Double Taxation
Avoidance AgreementIncome-Tax Act, 1961:
Notification under section 90: Convention between the Government of Republic of
India and the Government of Republic of Bulgaria for the avoidance of double
taxation and the prevention of fiscal evasion with respect to taxes on income
and on capitalNotification
No. G.S.R. 205(E), dtd. 9TH MAY, 1996.Whereas
the annexed Convention between the Government of the Republic of India and the
Government of the Republic of Bulgaria for the avoidance of double taxation and
the prevention of fiscal evasion with respect to taxes on income and on capital
has come into force on the 23rd June, 1995, after the notification by both the
Contracting States to each other of the completion of the procedures required
under their laws for bringing into force of the said Convention in accordance
with Article 30 of the said Convention;Now,
therefore, in exercise of the powers conferred by section 90 of the Income-tax
Act, 1961 (43 of 1961), the Central Government hereby directs that all the
provisions of the said Convention shall be given effect to in the Union of
India.ANNEXURECONVENTION
BETWEEN THE GOVERNMENT OF THE REPUBLIC OF INDIA AND THE GOVERNMENT OF THE
REPUBLIC OF BULGARIA FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF
FISCAL EVASION WITH RESPECT TO TAXES ON INCOME AND ON CAPITAL.The
Government of the Republic of India and the Government of the Republic of
Bulgaria.Desiring
to further expand and facilitate mutual economic relations,Have
resolved to conclude a Convention for the avoidance of double taxation and the
prevention of fiscal evasion with respect to taxes on income and on capitaland
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
this Convention shall apply are:a. In India:i.
the
income-tax, including any surcharge thereon; andii.
the
wealth-tax;(hereinafter
referred to as "Indian tax");a.b. In Bulgaria:i.
the
tax on total income;ii.
the
tax on profits; andiii.
the
tax on buildings;(hereinafter
referred to as "Bulgarian tax")2.
This
Convention shall also apply to any identical or substantially similar taxes
which are imposed by either Contracting State after the date of signature of
this Convention in addition to, or in place of, the taxes of that Contracting
State referred to in paragraph 1 of this Article. The competent authorities of
the Contracting States shall notify each other of any substantial changes which
are made in their respective laws.ARTICLE
3GENERAL
DEFINITIONS1. In this Convention,
unless the context otherwise requires:a. the term
"India" means the territory of India and includes the territorial sea
and airspace above it, as well as any other maritime zone in which India has
sovereign rights, other rights and jurisdiction, according to the Indian laws
and in accordance with International law;b. the term
"Bulgaria" means, the Republic of Bulgaria, and, when used in a
geographical sense means the territory over which it exercises its State
sovereignty, as well as the continental shelf and exclusive economic zone over
which it exercises sovereign rights and jurisdiction according to International
law;c. the terms
"Contracting State" and "the other Contracting State" mean
India or Bulgaria, as the context requires;d. the term
"tax" means Indian tax or Bulgarian tax, as the context requires, but
shall not include any amount which is payable in respect of any default or
omission in relation to the taxes to which this Convention applies or which
represents a penalty imposed relating to those taxes;e. the term
"person" shall have the meaning assigned to it in the taxation laws
in force in the respective Contracting State;f. the term
"company" means any body corporate or any entity which is treated as
a company or body corporate under the taxation laws in force in the respective
Contracting States;g. (g) the term
"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;g. (h) the term
"competent authority" means in the case of India, the Central
Government in the Ministry of Finance (Department of Revenue) or their
authorised representative; and in the case of Bulgaria - The Minister of
Finance or his authorised representative;h. the term
"international traffic" means any transport by a ship or aircraft
operated by an enterprise of a Contracting State, except when the ship or
aircraft is operated solely between places in the other Contracting State.2. As regards the
application of this 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
4RESIDENT1. For the purposes of
this Convention, the term "resident of a Contracting State" means:a. in the case of India,
any person who, under the laws of India, is liable to tax therein by reason of
his domicile, residence, place of management or any other criterion of a
similar nature.b. in the case of
Bulgaria, any individual who is national of Bulgaria, as well as any legal
person which has its head office in Bulgaria or is registered therein.1.2.a. where by reason of
the provisions of paragraph 1 of this Article an individual is a resident of
both Contracting States, then he shall be deemed to be a resident of the State
with which his personal and economic relations are closer (centre of vital
interest);b. if the Contracting
State in which he has his centre of vital interest cannot be determined, 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 of this Article, 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 the enterprise is wholly or
partly carried on, separately or together with other persons.2. The term
"permanent establishment" includes especially:a. a place of
management;b. a branch;c. an office;d. a factory;e. a workshop;f. a mine, an oil or gas
well, a quarry or any other place of extraction of natural resources;g. a warehouse in
relation to a person providing storage facilities for others;h. an installation or
structure used for the exploration or exploitation of natural resources;i. a building site or
construction, installation or assembly project or supervisory activities in
connection therewith, where such site, projects or activities (together with
other such sites, projects or activities, if any) continue for a period of more
than six months:Provided
that for the purpose of this paragraph an enterprise shall be deemed to have a
permanent establishment in a Contracting State and to carry on business through
that permanent establishment if it provides services or facilities in
connection with or supplies plant and machinery on hire used or to be used in
the prospecting for, or extraction or production of mineral oils in the State.3. Notwithstanding the
preceding provisions of this Article, the term "permanent
establishment" shall not be deemed 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 advertising, for the supply
of information, for scientific research, or for similar activities which have a
preparatory or auxiliary character, for the enterprise;f. the selling of goods
or merchandise belonging to the enterprises displayed in an occasional temporary
fair or exhibition in the process of closing down of such fair or exhibition;g. the maintenance of a
fixed place of business solely for any combination of activities mentioned in
sub-paragraphs (a) to (f), provided that overall activity of the fixed place of
business resulting from this combination is of a preparatory or auxiliary
character.However,
the provisions of sub-paragraphs (a) to (g) shall not be applicable where the
enterprise maintains any other fixed place of business in the other Contracting
State for any purposes other than the purposes specified in the said
sub-paragraphs.4. Notwithstanding the
provisions of paragraphs 1 and 2, where a person - other than agent of an
independent status to whom paragraph 5 applies - is acting in a Contracting
State on behalf of an enterprise of the other Contracting State, that
enterprise shall be deemed to have a permanent establishment in the first
mentioned Contracting State, if:a. he has, and
habitually exercises in that State an authority to conclude contracts on behalf
of the enterprise, unless his activities are limited to the purchase of goods
or merchandise for the enterprise;b. he has no such
authority, but habitually maintains in the first mentioned State a stock of
goods or merchandise from which he regularly delivers goods or merchandise on
behalf of the enterprise;c. he habitually secures
orders in the first mentioned State wholly or almost wholly for the enterprise
itself or for the enterprise and other enterprises in which the first mentioned
enterprise has a majority participation, or for the enterprise and other
enterprises which have a majority participation in the first mentioned
enterprise.5. 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, a general commission agent or any other agent of an
independent status, provided that such persons are acting in the ordinary
course of their business.6. The fact that a
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 the 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
laws of the Contracting State in which the property in question is situated.
The term shall in any case include property accessory to immovable property,
usufruct of immovable property and rights to variable or fixed payments as
consideration for the working of, or the right to work, mineral deposits,
sources and other natural resources. Ships, boats and aircraft shall not be
regarded as immovable property.3. The provisions of
paragraph 1 shall also apply to income derived from the direct use, letting or
use in any other form of immovable property.4. The provisions of
paragraphs 1 and 3 shall also apply to the income from immovable property of 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, 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 the determination
of the profits of a permanent establishment, there shall be allowed as
deductions expenses which are incurred for the purposes of the business of the
permanent establishment including executive and general administrative expenses
so incurred, whether in the State in which the permanent establishment is
situated or elsewhere, in accordance with the provisions of and subject to the
limitation of the taxation laws of that State.4. No profits shall be
attributed to a permanent establishment by reason of the mere purchase by that
permanent establishment of goods or merchandise for the enterprise.5. For the purposes of
the preceding paragraphs, the profits to be attributed to the permanent
establishment shall be determined by the same method year by year unless there
is good and sufficient reason to the contrary.6. Where profits include
items of income which are dealt with separately in other Articles of this
Convention, then the provisions of those Articles shall not be affected by the
provisions of this Article.ARTICLE
8AIR
TRANSPORT1. Profits derived by an
enterprise of a Contracting State from the operation of aircraft in
international traffic shall be taxable only in that State.2. The provisions of
paragraph 1 shall also apply to profits from the participation in a pool, a
joint business or an international operating agency.3. The provisions of
paragraphs 1 and 2 shall also apply where the enterprise has an office or
agency in the other State for the transportation of goods or persons. However,
this shall apply only to activities directly connected with the business of the
operation of aircraft in international traffic.4. For the purposes of
this Article, interest on funds connected with the operation of aircraft in
international traffic shall be regarded as profits derived from the operation
of such aircraft, and the provisions of Article 12 shall not apply in relation
to such interest.5. The term
"operation of aircraft" shall mean business of transportation by air
of passengers, mail, livestock or goods carried on by the owners or lessees or
charterers of aircraft, including the sale of tickets for such transportation
on behalf of other enterprises, the incidental lease of aircraft and any other
activity directly connected with such transportation.ARTICLE
9SHIPPING1. Income derived by an
enterprise of a Contracting State from the operation of ships in international
traffic shall be taxable only in that State.2. Notwithstanding
anything contained in paragraph 1 of this Article and paragraph 2 of Article 10
of the Agreement on Merchant Shipping dated 18th November, 1976 between the
Government of the Republic of India and the Government of the People's Republic
of Bulgaria, income derived by an enterprise of a Contracting State from the
operation of ships in international traffic from the ports of the other
Contracting State to the ports of third countries and from the ports of third
countries to the ports of the other Contracting State may be taxed in the other
Contracting State, but the tax imposed in that other Contracting State shall
not exceed:a. 50 per cent of the
tax otherwise imposed by the taxation law of that other Contracting State, or;b. 2.50 per cent of the
gross amount payable in respect of such operation of ships,whichever is lower.3. For the purposes of
clause (b) of paragraph 2 of this Article, the gross amount payable in respect
of the operation of ships shall mean the aggregate of the following amounts,
namely:a. the gross amount paid
or payable on account of the carriage of passengers, livestock, mail or goods
shipped at a port or ports in the other Contracting State;b. the gross amount
received in the other Contracting State on account of carriage of passengers,
livestock, mail or goods shipped at a port of the third country;c. interest arising in
the other Contracting State on funds connected with the operation of ships in
international traffic;d. the gross amount
payable on account of the use, maintenance or rent of containers (including trailers
and related equipments for the transport of containers) in connection with the
transport of goods or merchandise in international traffic.1.2.3.4. The provisions of
paragraphs 1 and 2 shall also apply to profits from the participation in a
pool, a joint business or an international operating agency engaged in the
operation of ships.5. For the purposes of
this Article:a. interest on funds
connected with the operation of ships in international traffic shall be
regarded as income from the operation of such ships and the provisions of
Article 12 shall not apply in relation to such interest; andb. income from the
operation of ships includes income derived from the use, maintenance or rental
of containers (including trailers and related equipments for the transport of
containers) in connection with the transport of goods or merchandise in
international traffic.ARTICLE
10ASSOCIATED
ENTERPRISEWhere
-a. an enterprise of a
Contracting State participates directly or indirectly in the management,
control or capital of an enterprise of the other Contracting State, 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
11DIVIDENDS1. Dividends paid by a
company which is resident of a Contracting State to a resident of the other
Contracting State may be taxed in that other State.2. However, such
dividends may also be taxed in the Contracting State of which the company
paying the dividends is a resident and according to the laws of that State, but
if the recipient is the beneficial owner of the dividends, the tax so charged
shall not exceed 15 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.3. The term
"dividends" as used in this Article means income from shares or other
rights, not being debt-claims, participating in profits, as well as income from
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 or a Contracting State, carries on business in the other
Contracting State of which the company paying the dividends is a resident,
through a permanent establishment situated therein or performs in that other
State independent personal services from a fixed base situated therein, and the
holding in respect of which the dividends are paid is effectively connected
with such permanent establishment or fixed base. In such case the provisions of
Article 7, or Article 15, as the case may be, shall apply.5. Where a company which
is a resident of a Contracting State derives profits or income from the other
Contracting State, that other State may not impose any tax on the dividends
paid by the company, except insofar as such dividends are paid to a resident of
that other State or so far as the holding in respect of which the dividends are
paid is effectively connected with a permanent establishment or a fixed base
situated in that other State, nor subject the company's undistributed profits
to a tax on the company's undistributed profits, even if the dividends paid or
the undistributed profits consist wholly or partly of profits or income arising
in such other State.ARTICLE
12INTEREST1. 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, if the recipient is the beneficial owner
of the interest, the tax so charged shall not exceed 15 per cent of the gross
amount of the interest.3. Notwithstanding the
provisions of paragraph 2,a. interest arising in a
Contracting State shall be exempt from tax in that State provided it is derived
and beneficially owned by:i. the Government, a
political subdivision or a local authority of the other Contracting State, orii. the Central Bank of
the other Contracting State;a.b. Interest arising in a
Contracting State shall be exempt from tax in that State if it is beneficially
owned by a resident of the other Contracting State and it is derived in
connection with a loan or credit extended or endorsed by:i. in the case of
Bulgaria, the Foreign Trade Bank to the extent such interest is attributable to
financing of exports and imports only;ii. in the case of India,
the Export-Import Bank of India (Exim Bank), to the extent such interest is
attributable to financing of exports and imports only;iii. any institution of a
Contracting State in charge of public financing of external trade;iv. any other person
provided that the loan or credit is approved by the Government of the first
mentioned Contracting State.1. The term
"interest" as used in this Article means income from debt-claims of
every kind, whether or not secured by mortgage and whether or not carrying a
right to participate in the debtor's profits, and in particular, income from
Government securities and income from bonds or debentures, including premiums
and prizes attaching to such securities, bonds or debentures. Penalty charges
for late payments shall not be regarded as interest for the purpose of this
Article.2. The provisions of
paragraphs 1 and 2 shall not apply if the beneficial owner of the interest,
being a resident of a Contracting State, carries on business in the other
Contracting State in which the interest arises, through a permanent
establishment situated therein, or performs in that other State independent
personal services from a fixed base situated therein, and the debt-claim in
respect of which the interest is paid is effectively connected with such
permanent establishment or fixed base. In such a case the provisions of Article
7 or Article 15, as the case may be, shall apply.3. Interest shall be
deemed to arise in a Contracting State when the payer is that Contracting State
itself, a political sub-division, a local authority thereof or a resident of
that State. Where, however, the person paying the interest, whether he is a
resident of a Contracting State or not, has in a Contracting State a permanent
establishment or a fixed base in connection with which the indebtedness on
which the interest is paid was incurred, and such interest is borne by such
permanent establishment or fixed base, then such interest shall be deemed to
arise in the Contracting State in which the permanent establishment or fixed
base is situated.4. Where, by reason of a
special relationship between the payer and the beneficial owner or between both
of them and some other person, the amount of the interest, having regard to the
debt claim for which it is paid, exceeds the amount which would have been
agreed upon by the payer and the beneficial owner in the absence of such
relationship, the provisions of this Article shall apply to the last mentioned
amount. In such 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
13ROYALTIES
AND FEES FOR TECHNICAL SERVICES1. Royalties and fees
for technical services arising in a Contracting State and paid to a resident of
the other Contracting State may be taxed in that other State.2. However, such
royalties and fees for technical services may also be taxed in the Contracting
State in which they arise, and according to the laws of that State, but if the
recipient is the beneficial owner of the royalties, or fees for technical
services, the tax so charged shall not exceed:a. 15 per cent of the
gross amount of the royalties relating to copyrights of literary, artistic or
scientific works, other than cinematograph films or films or tapes used for
radio or television broadcasting; andb. 20 per cent of the
gross amount of the royalties in all other cases or fees for technical
services.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 cinematograph films, or
films or tapes used for radio or television broadcasting, any patent, trade
mark, design or model, plan, secret formula or process, or for the use of, or
the right to use, industrial, commercial or scientific equipment, or for
information concerning industrial, commercial or scientific experience.4. The term "fees
for technical services" as used in this Article means payments of any
amount to any person other than payments to an employee of a person making
payments, in consideration for the services of a managerial, technical or
consultancy nature, including the provision of services of technical or other
personnel.5. The provisions of
paragraphs 1 and 2 shall not apply if the beneficial owner of the royalties or
fees for technical services, being a resident of a Contracting State, carries
on business in the other Contracting State in which the royalties or fees for
technical services arise, through a permanent establishment situated therein,
or performs in that other State independent personal services from a fixed base
situated therein, and the right, property or contract in respect of which the
royalties or fees for technical services are paid is effectively connected with
such permanent establishment or fixed base. In such case the provisions of
Article 7 or Article 15, as the case may be, shall apply.6. Royalties and fees
for technical services shall be deemed to arise in a Contracting State when the
payer is that State itself, a political sub-division, a local authority
thereof, or a resident of that State. Where, however, the person paying the
royalties or fees for technical services, whether he is a resident of a
Contracting State or not, has in a Contracting State a permanent establishment
or a fixed base in connection with which the liability to pay the royalties or
fees for technical services was incurred, and such royalties or fees for
technical services are borne by such permanent establishment or fixed base,
then such royalties or fees for technical services shall be deemed to arise in
the State in which the permanent establishment or fixed base is situated.ARTICLE
14CAPITAL
GAINS1. Gains derived by a
resident of a Contracting State from the alienation of immovable property
referred to in Article 6 and situated in the other Contracting State may be
taxed in that other State.2. Gains from the
alienation of movable property forming part of the business property of a
permanent establishment which an enterprise of a Contracting State has in the
other Contracting State or of movable property pertaining to a fixed base
available to a resident of a Contracting State in the other Contracting State
for the purpose of performing independent personal services, including such
gains from the alienation of such a permanent establishment (alone or together
with the whole enterprise) or of such fixed base, may be taxed in that other
State.3. Gains from the
alienation of ships or aircraft operated in international traffic or movable
property pertaining to the operation of such ships or aircraft shall be taxable
only in the Contracting State of which the alienator is resident.4. Gains from the
alienation of shares of the capital stock of a company the property of which consists
directly or indirectly principally of immovable property situated in a
Contracting State may be taxed in that State.5. Gains from the
alienation of shares, other than those mentioned in paragraph 4 of a company
which is a resident of a Contracting State may be taxed in that State.6. Gains from the
alienation of any property other than that mentioned in paragraphs 1, 2, 3, 4
and 5 shall be taxable only in the Contracting State of which the alienator is
a resident.ARTICLE
15INDEPENDENT
PERSONAL SERVICES1. Income derived by an
individual, who is a resident of a Contracting State from the performance of
professional services or other independent activities of a similar character
shall be taxable only in that State except in the following circumstances when such
income may also be taxed in the other Contracting State:a. if he has a fixed
base regularly available to him in the other Contracting State for the purpose
of performing his activities; in that case only so much of the income as is
attributable to that fixed base may be taxed in that other State; orb. if his stay in the
other Contracting State is for a period or periods amounting to or exceeding in
the aggregate 183 days in the relevant "previous year" or 'year of
income', as the case may be; in that case, only so much of the income as is
derived from his activities performed in that other State may be taxed in that
other State.1.2. The term
"professional services" includes independent scientific, literary,
artistic, educational or teaching activities, as well as the independent
activities of physicians, surgeons, lawyers, engineers, architects, dentists
and accountants.ARTICLE
16DEPENDENT
PERSONAL SERVICES1. Subject to the
provisions of Articles 17, 18, 19, 20, 21 and 22, salaries, wages and other
similar remuneration derived by a resident of a Contracting State in repect of
an employment shall be taxable only in that State unless the employment is
exercised in the other Contracting State. If the employment is so exercised,
such remuneration as is derived therefrom may be taxed in that other State.2. Notwithstanding the
provisions of paragraph 1, remuneration derived by a resident of a Contracting
State in respect of an employment exercied 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 relevant "previous year" or "year of
income", as the case may be; andb. the remuneration is
paid by, or on behalf of, an employer who is not a resident of the other State;
andc. the remuneration is
not borne by a permanent establishment or a fixed base which the employer has
in the other State.3. Notwithstanding the
preceding provisions of this Article, remuneration derived in respect of an
employment exercised aboard a ship or aircraft operated in international
traffic by an enterprise of a Contracting State may be taxed in that State.ARTICLE
17DIRECTORS'
FEESDirectors'
fees and similar payments derived by a resident of a Contracting State in his
capacity as 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
18INCOME
EARNED FROM ENTERTAINERS AND ATHLETES1. Notwithstanding the
provisions of Articles 15 and 16, income derived by a resident of a Contracting
State as an entertainer, such as a theatre, motion picture, radio or television
artiste, or a musician, or as an athlete, from his personal activities as such
exercised in the other Contracting State may be taxed in that other State.2. Where income in
aspect of personal activities exercised by an entertainer or athlete in his
capacity as such accrues not to the entertainer or athlete himself but to
another person, that income may, notwithstanding the provisions of Articles 7,
15 and 16, be taxed in the Contracting State, in which the activities of the
entertainer or athlete are exercised.3. Notwithstanding the
provisions of paragraph 1, income derived by an entertainer or an athlete who
is a resident of a Contracting State, from his personal activities as such,
exercised in the other Contracting State, shall be taxable only in the first
mentioned Contracting State, if the activities in the other Contracting State
are performed within the framework of cultural exchange between the two
Contracting States, or 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, 15 and 16, where income in respect of
personal activities exercised by an entertainer or an athlete in his capacity
as such in a Contracting State accrues not to the entertainer or athlete
himself but to another person, that income shall be taxable only in the other
Contracting State, if that other person is supported wholly or substantially
from the public funds of that other State, including any of its political
subdivisions or local authorities.ARTICLE
19REMUNERATIONS
AND PENSIONS IN RESPECT OF GOVERNMENT SERVICE1.a. Remuneration, other
than a pension, paid by a Contracting State or a political sub-division or a
local authority thereof to an individual in respect to services rendered to
that State or sub-division or authority shall be taxable only in that State;a.b. However, such
remuneration shall be taxable only in the other Contracting State if the
services are rendered in that other State and the individual is a resident of
that State, who:i. is a national of that
State; orii. did not become a
resident of that State solely for the purpose of rendering the services.1.2.a. Any pension paid by,
or out of funds, created by a Contracting State or a political sub-division or
a Contracting State or a political sub-division or a local authority thereof to
an individual in respect of services rendered to that State or sub-division or
authority shall be taxable only in that State;b. However, such pension
shall be taxable only in the other Contracting State if the individual is a
resident of, and a national of that other State.3. The provisions of
Articles 16, 17 and 20 shall apply to remuneration and pensions in respect of
services rendered in connection with a business carried on by a Contracting
State or a political sub-division or local authority thereof.ARTICLE
20NON-GOVERNMENT
PENSIONS AND ANNUITIES1. Any pension, other
than a pension referred to in Article 19, or any annuity derived by a resident
of a Contracting State from sources within the other Contracting State may be
taxed only in the first mentioned Contracting State.2. The term
"pension" means a periodic payment made in consideration of past
services or by way of compensation for injuries received in the course of
performance of services.3. The term
"annuity" means a stated sum payable periodically at stated times
during life or during a specified or ascertainable period of time, under an
obligation to make the payments in return for adequate and full consideration
in money or money's worth.ARTICLE
21PAYMENTS
RECEIVED BY STUDENTS AND APPRENTICES1. A student or business
apprentice who is or was a resident of one of the Contracting States
immediately before visiting the other Contracting State and who is present in
that State solely for the purpose of his education or training, shall be exempt
from tax in that other State on:a. payments made to him
by persons resident outside that other State for the purposes of his
maintenance, education or training; andb. remuneration from
employment in that other State, in an amount not exceeding Lv. 1500 or its
equivalent in Indian currency during any "previous year" or
"year of income", as the case may be, provided that such employment
is directly related to his studies or is undertaken for the purposes of his
maintenance.1.2. The benefits of this
Article shall extend only for such period of time as may be reasonable or
customarily required to complete the education or training undertaken, but in
no event shall any individual have the benefits of this Article, for more than
five consecutive years from the date of his first arrival in that other
Contracting State.ARTICLE
22PAYMENTS
RECEIVED BY PROFESSORS, TEACHERS AND RESEARCH SCHOLARS1. A professor or
teacher who is or was a resident of one of the Contracting States immediately
before visiting the other Contracting State for the purpose of teaching or
engaging in research, or both, at a university, college, school or other
approved institution in that other Contracting State shall be exempt from tax
in that other State on any remuneration for such teaching or research for a
period not exceeding two years from the date of his arrival in that other State.2. This paragraph shall
not apply to income from research if such research is undertaken primarily for
the private benefit of a specific person or persons.3. For the purpose of
this Article and Article 21, an individual shall be deemed to be a resident of
a Contracting State if he is resident in that Contracting State in the
"previous year" or the "year of income", as the case may
be, in which he visits the other Contracting State or in the immediately
preceding "previous year" or "year of income".4. For the purposes of
paragraph 1, "approved institution" means an institution which has
been approved or established by the competent authority of the concerned
Contracting State.ARTICLE
23OTHER
INCOME1. Subject to the
provisions of paragraphs 2 and 3 items of income of a resident of a Contracting
State, wherever arising, which are not expressly dealt with in the foregoing
Articles of this Convention shall be taxable only in that Contracting State.2. The provisions of
paragraph 1 shall not apply to income, other than income from immovable
property as defined in paragraph 2 of Article 6, if the recipient of such
income, being a resident of a Contracting State, carries on business in the
other Contracting State through a permanent establishment situated therein, or
performs in that other State independent personal services from a fixed base
situated therein, and the right or property in respect of which the income is
paid is effectively connected with such permanent establishment or fixed base.
In such case, the provisions of Article 7 or Article 15, as the case may be,
shall apply.3. Notwithstanding the
provisions of paragraphs 1 and 2, items of income of a resident of a
Contracting State not dealt with in the foregoing Articles of this Convention
and arising in the other Contracting State may be taxed in that other State.ARTICLE
24CAPITAL1. Capital represented
by immovable property referred to in Article 6, owned by a resident of a
Contracting State and situated in the other Contracting State, may be taxed in
that other State.2. Capital represented
by movable property forming part of the business property of a permanent
establishment which an enterprise of a Contracting State has in the other
Contracting State or by movable property pertaining to a fixed base available
to a resident of a Contracting State in the other Contracting State for the
purpose of performing independent personal services, may be taxed in that other
State.3. Capital represented
by ships or aircraft operated in international traffic and by movable property
pertaining to the operation of such ships or aircraft, shall be taxable only in
the Contracting State of which the enterprise owning such property is a
resident.4. All other elements of
capital of a resident of a Contracting State may be taxed in the Contracting
State in which such elements of capital are situated.ARTICLE
25ELIMINATION
OF DOUBLE TAXATION1. The laws in force in
either of the Contracting States shall continue to govern the taxation of
income or capital in the respective Contracting State except where provisions
to the contrary are made in this Convention.2. In both the
Contracting States, double taxation shall be avoided in the following manner:a. where a resident of a
Contracting State derives income or owns capital which, in accordance with the
provisions of this Convention, may be taxed in the other Contracting State, the
first mentioned State shall, subject to the provisions of sub-paragraph (b) of
this paragraph, exempt such income or capital from tax but may, in calculating
tax on the remaining income or capital of that person, apply the rate of tax
which would have been applicable if the exempted income or capital had not been
so exempted;b. Either of the
Contracting States when imposing taxes on its residents may include in the tax
base upon which such taxes are imposed the items of income which according to
the provisions of Articles 9, 11, 12 and 13 of this Convention may also be
taxed in the other State but shall allow as a deduction from the amount of tax
computed on such a base an amount equal to the tax paid in the other
Contracting State. Such deduction shall not, however, exceed that part of tax,
leviable by the first mentioned State, as computed before the deduction is
given, which is appropriate to the income which, in accordance with the provisions
of Articles 9, 11, 12 and 13 of this Convention may be taxed in the other
State.3. For the purposes of
sub-paragraph (b) of paragraphs 2 the term "tax paid in the other
Contracting State" shall be deemed to include any amount which would have been
payable as tax but for any relief by way of deduction allowed in computing the
taxable income or an exemption or a reduction of tax or otherwise under the
laws relating to taxation of income in force in that other Contracting State.ARTICLE
26NON-DISCRIMINATION1. The 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 and under the same conditions are or
may be subjected.2. The term
"nationals" means:a. All individuals
possessing the nationality of a Contracting State;b. All legal persons,
partnerships and associations deriving their status as such from the laws in
force in a Contracting State.3. 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 in the same circumstances or under the same conditions. This
provision shall not be construed as preventing a Contracting State from
charging the profits of a permanent establishment which an enterprise of the
other Contracting State has in the first mentioned State at a rate of tax which
is higher than that imposed on the profits of a similar enterprise of the first
mentioned Contracting State, nor as being not in accordance with the provisions
of paragraph 3 of Article 7 of this Convention.4. Nothing in this
Article shall be construed as obliging a Contracting State to grant to
non-residents of that State any personal allowances, reliefs, reductions and
deductions for taxation purposes which are by law available only to persons who
are so resident.5. Enterprises of a
Contracting State, the capital of which is wholly or partly owned or controlled
directly or indirectly, by one or more residents of the other Contracting
State, shall not be subjected in the first mentioned Contracting State to any
taxation or any requirement connected therewith which is other or more
burdensome than the taxation and connected requirements to which other similar
enterprises of that first mentioned State are or may be subjected in the same
circumstances and under the same conditions.6. In this Article the
term "taxation" means taxes which are subject of this Convention.ARTICLE
27MUTUAL
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 these States, present his case to the competent authority of the Contracting
State of which he is a resident. This case must be presented within three years
of the date of receipt of notice of the action which gives rise to taxation,
not in accordance with the Convention.2. The competent
authority shall endeavour, if the objection appears to it to be justified and
if it is not itself able to arrive at an appropriate solution, to resolve the
case by mutual agreement with the competent authority of the other 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 this 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
28EXCHANGE
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 insofar as the taxation thereunder is not contrary to
the Convention, in particular for the prevention of fraud or evasion of such
taxes. Any information received by a 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 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. The exchange of information
or documents shall be either on a routine basis or on request with reference to
particular case or both. The competent authorities of the Contracting States
shall agree from time to time on the list of the information or documents which
shall be furnished on a routine basis.3. In no case shall the
provisions of paragraph 1 be construed so as to impose on a 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 (ordre public).ARTICLE
29DIPLOMATIC
AND CONSULAR OFFICIALSNothing
in this Convention shall affect the fiscal privileges of diplomatic or consular
officials under the general rules of international law or under the provisions
of special agreements.ARTICLE
30ENTRY
INTO FORCE1. Each of the
Contracting States shall notify to the other the completion of the procedures
required by its law for the bringing into force of this Convention. This
Convention shall enter into force on the date of the latter of these
notifications and shall thereupon have effect:a. In India:i. in respect of income
arising in any previous year beginning on or after the first day of April next
following the calendar year in which the Convention enters into force; andii. in respect of capital
which is held on the last day of any previous year beginning on or after the
first day of April next following the calendar year in which the Convention
enter into force; anda.b. In Bulgaria:i. in respect of income
arising in any year of income beginning on or after the first day of January
next following the calendar year in which the Convention enters into force; andii. in respect of capital
which is held on the last day of any year of income beginning on or after the
first day of January next following the calendar year in which the Convention
enters into force.ARTICLE
31TERMINATIONThis
Convention shall remain in force indefinitely but either of the Contracting
States may, on or before the thirtieth day of June in any calendar year
beginning after the expiration of a period of five years from the date of its
entry into force, give to the other Contracting State through diplomatic
channels, written notice of termination. In such event, the Convention shall
cease to have effect:a.
In
India