Oman - Legal Draft

Double Taxation

Avoidance AgreementIncome-Tax Act, 1961:

Notification under section 90: Agreement Between the Republic of the India and

the Sultanate of Oman for the avoidance of double taxation and the prevention

of fiscal evasion with respect to taxes on incomeNotification

No. G. S. R. No. 563(E), dated 23rd September, 1997.NOTIFICATION

No. 10415Whereas

the annexed agreement between the Government of the Sultanate of Oman 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 has entered

into force on the 3rd June, 1997, after the notification by both the

Contracting States to each other of the completion of the proceedings required

by their laws for bringing into force of the said agreement in accordance with

paragraph 1 of Article 29 of the said agreement;Now,

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

Act, 1961 (43 of 1961), the Central Government hereby directs that all the

provisions of the said agreement shall be given effect to throughout the

territory of India.ANNEXUREAGREEMENT

BETWEEN THE REPUBLIC OF INDIA AND THE SULTANATE OF OMAN FOR THE AVOIDANCE OF

DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON

INCOMEThe

Government of the Republic of India and the Government of the Sultanate of

Oman,Desiring

to conclude an Agreement for the avoidance of double taxation and the

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

agreed as follows:Article

1PERSONAL

SCOPEThis

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

Contracting States.Article

2TAXES

COVERED1. The taxes to which

this agreement shall apply are:a. In India,the income-tax

including any surcharge thereon;(hereinafter

referred to as "Indian tax")a.b. In the Sultanate of

Omani.

the

company income tax;ii.

the

profit tax on commercial and industrial establishments;(hereinafter

referred to as "Omani tax")1.2. This agreement shall

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

either Contracting State after the date of signature of this Agreement in

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

competent authorities of the Contracting States shall notify each other of any

substantial changes which are made in their respective taxation laws within one

year from the date of such changes.Article

3GENERAL

DEFINITIONS1. In this Agreement,

unless the context otherwise requires:a. the term

"India" means the territory of India and includes the territorial sea

and airspace above it, as well as any other maritime zone in which India has

sovereign rights, other rights and jurisdictions, according to the Indian law

and in accordance with international law and the U. N. Convention on the Law of

the Sea;b. the term "the

Sultanate of Oman" means the territory of the Sultanate of Oman and the

islands belonging thereto, including the territorial waters and any area

outside the territorial waters over which the Sultanate of Oman may, in

accordance with international law, exercise sovereign rights with respect to

the exploration and exploitation of the natural resources of the sea bed and

the sub-soil and the above-lying waters.c. the terms "a

Contracting State" and "the other Contracting State" mean India

or the Sultanate of Oman as the context requires;d. the term

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

a company or body corporate under the taxation laws in force in the respective

Contracting States;e. 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 Sultanate of Oman, the Ministry

of National Economy and Supervisor of the Ministry of Finance or his authorised

representative;a.b.c.d.e.f. 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;g. the term "fiscal

year" means:i.

in

the case of India, the "previous year" as defined under section 5 of

the Income-tax Act, 1961;ii.

in

the case of the Sultanate of Oman, the "taxable year" as defined in

the Company Income Tax Law, 1981;a.b.c.d.e.f.g.h. the term

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

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

aircraft is operated solely between places in the other Contracting State;i. the term

"national" means any individual possessing the nationality of a

Contracting State, and any legal person, partnership or association deriving

its status from the laws in force in the Contracting State;j. the term

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

other entity which is treated as a taxable unit under the taxation laws in

force in the respective Contracting States;k. the term

"tax" means Indian tax or Omani tax, as the context requires, but

shall not include any amount which is payable in respect of any default or

omission in relation to the taxes to which this Agreement applies or which

represents a penalty imposed relating to those taxes.1.2. As regards the

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

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

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

Agreement applies.Article

4RESIDENT1. For the purposes of

this Agreement, the term "resident of a Contracting State" means any

person who, under the laws of that Contracting State, is liable to tax therein

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

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

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

States, then his status shall be determined as follows:a. he shall be deemed to

be a resident of the State in which he has a permanent home available to him;

if he has a permanent home available to him in both States, he shall be deemed

to be a resident of the State with which his personal and economic relations

are closer (centre of vital interests);b. if the State in which

he has his centre of vital interests cannot be determined, or if he has not a

permanent home available to him in either State, he shall be deemed to be a

resident of the State in which he has an habitual abode;c. if he has an habitual

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

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

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

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

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

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

State in which its place of effective management is situated.Article

5PERMANENT

ESTABLISHMENT1. For the purposes of

this Agreement, the term "permanent establishment" means a fixed

place of business through which the business of the 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 building site or

construction or assembly project or supervisory activities in connection

therewith; but only where such site, project or activity continues for a period

of more than 6 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, display or delivery of goods or merchandise

belonging to the enterprise;b. the maintenance of a

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

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

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

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

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

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

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

enterprise, any activity of a preparatory or auxiliary character.1.2.3. Notwithstanding the

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

independent status to whom paragraph 5 applies) is acting on behalf of an

enterprise and has, and habitually exercises, in a Contracting State an

authority to conclude contracts in the name of the enterprise, that enterprise

shall be deemed to have a permanent establishment in that State in respect of

any activities which that person undertakes for the enterprise, unless the

activities of such person are limited to those mentioned in paragraph 3 of this

Article 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.4. 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, provided that such persons are acting in the ordinary

course of their business.5. 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

6INCOME

FROM IMMOVABLE PROPERTY1. Income derived by a

resident of a Contracting State from immovable property (including income from

agriculture or forestry) situated in the other Contracting State may be taxed

in that other Contracting State.2. The term

"immovable property" shall have the meaning which it has under the

law of the Contracting State in which the property in question is situated. The

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

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

provisions of general law respecting landed property apply, usufruct of

immovable property and rights to variable or fixed payments as consideration

for the working of, or the right to work, mineral deposits, sources and other

natural resources. Ships, boats and aircraft shall not be regarded as immovable

property.3. The provisions of

paragraph 1 shall also apply to income derived from the direct use, letting, or

use in any other form of immovable property.4. The provisions of

paragraphs 1 and 3 shall also apply to the income from immovable property of an

enterprise and to income from immovable property used for the performance of

independent personal services.Article

7BUSINESS

PROFITS1.

The

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

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

through a permanent establishment situated therein. If the enterprise carries

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

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

indirectly to that permanent establishment.The

words "directly or indirectly" mean, for the purposes of this

article, that where a permanent establishment takes an active part in

negotiating, concluding or fulfilling contracts entered into by the enterprise,

then notwithstanding that other parts of the enterprise have also participated

in those transactions, there shall be attributed to the permanent establishment

that proportion of profits of the enterprise arising out of those contracts as

the contribution of the permanent establishment to those transactions bears to

that of the enterprise as a whole.1.2. 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 business of the permanent

establishment including executive and general administrative expenses so

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

or elsewhere in accordance with the provisions of and subject to the

limitations of the tax laws of that State.4. In so far 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 reasons of the mere purchase by that

permanent establishment of goods or merchandise for the enterprise.6. 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.7. Where profits include

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

Agreement, then the provisions of those Articles shall not be affected by the

provisions of this Article.Article

8AIR

TRANSPORT1. Profits derived by an

enterprise of a Contracting State from the operation of aircraft in

international traffic shall be taxable only in that Contracting State.2. The provisions of

paragraph 1 shall also apply to profits from the participation in a pool, a

joint business or an international operating agency.3. For the purposes of

this Article, interest on funds directly connected with the operation of

aircraft in international traffic shall be regarded as income or profits derived

from the operation of such aircraft, and the provisions of Article 12 shall not

apply in relation to such interest.4. The term

"operation of aircraft" means business of transportation by air of

passengers, mail, livestock or goods carried on by the owners or lessees or

charterers of aircraft, including the sale of tickets for such transportation

on behalf of other enterprises, the incidental lease of aircraft and any other

activity directly connected with such transportation.5. For the purposes of

this Article and notwithstanding the provisions of paragraph 1(f) of Article 3,

the term "enterprise of a Contracting State" means:i.

in

case of the Sultanate of Oman, Gulf Air, Oman Aviation Services Company (SAOG)

and any other enterprise carried on by a resident of the Sultanate of Oman;ii.

in

case of India, Air India, Indian Airlines and any other enterprise carried on

by a resident of India.Article

9SHIPPING1. Profits derived by an

enterprise of a Contracting State from the operation of ships in international

traffic shall be taxable only in that Contracting State.2. The provisions of

paragraph 1 shall also apply to profits from the participation in a pool, a

joint business or an international operating agency.3. For the purposes of

this Article, interest on funds directly connected with the operation of ships

in international traffic shall be regarded as income or profits from the

operation of such ships and the provisions of Article 12 shall not apply in

relation to such interest.4. The term

"operation of ships" means business of transportation by sea of

passengers, mail, livestock or goods carried on by the owners or lessees or

charterers of ships, including the sale of tickets for such transportation on

behalf of other enterprises, the incidental lease of ships and any other

activity directly connected with such transportation.Article

10ASSOCIATED

ENTERPRISESWhere:a. an enterprise of a

Contracting State participates directly or indirectly in the management,

control or capital of an enterprise of the other Contracting State, orb. the same persons

participate directly or indirectly in the management, control or capital of an

enterprise of a Contracting State and an enterprise of the other Contracting

State, and in either case, conditions are made or imposed between the two

enterprises in their commercial or financial relations which differ from those

which would be made between independent enterprises, then any profits which

would, but for those conditions, have accrued to one of the enterprises, but,

by reason of those conditions, have not so accrued, may be included in the

profits of that enterprise and taxed accordingly.Article

11DIVIDENDS1. Dividends paid by a

company which is resident of a Contracting State to a resident of the other

Contracting State may be taxed in that other 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 the State, but

if the recipient is the beneficial owner of the dividends, the tax so charged

shall not exceed:a. 10 per cent. of the

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

at least 10 per cent. of the shares of the company paying the dividends;b. 12 1/2 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. 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.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 16, 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 in so far 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 such other Contracting

State.Article

12INTEREST1. Interest arising in a

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

taxed in that other 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 State, but if the recipient is the beneficial

owner of the interest the tax so charged shall not exceed 10 per cent. of the

gross amount of the interest.3. Notwithstanding the provisions

of paragraph 2,a. interest arising in a

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

and beneficially owned by:i.

the

Government, a political sub-division or a local authority of the other

Contracting State; orii.

the

Central Bank of the other Contracting State;a.b. interest arising in a

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

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

and beneficially owned by any person other than a person referred to in

sub-paragraph (a) 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.1.2.3.4. The term

"interest" as used in this Article means income from debt-claims of

every kind, whether or not secured by mortgage and whether or not carrying a

right to participate in the debtor's profits, and in particular, income from

government securities and income from bonds or debentures, including premiums

and prizes attaching to such securities, bonds or debentures. Penalty charges

for late payment shall not be regarded as interest for the purpose of this

Article.5. The provisions of

paragraphs 1 and 2 shall not apply if the beneficial owner of the interest,

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

Contracting State in which the interest arises, through a permanent

establishment situated therein, or performs in that other 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 16, as the case may be, shall apply.6. 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

Contracting State. However, where the person paying the interest, whether he is

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

permanent establishment or a fixed base in connection with which the

indebtedness on which the interest is paid was incurred, and such interest is

borne by such permanent establishment or fixed base, then such interest shall

be deemed to arise in the Contracting State in which the permanent

establishment or fixed base is situated.7. Where, by reason of a

special relationship between the payer and the beneficial owner or between both

of them and some other person, the amount of the interest, having regard to the

debt-claim for which it is paid, exceeds the amount which would have been

agreed upon by the payer and the beneficial owner in the absence of such

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

mentioned amount. In such case, the excess part of the payments shall remain

taxable according to the laws of each Contracting State, due regard being had

to the other provisions of this Agreement.Article

13ROYALTIES1. Royalties 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 may also be taxed in that 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, 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, or

films or tapes used for radio or television broadcasting, any patent, trade

mark, design or model, plan, secret formula or process, or for the use of, or

the right to use, industrial, commercial or scientific equipment, or for

information concerning industrial, commercial or scientific experience.4. The provisions of

paragraphs 1 and 2 shall not apply if the beneficial owner of the royalties,

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

Contracting State in which the royalties 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

or property in respect of which the royalties are paid is effectively connected

with such permanent establishment or fixed base. In such case, the provisions

of Article 7 or Article 16, as the case may be, shall apply.5. Royalties shall be

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

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

Contracting State. However, where the person paying the royalties, whether he

is a resident of a Contracting State or not, has in that Contracting State a

permanent establishment or a fixed base in connection with which the liability

to pay the royalties was incurred, and such royalties are borne by such

permanent establishment or fixed base, then the royalties shall be deemed to

arise in the Contracting State in which the permanent establishment or fixed

base is situated.6. 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 royalties, having regard to the

use, right or information for which they are paid, exceeds the amount which

would have been agreed upon by the payer and the beneficial owner in the

absence of such relationship, the provisions of this article shall apply only

to the last mentioned amount. In such case, the excess part of the payments

shall remain taxable according to the laws of each Contracting State, due

regard being had to the other provisions of this Agreement.Article

14TECHNICAL

FEES1. Technical fees

arising in a Contracting State which are derived by a resident of the other

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

technical fees 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 technical fees, the tax so charged shall not exceed

15 per cent. of the gross amount of the technical fees.3. The term

"technical fees" as used in this article means payments of any kind

to any person, other than to an employee of the person making the payments, in

consideration for any services of a technical, managerial or consultancy

nature.4. The provisions of

paragraphs 1 and 2 shall not apply if the beneficial owner of the technical

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

Contracting State in which the technical fees 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

technical fees are effectively connected with such permanent establishment or

fixed base. In such case, the provisions of Article 7 or Article 16, as the

case may be, shall apply.5. Technical fees 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 Contracting State. However, where the person paying the technical fees,

whether he is a resident of that Contracting State or not, has in that

Contracting State a permanent establishment or a fixed base in connection with

which the liability to pay the technical fees was incurred, and such technical

fees are borne by such permanent establishment or fixed base then the technical

fees shall be deemed to arise in the Contracting State in which the permanent

establishment or fixed base is situated.6. Where, by reason of a

special relationship between the payer and the beneficial owner or between both

of them and some other person, the amount of the technical fees paid exceeds,

for whatever reason, the amount which would have been agreed upon by the payer

and the beneficial owner in the absence of such relationship, the provisions of

the article shall apply only to the last mentioned amount. In such case, the

excess part of the payments shall remain taxable according to the laws of each

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

Agreement.Article

15CAPITAL

GAINS1. Gains derived by a

resident of a Contracting State from the alienation of immovable property

referred to in Article 6, and situated in the other Contracting State may be

taxed in that other Contracting State.2. Gains from the

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

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

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

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

for the purpose of performing independent personal services, including such

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

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

Contracting State.3. Gains from the

alienation of ships or aircraft operated in international traffic or movable

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

taxable only in the Contracting State of which the alienator is a resident.4. Gains from the

alienation of shares of the capital stock of a company the property of which

consists directly or indirectly principally of immovable property situated in a

Contracting State may be taxed in that Contracting State.5. Gains from the

alienation of shares other than those mentioned in paragraph 4 in a company

which is a resident of a Contracting State may be taxed in that Contracting

State.6. Gains from the

alienation of any property other than that mentioned in paragraphs 1, 2, 3, 4

and 5 shall be taxable only in the Contracting State of which the alienator is

a resident.Article

16INDEPENDENT

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

Contracting State except in the following circumstances when such income may

also be taxed in the other Contracting State:-a. if he has a fixed

base regularly available to him in the other Contracting State for the purpose

of performing his activities; in that case, only so much of the income as is

attributable to that fixed base may be taxed in that other Contracting State;

orb. if his stay in the

other Contracting State is for a period or periods amounting to or exceeding in

the aggregate 183 days in the relevant fiscal year; in that case, only so much

of the income as is derived from his activities performed in that other State may

be taxed in that other State.1.2. The term

"professional services" include independent scientific, literary,

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

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

and accountants.Article

17DEPENDENT

PERSONAL SERVICES1. Subject to the

provisions of Articles 18, 19, 20, 21, 22 and 23, 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 first mentioned Contracting State if:a. the recipient is

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

the aggregate 183 days in the relevant fiscal year, andb. the remuneration is

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

Contracting State, andc. the remuneration is

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

in the other Contracting State.1.2.3. Notwithstanding the

preceding provisions of this article, remuneration derived in respect of an

employment exercised aboard a ship or aircraft operated in international

traffic by an enterprise of a Contracting State shall be taxable only in that

Contracting State. In case of aircraft, the term "enterprise of a

Contracting State" shall have the same meaning as defined in paragraph 5

of Article 8 of this Agreement.Article

18DIRECTORS'

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

19INCOME

EARNED BY ENTERTAINERS AND SPORTSPERSONS1. Notwithstanding the

provisions of Articles 16 and 17, income derived by a resident of a Contracting

State as an entertainer such as a theatre, motion picture, radio or television

artiste, or a musician or as a sportsperson, from his personal activities as

such exercised in the other Contracting State, may be taxed in that other

Contracting State.2. Where income in

respect of personal activities exercised by an entertainer or a sportsperson in

his capacity as such accrues not to the entertainer or sportsperson himself but

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

7, 16 and 17, be taxed in the Contracting State in which the activities of the

entertainer or sportsperson are exercised.3. Notwithstanding the

provisions of paragraph 1, income derived by an entertainer or a sportsperson

who is a resident of a Contracting State from his personal activities as such

exercised in the other Contracting State, shall be taxable only in

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

Contracting State are supported wholly or substantially from the public funds

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

sub-divisions or local authorities.4. Notwithstanding the

provisions of paragraph 2 and Articles 7, 16 and 17, where income in respect of

personal activities exercised by an entertainer or a sportsperson in his

capacity as such in a Contracting State accrues not to the entertainer or

sportsperson himself but to another person, that income shall be taxable only

in the other Contracting State, if that other person is supported wholly or

substantially from the public funds of that other Contracting State, including

any of its political subdivisions or local authorities.Article

20REMUNERATION

AND PENSIONS IN RESPECT OF GOVERNMENT SERVICE1.a. Remuneration, other

than a pension, paid by a Contracting State or a political sub-division or a

local authority thereof to an individual in respect of services rendered to

that Contracting State or subdivision or authority 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 Contracting State whoi.

is

a national of that other Contracting State; orii.

did

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

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

or out of funds created by a Contracting State or a political sub-division or a

local authority thereof to an individual in respect of services rendered to

that Contracting State or subdivision or authority 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 17, 18 and 21 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

21NON-GOVERNMENT

PENSIONS AND ANNUITIES1. Any pension, other

than a pension referred to in Article 20, or any annuity derived by a resident

of a Contracting State from sources within the other Contracting State may be

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

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

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

performance of services.3. The term

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

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

obligation to make the payments in return for adequate and full consideration

in money or money's worth.Article

22PAYMENTS

RECEIVED BY STUDENTS AND APPRENTICES1. A student or business

apprentice who is or was a resident of a Contracting State immediately before

visiting the other Contracting State and who is present in that other

Contracting State solely for the purpose of his education or training, shall be

exempt from tax in that other Contracting State on:-a. payments made to him

by persons residing outside that other Contracting State for the purposes of

his maintenance, education or training; orb. remuneration from

employment in that other Contracting State, in an amount not exceeding US

dollars 2000 or its equivalent amount during any fiscal year, 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 than

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

Contracting State.Article

23PAYMENTS

RECEIVED BY PROFESSORS, TEACHERS AND RESEARCH SCHOLARS1. A professor or

teacher who is or was a resident of a Contracting State immediately before

visiting the other Contracting State for the purpose of teaching or engaging in

research, or both, at a university, college, school or other approved

institution in that other Contracting State shall be exempt from tax in that

other Contracting State on any remuneration for such teaching or research for a

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

Contracting State.2. This article shall

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

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

this article and Article 22, an individual shall be deemed to be a resident of

a Contracting State if he is a resident in that Contracting State in the fiscal

year in which he visits the other Contracting State or in the immediately

preceding fiscal year.4. For the purposes 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

24OTHER

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 Agreement, shall be taxable only in that Contracting

State.2. The provisions of

paragraph 1 of this article 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 16, as the case may

be, shall apply.3. Notwithstanding the

provisions of paragraphs 1 and 2, items of income of a resident of a

Contracting State not dealt with in the foregoing Articles of this Agreement

and arising in the other Contracting State may also be taxed in that other State.Article

25AVOIDANCE

OF DOUBLE TAXATION1. The law in force in

either of the Contracting States will continue to govern the taxation of income

in the respective Contracting States except where provisions to the contrary

are made in this Agreement.2. Where a resident of

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

Agreement, may be taxed in the Sultanate of Oman, India shall allow as a

deduction from the tax on the income of that resident an amount equal to the

income-tax paid in the Sultanate of Oman, whether directly or by deduction.

Such deduction shall not, however, exceed that part of the income-tax (as

computed before the deduction is given) which is attributable to the income

which may be taxed in the Sultanate of Oman.3. Where a resident of

the Sultanate of Oman derives income which, in accordance with the provisions

of this Agreement, may be taxed in India, the Sultanate of Oman shall allow as

a deduction from the tax on the income of the resident an amount equal to the

income-tax paid in India, whether directly or by deduction. Such deduction

shall not, however, exceed that part of the income-tax (as computed before the

deduction is given) which is attributable to the income which may be taxed in

India.4. The tax payable in a

Contracting State mentioned in paragraph 2 and paragraph 3 of this article

shall be deemed to include the tax which would have been payable but for the

tax incentives granted under the laws of the Contracting State and which are

designed to promote economic development.5. Income which, in

accordance with the provisions of this Agreement, is not to be subjected to tax

in a Contracting State, may be taken into account for calculating the rate of

tax to be imposed in that Contracting State.Article

26MUTUAL

AGREEMENT PROCEDURE1. Where a person 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

Agreement, 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 Agreement.2. The competent

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

if it is not itself able to arrive at 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

Agreement. Any agreement reached shall be implemented notwithstanding any time

limits in the domestic laws of the Contracting State.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 Agreement. They may also consult together for the

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

authorities of the Contracting States may communicate with each other directly

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

paragraphs. When it seems advisable in order to reach agreement to have an oral

exchange of opinions, such exchange may take place through a Commission

consisting of representatives of the competent authorities of the Contracting

States.Article

27EXCHANGE

OF INFORMATION1.

The

competent authorities of the Contracting States shall exchange such information

(including documents) as is necessary for carrying out the provisions of this

Agreement or of the domestic laws of the Contracting States concerning taxes

covered by this Agreement, in so far as the taxation thereunder is not contrary

to this Agreement, in particular for the prevention of fraud or evasion of such

taxes. Any information received by a Contracting State shall be treated as

secret in the same manner as information obtained under the domestic laws of

that Contracting State. However, if the information is originally regarded as

secret in the transmitting State, it shall be disclosed only to persons or

authorities (including courts and administrative bodies) involved in the

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

the determination of objections and appeals in relation