Pakistan - Legal Draft

Double Taxation

Avoidance AgreementAgreement between the

Republic of India and the Islamic Republic of Pakistan for the avoidance of

double taxation of income derived from International Air TransportNotification

G.S.R. No. 792(E), dtd. 29.08.1989.Whereas

the annexed Agreement between the Republic of India and the Islamic Republic of

Pakistan for the avoidance of double taxation of income derived from

international air transport has entered into force on the 1st day of August,

1989, 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 5 of the said Agreement.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 Agreement shall be given effect to in the Union of India.ANNEXUREAGREEMENT

BETWEEN THE REPUBLIC OF INDIA AND THE ISLAMIC REPUBLIC OF PAKISTAN FOR THE

AVOIDANCE OF DOUBLE TAXATION OF INCOME DERIVED FROM INTERNATIONAL AIR

TRANSPORT.The

Government of the Republic of India and the Government of the Islamic Republic

of Pakistan;Desiring

to conclude an agreement for the avoidance of double taxation of income derived

from international air transport:Have

agreed as follows:Article

1TAXES

COVERED1. This Agreement shall

apply to taxes on income imposed on behalf of a Contracting State or of its

political sub-divisions or local authorities irrespective of the manner in

which they are levied.2. The existing taxes to

which this Agreement shall apply are:a. In the case of

Pakistan:i.

the

income-tax;ii.

the

super-tax; andiii.

the

surcharge;(hereinafter

referred to as " Pakistan tax ");a.b. In the case of India:i.

the

income-tax including surcharge thereon; andii.

the

surtax;(hereinafter

referred to as " Indian tax ").1.2.3. This Agreement shall

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

the date of signature of this Agreement in addition to, or in place of, the

taxes referred to in paragraph 2 of this article. The competent authority of a

Contracting State shall, as soon as possible or at least at the end of each

year, notify the other of any substantive changes which are made in its

taxation law.Article

2DEFINITIONS1. In this Agreement,

unless the context otherwise requires:a. the terms " a

Contracting State " and " the other Contracting State " mean

Pakistan or India, as the context requires;b. the term " tax

" means " Pakistan tax ", or " Indian tax ", as the

context requires;c. the term "

enterprise of a Contracting State " means:i.

an

airline designated by the Government of that State in pursuance of the

Agreement between the Government of the Islamic Republic of Pakistan and the

Government of the Republic of India relating to air services, dated 16th July,

1976 (as amended or revised from time to time); orii.

an

airline which is authorised by the Government of that State by a general or special

arrangement between the two Contracting States to operate chartered flights

between or beyond their territories;a.b.c.d. the term "

international traffic " means any transport by an aircraft operated by an

enterprise of a Contracting State, except when the aircraft is operated solely

between places in the other Contracting State;e. the term "

competent authority " means:i.

in

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

(Department of Revenue) or their authorised representative; andii.

in

the case of Pakistan, the Central Board of Revenue or their authorised

representative.1.2. As regards the

application of the 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 State concerning the taxes to which the Agreement

applies.Article

3AVOIDANCE

OF DOUBLE TAXATION1. Profits derived by an

enterprise of a Contracting State from the operation of aircraft in

international traffic shall be exempt from tax in the other Contracting State.2. The provisions of

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

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

paragraph 1, interest on funds connected with the operation of aircraft in

international traffic shall be regarded as profits derived from the operation

of such aircraft.Article

4RESIDUAL

PROVISIONSThe

laws in force in either of the Contracting States will continue to govern the

assessment and taxation of income in the Contracting States except where an

express provision to the contrary is made in this Agreement.Article

5ENTRY

INTO FORCEEach

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

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

Agreement shall enter into force on the first day of the second month following

the month in which the later of these notifications has been given and shall

have effect in respect of income derived on or after the 1st day of July, 1986.Article

6TERMINATION1. This Agreement shall

continue in effect indefinitely but either Contracting State may, on or before

the thirtieth day of June in any calendar year beginning not earlier than the

expiry of a period of five years from the date of its entry into force, give

notice of termination to the other Contracting State and in such event this

Agreement shall cease to be effective:a. In Pakistan, in

respect of any assessment year on or after the 1st day of July of the second calendar

year following the year in which the notice is given;b. In India, in respect

of any assessment year commencing on or after the 1st day of April of the

second calendar year following the year in which the notice is given.1.2. In case a

comprehensive agreement for the avoidance of double taxation with respect to

taxes on income, including inter alia, income derived from International Air

Transport is concluded between the Contracting States, then, notwithstanding

anything to the contrary in paragraph 1, this Agreement shall cease to have

effect from the date on which such comprehensive Agreement enters into force.IN

WITNESS WHEREOF,

the undersigned, duly authorised thereto, have signed this Agreement.Done

at Islamabad on this thirty-first day of December, one thousand nine hundred

and eighty eight in two originals, each in the Hindi and English languages,

both texts being equally authentic. In case of divergence between the two

texts, the English text shall be the operative one.For

the Government of the For the Government of the IslamicRepublic

of India, Republic of Pakistan(Sd.)

S. K. Singh, (Sd.) Niaz A. Naik,Ambassador

of India to Pakistan. Ambassador of Pakistan to India.(Sd.)

P. K. Appachoo,Joint

Secretary to the Government of India.[No.

8438/F. No. 501/9/76-FTD]