Double Taxation
Avoidance AgreementIncome-tax Act, 1961:
Notification under section 90: Agreement between the Government of the Republic
of India and the Government of the People's Republic of China for the avoidance
of double taxation and the prevention of fiscal evasion with respect to taxes
on incomeNotification
No. 9747 (F. NO. 503/5/93-FTD), DATED 5-4-1995Whereas
the annexed Agreement between the Government of the Republic of India and the
Government of the People's Republic of China for the avoidance of double
taxation and the prevention of fiscal evasion with respect to taxes on income
has come into force on the 21st day of November, 1994 after the notification by
both the Contracting States to each other of the completion of the procedures
required under their laws for bringing into force of the said Agreement in
accordance with Article 28 of the said Agreement;Now,
therefore, in exercise of the powers conferred by section 90 of the Income-tax
Act, 1961 (43 of 1961), the Central Government hereby directs that all the
provisions of the said Agreement shall be given effect to in the Union of
India.ANNEXUREAGREEMENT
BETWEEN THE GOVERNMENT OF THE REPUBLIC OF INDIA AND THE GOVERNMENT OF THE
PEOPLE'S REPUBLIC OF CHINA FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE
PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOMEThe
Government of the Republic of India and the Government of the People's Republic
of China.Desiring
to conclude an Agreement for the avoidance of double taxation and the prevention
of fiscal evasion with respect to taxes on income.Have
agreed as follows:Article
1PERSONAL
SCOPEThis
Agreement shall apply to persons who are residents of one or both of the
Contracting States.Article
2TAXES
COVERED1. This Agreement shall
apply to taxes on income imposed on behalf of a Contracting State or of its
political sub-divisions or local authorities, irrespective of the manner in
which they are levied.2. There shall be
regarded as taxes on income, all taxes imposed on total income, or on elements
of income, including taxes on gains from the alienation of movable or immovable
property, as well as taxes on capital appreciation.3. The existing taxes to
which the Agreement shall apply are:a. In China:i.
the
individual income-tax;ii.
the
income-tax for enterprises with foreign investment and foreign enterprises;iii.
the
local income-tax; (hereinafter referred to as " Chinese Tax ").a.b. In India:The income-tax including any surcharge thereon; (hereinafter referred to as
" Indian Tax ").4.
This
Agreement shall also apply to any identical or substantially similar taxes
which are imposed after the date of signature of this Agreement in addition to,
or in place of, the existing taxes referred to in paragraph 3.The
competent authorities of the Contracting States shall notify each other of any
substantial changes which have been made in their respective taxation laws
within a reasonable period of time after such changes.Article
3GENERAL
DEFINITIONS1. For the purposes of
this Agreement, unless the context otherwise requires:a. the term " China
" means the People's Republic of China; when used in geographical sense,
means all the territory of the People's Republic of China, including its
territorial sea, in which the Chinese laws relating to taxation apply, and any area
beyond its territorial sea, within which the People's Republic of China has
sovereign rights of exploration for any exploitation of resources of the
sea-bed and its sub-soil and superjacent water resources in accordance with
inter-national law;b. the term " India
" means the territory of the Republic 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 jurisdictions, according to
the Indian law and in accordance with international law;c. the terms " a
Contracting State " and " the other Contracting State " mean
China or India as the context requires;d. the term " tax
" means Chinese tax or Indian tax, as the context requires;e. 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;f. the term "
company " means any body corporate or any entity which is treated as a
body corporate for tax purposes;g. the terms "
enterprise of a Contracting State " and " enterprise of the other
Contracting State " mean, respectively, and enterprise carried on by a
resident of a Contracting State and an enterprise carried on by a resident of
the other Contracting State;h. the term "
nationals " means any individual possessing the nationality of a
Contracting State and any legal person, partnership or association deriving its
status from the laws in force in the Contracting State:i. the term "
international traffic " means any transport by a ship or aircraft operated
by an enterprise which is a resident of a Contracting State, except when the
ship orcraft is operated solely between places in the other Contracting State;j. the term "
competent authority " means, in the case of China, the State
Administration of Taxation or its authorized representative, and in the case of
India, the Central Government in the Ministry of Finance (Department of
Revenue) or their authorized representative.1.2. As regards the
application of this Agreement by a Contracting State, any term not defined
therein shall, unless the context otherwise requires, have the meaning which it
has under the laws of that Contracting State concerning the taxes to which this
Agreement applies.Article
4RESIDENT1. For the purposes of
this Agreement, the term " resident of a Contracting State " means
any person who, under the laws of that Contracting State, is liable to tax
therein by reason of his domicile, residence, place of head office 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 Contracting State in which he has a permanent home
available to him; if he has a permanent home available to him in both
Contracting States, he shall be deemed to be a resident of the Contracting
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 Contracting 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 Contracting States or in neither of them, he shall be deemed to
be a resident of the Contracting State of which he is a national;d. If he is a national
of both Contracting 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
Contracting State in which its head office is situated.Article
5PERMANENT
ESTABLISHMENT1. For the purposes of
this Agreement, the term "permanent establishment" means a fixed
place of business through which the business of an enterprise is wholly or
partly carried on.2. The term "permanent
establishment" 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. a farm, plantation or
other place where agriculture, forestry, plantation or related activities are
carried on;i. an installation or
structure used for the exploration or exploitation of natural resources, but
only if so used for a period of more than 183 days;j. a building site or
construction, installation or assembly project or supervisory activities in
connection therewith, where such site, project or activities (together with
other such sites, projects or activities, if any) continue for a period of more
than 183 days;k. the furnishing of
services other than technical services as defined in Article 12 (Royalties and
Fees for Technical Services), by an enterprise of a Contracting State through
employees or other personnel in the other Contracting State, but only if
activities of that nature continue within that other Contracting State for a
period or periods aggregating more than 183 days.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, display or delivery 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, display or delivery;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.1.2.3.4. Notwithstanding the
provisions of paragraphs 1 and 2, where a person other than an agent of an
independent status to whom the provisions of paragraph 5 apply--is acting in a
Contracting State on behalf of an enterprise of the other Contracting State,
has and habitually exercises an authority to conclude contracts in the name of
the enterprise, that enterprise shall be deemed to have a permanent
establishment in the first-mentioned Contracting State in respect of any
activities which that person undertakes for the enterprise, 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.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
Contracting State through a broker, general commission agent or any other agent
of an independent status, provided that such persons are acting in the ordinary
course of their business. However, when the activities of such an agent are
devoted wholly or almost wholly on behalf of that enterprise, he will not be
considered an agent of an independent status within the meaning of this
paragraph.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 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 situated in the other
Contracting State may be taxed in that other Contracting 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 Contracting
State unless the enterprise carries 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 Contracting State but only so much of them as is directly or indirectly
attributable to that permanent establishment. The provisions of this paragraph
shall, however, not apply if the enterprise proves that the above activities
could not have been undertaken by the permanent establishment or have no
relation with the 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. Insofar as the tax
law of a Contracting State provides with respect to a specific business
activity that the profits to be attributed to a permanent establishment are to
be determined on the basis of a deemed profit, nothing in paragraph 2 shall
preclude that Contracting State from applying those provisions of its law,
provided that the result is in accordance with the principles contained in this
Article.4. In determining 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 Contracting State in which the permanent establishment
is situated or elsewhere in accordance with the provisions of tax law of that
Contracting State.5. 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.6. For the purposes of
paragraphs 1 to 5, the profits to be attributed to the permanent establishment
shall be determined by the same method year by year unless there is good and
sufficient reason to the contrary.7. Where profits include
items of income which are dealt with separately in other Articles of this
Agreement, then the provisions of those Articles shall not be affected by the
provisions of this Article.Article
8SHIPPING
AND AIR TRANSPORT1. Profits derived by an
enterprise which is a resident of a Contracting State from the operation by
that enterprise of ships or aircraft in international traffic shall be taxable
only in that Contracting State.2. For the purposes of
this Article, profits from the operation of ships or aircraft in international
traffic shall mean profits derived by an enterprise described in paragraph 1
from the transportation by sea or air respectively of passengers, mail,
livestock or goods carried on by the owners or lessees or charterers of ships
or aircraft including:a. the sale of tickets
for such transportation;b. the rental of ships
or aircraft connected with such transportation; andc. income from use,
maintenance, or rental of containers (including traders barges, and related
equipment for the transport of containers) operated in international traffic.1.2.3. For the purposes of
this Article, interest on funds directly connected with the operation of ships
or aircraft in international traffic shall be regarded as profits described in
this Article, and the provisions of Article 11 (interest) shall not apply in
relation to such interest.4. The provisions of
paragraph 1 shall also apply to profits from the participation in a pool, a
joint business or an international operating agency.Article
9ASSOCIATED
ENTERPRISES1. Where-a. an enterprise of a
Contracting State participates directly or indirectly in the management,
control or capital of an enterprise of the other Contracting State, 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.2. Where a Contracting
State includes in the profits of an enterprise of that Contracting State--and
taxes accordingly--profits on which an enterprise of the other Contracting
State has been charged to tax in that other Contracting State, and the profits
so included are profits which would have accrued to the enterprise of the
first-mentioned Contracting State if the conditions made between the two
enterprises had been those which would have been made between independent
enterprises, then that other State shall make an appropriate adjustment to the
amount of tax charged therein on those profits. In determining such adjustment,
due regard shall be had to the other provisions of this Agreement and the
competent authorities, of the Contracting States shall, if necessary, consult
each other.Article
10DIVIDENDS1. Dividends paid by a
company which is a resident of a Contracting State to a resident of the other
Contracting State, Contracting State may be taxed in that other Contracting
State.2. However, such
dividends may also be taxed in the Contracting State owner of the dividends the
tax so charged shall not exceed 10 per cent of the gross amount of the
dividends. The provisions of this paragraph shall not affect the taxation of
the company in respect of the profits out of which the dividends are paid.3. The term
"dividends" as used in this Article means income from shares, or
other rights, not being debt claims, participating in profits, as well as
income from other corporate rights which is subjected to the same taxation
treatment as income from shares by the laws of the State of which the company
making the distribution is a resident.4. The provisions of
paragraphs 1 and 2 shall not apply if the beneficial owner of the dividends,
being a resident of a Contracting State, carries on business in the other
Contracting State of which the company paying the dividends is a resident,
through a permanent establishment situated therein, or performs in that either
Contracting State independent personal services from a fixed base situated
therein, and the holding in respect of which the dividends are paid is
effectively connected with such permanent establishment or fixed base, in such
case the provisions of Article 7 or Article 14, as the case may be, shall
apply.5. Where a company which
is a resident of a Contracting State derives profits or income from the other
Contracting State, that other Contracting 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 Contracting State or insofar 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 Contracting 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 Contracting
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 Contracting State.2. However, such
interest may also be taxed in the Contracting State in which it arises and
according to the laws of that Contracting State, but if the recipient is the
beneficial owner of the interest the tax so charged shall not exceed 10 per
cent of the gross amount of the interest.3. Notwithstanding the
provisions of paragraph 2, interest arising in a Contracting State and derived
by the Government of the other Contracting State, a political sub-division, a
local authority and the Central Bank thereof or any financial institution
wholly owned by that Government, or by any other resident of that other
Contracting State with respect to debt claims indirectly financed by the
Government of that other Contracting State, a political sub-division, a local
authority, and the Central Bank thereof or any financial institution wholly
owned by that Government shall be exempt from tax in the first-mentioned
Contracting State.4. The term
"interest" as used in this Article means income from debtclaims of
every kind, whether or not secured by mortgage and whether or not carrying a
right to participate in the debtor's profits, and in particular, income from
Government securities and income from bonds or debentures, including premiums
and prizes attaching to such securities, bonds or debentures. Penalty charges
for late payment shall not be regarded as interest for the purpose of this
Article.5. The provisions of
paragraphs 1 and 2 shall not apply if the beneficial owner of the interest,
being a resident of a Contracting State, carries on business in the other
Contracting State in which the interest arises, through a permanent
establishment situated therein, or performs in that other Contracting State
independent personal services from a fixed base situated therein, and the
debt-claim in respect of which the interest is paid is effectively connected
with such permanent establishment or fixed base. In such case the provisions of
Article 7 or Article 14, as the case may be, shall apply.6. Interest shall be
deemed to arise in a Contracting State when the payer is the Government of that
Contracting State, a political sub-division, a local authority thereof or a
resident of that Contracting 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.7. Where, by reason of a
special relationship between the payer and the beneficial owner or between both
of them and some other person, the amount of the interest, having regard to the
debt-claim for which it is paid, exceeds the amount which would have been
agreed upon by the payer and the beneficial owner in the absence of such
relationship, the provisions of this Article shall apply only to the
last-mentioned amount. In such case, the excess part of the payments shall
remain taxable according to the laws of each Contracting State, due regard
being had to the other provisions of this Agreement.Article
12ROYALTIES
AND FEES FOR TECHNICAL SERVICES1. Royalties or fees for
technical services arising in a Contracting State and paid to a resident of the
other Contracting State may be taxed in that other Contracting State.2. However, such
royalties or fees for technical services may also be taxed in the Contracting
State in which they arise, and according to the laws of that Contracting State,
but if the recipient is the beneficial owner of the royalties or fees for
technical services, the tax so charged shall not exceed 10 per cent of the
gross amount of the royalties or fees for technical services.3. The term "
royalties " as used in this Article means payment 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 and films or tapes
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 any payment for the
provision of services of managerial, technical or consultancy nature by a
resident of a Contracting State in the other Contracting State, but does not
include payment for activities mentioned in paragraph 2(k) of Article 5 and
Article 15 of the Agreement.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 Contracting 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 14, as the case may be, shall apply.6. Royalties or fees for
technical services shall be deemed to arise in a Contracting State when the
payer is the Government of that Contracting State, a political sub-division, a
local authority thereof or a resident of that Contracting 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 Contracting State in which the permanent establishment or fixed
based is situated.7. Where, by reason of a
special relationship between the payer and the beneficial owner or between both
of them and some other person, the amount of the royalties or fees for
technical services, having regard to the use, right or information for which
they are paid, exceeds the amount which would have been agreed upon by the
payer and the beneficial owner in the absence of such relationship, the
provisions of this Article shall apply only to the last-mentioned amount. In
such case, the excess part of the payments shall remain taxable according to
the laws of each Contracting State, due regard being had to the other
provisions of this Agreement.Article
13CAPITAL
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 Contracting State.2. Gains from the
alienation of movable property forming part of 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 a fixed base, may be taxed in that other
Contracting State.3. Gains from the
alienation of ships or aircraft operated in international traffic or movable
property pertaining to the operation of such ships or aircraft shall be taxable
only in the Contracting State of which the alienator is a resident.4. Gains from the
alienation of shares of the capital stock of a company the property of which
consists directly or indirectly principally of immovable property situated in a
Contracting State may be taxed in that Contracting State.5. Gains from the
alienation of any property other than that referred to in the preceding
paragraphs of this Article, arising in a Contracting State, may be taxed in
that Contracting State.Article
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 Contracting State
except in one of 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 Contracting State;b. if his stay in the
other Contracting State is for a period or periods exceeding in the aggregate
183 days in the taxable year concerned; in that case, only so much of the
income as is derived from his activities performed in that other Contracting
State may be taxed in that other Contracting State.2. The term "professional
services" includes especially independent scientific, literary, artistic,
educational or teaching activities as well as the independent activities of
physicians, lawyers, engineers, architects, dentists and accountants.Article
15DEPENDENT
PERSONAL SERVICES1. Subject to the
provisions of Articles 16, 18, 19, 20 and 21, 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 Contracting 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
Contracting State.2. Notwithstanding the
provisions of paragraph 1, remuneration derived by a resident of a Contracting
State in respect of an employment exercised in the other Contracting State
shall be taxable only in the firstmentioned State if:a. the recipient is
present in the other Contracting State for a period or periods not exceeding in
the aggregate 183 days in the taxable year concerned;b. the remuneration is
paid by, or on behalf of, an employer who is not a resident of the other
Contracting State; andc. the remuneration is
not borne by a permanent establishment or a fixed base which the employer has in
the other Contracting State.1.2.3. Notwithstanding the
provisions of paragraphs 1 and 2 of this Article, remuneration derived in
respect of an employment exercised aboard a ship or aircraft operated by an
enterprise which is a resident of a Contracting State in international traffic
shall be taxable only in that Contracting State.Article
16DIRECTORS'
FEESDirectors'
fees and other 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 resident
of the other Contracting State may be taxed in that other Contracting State.Article
17ARTISTES
AND SPORTSPERSONS1. Notwithstanding the
provisions of Articles 14 and 15, income derived by a resident of a Contracting
State as an entertainer, such as a theatre, motion picture, radio or television
artiste, or a musician, or as a sportsperson, from his personal activities as
such exercised in the other Contracting State, may be taxed in that other
Contracting State.2. Where income in
respect of personal activities exercised by an entertainer or a sportsperson in
his capacity as such accrues not to the entertainer or sportsperson 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 sportsperson are exercised.3. Notwithstanding the
provisions of paragraphs 1 and 2, income derived by entertainers or
sportspersons who are residents of a Contracting State from the activities exercised
in the other Contracting State either as a part of cultural exchange between
the Contracting States or supported wholly or substantially from the public
funds in either of the Contracting States or political sub-divisions or local
authorities thereof, shall be exempt from tax in that other Contracting State.Article
18PENSIONS1. Subject to the
provisions of paragraph 2 of Article 19, pensions, annuity and other similar
remuneration paid to a resident of a Contracting State in consideration of past
employment shall be taxable only in that Contracting State.2. Notwithstanding the
provisions of paragraph 1, pensions, annuity paid and other similar payments
made by the Government of a Contracting State or a political sub-division or a
local authority thereof under a public welfare scheme of the social security
system of that Contracting State shall be taxable only in that Contracting
State.Article
19REMUNERATION
AND PENSIONS IN RESPECT OF GOVERNMENT SERVICES1.a. Remuneration, other
than pension, paid by the Government of a Contracting State or a political
sub-division or a local authority thereof to an individual in respect of
services rendered to the Government of that Contracting State or a political
sub-division or a local authority thereof, in the discharge of functions of a
governmental nature, shall be taxable only in that Contracting State.b. However, such
remuneration shall be taxable only in the other Contracting State if the
services are rendered in that other Contracting State and the individual is a
resident of that other Contracting State who:i. is a national of that
other Contracting State;ii. did not become a
resident of that other Contracting State solely for the purpose of rendering
the services.1.2.a. Any pension paid by,
or out of funds to which contributions are made by the Government of a
Contracting State or a political sub-division or a local authority thereof to
an individual in respect of services rendered to the Government of that
Contracting State or a political sub-division or a local authority thereof
shall be taxable only in that Contracting 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 Contracting State.1.2.3. The provisions of
Articles 15, 16, 17 and 18 shall apply to remuneration and pensions in respect
of services rendered in connection with a business carried on by the Government
of a Contracting State or a political sub-division or a local authority
thereof.Article
20PAYMENTS
RECEIVED BY PROFESSORS, TEACHERS AND RESEARCH SCHOLARS1. An individual who is,
or immediately before visiting a Contracting State was, a resident of the other
Contracting State and is present in the first-mentioned Contracting State for
the primary purpose of teaching, giving lectures or conducting research at a
university, college, school or educational institution or scientific research
institution approved by the Government of the first-mentioned Contracting State
shall be exempt from tax in the first-mentioned Contracting State, for a period
of three years from the date of his first arrival in the first-mentioned
Contracting State, in respect of remuneration for such teaching, lectures or
research.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
21PAYMENTS
RECEIVED BY STUDENTS, TRAINEES AND APPRENTICES1. A student, business
apprentice or trainee 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, training shall
be exempt from tax in that first-mentioned State on the following payments or
income received or derived by him for the purpose of his maintenance, education
or training:a. payments derived from
sources outside that Contracting State for the purpose of his maintenance,
education, study, research or training;b. grants, scholarships
or awards supplied by the Government, or a scientific, educational, cultural or
other tax-exempt organization; andc. income derived from
personal services performed in that Contracting State for the purpose of
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 Contracting State.Article
22OTHER
INCOME1. Items of income of a
resident of a Contracting State, wherever arising, not dealt with in the
foregoing Articles of this Agreement 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 Contracting State independent personal services from a
fixed base situated therein, and the right or property in respect of which the
income is paid is effectively connected with such permanent establishment or
fixed base. In such case the provisions of Article 7 or Article 14, as the case
may be, shall apply.3. Notwithstanding the
provisions of paragraphs 1 and 2, items of income of a resident of a
Contracting State not dealt with in the foregoing Articles of this Agreement
and arising in the other Contracting State may be taxed in that other
Contracting State.Article
23METHODS
FOR THE ELIMINATION OF DOUBLE TAXATION1. In China, double
taxation shall be eliminated as follows:a. Where a resident of
China derives income from India the amount of tax on that income payable in
India in accordance with the provisions of this Agreement, may be credited
against the Chinese tax imposed on that resident. The amount of credit,
however, shall not exceed the amount of the Chinese tax on that income computed
in accordance with the taxation laws and regulations of China.b. Where the income
derived from India is a dividend paid by a company which is a resident of India
to a company which is a resident of China and which owns not less than 10 per
cent of the shares of the company paying the dividend, the credit shall take
into account the tax paid to India by the company paying the dividend in
respect of its income.1.2. In India, double
taxation shall be eliminated as follows:Where
a resident of India derives income which, in accordance with the provisions of
this Agreement, may be taxed in China, India shall allow as a deduction from
the tax on the income of that resident an amount equal to the income-tax paid
in China whether directly or by deduction. Such deduction shall not, however,
exceed that part of the income-tax (as computed before the deduction is given)
which is attributable, as the case may be, to the income which may be taxed in
China.3.
The
tax paid in a Contracting State mentioned in paragraphs 1 and 2 of this Article
shall be deemed to include the tax which would have been payable but for the
legal provisions concerning tax reduction, exemption or other tax incentives of
the Contracting States for the promotion of economic development.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 Contracting 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
Contracting State than the taxation levied on enterprises of that other
Contracting State carrying on the same activities in the same circumstances or
under the same conditions.3. Where a Contracting
State charges the profits of a permanent establishment which an enterprise of
the other Contracting State has in the first-mentioned Contracting State at a
rate of tax which is different from that imposed on the profits of a similar
enterprise of the first-mentioned Contracting State, it shall not be construed
as discrimination under this Article.4. Nothing contained in
this Article shall be construed as obliging a Contracting State to grant to
residents of the other Contracting State any personal allowances, reliefs and
deductions for taxation purposes on account of civil status or family
responsibilities which it grants to its own residents.5. Except where the
provisions of paragraph 1 of Article 9, paragraph 7 of Article 11, or paragraph
7 of Article 12, apply, interest, royalties and other disbursements paid by an
enterprise of a Contracting State to a resident of the other Contracting State
shall, for the purpose of determining the taxable profits of such enterprise,
be deductible under the same conditions as if they had been paid to a resident
of the first-mentioned State subject to the provisions of domestic laws of that
Contracting State.6. Enterprises of a
Contracting State, the capital of which is wholly or partly owned or
controlled, directly or indirectly, by one or more residents of the other Contracting
State, shall not be subjected in the first-mentioned State to any taxation or
any requirement connected therewith which is other or more burdensome than the
taxation and connected requirements to which other similar enterprises of the
first-mentioned State are or may be subjected in the same circumstances and
under the same conditions.7. In this Article, the
term "taxation" means taxes which are the subject of this Agreement.Article
25MUTUAL
AGREEMENT PROCEDURE1. Where a person
considers that the actions of one or both of the Contracting States result or
will result for him in taxation not in accordance with the provisions of this
Agreement, he may, irrespective of the remedies provided by the domestic law of
those States, present his case to the competent authority of the Contracting
State of which he is a resident or, if his case comes under paragraph 1 of
Article 24, to that of the Contracting State of which he is a national. The
case must be presented within three years from the first notification of the
action resulting in taxation not in accordance with the provisions of the
Agreement.2. The competent
authority shall endeavour, if the objection appears to it to be justified and
if it is not itself able to arrive at a satisfactory solution, to resolve the
case by mutual agreement with the competent authority of the other Contracting
State, with a view to the avoidance of taxation which is not in accordance with
the provisions of this Agreement. Any agreement reached shall be implemented
notwithstanding any time limits in the domestic law of the Contracting States.3. The competent
authorities of the Contracting States shall endeavour to resolve by mutual
agreement any difficulties or doubts arising as to the interpretation or
application of the Agreement. They may also consult together for the
elimination of double taxation in cases not provided for in this Agreement.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 paragraphs 2 and 3. When it
seems advisable for reaching agreement, representatives of the competent
authorities of the Contracting States may meet together for an oral exchange of
opinions.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 this
Agreement or of the domestic laws of the Contracting States concerning taxes
covered by the Agreement, insofar as the taxation thereunder is not contrary to
this Agreement, in particular for the prevention of evasion of such taxes. The
exchange of information is not restricted by Article 1. Any information
received by a Contracting State shall be treated as secret and shall be
disclosed only to persons or authorities (including courts and administrative
bodies) involved in the assessment or collection of, the enforcement or
prosecution in respect of, or the determination of appeals in relation to, the
taxes covered by the Agreement. Such persons or authorities shall use the
information only for such purposes. They may disclose the information in public
court proceedings or in judicial decisions.2. In no case shall the
provisions of paragraph 1 be construed so as to impose on a Contracting State
the obligation:a. to carry out
administrative measures at variance with the laws and administrative practice of
that or of the other Contracting State;b. to supply information
or documents which is not obtainable under the laws or in the normal course of
the administration of that or of the other Contracting State; andc. 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 (order public).Article
27DIPLOMATIC
AGENTS AND CONSULARS OFFICERSNothing
in this Agreement 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 FORCEThis
Agreement shall enter into force on the thirtieth day after the date on which
diplomatic notes indicating the completion of internal legal procedures
necessary in each country for the entry into force of this Agreement have been
exchanged. This Agreement shall have effect:a. in China, in respect
of income arising in any taxable year beginning on or after the first day of
January next following the calendar year in which this Agreement enters into
force;b. in India, 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 this Agreement enters into
force.Article
29TERMINATIONThis
Agreement shall remain in force indefinitely but either of the Contracting
States may, on or before the thirtieth day of June in any calendar year
beginning after the expiration of a period of five years from the date of its
entry into force, give written notice of termination to the other Contracting
State through the diplomatic channels. In such event this Agreement shall cease
to have effect:a. in China, in respect
of income arising in any taxable year beginning on or after the first day of
January next following the calendar year in which the notice of termination is
given;b. in India, 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 notice is given.In
witness whereof, the undersigned, being duly authorized thereto, have signed
the present Agreement.Done
in duplicate at New Delhi on this eighteenth day of July one thousand nine
hundred and ninety-four in the Hindi, Chinese and English languages, all three
texts being equally authentic. In case of any divergence, the English text
shall prevail.-Sd-
-Sd-For
the Government of the For the Government of theRepublic
of India People's Republic of ChinaPROTOCOLAt
the signing of the Agreement between the Government of the Republic of India
and the Government of the People's Republic of China for the Avoidance of
Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on
Income (hereinafter referred to as " The Agreement ") both sides have
agreed upon the following provisions which form an integral part of the Agreement:1.
With
reference to paragraph (1d) of Article 3:It
is understood that the term "tax" should not include any penalty
imposed for non-compliance of the laws and regulations relating to the taxes to
which this Agreement applies.1.2. With reference to
Article 8, the exemption shall also include:i.
In
China, the business tax;ii.
In
India, any tax similar to the business tax in China which may be imposed in