beginning on or after first

day of April immediately following the calendar year in which the notice is

given.In

witness whereof the undersigned being duly authorised thereto have signed this

Convention.Done

at New Delhi this 26th day of April, 1988, in duplicate in Hindi, Portuguese

and English languages, all three texts being equally authentic. In case of any

divergence of interpretation the English text shall prevail.For

the Government of the For the Government of the Republic of India Federative

Republic of BrazilP.

K. AppachooPROTOCOLAt

the moment of the signature of the Convention between the Republic of India and

the Federative Republic of Brazil for the avoidance of double taxation and the

prevention of fiscal evasion with respect to taxes on income the undersigned,

being duly autliorised thereto, have agreed upon the following provisions which

constitute an integral part of the Convention.1.

With

reference to Article 3, paragraph 1, item (q):It

is understood that the term "tax" shall not include any amount which

is payable in respect of any default or omission in relation to the taxes to

which this Convention applies or which represents a penalty imposed relating to

those taxes.2.

With

reference to Article 12, paragraph 3:It

is understood that the provisions of paragraph 3 of Article 12 shall apply to

payments of any kind to any person, other than payments to an employee of a

person making such payments, in consideration for the rendering of assistance

or services of a managerial, administrative, scientific, technical or

consultancy nature.3.

With

reference to Article 20:It

is understood that the terms "museum or other cultural institution"

shall refer only to such organisations which have been approved in this regard

by the competent authority of the Contracting State concerned.4.

With

reference to Article 24, paragraph 2:It

is understood that the provisions of paragraph 5 of Article 10 are not in

conflict with the provisions of paragraph 2 of Article 24.5.

It

is understood that either Contracting State may, at any time not earlier than

ten years from the date on which the Convention enters into force, seek to

review any or all of its provisions, by notice in writing through competent authority

thereof to the competent authority of the other Contracting State. The

competent authorities shall, within a period of six months thereafter, initiate

appropriate proceedings for such review.In

witness whereof the undersigned being duly authorised thereto have signed this

Protocol.Done

at New Delhi this, 26th day of April, 1988, in duplicate in Hindi, Portuguese

and English languages, all three texts being equally authentic. In case of any

divergence of interpretation, the English text shall prevail.For

the Government of the For the Government of theRepublic

of India Federative Republic of BrazilP.

K. Appachoo(Sd.)

N. C. Jain,Joint

Secretary to the Government of India[Notification

No. 9020/F. No. 501/4/84-FTD]