Mauritius - Legal Draft

CONVENTION BETWEEN

THE GOVERNMENT OF THE REPUBLIC OF INDIA AND THE GOVERNMENT OF MAURITIUS FOR THE

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

TO TAXES OF INCOME AND CAPITAL GAINS.Notification

F. No. 501/20/73-FTD dated 6-12-1983.G.S.R.

920(E).---Whereas the annexed Convention between the Government of the Republic

of India and the Government of Mauritius for the avoidance of double taxation

and the prevention of fiscal evasion with respect to taxes on income and

capital gains and for the encouragement of mutual trade and investment has come

into force on the notification by both the Contracting States to each other of

completion of the procedures required by their respective laws, as required by

Article 28 of the said Convention;Now,

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

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

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

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

BETWEENThe

Government of the Republic of India and The Government of Mauritious forThe

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

to Taxes of Income and Capital Gains.The

Government of the Republic of India and the Government of Mauritius.DESIRING

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

prevention of fiscal evasion with respect to taxes on income and capital gains

and for the encouragement of mutual trade and investment.HAVE

AGREED as follows:CHAPTER

I SCOPE OF THE CONVENTIONARTICLE

1 Personal ScopeThis

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

Contracting States.ARTICLE

2 Taxes Covered1. The existing taxes to

which this Convention shall apply are:a. in the case of India:i.

the

income-tax including any surcharge thereon imposed under the Income-tax Act,

1961 (43 of 1961);ii.

the

surtax imposed under the Companies (Profits) Surtax Act, 1964 (7 of 1964);

(hereinafter referred to as " Indian tax ").a.b. in the case of

Mauritius:the

income-tax (hereinafter referred to as " Mauritius tax ").1.2. This Convention shall

also apply to any identical of substantially similar taxes which are imposed by

either Contracting State after the date of signature of the present Convention

in addition to, or in place of, the existing taxes referred to in paragraph 1

of this Article.3. The competent

authorities of the Contracting States shall notify to each other any

significant changes which are made in their respective taxation laws.CHAPTER

II DEFINITIONSARTICLE

3 General 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 referred to in the Territorial

Waters, Continental Shelf, Exclusive Economic Zone and other Maritime Zones

Act, 1976 (Act No. 80 of 1976), in which India has certain rights and to the

extent that these rights can be exercised therein as if such maritime zone is a

part of the territory of India;b. the term ' Mauritius

' means all the territories, including all the islands, which in accordance

with the laws of Mauritius, constitute the State of Mauritius and includes:i.

the

territorial sea of Mauritius; andii.

any

area outside the territorial sea of Mauritius which in accordance with

international law has been or may hereafter be designated, under the laws of

Mauritius concerning the Continental Shelf as an area within which the rights

of Mauritius with respect to the sea bed and sub-soil and their natural

resources may be exercised;a.b.c. the terms ' a

Contracting State ' and the other Contracting State' mean India or Mauritius as

the context requires;d. the term ' tax '

means Indian tax or Mauritius tax as the context requires, but shall not

include any amount which is payable in respect of any default for omission in

relation to the taxes to which this Convention applies or which represents a

penalty imposed relating to those taxes;e. the term ' person '

includes an individual, a company and any other entity, corporate or

non-corporate, which is treated as a taxable unit under the taxation laws in

force in the respective Contracting States;f. the term ' company '

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

corporate under the taxation laws in force in the respective Contracting

States;g. The term enterprise

of a Contracting State' and ' enterprise of the other Contracting State' mean

respectively an industrail, mining, commercial plantation or agricultural

enterprise or similar under taking carried on by a resident of a Contracting

State and an industrial, mining, commercial, planta tion or agricultural

enterprise or similar undertaking carried on by a resident of the other

Contracting State;h. the term ' competent

authority ' means in the case of India the Central Government in the Ministry

of Finance (Department of Revenue) or their authorised representative; and in

the case of Mauritius, the Commissioner of Income-Tax or his authorised

representative;a.b.c.d.e.f.g.h.i. the term ' national '

means any individual possessing the nationality of a Contracting State and any

local person, partnership or association deriving its status from the laws in

force in the Contracting State;j. the term '

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

an enterprise which has its place of effective management in a Contracting

State, except when the ship or aircraft is operated by the enterprise solely

between places in the other Contracting State.1.2. In the application of

the provisions 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 in force of that Contracting State relating to the areas

which are the subject of this Convention.ARTICLE

4 Residents1. For the purposes of

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

any person who under the laws of that State, is liable to taxation therein by

reason of his domicile, residence, place or management or any other criterion

of similar nature. The terms " resident of India " and "

resident of Mauritius " shall be construed accordingly.2. Where by reason of

the provisions of pargraph 1, an individual is a resident of both Contracting

States, then his residential status for the purposes of this Convention shall

be determined in accordance with the following rules;a. he shall be deemed to

be a resident of the Contracting State in which he has a permanent home

available to him; if he has a permanent home available to him in both

Contracting States, be shall be deemed to be a resident of the Contracting

State with which his personal and economic relations are closer (hereinafter

referred to as his " centre of vital interests ");b. if the Contracting

State in which he has his centre of vital interest cannot be determined, or if

he does not have a permanent home available to him in either Contracting State

he shall be deemed to be a resident of the Contracting State in which he has an

habitual abode;c. if he has an habitual

abode in both Contracting States or in neither of them, he shall be deemed to

be a resident of the Contracting State of which he is a national;d. if he is a national

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

the Contracting States shall settle the question by mutual agreement.1.2.3. Where by reason of

the provision of paragraph 1, a person other than an individual is a resident

of both the Contracting States, then it shall be deemed to be a resident of the

Contracting State in which its place of effective management is situated.ARTICLE

5 Permanent Establishment1. For the purposes of

this Convention, the term ' permanent establishment ' means a fixed place of

business through which the business of the enterprise is wholly or partly

carried on.2. The term ' permanent

establishment ' shall include:a. a place of

management;b. a branch;c. an office;d. a factory;e. a workshop;f. a warehouse, in

relation to a person providing storage facilities for others;g. a mine, an oil or gas

well, a quarry or any other place of extraction of natural resources;h. a farm, plantation or

other place where agricultural, forestry, plantation or related activities are

carried on;i. a building site or

construction or assembly project or supervisory activities in connection

therewith, where such site, project or supervisory activity continues for a

period of more than nine months.1.2.3. Notwithstanding the

preceding provisions of this Article, the term permanent establishment shall be

deemed not to include:a. the use of facilities

solely for the purpose of storage or display of 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 for collecting information for the enterprise;e. the maintenance of a

fixed place of business solelyi.

for

the purpose of advertising,ii.

for

the supply of information,iii.

for

scientific research, oriv.

for

similar activities.which

have a preparatory or auxiliary character for the enterprise.1.2.3.4. Notwithstanding the

provisions of paragraphs 1 and 2 of this Article, a person acting in a Contracting

State for or on behalf of an enterprise of the other Contracting State (other

than an agent of an independent status to whom the provisions of paragraph 5

apply) shall be deemed to be a permanent establishment of that enterprise in

the first-mentioned State if:i.

he

has and habitually exercises in that first mentioned State, an authority to

conclude contracts in the name of the enterprise unless his activities are

limited to the purchase of goods or merchandise for the enterprise; orii.

he

habitually maintains in that first-mentioned State a stock of goods or

merchandise belonging to the enterprise from which he regularly fulfils orders

on behalf of the enterprise.1.2.3.4.5. An enterprise of a

Contracting State shall not be deemed to have a permanent establishment in the

other Contracting State merely because it carries on business in that other

State through a broker, general commission agent or any other agent of an

independent status, where such persons are acting in the ordinary course of

their business. However, when the activities of such an agent are devoted

exclusively or almost exclusively on behalf of that enterprise, he will not be

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

paragraph.6. The fact that a

company, which is a resident of a Contracting State controls or is controlled

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

carries on business in that other Contracting State (whether through a

permanent establishment or otherwise) shall not, of itself, constitute either

company a permanent establishment of the other.CHAPTER

III TAXATION OF INCOMEARTICLE

6 Income from Immovable Property1. Income from immovable

property may be taxed in the Contracting State in which such property is

situated.2. The term " immovable

property " shall be defined in accordance with the law and usage of the

Contracting State in which the property 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, oilwells, quarries and other places of extraction of

natural resources, ships, boats 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

7 Business Profits1. The profits of an

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

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

permanent establishment situated therein. If the enterprise carries on business

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

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

provisions of paragraph 3 of this Article, 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. Where the correct amount of profits attributable to a permanent

establishment cannot be readily determined or the determination thereof

presents exceptional difficulties, the profits attributable to the permanent

establishment may be estimated on a reasonable basis.3. In determining the

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

expenses which are incurred for the purposes of the business of the permanent

establishment including executive and general administrative expenses so

incurred, whether in the State in which the permanent establishment is situated

or elsewhere.4. No profits shall be

attribuated to a permanent establishmerit by reason of the mere purchase by

that permanent establishment of goods or merchandise for the enterprise.5. For the purposes of

the preceding paragraphs, the profits to be attributed to the permanent

establishment shall be determined by the same method year by year unless there

is good and sufficient reason to the contrary.6. Where, profits

include items or 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

8 Shipping and Air Transport1. Profits from the

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

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

enterprise is situated.2. If the place of

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

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

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

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

paragraph 1 of this Article shall also apply to profits from the participation

in a pool, a joint business or an international operating agency.4. For the purposes of

paragraph 1, interest on funds connected with the operation of ships or

aircraft in international traffic shall be regarded as profits from the

operation of such ships or aircraft, and the provisions of Article 11 shall not

apply in relation to such interest.5. The term "

operation of ships or aircraft " shall mean business of transportation of

persons, mail, livestock or goods, carried on by the owners or lesses or

charterers of the ships or aircraft, including the sale of tickets for such

transportation on behalf of other enterprises, the incidental lease of ships or

aircraft and any other activity directly connected with such transportation.ARTICLE

9 Associated 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

enter prise 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 accured, may be included in the profits of that

enterprise and taxed accordingly.ARTICLE

10 Dividends1. 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 accordingly to the laws of that State,

but if the recipient is the beneficial owner of the dividends the tax so

charged shall not exceed:a. five per cent of the

gross amount of the dividends if the beneficial owner is a company which holds

directly at least 10 per cent of the capital of the company paying the

dividends;b. fifteen per cent of

the gross amount of the dividends in all other cases.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. Notwithstanding the

provisions of paragraph 2, dividends paid by a company which is a resident of

Mauritius to a resident of India may be taxed in Mauritius and according to the

laws of Mauritius, as long as dividends paid by companies which are residents

of Mauritius are allowed as deductible expenses for determining their taxable

profits. However, the tax charged shall not exceed the rate of the Mauritius

tax on profits of the company paying the dividends.4. The term ' dividends

' as used in this Article means income from shares or other rights, not being

debt-claims, participating in profits, as well as income from other corporate

rights which is subjected to the same taxation treatment as income from shares

by the laws of the Contracting State of which the company making the

distribution is a resident.5. The provisions of

paragraphs 1, 2 and 3 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 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 a case, the provisions

of Article 7 or Article 14, as the case may be, shall apply.6. Where a company which

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

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

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

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

dividends are paid is effectively connected with a permanent establishment or a

fixed base situated in that other State, nor subject the company's

undistributed profits to a tax on the company's undistributed profits even if

the dividends paid or the undistributed profits consist wholly or partly of

profits or income arising in such other State.ARTICLE

11 Interest1. 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, subject to

the provisions of paragraphs 3 and 4 of this Article, such interest may also be

taxed in the Contracting State in which it arises and according to the laws of

that State.3. Interest arising in a

Contracting State shall be exempt from tax in that State provided it is derived

and beneficially owned by:a. the Government or a

local authority of the other Contracting State;b. any agency or entity

created or organised by the Government of the other Contracting State; orc. any bank carrying on

a bonafide banking business which is a resident of the other Contracting State.1.2.3.4. Interest arising in a

Contracting State shall be exempt from tax in that Contracting State to the

extent approved by the Government of that State if it is derived and

beneficially owned by any person (other than a person referred to in paragraph

3) who is a resident of the other Contracting State provided that the

transaction giving rise to the debt-claim has been approved in this regard by

the Government of the first-mentioned Contracting State.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. Penalty charges for late payment shall

not he regarded as interest for the purpose of this Article.6. The provisions of

paragraphs 1, 2 3, and 4 shall not apply if the recipient 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 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, a local authority or a resident of that

State. Where, however, the person paying the interest, whether be is a resident

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

establishment in connection with which the indebtedness on which the interest

is paid was incurred, and such interest is home by that permanent establishment,

then such interest shall be deemed to arise in the Contracting State in which

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

special relationship between the payer and the recipient or between both of

them and some other person, the amount of the interest paid, 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 recipient in the absence of such relationship,

the provisions of this Article shall apply only to the last-mentioned amount.

In that case, the excess part of the payments shall remain taxable according to

the law of each Contracting State, due regard being had to the other provisions

of this Convention.ARTICLE

12 Royalties1. Royalties arising in a

Contracting State and paid to a resident of the other Contracting State may be

taxed in that other State.2. However, such

royalties may also be taxed in the Contracting State in which they arise, and

according to the law of that State, but the tax so charged shall not exceed 15

per cent of the gross amount of the royalties.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 provisions of

paragraphs 1 and 2 shall not apply if the recipient of the royalties, being a

resident of a Contracting State carries on business in the other Contracting Slate

in which the royalties 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 are paid is effectively connected with such permanent establishment

or fixed base. In such a case, the provisions of Article 7 or Article 14, as

the case may be, shall apply.5. Royalties shall be

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

itself, a political sub-division, a local authority or a resident of that

State, where, however, the person paying the royalties, whether he is a

resident of a Contracting State or not, has in a Contracting State a permanent

establishment in connection with which the liability to pay the royalties was

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

such royalties shall be deemed to arise in the Contracting State in which the

permanent establishment is situated.6. Where, by reason of a

special relationship between the payer and the recipient or between both of

them and some other person the amount of royalties paid, 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 recipient in the absence of

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

mentioned amount. In that 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

13 Capital Gains1. Gains from the

alienation of immovable property, as defined in paragraph 2 of Article 6, may

be taxed in the Contracting State in which such property is situated.2. Gains from the

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

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

other Contracting State or of movable property pertaining to a fixed base

available to a resident of a Contracting State in the other Contracting State

for the purpose of performing independent personal services, including such

gains from the alienation of such a permanent establishment (alone or together

with the whole enterprise) or of such a fixed base, may be taxed in that other

State.3. Notwithstanding the

provisions of paragraph 2 of this Article, gains from the alienation of ships

and aircraft operated in international traffic and movable property pertaining

to the operation of such ships and aircraft, shall be taxable only in the

Contracting State in which the price of effective management of the enterprise

is situated.4. Gains derived by a

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

those mentioned in paragraphs 1, 2 and 3 of this Article shall be taxable only

in that State.5. For the purpose of

this Article the term " alienation " means the sale, exchange,

transfer or relinquishment of the property or the extinguishment of any rights

therein or the compulsory acquisition thereof under any law in force in the

respective Contracting States.ARTICLE

14 Independent Personal Services1. Income derived by a

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

independent activities of a similar character shall be taxable only in that

State unless he has a fixed base regularly available to him in the other

Contracting State for the purpose of performing his activities. If he has such

a fixed base, the income may be taxed in the other Contracting State but only

so much of it as is attributable to that fixed base.2. The term '

professional services ' includes especially independent scientific, literary,

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

activities of physicians, lawyers, engineers, architects, dentists and

accountants.ARTICLE

15 Dependent Personal Services1. Subject to the

provisions of Articles 16, 17, 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,

such remuneration as is derived therefrom may be taxed in that other

Contracting State.2. Notwithstanding the

provisions of paragraph 1 of this Article 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 first-mentioned State if:a. the recipient is

present in the other State for a period or periods not exceeding in the

aggregate 183 days in the relevant " previous year " or " year

of income ", 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.1.2.3.4. Notwithstanding the

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

exercised abroad, a ship or aircraft in international traffic, may be taxed

only in the Contracting State in which the place of effective management of the

enterprise is situated.ARTICLE

16 Directors' FeesDirectors'

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

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

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

State.ARTICLE

17 Artistes and Athletes1. Notwithstanding the

provisions of Articles 14 and 15, incised by an entertainer or an athlete in

his capacity as such, and ture, radio or television artistes and musicians and

by athletes, from their personal activities as much may be taxed in the

Contracting State in which these activities are exercised.2. Where income is

derived from personal activities exercised by an entertainer or an athlete in

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

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

7, 14 and 15, be taxed in the State in which the activities of the entertainer

or athlete are exercised.3. Notwithstanding the

provisions of paragraph 1 of this Article, income derived by an entertainer or

an athelete who is a resident of a Contracting State from his personal

activities as such exercised in the other Contracting State, shall be taxable

only in the first-mentioned Contracting State, if those activities in the other

Constituting State, are supported wholly or substantially from the public funds

of the first-mentioned Contracting State, including any of its political

sub-divisions or local authorities.4. Notwithstanding the

provisions of paragraph 2 of this Axticle and Articles 7, 14 and 15, where

income is derived from personal activities exercised by an entertainer or an

athlete in his capacity as such in a Contracting State and accrues not to the

entertiner or athlete himself but to another person, that income shall be

taxable only in the Contracting State, if that other persons is supported

wholly or substantially from the public funds of that other Contracting State,

including any of its political sub-divisions or local authorities.ARTICLE

18 Governmental Functions1. Remuneration, other

than pension, paid by the Government of a Contracting State to an individual

who is a national of that State in respect of services rendered to that State,

shall be taxable only in that State.2. Any pension paid by

the Government of a Contracting State to an individual who is a national of

that State, shall be taxable only in that Contracting State.3. The provisions of

paragraphs 1 and 2 of this Article shall not apply to remuneration and pensions

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

the Government of either of the Contracting States for the purpose of profit.4. The provisions of

paragraph 1 of this Article shall likewise apply in respect of remuneration

paid under a development assistance programme of a Contracting State, out of

funds supplied by that State to a specialist or volunteer seconded to the other

Contracting State with the Consent of that other State.5. For the purpose of

this Article, the term " Government " shall include any State

Government or local or statutory authority of either Contracting State and, in

particular, the Reserve Bank of India and the Bank of Mauritius.ARTICLE

19 Non-Governmental Pensions and Annuities1. Any pension, other

than a pension referred to in Article 18, or any annuity derived by a resident

of a Contracting State sources within the other Contracting State shall be

taxed only in the first-mentioned Contracting State.2. The term "

pension " means a periodic payment made in consideration of past services

or by way of compensation for injuries received in the course of performance of

services.3. The term "

annuity " means a stated sum payable periodically at stated times during

life or during a specified or ascertainable period of time, under an obligation

to make the payments in return for adequte and full consideration in money or

money's worth.ARTICLE

20 Students and Apprentices1. A student or business

apprentice who is or was a resident of one of the Contracting States

immediately before visiting the other Contracting State and who is present in

that other Contracting State solely for the purpose of his education or

training shall be exempt from tax in that other Contracting State on;a. payments made to him

from sources outside that other Contracting State for the purposes of his

maintenance, education or training; andb. remuneration from

employment in that other Contracting State, in an amount not exceeding Rs.

15,000 in Indian currency or its equivalent in Mauritius rupees at the parity

rate of Exchange during any " previous year " or " year of

income " as the case may be, provided that such employment is directly

related to his studies or is undertaken for the purpose of his maintenance.1.2. The benefits of this

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

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

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

consecutive years from the date of his first arrival, in that other Contracting

State.ARTICLE

21 Professors, Teachers and Research Scholars1. A Professor, Teacher

and Research Scholar who is or was a resident of one of the Contracting States

immediately before visiting the other Contracting State at the invitation of

that other Contracting State or of a university, college, school or other

approved institution, in that other Contracting State for the purpose of

teaching or engaging in research, or both, at the university, college, school

or other approved institution, shall be exempt from tax in that other

Contracting State on any remuneration for such teaching at research for a

period not exceeding two years from the date of his arrival in that other

Contracting State.2. This Article shall

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

the private benefit of a specific person or persons.3. For the purposes of

this Article and Article 20 an individual shall be deemed to be a resident of a

Contracting State if he is resident in that Contracting State in the "

previous year " or the year of income " as the case may be, in which

he visits the other Contracting State or in the immediately preceding "

previous year " on the " year of income ".4. For the purpose of

paragraph 1, " approved institution " means an institution which has

been approved in this regard by the competent authority of the concerned

Contracting State.ARTICLE

22 Other Income1. Subject to the

provisions of paragraph 2 of this Article, items of income of a resident of a

Contracting State, wherever arising, which are not expressly dealt with in the

foregoing Articles of this Convention, shall be taxable only in that

Contracting State.2. The provisions of

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

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

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

other Contracting State through a permanent establishment situated therein, or

performs in that other State independent personal services from a fixed base

situated therein and the right or property in respect of which the income is

paid is effectively connected with such permanent establishment or fixed base.

In such case, the provisions of Article 7 or Article 14, as the case may be,

shall apply.CHAPTER

IV METHODS FOR ELIMINATION OF DOUBLE TAXATIONARTICLE

23 Elimination of Double Taxation1. The laws in force in

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

income in the respective Contracting States except where provisions to the

contrary are made in this Convention.2.a. The amount of

Mauritius tax payable under the laws of Mauritius and in accordance with the

provisions of this Convention, whether directly or by deduction, by a resident

of India, in respect of profits or income arising in Mauritius, which has been

subjected to tax both in India and in Mauritius, shall be allowed as a credit

against the Indian tax payable in respect of such profits or income provided

that such credit shall not exceed the Indian tax (as computed before allowing

any such credit) which is appropriate to the profits or income arising in

Mauritius. Further, where such resident is a company by which surtax is payable

in India, the credit aforesaid shall be allowed in the first instance against

income-tax payable by the company in India and as to the balance, if any,

against surtax payable by it in India.b. In the case of a

dividend paid by a company which is a resident of Mauritius to a company which

is a resident of India and which owns at least 10 per cent of the shares of the

company paying the dividend the credit shall take into account (in addition to

any Mauritius Tax for which credit may be allowed under the provisions of

sub-paragraph (a) of this paragraph) the Mauritius tax payable by the company

in respect of the profits out of which such dividend is paid.1.2.3. For the purposes of

the credit referred to in paragraph 2, the term ' Mauritius tax payble ' shall

be deemed to include any amount which would have been payable is Mauritius tax

for any year but for an exemption or reduction of tax granted for that year or

any part thereof under:i.

section

33, 34, 34A and 34B of the Mauritius Income Act (41 of 1974);ii.

any

other provision which may subsequently be made granting an exemption or

reduction of tax which the competent authorities of the Contracting States

agree to be for the purposes of economic development).1.2.3.4.a. The amount of Indian

tax payable under the laws of India and inaccordance with the provisions of

this Convention, whether directly or by deduction, by a resident of Mauritius,

in respect of profits or income arising in India, which has been subjected to

tax both in India and Mauritius shall be allowed as a credit against Mauritius

tax payable in respect of such profits or income provided that such credit

shall not exceed the Mauritius tax (as computed before allowing any such

credit) is appropriate to the profits or income arising in India.b. In the case of a

dividend paid by a company which is a resident of India to a company which is a

resident of Mauritius and which owns at least 10 per cent of the shares of the

company paying the dividend, the credit shall take into account (in addition to

any Indian Tax for which credit may be allowed under the provisions of

sub-paragraph (a) of this paragraph) the Indian tax payable by the company in

respect of the profits out of which such dividend is paid).1.2.3.4.5. For the purposes of

the credit referred to in paragraph 4. the term ' Indian tax payable ' shall be

deemed to include any amount by which tax has been reduced by the special

incentive measures under:i.

section

10(4), 10(4A), 10(6), (viia), 10(15) (iv), 10(28), 10A, 32A, 33A, 35B, 54E,

80HH, 80HHA, 80-I, 80L, of the Indian Income-tax Act, 1961 (43 of 1961),ii.

any

othe provision which may subsequently be enacted granting a reduction of tax

which the competent authorities of the Contracting States agree to be for the

purposes of economic development.1.2.3.4.5.6. Where under this

Convention a resident of Contracting State is exempt from tax in that

Contracting State in respect of income derived from the other Contracting

State, then the first mentioned Contracting State may, in calculating tax on

the remaining income of that person, apply the rate of tax which would have

been applicable if the income exempted from tax in accordance with this

Convention had not been so exempted.CHAPTER

V SPECIAL PROVISIONSARTICLE

24 Non-Discrimination1. The nationals of a

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

taxation or any requirement connected therewith which is other or more

burdensome than the taxation and connected requirements to which nationals of

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

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

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

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

same activities in the same circumstances.3. Nothing contained in

this Article shall be construed as obliging a Contracting State to grant

persons not resident in that State any personal allowances, reliefs, reductions

and deductions for taxation purpose which are by law available only to persons

who are so resident.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 burdens than the taxation and connected requirements to which other

similar enterprises of that first mentioned State are or may be subjected in

the same circumstances.5. In this Article, the

term " taxation " means taxes which are the subject of this

Convention.ARTICLE

25 Mutual Agreement Procedure1. Where a resident of a

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

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

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

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

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

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

in accordance with the Convention.2. The competent

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

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

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

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

Convention. Any agreement reached shall be implemented notwithstanding any time

limits in the laws of the Contracting States.3. the competent

authorities of the Contracting States shall endeavour to resolve by mutual

agreement any difficulties or doubts arising as to the interpretation or

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

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

authorities of the Contracting States may communicate with each other directly

for the purpose of reaching an 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

26 Exchange of Information or Document1. The competent

authorities of the Contracting States shall exchange such information or

document as is necessary for carrying out the provisions of this Convention or

for prevention of evasion of taxes which are the subject of this Convention.

Any information or document so exchanged shall be treated on secret but may be

disclosed to persons (including courts or other authorities) concerned with the

assessment, collection enforcement, investigation or prosecution in respect of

the taxes which are the subject of this Convention, or to persons with respect

to whom the information or document relates.2. The exchange of

information or documents shall be either on a routine basis or on routine basis

or on request with reference to particular cases or both. The competent

authorities of the Contracting States shall agree from time to time on the list

of the information or documents which shall be furnished on a routine basis.3. The provisions of

paragraph 1 shall not be construed so as to impose on a Contracting State the

obligation:a. to cary out

administrative measures at variance with the laws or administrative practice of

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

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

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

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

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

would be contrary to public policy.ARTICLE

27 Diplomatic and Consular ActivitiesNothing

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

officials under the general rules of international law or under the provisions

of special agreement.CHAPTER

VI FINAL PROVISIONSARTICLE

28 Entry into ForceEach

of the Contracting State shall notify to the other completion of the procedures

required by its law for the bringing into force of this Convention. The

Convention shall enter into force on the date of the later of these

notifications and shall thereupon have effect:a. in India, in respect

of income and capital gains assessable for any assessment year commencing on or

after 1st April, 1983;b. In Mauritius, in

respect of income and capital gains assessable for any assessment year

commentcing on or after 1st July, 1983.ARTICLE

29 TerminationThe

Convention shall remain in force indefinitely but either of the Contracting

States may, on or before the thirtieth day of June in any calendar year

beginning after the expiration of a period of five years from the date of its

entry into force, give the other Contracting State through diplomatic channels,

written notice of termination and in such event, this convention shall cease to

have effect:a. in India, in respect

of income and capital gains assessable for the assessment year commencing on

1st day of April in the second calendar year next following the calendar year

in which the notice is given, and subsequent years;b. in Mauritius, in

respect of income and capital gains assessable for the assessment year

commencing on 1st day of July in the second calendar year next following the

calendar year in which the notice is given, and subsequent years.In

witness whereof the undersigned, being duly authorised thereto, have signed the

present convention.Done

on this 24th day of August, 1982 at Port Louis on two original copies each in

the Hindi and English Languages both the texts being equally authentic. In case

of divergence between the two texts, the English text shall be the operative

one.Sd/---For

the Govt. of India[F.

No. 501/20/73-FTD]C.

K. TIKKU, Jt. SecySd/---For

the Govt. of Mauritius