Sweden - Legal Draft

Double Taxation

Avoidance AgreementIncome-tax Act,

1961:Notification under section 90:Convention between the Government of the

Kingdom of Sweden and the Government of the Republic of India for avoidance of

Double Taxation and prevention of Fiscal Evasion with respect to taxes on

income and on capitalNotification

No. G. S. R. 705(E), dtd. 17.12.1997.Whereas

the annexed Convention between the Government of the Kingdom of Sweden 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 and on capital

shall come into force, on the twenty-fifth day of the December, 1997, thirty

days after the receipt of the letter of the notifications by both the

Contracting States to each other of the procedures required under their laws

for bringing into force of the said Convention in accordance with Article 30 of

the said Convention;Now,

therefore, in exercise of the powers conferred under section 90 of the

Income-tax Act, 1961 (43 of 1961) and section 44A of the Wealth-tax Act, 1957

(27 of 1957), the Central Government hereby directs that all the provisions of

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

BETWEEN THE GOVERNMENT OF THE REPUBLIC OF INDIA AND THE GOVERNMENT OF THE

KINGDOM OF SWEDEN FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF

FISCAL EVASION WITH RESPECT TO TAXES ON INCOME AND ON CAPITALThe

Government of the Republic of India and the Government of the Kingdom of Sweden,

desiring to conclude a Convention for the Avoidance of Double Taxation and the

Prevention of Fiscal Evasion with respect to taxes on income and on capital and

with a view to promoting economic co-operation between the two countries, have

agreed as follows:ARTICLE

1PERSONAL

SCOPEThis

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

Contracting States.ARTICLE

2TAXES

COVERED1. This Convention shall

apply to taxes on income and on capital imposed on behalf of a Contracting State

or of its political sub-divisions or local authorities, irrespective of the

manner in which they are levied.2. There shall be

regarded as taxes on income and on capital all taxes imposed on total income,

on total capital, or on elements of income or of capital, including taxes on

gains from the alienation of movable or immovable property, taxes on the total

amounts of wages or salaries paid by enterprises, as well as taxes on capital

appreciation.3. The existing taxes to

which this Convention shall apply are in particular:a. In India:i.

the

income-tax, including any surcharge thereon; andii.

the

tax on capital (the wealth-tax); (hereinafter referred to as 'Indian tax');a.b. In Sweden:i.

the

income-tax, including the national income-tax (den statliga inkomstskatten), including

the tax on employees at sea (sjomansskatten) and the withholding tax on

dividends (kupongskatten);ii.

the

income-tax on non-residents (den sarskilda inkomstskatten for utomlands

bosatta);iii.

the

income-tax on non-resident artistes and athletes (den sarskilda inkomstskatten

for utomlands bosatta artister m.fl.);iv.

the

municipal income-tax (den kommunala inkomstskatten);v.

the

tax on means intended for expansion purposes (expansions-medelsskatt); andvi.

the

net wealth-tax;(hereinafter

referred to as 'Swedish tax').1.2.3.4. The Convention shall

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

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

the existing taxes referred to in paragraph (3). The competent authorities of

the Contracting States shall notify each other of any substantial changes which

have been made in their respective taxation laws.ARTICLE

3GENERAL

DEFINITIONS1. For the purposes of

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

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

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

rights, other rights and jurisdiction, according to the Indian law and in

accordance with international law, including the U. N. Convention on the Law of

the Sea;b. the term 'Sweden'

means the Kingdom of Sweden and, when used in a geographical sense, includes

the national territory, the territorial sea of Sweden as well as other maritime

areas over which Sweden in accordance with international law exercises

sovereign rights or jurisdiction;c. the terms 'a

Contracting State' and 'the other Contracting State' mean India or Sweden, as

the context requires;d. 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;e. the term 'company'

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

tax purposes;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 '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;h. the term 'national'

means:i.

any

individual possessing the nationality of a Contracting State;ii.

any

legal person, partnership and association deriving its status as such from the

laws in force in a Contracting State;a.b.c.d.e.f.g.h.i. the term 'competent

authority' means:i.

in

India: the Central Government in the Ministry of Finance (Department of

Revenue) or their authorised representative;ii.

in

Sweden: the Minister of Finance, his authorised representative or the authority

which is designated as a competent authority for the purposes of this

Convention;a.b.c.d.e.f.g.h.i.j. the term 'fiscal

year' means:i.

in

the case of India, 'previous year' as defined under section 3 of the Income-tax

Act, 1961;ii.

in

the case of Sweden, 'beskattningsar' as defined under section 3 of the

Kommunalskattelagen, 1928;a.b.c.d.e.f.g.h.i.j.k. the term 'tax' means

Indian tax or Swedish tax, as the context requires, but shall not include any

amount which is payable in respect of any default or omission in relation to

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

imposed relating to those taxes.1.2. As regards, the

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

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

has under the law of that State concerning the taxes to which the Convention applies.ARTICLE

4RESIDENT1.

For

the purposes of this Convention, the term 'resident of a Contracting State'

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

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

of a similar nature, and also includes that State, a political sub-division, a

local authority and any governmental body or agency thereof. In the case of a

partnership or estate, the term applies only to the extent that the income

derived by such partnership or estate is subject to tax in that state as the

income of a resident, either in its hands or in the hands of its partners or

beneficiaries.The

term 'resident of a Contracting State' does not include any person who is

liable to tax in that State in respect only of income from sources in that

State or capital situated therein.1.2. 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 only 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 only 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

only 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. If the

State in which its place of effective management is situated cannot be

determined, then the competent authorities of the Contracting States shall

settle the question by mutual agreement.ARTICLE

5PERMANANT

ESTABLISHMENT1. For the purposes of

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

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

carried on.2. The term 'permanent

establishment' includes especially:a. a place of

management;b. a branch;c. an office;d. a factory;e. a workshop;f. a mine, an oil or gas

well, a quarry or any other place of extraction of natural resources;g. a sales outlet;h. a warehouse in

relation to a person providing storage facilities for others; andi. a farm, plantation or

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

carried on.1.2.3. A building site or a

construction, assembly or installation project or supervisory activities in

connection therewith constitute a permanent establishment only if such site,

project or activities continue for a period of more than six months.4. An enterprise shall

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

on business through that permanent establishment if it provides services or

facilities in connection with, or supplies plant and machinery on hire used for

or to be used in the prospecting for, or extraction or exploitation of mineral

oils in that State.5. 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 other activity of a preparatory or auxiliary character;f. the maintenance of a

fixed place of business solely for any combination of activities mentioned in

sub-paragraphs (a) to (e), provided that the overall activity of the fixed

place of business resulting from this combination is of a preparatory or

auxiliary character.1.2.3.4.5.6. Notwithstanding the

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

an independent status to whom paragraph (8) applies - is acting in a

Contracting State on behalf of an enterprise of the other Contracting State,

that enterprise shall be deemed to have a permanent establishment in the

first-mentioned Contracting State in respect of any activities which that

person undertakes for the enterprise, if such a person:a. has and habitually

exercises in that State an authority to conclude contracts in the name of the

enterprise, unless the activities of such person are limited to those mentioned

in paragraph (5) which, if exercised through a fixed place of business, would

not make this fixed place of business a permanent establishment under the

provisions of that paragraph; orb. has no such

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

goods or merchandise from which he regularly delivers goods or merchandise on

behalf of the enterprise; orc. habitually secures

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

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

or subject to the same control, as that enterprise.1.2.3.4.5.6.7. Notwithstanding the

preceding provisions of this Article, an insurance enterprise of a Contracting

State shall, except in regard to re-insurance, be deemed to have a permanent

establishment in the other Contracting State if it collects premiums in the territory

of that other State or insures risks situated therein through a person other

than an agent of an independent status to whom paragraph (8) applies.8. An enterprise shall

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

because it carries on business in that State through a broker, general

commission agent or any other agent of an independent status, provided that

such persons are acting in the ordinary course of their business. However, when

the activities of such an agent are devoted wholly or almost wholly on behalf

of that enterprise, he will not be considered an agent of an independent status

within the meaning of this paragraph.9. The fact that a

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

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

on business in that other 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 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, buildings, 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 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 State but

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

provisions of paragraph (3), where an enterprise of a Contracting State carries

on business in the other Contracting State through a permanent establishment

situated therein, there shall in each Contracting State be attributed to that

permanent establishment the profits which it might be expected to make if it

were a distinct and separate enterprise engaged in the same or similar

activities under the same or similar conditions and dealing wholly

independently with the enterprise of which it is a permanent establishment.3. In determining the

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

expenses which are incurred for the purposes of the permanent establishment,

including executive and general administrative expenses so incurred, whether in

the State in which the permanent establishment is situated or elsewhere, in

accordance with the provisions of and subject to the limitations of the tax

laws of that State.4. No profits shall be

attributed to a permanent establishment by reason of the mere purchase by that

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

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

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

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

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

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

provisions of this Article.ARTICLE

8SHIPPING

AND AIR TRANSPORT1. Profits of an

enterprise of a Contracting State from the operation of ships or aircraft in

international traffic shall be taxable only in that State.2. Profits derived by a

transportation enterprise which is a resident of a Contracting State from the

use, maintenance, or rental of containers (including trailers and other

equipment for the transport of containers) used for the transport of goods or

merchandise in international traffic shall be taxable only in that Contracting

State unless the containers are used solely within the other Contracting State.3. With respect to

profits derived by the Swedish, Danish and Norwegian air transport consortium

Scandinavian Airlines System (SAS), the provisions of paragraph (1) shall apply

only to such part of the profits as corresponds to the participation held in

that consortium by SAS Sverige AB, the Swedish partner of Scandinavian Airlines

System (SAS).4. The provisions of

paragraphs (1) and (2) shall also apply to profits from the participation in a

pool, a joint business or an international operating agency.ARTICLE

9ASSOCIATED

ENTERPRISESWhere:a. an enterprise of a

Contracting State participates directly or indirectly in the management,

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

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

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

State,and

in either case conditions are made or imposed between the two enterprises in

their commercial or financial relations which differ from those which would be

made between independent enterprises, then any profits which would, but for

those conditions, have accrued to one of the enterprises, but, by reason of

those conditions, have not so accrued, may be included in the profits of that

enterprise and taxed accordingly.Any

case resulting in double taxation from the application of this Article may be

resolved under the mutual agreement procedure.ARTICLE

10DIVIDENDS1. Dividends paid by a

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

Contracting State may be taxed in that other State.2. Notwithstanding the

provisions of paragraph (1), such dividends may also be taxed in the

Contracting State of which the company paying the dividends is a resident and

according to the laws of that State, but if the beneficial owner of the

dividends is a resident of the other Contracting State, the tax so charged

shall not exceed 10 per cent of the gross amount of the dividends.This

paragraph shall not affect the taxation of the company in respect of the

profits out of which the dividends are paid.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 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 State independent personal services from a fixed base situated therein,

and the holding in respect of which the dividends are paid is effectively

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

provisions of Article 7 or Article 14, as the case may be, shall apply.5. Where a company which

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

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

paid by the company, except insofar as such dividends are paid to a resident of

that other State or insofar 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

11INTEREST1. Interest arising in a

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

in that other State.2. However, such

interest may also be taxed in the Contracting State in which it arises and

according to the laws of that State, but if the beneficial owner of the

interest is a resident of the other Contracting State, the tax so charged shall

not exceed 10 per cent of the gross amount of the interest.3. Notwithstanding the

provisions of paragraph (2), interest arising in a Contracting State shall be

exempt from tax in that Contracting State provided it is derived and

beneficially owned by, or derived in connection with a loan or credit extended

or endorsed by:i.

the

Government, a political sub-division, a statutory body, or a local authority of

the other Contracting State; orii.

in

the case of India, the Reserve Bank of India, the Industrial Finance

Corporation of India, the Industrial Development Bank of India, the

Export-Import Bank of India, the National Housing Bank, the Small Industries

Development Bank of India and the Industrial Credit and Investment Corporation

of India (ICICI); and in the case of Sweden, the Swedish International

Development Authority (SIDA), SWEDECORP (Styrelsen for internationellt

naringslivsbistand), Swedfund International AB or The Swedish Export Credits

Guarantee Board (Exportkreditnamnden); ori.ii.iii.

any

other institution as may be agreed from time to time between the competent

authorities of the Contracting States.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), (2) and (3) shall not apply if the beneficial owner of the

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

other Contracting State in which the interest arises, through a permanent

establishment situated therein, or performs in that other 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.6. Interest shall be

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

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

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

establishment or a fixed base in connection with which the indebtedness on

which the interest is paid was incurred, and such interest is borne by such

permanent establishment or fixed base, then such interest shall be deemed to

arise in the 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 Convention.ARTICLE

12ROYALTIES

AND FEES FOR TECHNICAL SERVICES1. Royalties and fees

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

the other Contracting State may be taxed in that other State.2. Notwithstanding the

provisions of paragraph (1), such royalties and fees for technical services may

also be taxed in the Contracting State in which they arise, and according to

the laws of that State, but if the recipient is the beneficial owner of the

royalties or fees for technical services, the tax so charged shall not exceed

10 per cent of the gross amount of the royalties or fees for technical

services.3.a. The term 'royalties'

as used in this Article means payments of any kind received as a consideration

for the use of, or the right to use, any copyright of literary, artistic or

scientific work including cinematograph films, any patent, trade mark, design

or model, plan, secret formula or process, or for information concerning

industrial, commercial or scientific experience.b. The term 'fees for

technical services' means payment of any kind in consideration for the

rendering of any managerial, technical or consultancy services including the

provision of services by technical or other personnel but does not include

payments for services mentioned in Articles 14 and 15 of this Convention.1.2.3.4. The provisions of

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

or fees for technical services, being a resident of a Contracting State,

carries on business in the other Contracting State in which the royalties or

fees for technical services arise, through a permanent establishment situated

therein, or performs in that other State independent personal services from a

fixed base situated therein, and the right or property in respect of which the

royalties or fees for technical services are paid is effectively connected with

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

Article 7 or Article 14, as the case may be, shall apply.`5. Royalties or fees for

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

payer is a resident of that State. Where, however, the person paying the

royalties or fees for technical services, whether he is a resident of a

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

or a fixed base in connection with which the liability to pay the royalties or

fees for technical services was incurred, and such royalties or fees for

technical services are borne by such permanent establishment or fixed base,

then such royalties or fees for technical services shall be deemed to arise in

the State in which the permanent establishment or fixed base is situated.6. Where by reason of a

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

of them and some other person, the amount of the royalties or fees for

technical services, having regard to the use, right or information for which

they are paid, exceeds the amount which would have been agreed upon by the

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

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

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

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

provisions of this Convention.ARTICLE

13CAPITAL

GAINS1. Gains derived by a

resident of a Contracting State from the alienation of immovable property

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

taxed in that other State.2. Gains from 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 with the whole

enterprise) or of such fixed base, may be taxed in that other State.3. Gains derived by a

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

operated in international traffic or movable property pertaining to the

operation of such ships or aircraft, shall be taxable only in that State.With

respect to gains derived by the Swedish, Danish and Norwegian air transport

consortium Scandinavian Airlines System (SAS), the provisions of this paragraph

shall apply only to such portion of the gains as corresponds to the

participation held in that consortium by SAS Sverige AB, the Swedish partner of

Scandinavian Airlines System (SAS).1.2.3.4. Gains from the

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

consists directly or indirectly principally of immovable property situated in a

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

alienation of any property other than that referred to in paragraphs (1), (2),

(3) and (4), shall be taxable only in the Contracting State of which the

alienator is a resident, provided that such resident is subject to tax thereon

in that State. If the resident is not subject to tax thereon, then such gains

may be taxed in the other Contracting State.6. Notwithstanding the

provisions of paragraph (5), gains from the alienation of any property derived

by an individual who has been a resident of a Contracting State and who has

become a resident of the other Contracting State, may be taxed in the

first-mentioned State if the alienation of the property occurs at any time

during the four years next following the date on which the individual has

ceased to be a resident of the first-mentioned State.ARTICLE

14INDEPENDENT

PERSONAL SERVICES1. Income derived by a

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

activities of an independent character shall be taxable only in that State

except in the following circumstances, when such income may 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 the other State; orb. if his stay in the

other State is for a period or periods aggregating 183 days or more in any

twelve-month period commencing or ending in the fiscal year concerned; in that

case, only so much of the income as is derived from his activities performed in

that other State may be taxed in that other State.1.2. The term

'professional services' includes especially independent scientific, literary,

artistic, educational or teaching activities as well as the independent

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

and accountants.ARTICLE

15DEPENDENT

PERSONAL SERVICES1. Subject to the

provisions of Articles 16, 18 and 19, 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 State.2. Notwithstanding the

provisions of paragraph (1), remuneration derived by a resident of a Contracting

State in respect of an employment exercised in the other Contracting State

shall be taxable only in the first-mentioned State if:a. the recipient is

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

aggregate 183 days in any twelve-month period commencing or ending in the

fiscal year concerned; andb. the remuneration is

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

andc. the remuneration is

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

in the other State.1.2.3. Notwithstanding the

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

employment exercised aboard a ship or aircraft operated in international

traffic by an enterprise of a Contracting State may be taxed in that State.

Where a resident of Sweden derives remuneration in respect of an employment

exercised aboard an aircraft operated in international traffic by the Swedish,

Danish and Norwegian air transport consortium Scandinavian Airlines System

(SAS), such remuneration shall be taxable only in Sweden.ARTICLE

16DIRECTORS'

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 State.ARTICLE

17ARTISTES

AND SPORTSPERSONS1. Notwithstanding the

provisions of Articles 14 and 15, income derived by a resident of a Contracting

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

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

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

State.2. Where income in

respect of personal activities exercised by an artiste or a sportsperson in his

capacity as such accrues not to the artiste or sportsperson himself but to

another person, that income may, notwithstanding the provisions of Articles 7,

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

artiste or sportsperson are exercised.3. The provisions of

paragraphs (1) and (2), shall not apply to income from activities performed in

a Contracting State by artistes or sportspersons if the visit to that State is

substantially supported by public funds of the other Contracting State or of a

political sub-division or local authority thereof. In such a case, the income

shall be taxable only in the Contracting State of which the artiste or

sportsperson is a resident.ARTICLE

18PENSIONS,

SOCIAL SECURITRY PAYMENTS AND ANNUITIES1. Subject to the

provisions of paragraph 2 of Article 19, pensions and other similar

remuneration in consideration of past employment, annuities and payments under

the Social Security legislation arising in a Contracting State and paid to a

resident of the other Contracting State may be taxed in the first-mentioned

Contracting State.2. 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

19GOVERNMENT

SERVICE1.a. Remuneration, other

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

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

that State or sub-division or authority shall be taxable only in that State.b. However, such

remuneration shall be taxable only in the other Contracting State if the

services are rendered in that other State and the individual is a resident of

that State who:i.

is

a national of that State; orii.

did

not become a resident of that State solely for the purpose of rendering the

services.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 State or sub-division or authority shall be taxable only in that State.b. However, such pension

shall be taxable only in the other Contracting State if the individual is a

resident of, and a national of, that State.1.2.3. The provisions of

Articles 15, 16 and 18 shall apply to remuneration and to pensions in respect

of services rendered in connection with a business carried on by a Contracting

State or a political sub-division or a local authority thereof.ARTICLE

20STUDENTS

AND APPRENTICES1. A student or business

apprentice who is or was immediately before visiting a Contracting State a

resident of the other Contracting State and who is present in the first-mentioned

State solely for the purpose of his education or training shall, besides loans

on preferential conditions provided by the Government or any other organisation

or institution of the first-mentioned State and tax exempt grants and

scholarships, be exempt from tax in the first-mentioned State on:a. payments made to him

by persons residing outside the first-mentioned State for the purpose of his

maintenance, education or training; andb. remuneration from

employment in the first-mentioned State, in an amount not exceeding 10,000 (ten

thousand) Swedish Kronor or its equivalent amount during any fiscal year, as

the case may be, provided that such employment is directly related to his

studies or is undertaken for the purpose of his maintenance and that his stay

in the first-mentioned State lasts for six months or more.1.2. The benefit of this

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

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

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

five consecutive years from the date of his first arrival in the

first-mentioned State.ARTICLE

21PROFESSORS,

TEACHERS AND RESEARCH SCHOLARS1. A professor, teacher

or research scholar who, visits a Contracting State at the invitation of that

State or of a university, college, school or other such institution of that

State not exceeding three years solely for the purpose of teaching, giving

lectures or carrying out research at such institution and who is, or was

immediately before that visit, a resident of the other Contracting State shall

be exempt from tax in the first-mentioned State, provided that the institution

in question receives approval from the competent authority of that Contracting

State, on his remuneration for such activity during the period of the first

year from the date of his arrival and in the subsequent years, the exemption

will be only in respect of remuneration derived by him from outside that 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.ARTICLE

22OTHER

INCOME1. Items of income of a

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

foregoing Articles of this Convention shall be taxable only in that State.2. The provisions of

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

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

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

other Contracting State through a permanent establishment situated therein, or

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

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

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

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

shall apply.3. Notwithstanding the

provisions of paragraph (1), if a resident of a Contracting State derives

income from sources within the other Contracting State in the form of

lotteries, crossword puzzles, races including horse races, card games and other

games of any sort or gambling or betting of any form or nature whatsoever, such

income may be taxed in the other Contracting State.ARTICLE

23CAPITAL1. Capital represented

by immovable property referred to in Article 6, owned by a resident of a

Contracting State and situated in the other Contracting State, may be taxed in

that other State.2. Capital represented

by movable property forming part of the business property of a permanent

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

Contracting State or by movable property pertaining to a fixed base available

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

purpose of performing independent personal services, may be taxed in that other

State.3. Capital represented

by ships and aircraft operated in international traffic by an enterprise of a

Contracting State and by movable property pertaining to the operation of such

ships and aircraft, shall be taxable only in that State.With

respect to capital owned by the Swedish, Danish and Norwegian air transport

consortium Scandinavian Airlines System (SAS), the provisions of this Article

shall apply only to such part of the capital as relates to the participation

held in that consortium by SAS Sverige AB, the Swedish partner of SAS.ARTICLE

24ELIMINATION

OF DOUBLE TAXATION1. The laws in force in either

of the Contracting State will continue to govern the taxation of income in the

respective Contracting States except where provisions to the contrary are made

in this Convention.2. In the case of India,

double taxation shall be avoided as follows:a. Where a resident of

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

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

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

Sweden whether directly or by way of deduction at source. Such amount 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

Sweden.b. Where a resident of

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

Convention, shall be taxable only in Sweden, India may, when determining the

graduated rate of Indian tax, take into account the income which shall be

taxable only in Sweden.c. Where a resident of

India owns assets which, in accordance with the provisions of this Convention,

may be taxed in Sweden, India shall allow as a deduction from tax on such

assets an amount equal to the tax on net wealth paid in Sweden in respect of

such assets. Such deduction shall not, however, exceed that part of the Indian

tax on net wealth as computed before the deduction is given which is

appropriate to the assets which may be taxed in Sweden.1.2.3. In the case of

Sweden, double taxation shall be avoided as follows:a. Where a resident of

Sweden derives income which under the laws of India and in accordance with the

provisions of this Convention may be taxed in India, Sweden shall allow-subject

to the provisions of the laws of Sweden concerning credit for foreign tax (as

it may be amended from time to time without changing the general principle

hereof)-as a deduction from the tax on such income, an amount equal to the

Indian tax paid in respect of such income.b. Where a resident of

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

Convention, shall be taxable only in India, Sweden may, when determining the

graduated rate of Swedish tax, take into account the income which shall be

taxable only in India.c. Notwithstanding the

provisions of sub-paragraph (a) of this paragraph, dividends paid by a company

which is a resident of India to a company which is a resident of Sweden shall

be exempt from Swedish tax according to the provisions of Swedish law governing

the exemption of tax on dividends paid to Swedish companies by subsidiaries

abroad.d. For the purposes of

sub-paragraph (a) of this paragraph, the term 'Indian tax paid' shall be deemed

to include the Indian tax which would have been paid but for any exemption or

reduction of tax granted under incentive provisions contained in the Indian law

designed to promote economic development to the extent that such exemption or

reduction is granted for profits from industrial or manufacturing activities or

from agriculture, fishing or tourism (including restaurants and hotels) provided

that the activities have been carried out within India. For the purpose of

sub-paragraph (c) of this paragraph, a tax of 15 per cent calculated on a

Swedish tax base shall be considered to have been paid for such activities

under those conditions mentioned in the previous sentence.The

competent authorities may agree to extend the application of this provision

also to other activities.a.b.c.d.e. The provisions of

paragraph (d) shall apply only for the first ten years during which this

Convention is effective. This period may be extended by a mutual agreement

between the competent authorities.f. Where a resident of

Sweden owns assets which, in accordance with the provisions of this Convention,

may be taxed in India, Sweden shall allow as a deduction from tax on such

assets an amount equal to the tax on net wealth paid in India in respect of

such assets. Such deduction shall not, however, exceed that part of the Swedish

tax on net wealth as computed before the deduction is given which is

appropriate to the assets which may be taxed in India.ARTICLE

25NON-DISCRIMINATION1. Nationals of a

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

taxation or any requirement connected therewith, which is other or more

burdensome than the taxation and connected requirements to which nationals of

that other State in the same circumstances are or may be subjected. This

provision shall, notwithstanding the provisions of Article 1, also apply to

persons who are not residents of one or both of the Contracting States.2. The taxation on a

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

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

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

same activities. This provision shall not be construed as obliging a

Contracting State to grant to residents of the other Contracting