Japan - Legal Draft

Double Taxation

Avoidance AgreementsConvention between

the Government of the Republic of India and the Government of Japan for the

avoidance of double taxation and the prevention of fiscal evasion with respect

to taxes on incomeNotification

No. G. S. R. 101(E), dtd. 1st March, 1990.Whereas

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

Government of Japan for the avoidance of double taxation and the prevention of

fiscal evasion with respect to taxes on income has come into force on the 29th

December, 1989, after the exchange of instruments of ratification as required

by Paragraph 1 of article 28 of the said Convention;Now,

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

Act, 1961 (43 of 1961), 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 JAPAN AND THE GOVERNMENT OF THE REPUBLIC OF INDIA FOR

THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH

RESPECT TO TAXES ON INCOME.The

Government of Japan and the Government of the Republic of India.Desiring

to conclude a new Convention for the avoidance of double taxation and the

prevention of fiscal evasion with respect to taxes on income,Have

agreed as follows:Article

1This

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

Contracting States.Article

1. The taxes which are

the subject of this Convention are:a. In Japan:i.

the

income-tax; andii.

the

corporation-tax;(hereinafter

referred to as "Japanese-tax");a.b. In India:the

income-tax including any surcharge thereon(hereinafter

referred to as "Indian tax").1.2. This Convention shall

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

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

those referred to in paragraph 1. 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

1. For the purposes of

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

"Japan", when used in a geographical sense, means all the territory

of Japan, including its territorial sea, in which the laws relating to Japanese

tax are in force, and all the area beyond its territorial sea, including the

seabed and subsoil thereof, over which Japan has jurisdiction in accordance with

international law and in which the laws relating to Japanese tax are in force;b. the term

"India" means the territory of India including the territorial sea

and any other maritime zone in which India has sovereign rights according to

the Indian law and in accordance with international law;c. the terms "a

Contracting State" and "the other Contracting State" mean Japan

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

"tax" means Japanese tax or Indian tax, as the context requires;e. the term

"person" includes an individual, a company and any other body of

persons;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 an 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:1.1. In respect of Japan:all individuals possessing the nationality of Japan and all juridical persons

created or organized under the laws of Japan and all organizations without

juridical personality treated for the purposes of Japanese tax as juridical

persons created or organized under the laws of Japan;1.2. In respect of India:i. all individuals

possessing the nationality of India;ii. all legal persons,

partnerships and associations deriving their status as such from the laws in

force in India;a.b.c.d.e.f.g.h.i. the term

"international traffic" means any transport by a ship or aircraft operated

by an enterprise of a Contracting State, except when the ship or aircraft is

operated solely between places in the other Contracting State; andj. the term

"competent authority" means:i.

in

Japan, the Minister of Finance or his authorized representative;ii.

In

India, the Central Government in the Ministry of Finance, Department of

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

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

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

has under the laws of that Contracting State concerning the taxes to which this

Convention applies.Article

1. For the purposes of

this Convention, 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 or main office or any other

criterion of a similar nature.2. Where by reason of

the provisions of paragraph 1 a person is a resident of both Contracting

States, then the competent authorities of the Contracting States shall

determine by mutual agreement the Contracting State of which that person shall

be deemed to be a resident for the purposes of this Convention.Article

1. 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 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. a store or other

sales outlet; andj. an installation or

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

for a period of more than six months,1.2.3. A building site or

construction, installation or assembly project constitutes a permanent

establishment only if it lasts for more than six months.4. An enterprise shall

be deemed to have a permanent establishment in a Contracting State and to carry

on business through that permanent establishment if it carries on supervisory

activities in that Contracting State for more than six months in connection

with a building site or construction, installation or assembly project which is

being undertaken in that Contracting State.5. Notwithstanding the

provisions of paragraphs 3 and 4 an enterprise shall be deemed to have a

permanent establishment in a Contracting State and to carry on business through

that permanent establishment if it provides services or facilities in that

Contracting State for more than six months in connection with the exploration,

exploitation or extraction of mineral oils in that Contracting State.6. Notwithstanding the

provisions of the preceding paragraphs of this article, the term

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

solely for the purpose of storage or display of goods or merchandise belonging

to the enterprise;b. the maintenance of a

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

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

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

purpose of processing by another enterprise;d. the maintenance of a

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

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

fixed place of business solely for the purpose of carrying on, for the

enterprise, any other activity of a preparatory or auxiliary character.1.2.3.4.5.6.7. Notwithstanding the

provisions of paragraphs 1 and 2, where a person --other than an agent of an

independent status to whom paragraph 8 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, ifa. he has and habitually

exercises in that Contracting State an authority to conclude contracts on

behalf of the enterprise, unless his activities are limited to those mentioned

in paragraph 6 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;b. he has no such

authority, but habitually maintains in the first-mentioned Contracting State a

stock of goods or merchandise from which he regularly delivers goods or

merchandise on behalf of the enterprise; orc. he habitually secures

orders in the first-mentioned Contracting State, wholly or almost wholly for

the enterprise itself or for the enterprise and other enterprises controlling,

controlled by, or subject to the same common control as that enterprise.1.2.3.4.5.6.7.8. An enterprise shall

not be deemed to have a permanent establishment in a Contracting State merely

because it carries on business in that 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.9. 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 Contracting State (whether through a permanent

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

permanent establishment of the other.Article

1. 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

laws of the Contracting State in which the property in question is situated.

The term shall in any case include property accessory to immovable property,

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

provisions of general law respecting immovable 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

1. The profits of an

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

State unless the enterprise carries on business in the other Contracting State

through a permanent establishment situated therein. If the enterprise carries

on business as aforesaid, the profits of the enterprise may be taxed in that

other Contracting State but only so much of them as is directly or indirectly

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 Contracting State in which the permanent establishment is situated or

elsewhere.4. Insofar as it has

been customary in a Contracting State to determine the profits to be attributed

to a permanent establishment on the basis of an apportionment of the total

profits of the enterprise to its various parts, nothing in paragraph 2 shall

preclude that Contracting State from determining the profits to be taxed by

such an apportionment as may be customary; the method of apportionment adopted

shall, however, be such that the result shall be in accordance with the

principles contained in this article.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

the provisions of the preceding paragraphs of this article, the profits to be

attributed to the permanent establishment shall be determined by the same

method year by year unless there is good and sufficient reason to the contrary.7. Where profits include

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

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

provisions of this article.Article

1. Profits from the

operation of aircraft in international traffic carried on by an enterprise of a

Contracting State shall be taxable only in that Contracting State.2. Profits from the

operation of ships in international traffic carried on by an enterprise of a

Contracting State shall be taxable only in that Contracting State.3. Notwithstanding the

provisions of paragraph 2, such profits may be taxed in the other Contracting

State from which they are derived during a period of first ten taxable years or

"previous years", as the case may be, for which this Convention shall

have effect provided that the tax so charged shall not exceed:a. during the first five

years, 50 per cent.,b. during the remaining

five years, 25 per cent. of the tax otherwise imposed by the taxation law of

that other Contracting State.1.2.3.4. The provisions of the

preceding paragraphs of this article shall also apply to profits from the

participation in a pool, a joint business or an international operating agency.5. 5.The provisions of

this article shall, notwithstanding the provisions of article 2, apply to the

enterprise tax in Japan and to any tax similar to the said enterprise tax if

and when such a tax is imposed in India.Article

1. Wherea. 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.1.2. 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 where the competent

authorities of the Contracting States agree, upon consultation, that all or

part of the profits so included are profits which would have accrued to the

enterprise of the firstmentioned Contracting State if the conditions made

between the two enterprises had been those which would have been made between

independent enterprises, then that other Contracting State shall make an

appropriate adjustment to the amount of the tax charged therein on those agreed

profits. In determining such adjustment, due regard shall be had to the other

provisions of this Convention.Article

1. 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 Contracting 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

Contracting State, but if the recipient is the beneficial owner of the

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

of the dividends.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.1.2.3. 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 taxation laws of the Contracting 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 other

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 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 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 that other Contracting

State.Article

1. 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:a. 10 per cent. of the gross

amount of the interest if the beneficial owner is a bank; andb. 15 per cent. of the

gross amount of the interest in all other cases.1.2.3. 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 or a

local authority thereof, the Central Bank of that other Contracting State or

any financial institution wholly owned by that Government, or by any resident

of the other Contracting State with respect to debt-claims guaranteed or

indirectly financed by the Government of that other Contracting State, a

political sub-division or a local authority thereof, the Central Bank of that

other Contracting State or any financial institution wholly owned by that

Government shall be exempt from tax in the first-mentioned Contracting State.4. For the purposes of

paragraph 3, the terms "the Central Bank" and "financial

institution wholly owned by the Government" mean:a. In the case of Japan:i.

the

Bank of Japan;ii.

the

Export-Import Bank of Japan;iii.

the

Overseas Economic Cooperation Fund;iv.

the

Japan International Co-operation Agency; andv.

such

other financial institution the capital of which is wholly owned by the

Government of Japan as may be agreed upon from time to time between the

Governments of the two Contracting States;a.b. In the case of India:i.

the

Reserve Bank of India;ii.

the

Export-Import Bank of India;iii.

such

other financial institution the capital of which is wholly owned by the

Government of India as may be agreed upon from time to time between the

Governments of the two Contracting States.1.2.3.4.5. 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.6. The provisions of

paragraphs 1, 2 and 3 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.7. Interest shall be

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

itself, a political sub-division or 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.8. 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 Convention.Article

1. Royalties and fees

for technical services arising in a Contracting State and paid to a resident of

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

royalties and fees for technical services may also be taxed in the Contracting

State in which they arise and according to the laws of that 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 20 per cent. of the

gross amount of the royalties or fees for technical services.3. The term

"royalties" as used in this article means payments of any kind

received as a consideration for the use of, or the right to use, any copyright

of literary, artistic or scientific work including cinematograph films 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 payment of any

amount to any person other than payments to an employee of a person making

payments and to any individual for independent personal services referred to in

article 14, in consideration for the services of a managerial, technical or

consultancy nature, including the provisions of services of technical or other

personnel.5. The provisions of

paragraphs I 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 and fees

for technical services shall be deemed to arise in a Contracting State when the

payer is that Contracting State itself, a political sub-division, a local

authority thereof or a resident of that 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

base is situated.7. Where, by reason of

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

1. 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 any property, other than immovable 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 any property, other.

than immovable 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. Unless the provisions

of paragraph 2 are applicable, gains derived by a resident of a Contracting

State from the alienation of shares of a company which is a resident of the

other Contracting State may be taxed in that other Contracting State.4. Gains derived by a

resident of a Contracting State from the alienation of ships or aircraft

operated in international traffic and any property, other than immovable

property, pertaining to the operation of such ships or aircraft shall be

taxable only in that Contracting State.5. Gains derived by a

resident of a Contracting State from the alienation of any property other than

that referred to in paragraphs 1 to 4, shall be taxable only in that

Contracting State.Article

1. 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 unless he has a fixed base regularly available to him in the

other Contracting State for the purpose of performing his activities or he is

present in that other Contracting State for a period or periods exceeding in

the aggregate 183 days during any taxable year or "previous year", as

the case may be. If he has such a fixed base or remains in that other

Contracting State for the aforesaid period or periods, the income may be taxed

in that other Contracting State but only so much of it as is attributable to

that fixed base or is derived in that other Contracting State during the

aforesaid period or periods.2. The term

"professional services" includes especially independent scientific,

literary, artistic, educational or teaching activities as well as the

independent activities of physicians, surgeons, lawyers, engineers, architects,

dentists and accountants.2.Article 151. 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 Contracting State, if:a. the recipient is

present in that other Contracting State for a period or periods not exceeding

in the aggregate 183 days during any taxable year or "previous year",

as the case may be; andb. the remuneration is

paid by, or on behalf of, an employer who is not a resident of that other

Contracting State; andc. the remuneration is

not borne by a permanent establishment or a fixed base which the employer has

in that other Contracting State.3. Notwithstanding the

provisions of paragraphs 1 and 2, remuneration in respect of an employment

exercised aboard a ship or aircraft operated in international traffic by an

enterprise of a Contracting State may be taxed in that Contracting State.Article

16Directors'

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

his capacity as a member of the board of directors of a company which is a

resident of the other Contracting State may be taxed in that other Contracting

State.Article

Notwithstanding

the provisions of articles 14 and 15, income derived by an individual who is a

resident of a Contracting State as an entertainer such as a theatre, motion

picture, radio or television artiste, and a musician, or as an athlete, from

his personal activities as such exercised in the other Contracting State, may

be taxed in that other Contracting State.Such

income shall, however, be exempt from tax in that other Contracting State if

such activities are exercised by an individual who is a resident of the

first-mentioned Contracting State purusant to a special programme for cultural

exchange agreed upon between the Governments of the two Contracting States.1.2. Where income in

respect of personal activities exercised in a Contracting State by an

entertainer or an athlete in his capacity as such accrues not to the

entertainer or athlete himself but to another person who is a resident of the

other Contracting State, that income may, notwithstanding the provisions of

Articles 7, 14 and 15, be taxed in the firstmentioned Contracting State.Such

income shall, however, be exempt from tax in the firstmentioned Contracting

State if such activities are exercised pursuant to a special programme for

cultural exchange agreed upon between the Governments of the two Contracting

States.Article

18Subject

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 Contracting State.Article

1. 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 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; orii.

did

not become a resident of that other Contracting State solely for the purpose of

performing the services.1.2.a. Any pension paid by,

or out of funds to which contributions are made by, a Contracting State, or a

political sub-division or a local authority thereof, to an individual in

respect of services rendered to 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 a Contracting

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

20Payments

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

visiting a Contracting State a resident of the other Contracting State and who

is present in the first-mentioned Contracting State solely for the purpose of

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

education or training shall be exempt from tax in the first-mentioned

Contracting State, provided that such payments are made to him from outside

that first-mentioned Contracting State.Article

1. A professor or

teacher who makes a temporary visit to a Contracting State for a period not

exceeding two years for the purpose of teaching or conducting research at a

university, college, school or other accredited educational institution, and

who is, or immediately before such visit was, a resident of the other

Contracting State shall be taxable only in that other Contracting State in

respect of remuneration for such teaching or research.2. The article shall not

apply to income from research if such research is undertaken not in the public

interest but primarily for the private benefit of a specific person or persons.Article

1. Items of income of a

resident of a Contracting State, wherever arising, not dealt with in the foregoing

articles of the Convention, shall be taxable only in that Contracting State.2. The provisions of

paragraph 1 shall not apply to income, other than income from immovable

property as defined in paragraph 2 of article 6, if the recipient of such

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

other Contracting State through a permanent establishment situated therein, or

performs in that other 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 Convention and arising in the

other Contracting State may be taxed in that other Contracting State.Article

1. The laws in force in

either of the Contracting States shall continue to govern the taxation of

income in the respective Contracting State except where express provisions to

the contrary are made in this Convention.2. Double taxation shall

be avoided in the case of India as follows:a. Where a resident of

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

Convention, may be taxed in Japan, India shall allow as a deduction from the

tax on the income of that resident an amount equal to the Japanese tax paid in

Japan, whether directly or by deduction, such deduction in either case 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 Japan. Further, where such resident is a company by which

surtax is payable in India, the deduction in respect of income tax paid in

Japan shall be allowed in the first instance from income tax payable by the

company in India and as to the balance, if any, from surtax payable by it in

India.b. Where a resident of

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

Convention, shall be taxable only in Japan, India may include this income in

the tax base but shall allow as a deduction from the income tax that part of

the income-tax which is attributable, as the case may be, to the income,

derived from Japan.1.2.3. Subject to the laws

of Japan regarding the allowance as a credit against Japanese tax of tax

payable in any country other than Japan:a. Where a resident of

Japan derives income from India which may be taxed in India in accordance with

the provisions of this Convention, the amount of Indian tax payable in respect

of that income shall be allowed as a credit against the Japanese tax imposed on

that resident. The amount of credit, however, shall not exceed that part of the

Japanese tax which is appropriate to that income.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 Japan and which owns not less than 25 per

cent. either of the voting shares of the company paying the dividend, or of the

total shares issued by that company, the credit shall take into account the

Indian tax payable by the company paying the dividend in respect of its income.c. For the purposes of

the credit referred to in sub-paragraphs (a) and (b) above, there shall be

deemed to have been paid by the taxpayer the amount which would have been paid

as Indian tax under the laws of India and in accordance with this Convention if

the Indian tax had not been reduced or relieved in accordance with the special

incentive measures designed to promote economic development in India, effective

on the date of signature of this Convention or which may be introduced in

future in the Indian tax laws in modification of or in addition to the existing

measures, provided that an agreement is made between the two Governments in

respect of the scope of the benefit accorded to the taxpayer by the said

measures.Article

1. Nationals of a

Contracting State shall 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.

This provision shall, notwithstanding the provisons 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

Contracting State than the taxation levied on enterprises of that other

Contracting State carrying on the same activities.This

provision shall not be construed as obliging a Contracting State to grant to

residents of the other Contracting State any personal allowances, reliefs and

reductions for taxation purposes on account of civil status or family

responsibilities which it grants to its own residents.1.2.3. Except where the

provisions of article 9, paragraph 8 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 Contracting State,4. Enterprises of a

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

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

Contracting State, shall not be subjected in the first-mentioned Contracting

State to any taxation or any requirement connected therewith which is other or

more burdensome than the taxation and connected requirements to which other

similar enterprises of the first-mentioned Contracting State are or may be

subjected.5. In this article, the

term "taxation" means taxes which are the subject of this Convention.Article

1. 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 laws

of those Contracting 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 this

Convention.2. The competent

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

if it is not itself able to arrive at 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 not in accordance with the

provisions of this Convention. Any agreement reached shall be implemented

notwithstanding any time limits in the domestic laws of the Contracting States.3. The competent

authorities of the Contracting States shall endeavour to resolve by mutual

agreement any difficulties or doubts arising as to the interpretation or

application of this Convention. They may also consult together for the

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

authorities of the Contracting States may communicate with each other directly

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

paragraphs of this article.Article

1. The competent

authorities of the Contracting States shall exchange such information as is

necessary for carrying out the provisions of this Convention or of the domestic

laws of the Contracting States concerning taxes covered by this Convention in

so far as the taxation thereunder is not contrary to the provisions of this

Convention, or for the prevention of fiscal evasion or fraud with respect to

such taxes. Any information so exchanged shall be treated as secret and shall

be disclosed only to persons or authorities, including courts, involved in the

assessment or collection of, the enforcement or prosecution in respect of, the

taxes covered by this Convention or the determination of appeals in relation

thereto.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 the administrative

practice of that or of the other Contracting State;b. to supply information

which is not obtainable under the laws or in the normal course of the

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

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

professional secret or trade process, or information, the disclosure of which

would be contrary to public policy.Article

27Nothing

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

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

provisions of special agreements.Article

1. This Convention shall

be ratified and the instruments of ratification shall be exchanged at..... as soon

as possible.2. This Convention shall

enter into force on the thirtieth day after the date of the exchange of

instruments of ratification and shall have effect:a. In Japan:as

regards income for any taxable year beginning on or after the first day of January

of the calendar year next following that in which this Convention enters into

force; anda.b. In India:as

regards income for any "previous year" beginning on or after the

first day of April of the calendar year next following that in which this

Convention enters into force.1.2.3. The Agreement between

Japan and India for the avoidance of double taxation in respect of taxes on

income signed at New Delhi on