Double Taxation
Avoidance Agreement(formerly
Czechoslovakia)Income-tax Act, 1961:
Notification under section 90: Convention between the Government of the
Republic of India and the Government of the Czech Republic 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. 811(E), dtd. 8th December, 1999Whereas
the annexed Convention between the Government of the Republic of India and the
Government of the Czech Republic 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 27th day of September, 1999, on the notification by
both the Contracting States of each other, under article 30 of the said
Convention, of the completion of the procedures required under their respective
laws for bringing into force of the said Convention;Now,
therefore, in exercise of the powers conferred by section 90 of the Income-tax
Act, 1961(43 of 1961) and section 44A of the Wealth-tax Act, 1957 (27 of 1957),
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 CZECH
REPUBLIC 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 Czech Republic
desiring to conclude a Convention for the avoidance of double taxation and the
prevention of fiscal evasion with respect to taxes on income and on capital and
with a view to promoting economic co-operation between the two countries, 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. This Convention shall
apply to taxes on income and on capital 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 and on capital all taxes imposed on total income,
on total capital, or on elements of income, or capital, including taxes on
gains from the alienation of movable or immovable property, and taxes on the
total amounts of wages or salaries paid by enterprises, as well as taxes on
capital appreciation.3. The existing taxes to
which the Convention shall apply are in particular:a. In India:i.
The
income-tax, including any surcharge thereon;ii.
The
wealth-tax;(hereinafter
referred to as "Indian tax").a.b. In the Czech
Republic:i.
The
tax on income of individuals;ii.
The
tax on income of legal persons;iii.
The
tax on immovable property;(hereinafter
referred to as "Czech tax").4.
The
Convention shall apply also to any identical or substantially similar taxes
which are imposed after the date of signature of the Convention in addition to,
or in place of, the existing taxes referred to in paragraph 3. The competent
authorities of the Contracting States shall notify each other of significant
changes which have been made in their respective taxation laws.Article
3GENERAL
DEFINITIONS1. For the purposes of
this Convention, unless the context otherwise requires:a. The term
"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 law
and in accordance with the international law, including the U.N. Convention on
the Law of the Sea;b. The term "the
Czech Republic" means the territory of the Czech Republic over which,
under Czech legislation and in accordance with international law, the sovereign
rights of the Czech Republic are exercised;c. The term
"person" includes an individual, a company, a body of persons and any
other entity which is treated as a taxable unit under the taxation laws in
force in the respective Contracting States;d. The term
"company" means any body corporate or any entity which is treated as
a body corporate for tax purposes;e. The terms
"enterprise of a Contracting State" and "enterprise of the other
Contracting State" mean respectively an enterprise carried on by a resident
of a Contracting State and an enterprise carried on by a resident of the other
Contraction State;f. 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 or aircraft is operated solely between places in the other
Contracting State;g. The term
"competent authority" means:i.
In
India: the Central Government in the Ministry of Finance (Department of
Revenue) or their authorised representative;ii.
In
the Czech Republic, the Ministry of Finance or his authorised representative;a.b.c.d.e.f.g.h. The term
"national" means:i.
Any
individual possessing the nationality of Contracting State;ii.
Any
legal person, partnership or association deriving its status as such from the
laws in force in a Contracting State;a.b.c.d.e.f.g.h.i. The term "fiscal
year" means:i.
In
the case of India, "previous year" as defined under section 3 of the
Income-tax Act, 1961;ii.
In
the case of Czech Republic, "calendar year";a.b.c.d.e.f.g.h.i.j. The term
"tax" means Indian tax or Czech 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 or fine imposed relating to those taxes.k. The terms "a
Contracting State" and "the Contracting State" mean the Republic
of India or the Czech Republic as the context requires.2. As regards the
application of the Convention by a Contracting State any term not defined
therein shall, unless the context otherwise requires, have the meaning which it
has under the law of that State concerning the taxes to which the Convention
applies.Article
4RESIDENT1. For the purposes of
this Convention, the term "resident of a Contracting State" means any
person who, under the laws of that State is liable to tax therein by reason of
his domicile, residence, place of management or any other criterion of a
similar nature. But this term does not include any person who is liable to tax
in that State in respect only of income from sources in that State or capital
situated therein.2. Where by reason of
the provisions of paragraph 1 an individual is a resident of both Contracting
States, then his status shall be determined as follows:a. He shall be deemed to
be a resident of the State in which he has a permanent home available to him;
if he has a permanent home available to him in both States, he shall be deemed
to be a resident of the State with which his personal and economic relations
are closer ('centre of vital interest");b. If the State in which
he has his centre of vital interests cannot be determined, or if he has not a
permanent home available to him in either State, he shall be deemed to be a
resident of the State in which he has an habitual abode;c. If he has an habitual
abode in both States or in neither of them, he shall be deemed to be a resident
of the Stat of which he is a national;d. If he is a national
of both States or of neither of them, the competent authorities of the
Contracting States shall settle the question by mutual agreement.3. Where by reason of
the provisions of paragraph 1 a person other than an individual is a resident
of the State in which its place of effective management is situated. If the
State in which its place of effective management is situated cannot be
determine, then the competent authorities of the Contracting States shall
settle the question by mutual agreement.Article
5PERMANENT
ESTABLISHMENT1. For the purposes of
this Convention the term "permanent establishment" means a fixed
place of business through which the business of an enterprise is wholly or
partly carried on.2. The term
"permanent establishment" includes especially:a. A place of
management;b. A branch;c. An office;d. A factory;e. A workshop;f. A mine, an oil or gas
well, a quarry or any other place of extraction of natural resources;g. A sales outlet;h. A warehouse in
relation to a person providing storage facilities for others; andi. A farm, plantation or
other place where agricultural, forestry, plantation or related activities are
carried on.3. A building site or
construction, assembly or installation project or supervisory activities in
connection therewith constitute a permanent establishment only if such site,
project or activities last more than six months.4. Notwithstanding the
preceding provisions of this article, the term "permanent
establishment" shall be deemed not to include:a. The use of facilities
solely for the purpose of storage or display of goods or merchandise belonging
to the enterprise;b. The maintenance of a
stock of goods or merchandise belonging to the enterprise solely for the
purpose of storage or display;c. The maintenance of a
stock of goods or merchandise belonging to the enterprise solely for the
purpose of processing by another enterprise;d. The maintenance of a
fixed place of business solely for the purpose of purchasing goods or
merchandise or of collecting information, for the enterprise;e. The maintenance of a
fixed place of business solely for the purpose of carrying on, for the
enterprise, any other activity of a preparatory or auxiliary character.f. The maintenance of a
fixed place of business solely for any combination of activities mentioned in
sub-paragraphs (a) to (e), provided that the overall activity of the fixed
place of business resulting from this combination is of a preparatory or
auxiliary character.5. Notwithstanding the
provisions of paragraphs 1 and 2, where a person other than an agent of an
independent status to whom paragraph 7 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 in respect of any activities which that person undertakes for
the enterprises, if such a person:a. Has and habitually
exercises in that State an authority to conclude contracts in the name of the
enterprise, unless the activities of such person are limited to those mentioned
in paragraph 4 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; orb. 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.6. Notwithstanding the
preceding provisions of this article an insurance enterprise of a Contracting
State shall, except in regard to re-insurance, be deemed to have a permanent
establishment in the other Contracting State if it collects premiums in the
territory of that other State or insures risks situated therein through a
person other than an agent of an independent status to whom paragraph 7
applies.7. An enterprise shall
not be deemed to have a permanent establishment in a Contracting State merely
because it carries on business in that 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, ha will not be considered an agent of an independent status
within the meaning of this paragraph.8. 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 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 also be
taxed in that other State.2. The term
"immovable property" shall have the meaning which it has under the
law of the Contracting State in which the property in question is situated. The
term shall in any case include property accessory to immovable property,
livestock and equipment used in agriculture and forestry, rights to which the
provisions of general law respecting landed property apply, usufruct of
immovable property and rights to variable or fixed payments as consideration
for the working of, or the right to work, mineral deposits, sources and other natural
resources; ships, boats, aircrafts and motor vehicles shall not be regarded as
immovable property.3. The provisions of
paragraph 1 shall apply to income derived from the direct use, letting or use
in any other form of immovable property.4. The provisions of
paragraphs 1 and 3 shall also apply to the income from immovable property of an
enterprise and to income from immovable property used for the performance of
independent personal services.Article
7BUSINESS
PROFITS1. The profits of an
enterprise of a Contracting State shall be taxable only in that State unless
the enterprise carries on business in the other Contracting State through a
permanent establishment situated therein. If the enterprise carries on business
as aforesaid, the profits of the enterprise may also be taxed in the other
State but only so much of them as is attributable to that permanent
establishment.2. Subject to the
provisions of paragraph 3, where an enterprise of a Contracting State carries
on business In the other Contracting State through a permanent establishment
situated therein, there shall in each Contracting State be attributed to that
permanent establishment the profits which it might be expected to make if it
were a distinct and separate enterprise engaged in the same or similar
activities under the same or similar conditions and dealing wholly
independently with the enterprise of which it is a permanent establishment.3. In determining the
profits of a permanent establishment, there shall be allowed as deductions
expenses which are incurred for the purposes of the permanent establishment,
including executive and general administrative expenses so incurred, whether in
the State in which the permanent establishment is situated or elsewhere, in
accordance with the provisions of and subject to the limitations of the tax
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 to 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
8SHIPPING
AND AIR TRANSPORT1. Profits derived by an
enterprise of a Contracting State from the operation of ships or aircrafts in
international traffic shall be taxable only in that State.2. Profits derived by a
transportation enterprise which is a resident of a Contracting State from the
use, maintenance, or rental of containers (including trailers and other
equipment for the transport of containers) used for the transport of goods or
merchandise in international traffic shall be taxable only in that Contracting
State unless the containers are used solely within the other Contracting State.3. For the purposes of
this article, interest on funds directly connected with the operations of ships
or aircraft in international traffic shall be regarded as profits derived from
the operation of such ships or aircraft, and the provisions of Article 11 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
ENTERPRISESWhere: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
10DIVIDENDS1. Dividends paid by a
company which is a resident of a Contracting State to a resident of the other
Contracting State may be taxed in that other State.2. However, such
dividends may also be taxed in the Contracting State of which the company
paying the dividends is a resident and according to the laws of that State, but
if the beneficial owner of the dividends is a resident of the other Contracting
State the tax so charged shall not exceed 10 per cent. of 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
other 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 perform in that State
independent personal services from affixed 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 State may not impose any tax on the dividends
paid by the company, except in so far as such dividends are paid to a resident
of that other State or in so far as the holding in respect of which the
dividends are paid is effectively connected with a permanent establishment 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 or income arising in such other State.Article
11INTEREST1. Interest arising in a
Contracting State and paid to a resident of the other Contracting State may be
taxed in that other State.2. However, such
interest may also be taxed in the Contracting State in which it arises, and
according to the laws of that State; but if the beneficial owner of the
interest is a resident of the other Contracting State 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 shall be
exempt from tax in that Contracting State provided it is derived and
beneficially owned by, or derived in connection with a loan or credit extended
or endorsed by:-a. The Government, a
political sub-division or a local authority of the other Contracting State; orb. (i) in the case of
India, the Reserve Bank of India, the Industrial Finance Corporation of India,
the Industrial Development Bank of India, the Export-import Bank of India, the
National Housing Bank, the Small Industries Development Bank of India and the
Industrial Credit and Investment Corporation of India (ICICI); and (ii)in the
case of Czech Republic, the Czech National (Bank(CNB), the Czech Export
Bank(CEB), the Export Guarantee and Insurance Company (EGAP), and the
Konsolidation Bank(KOB); orc. any other institution
as may be agreed upon from time to time between the competent authorities of
the Contracting States.4. 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 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 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 14, as the case may be, shall, apply.6. Interest shall be
deemed to arise in a Contracting State when the payer is that State itself, a
political sub-division, a local authority or a resident of that State. Where,
however, the person paying the interest, whether he is a resident of a
Contracting State or not, has in a Contracting State a permanent establishment
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 o f this article shall apply only to the last mentioned amount.
In such case, the excess part of the payments shall remain taxable according to
the laws of each Contracting State, due regard being had to the other
provisions of this Convention.Article
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 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 State, but if the
beneficial owner of the royalties or fees for technical services is a resident
of the other Contracting State the tax so charged shall not exceed 10 per cent.
of the gross amount of the royalties or fees for technical services.3.a. 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 a literary, artistic or scientific work including cinematograph films an
films or tapes for television or radio broadcasting, any patent, trade mark,
design or model, plan, secret formula or process, or any industrial, commercial
or scientific equipment or for information concerning industrial, commercial or
scientific experience;b. The term "fees
for technical services" as used in this article means payments of any kind
received as a consideration for the rendering of any managerial, technical or
consultancy as services including the provision of services by technical or
other personnel but does not include payments for services mentioned in Article
14 and 15 of this Convention.4. 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 or property 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.5. Royalties or 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 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 Contracting State
in which the permanent establishment or fixed base is situated.6. Where, by reason of a
special relationship between the payer and the beneficial owner or between both
of them and some other person, the amount of the royalties 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 Convention.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 also
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 persona services, including such
gains from the alienation of such a permanent establishment (alone or with the
whole enterprise) or of such fixed base, may also be taxed in that other State.3. Gains derived by an
enterprise of a Contracting State from the alienation of ships or aircrafts
operated in international traffic or movable property pertaining to the
operation of such ships or aircraft shall be taxable only in that State.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 in 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 referred to in paragraphs 1,2,3,4
and 5, shall be taxable only in the Contracting State of which the alienator is
a resident.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 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 State is for a period or periods aggregating 183 days or more in any
12-month period commencing or ending in the fiscal year concerned; 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.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, surgeons,
dentists and accountants.Article
15DEPENDENT
PERSONAL SERVICES1. Subject to the
provisions of Article 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 State unless the employment is
exercised in the other Contracting State. If the employment is so exercised in
the other Contracting State. If the employment is so exercised, such
remuneration as is derived therefrom may be taxed in that other State.2. Notwithstanding the
provisions of paragraph 1, remuneration derived by a resident of a Contracting
State in respect of an employment exercised in the other Contracting State
shall be taxable only in the first-mentioned State if all the following
conditions are met:a. The recipient is
present in the other State for a period or periods not exceeding in the
aggregate 183 days in any 12-month period commencing or ending in the fiscal
year concerned; 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.1.2.3. Notwithstanding the
preceding provisions of this article, remuneration derived in respect of an
employment exercised aboard a ship or air- craft operated in international
traffic, by an enterprise of a Contracting State may be taxed in that State.4. The term
"employer" mentioned in paragraph 2(b) covers the person having right
on the work produced and bearing the responsibility and risk connected with the
performance of the work.Article
16DIRECTOR'S
FEESDirectors'
fees and other similar payments derived by a resident of a Contracting State
inn his capacity as am member of the board of directors of a company which is a
resident of the other Contracting State may also be taxed in that other State.Article
17ARTISTES
AND SPORTSPERSONS1. Notwithstanding the
provisions of Article 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
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. The provisions of
paragraphs 1 and 2, shall not apply to income from activities performed in a
Contracting State by an entertainer or a sportsperson if the visit to that
State is substantially supported by public funds of the other Contracting
States or of political sub-divisions or local authorities thereof. In such
case, the income is taxable only in the Contracting State of which the
entertainer or sportsperson is a resident.Article
18PENSIONSSubject
to the provisions of paragraph 2 of Article 19, pensions and other similar
remuneration paid to a resident of a Contracting State in consideration of past
employment shall be taxable only in that State.Article
19GOVERNMENT
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 of services rendered to
that State or sub-division or authority shall be taxable only in that State.b. However, such
remuneration shall be taxable only in the other Contracting State if the
services are rendered in that 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.2.a. Any pension paid by,
or out of funds created by, 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 State.1.2.3. The provisions of
Article 15,16 and 18 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 a local authority thereof.Article
20STUDENTS
AND APPRENTICES1. A Student or business
apprentice who is or was a resident of a Contracting State immediately before
visiting the other Contracting State and who is present in that other
Contracting State solely for the purpose of his education or training shall,
besides grants, loans and scholarships, be exempt from tax in that other State
on:a. Payments made to him
by persons residing outside that other State for the purposes of his
maintenance, education or training; andb. Remuneration from
employment in that other State for an amount not exceeding the amount which is
exempt from tax under the laws of that other Contracting State for any fiscal
year, provided that such employment is directly related to his studies or is
undertaken for the purpose of his maintenance.2. The benefit 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 benefit of this article for more than
seven consecutive years from the date of his first arrival in that other
Contracting State.Article
21PROFESSORS,
TEACHERS AND RESEARCH SCHOLARS1. A Professor or
teacher who is or was a resident of a Contracting State 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 first arrival in that other State.2. This article shall
not apply to income from research, if such research is undertaken primarily for
the private benefit of a specific person or persons.3. For the purposes of
paragraph 1 the term "approved institution" means an institution
which has be approved in this regard by the competent authority of the
concerned 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 Convention shall be taxable only in that 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 14, as the case may be,
shall apply.3. Notwithstanding the
provisions of paragraph 1 if a resident of a Contracting State derives income
from sources within the other Contracting State in the form of lotteries,
crossword puzzles, races including horse races, card games and other games of
any sort of gambling or betting of any form or nature whatsoever, such income
may be taxed in the other Contracting State.Article
23CAPITAL1. Capital represented
by immovable property referred to in Article 6, owned by a resident of a
ontracting 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 also be taxed in that
other State.3. Capital represented
by ships or aircraft, operated in international traffic or by movable property
such ships, aircraft or property is a resident.4. All other elements of
capital of a resident of a Contracting State shall be taxable only in that
State.Article
24ELIMINATION
OF DOUBLE TAXATION1. The laws in force in
either of the Contracting State will continue to govern the taxation of income
and of Capital in the respective Contracting State except where provisions to
the contrary are made in this Convention.2. In the case of India,
double taxation shall be eliminated as follows:Where
a resident of India derives income or owns capital which, in accordance with
the provisions of this Convention, may be taxed in the Czech Republic, whether
directly or by deduction at source. Such amount shall not, however, exceed that
part of the tax, as computed before the deduction is given, which is
attributable to the income or capital which may be taxed in the Czech Republic.3.
In
the case of the Czech Republic, double taxation shall be eliminated as follows:Where
a resident of the Czech Republic derives income or owns capital which, in
accordance with the provisions of this Convention, may be taxed in India, the
Czech Republic shall allow as a deduction from the tax on the income or capital
of that resident an amount equal to the tax paid in India. Such deduction shall
not, however, exceed that part of the tax, as compared before the deduction is
given, which is attributable to the income or capital which may be taxed in
India.4. The tax payable in
the Contracting State mentioned in paragraphs 2 and 3 of this article shall be
deemed to include the tax which would have been payable but for the tax
incentives granted under the laws of the Contracting State and which are
designed to promote economic development.5. Where, in accordance
with any provision of this Convention, income derived or capital owned by a
resident of a Contracting State is exempt from tax in that State, such State
may nevertheless, in calculating the amount of tax on the remaining income or
capital of such resident, take into account the exempted income or capital.Article
25NON-DISCRIMINATION1. Nationals of a
Contracting State shall not be subjected in the other Contracting State to any
taxation or any requirement connected therewith, which is other or more
burdensome than the taxation and connected requirements to which nationals of
that other State in the same circumstances are or may be subjected. This
provision shall, notwithstanding the provisions of Article 1, also apply to
persons who are not residents of one or both of the Contracting States.2. The taxation on a
permanent establishment which an enterprise of a Contracting State has in the
other Contracting State shall not be less favourably levied in that other State
than the taxation levied on enterprises of that other State carrying on the
same activities. This provision shall not be construed as preventing a
Contracting State from charging the profits of a permanent establishment which a
company 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
company of the first-mentioned Contracting State, not as being in conflict with
the provisions of paragraph 3 of Article 7 of this Convention.3. Enterprises of a
Contracting State, the capital of which is wholly or partly owned or
controlled, directly or indirectly by one or more residents of the other
Contracting State, shall not be subjected in the first-mentioned State to any
taxation or any requirement connected therewith which is other or more
burdensome than the taxation and connected requirements to which other similar
enterprises of the first-mentioned State are or may be subjected.4. Except where the provisions
of Article 9, paragraph 7 of Article 11 or paragraph 6 of Article 12 apply,
interest, royalties and other disbursement 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. Similarly, any debt of an enterprise of a Contracting
State to a resident of the other Contracting State shall, for the purpose of
determining the taxable capital of such enterprise, be deductible under the
same conditions as if they had been contracted to a resident of the
first-mentioned State.5. The provisions of
this article shall, notwithstanding the provisions of Article 2, apply to taxes
of every kind and description.Article
26MUTUAL
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
Convention, 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 resident or, if his case comes under paragraph 1 of
Article 25, to that of the Contracting State of which he is a national. He 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 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 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
Convention. 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 f the Convention. They may also consult together for the
elimination of double taxation in cases not provided for in the Convention.4. The competent
authorities of the Contracting States may communicate with each other directly
for the purpose of reaching an agreement in the sense of the preceding
paragraphs. When it seems advisable in order to reach agreement to have an oral
exchange of opinions, such exchange may take place through a Commission
consisting of representatives of the competent authorities of the Contracting
States.Article
27EXCHANGE
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
Convention or of the domestic laws of the Contracting States concerning taxes
covered by the Convention in so far as the taxation thereunder is not contrary
to the Convention in particular for the prevention of fraud or evasion of such
taxes. The exchange of information is not restricted by Article 1. Any
information received by a Contracting State shall be treated as secret in the
same manner as information obtained under he domestic laws of that State 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 Convention. 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 law 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;c. To supply information
or documents which would disclose any trade, business, industrial, commercial
or professional secret or trade process or information, or documents the
disclosure of which would be contrary to public policy.Article
28COLLECTION
ASSISTANCE1. The Contracting
States undertake to lend assistance to each other in the collection of taxes to
which this Convention relates, together with interests, costs, and civil
penalties relating to such taxes, referred to in this article as a
"revenue claim".2. Requests for
assistance by the competent authority of a Contracting State in the collection
of a revenue claim shall include a certification by such authority that, under
the laws of that State, the revenue claim has been finally determined. For the
purposes of this article, a revenue claim if finally determined when a
Contracting State has the right under its internal law to collect the revenue
claim and the taxpayer has no further rights to restrain collection.3. A request for
assistance in collection of taxes due from a taxpayer shall be made only if
adequate assets of that taxpayer are not available for recovering the taxes
from him in the Contracting State making the request.4. Amounts collected by
the competent authority of a Contracting State pursuant to this article shall
be forwarded to the competent authority of the other Contracting State.
However, the first-mentioned Contracting State shall be entitled to
reimbursement of costs, if any, incurred in the course of rendering such
assistance to the extent mutually agreed between the competent authorities of
the two States.5. Nothing in this
article shall be construed as imposing on either Contracting State the
obligation to carry out administrative measures of a different nature from
those used in the collection of its own taxes or those which would be contrary
to its public policy.6. Notwithstanding the
provisions of Article 30 relating to entry into force of this Convention, the
application of this Article shall commence on a date to be mutually agreed upon
by the competent authorities of the Contracting State.Article
29MEMBERS
OF DIPLOMATIC MISSIONS AND CONSULAR POSTSNothing
in this Convention shall affect the fiscal privileges of members of diplomatic
missions or consular posts under the general rules of international law of
under the provisions of special agreements.Article
30ENTRY
INTO FORCE1. The Contracting
States shall notify each other in writing, through diplomatic channels, of the
completion of the procedures required by the respective laws for the entry into
force of this convention.2. This Convention shall
enter into force on the date of the later of the notifications referred to in
paragraph 1 of this article.3. The provisions of
this Convention shall have effect:a. In India:In respect of income derived or capital held in any fiscal year beginning on or
after the first day of April next following the calendar year in which the
Convention enters into force; anda.b. In the Czech
Republic:i.
In
respect of taxes withheld at source, to income paid or credited on or after
first January in the calendar year next following that in which the Convention
enters into force;ii.
In
respect of other taxes on income and taxes on capital, to income or capital in
any taxable year beginning on or after first January in the calendar year next
following that in which the Convention enters into force.4. On the entry into
effect of this Convention, the application of the Agreement between the
Government of India for the Czechoslovak Socialist Republic and the Government
of India for the avoidance of double taxation and the prevention of fiscal
evasion with respect taxes on income signed at New Delhi on 27th January, 1986,
shall, in relation between the Czech Republic and India, cease to have effect.Article
31TERMINATIONThis
Convention shall remain in force indefinitely until terminated by a Contracting
State. Either Contracting State may terminate the Convention, through diplomatic
channels, by giving notice of termination at least six months before the end of
any calendar year beginning after the expiration of five years from the date of
entry into force of the Convention. In such event, the Convention shall cease
to have effect:a.
In
India:In respect of income derived in any previous year on or after the first day of
April next following the calendar year in which the notice is given and in
respect of capital held at the expiry of any previous year beginning on or after
first day of April next following the calendar year in which the notice of
termination is given;a.b. In the Czech
Republic,i.
In
respect of taxes withheld at source, to income paid or credited on or after
first January, in the calendar year next following that in which the notice is
given;ii.
In
respect of other taxes on income and taxes on capital, to income or capital in
any taxable year beginning on or after first January, in the calendar year next
following that in which the notice is given.In
WITNESS WHEREOF the undersigned, being duly authorised thereto, have signed
this Convention.DONE
in duplicate at Prague, this the 1st day of October, 1998, in the Hindi,
English and Czech languages, all three texts being equally authentic. In case
of divergence between the texts, the English text shall be