Switzerland - Legal Draft

Double Taxation

Avoidance AgreementIncome-tax Act,

1961:Notification under Section 90:Agreement between the Government of Republic

of India and the Swiss Confederation for avoidance of double taxation with

respect to taxes on incomeNotification

G.S.R. NO. 357(E),dtd. 21.4.1995.Whereas

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

Government of the Swiss Confederation for the avoidance of double taxation with

respect to taxes on income has entered into force on 29th December, 1994 after

the notification by both the Contracting States to each other of the completion

of the procedures required under their laws for bringing into force of the said

Agreement in accordance with paragraph 1 of Article 26 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 in the Union of India.AGREEMENT

BETWEEN THE REPUBLIC OF INDIA AND THE SWISS CONFEDERATION FOR THE AVOIDANCE OF

DOUBLE TAXATION WITH RESPECT TO TAXES ON INCOME--THE GOVERNMENT OF THE REPUBLIC

OF INDIA AND THE SWISS FEDERAL COUNCILDesiring

to conclude an Agreement for the avoidance of double taxation 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 the case of India:the

income-tax including any surcharge thereon; anda.b. In the case of

Switzerland:the

federal, cantonal and communal taxes on income (total income, earned income,

income from capital, industrial and commercial profits, capital gains, and

other items of income).1.2. The Agreement shall

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

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

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

Article.3. In this Agreement,

the term "Indian tax" means tax imposed by India, being tax to which

this Agreement applies; the term "Swiss tax" means tax imposed in

Switzerland, being tax to which this Agreement applies; and the term

"tax" means Indian tax or Swiss tax, as the context requires; but the

taxes in the preceding paragraphs of this Article do not include any penalty or

interest imposed under the law in force in either Contracting State relating to

the taxes to which this Agreement applies.4. The competent

authorities of the Contracting States shall notify to each other any

significant changes which have been made in their relevant respective taxation

laws.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 the air space 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;b. the term

"Switzerland" means the Swiss Confederation;c. the terms "a

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

or Switzerland, as the context requires;d. the term "person"

includes an individual, a company, a body of persons, or any other entity which

is taxable under the laws in force in either Contracting State;e. the term

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

a company under the taxation laws of the respective Contracting States;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

"competent authority" means, in the case of India, the Central

Government in the Department of Revenue or their authorised representative,

and, in the case of Switzerland, the Director of the Federal Tax Administration

or his authorised representative;h. 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;i. 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;j. the term

"operation of aircraft" shall mean 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;k. the term "fiscal

year" means:i.

in

the case of India, the "previous year" as defined in the Income-tax

Act of India; andii.

in

the case of Switzerland, the calendar year.1.2. In the application of

the provisions 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 laws in force in that State relating to the taxes which are the

subject of this Agreement.Article

4FISCAL

DOMICILE1. For the purposes of

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

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

reason of his domicile, residence, place of incorporation, 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 residential status for the purposes of this Agreement shall be

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

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

available to him. If he has a permanent home available to him in both

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

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

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

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

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

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

habitual abode;c. if he has an habitual

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

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

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

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

the 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

Contracting 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" shall include especially:a. a place of

management;b. a branch;c. an office;d. a store or other

sales outlet;e. a factory;f. a workshop;g. a warehouse in

relation to a person providing storage facilities for others;h. a permanent sales

exhibition;i. a mine, a quarry, an

oil or gas well, or any other place of extraction of natural resources;j. a building site or

construction, installation or assembly project or supervisory activities in

connection therewith, where such site, project or supervisory activity

continues for a period of more than six months;k. an installation or

structure used for the exploration or development of natural resources for more

than 90 days; andl. the furnishing of

services other than included services as defined in Article 12, within a

Contracting State by an enterprise through employees or other personnel, but

only if:i.

activities

of that nature continue within that State for a period or periods aggregating

more than 90 days within any twelve month period; orii.

the

services are performed within that State for a related enterprise (within the

meaning of paragraph 1 of Article 9) for a period or periods aggregating more

than 30 days within any twelve-month period.1.2.3. The term

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

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

to the enterprise;b. the maintenance of a

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

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

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

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

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

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

fixed place of business solely for the purpose of advertising, for the supply

of information or for scientific research, being activities solely of a

preparatory or auxiliary character in the trade or business of the enterprise.1.2.3.4. A person acting in a

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

State-other than an agent of an independent status to whom paragraph 5

applies-shall be deemed to be a permanent establishment of that enterprise in

the first-mentioned State if:i.

he

has and habitually exercises in that State, an authority to negotiate and enter

into contracts for or on behalf of the enterprise, unless his activities are

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

he

habitually maintains in the first-mentioned Contracting State a stock of goods

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

behalf of the enterprise; oriii.

in

so acting, he manufactures or processes in that State for the enterprise goods

or merchandise belonging to the enterprise, provided that this provision shall

apply only in relation to the goods or merchandise so manufactured or

processed.1.2.3.4.5. An enterprise of a

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

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

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

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

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

wholly or almost wholly on behalf of that enterprise or for the enterprise and

other enterprises which are controlled by it or have a controlling interest in

it, he would not be considered an agent of an independent status within the

meaning of this paragraph.6. The fact that a

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

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

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

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

either company a permanent establishment of the other.Article

6INCOME

FROM IMMOVABLE PROPERTY1. Income from immovable

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

situated.2. The term

"immovable property" shall be defined in accordance with the law of

the Contracting State in which the property is situated. The term shall in any

case include property accessory to immovable property, livestock and equipment

used in agriculture and forestry, rights to which the provisions of general law

respecting landed property apply, usufruct of immovable property and rights to

variable or fixed payments as consideration for the working of, or the right to

work, mineral deposits, oilwells, quarries and other places of extraction of

natural resources. Ships 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

professional services.Article

7BUSINESS

PROFITS1. The business profits

of an enterprise of a Contracting State, other than the profits from the

operation of ships in international traffic, 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 directly or indirectly attributable

to that permanent establishment.2. 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 the determination

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

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

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

situated or elsewhere. Executive and general administrative expenses shall be

allowed as deductions in accordance with the taxation laws of that State.

Nothing in this paragraph shall, however, authorise a deduction for expenses

which would not be deductible if the permanent establishment were a separate

enterprise.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 laid down in this Article.5. No profits shall be

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

permanent establishment of goods or merchandise for the enterprise.6. 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 from the

operation of aircraft in international traffic shall be taxable only in the

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

is situated.2. The provisions of

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

joint business or an international operating agency.Article

9ASSOCIATED

ENTERPRISESWherea. 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

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. However, such

dividends may also be taxed in the Contracting State of which the company

paying the dividends is a resident and according to the laws of that State, but

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

shall not exceed 15 per cent of the gross amount of the dividends.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,

"jouissance" shares or "jouissance" rights, mining shares,

founders' shares or other rights, not being debt-claims, participating in

profits, as well as income from other corporate rights which is subjected to

the same taxation treatment as income from shares by the taxation law 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 and the holding in respect

of which the dividends are paid is effectively such permanent establishment. In

such a case the provisions of Article 7 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 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 recipient is the beneficial

owner of the interest the tax so charged shall not exceed 15 per cent of the

gross amount of interest.3. Notwithstanding the

provisions of paragraph 2, where the interest is paid to a bank carrying on a

bona fide banking business or to an enterprise which holds directly or

indirectly at least 20 per cent of the capital of the company paying the

interest which are a resident of the other Contracting State and are the

beneficial owner of the interest, the tax so charged in the Contracting State

in which the interest arises shall not exceed 10 per cent of the gross amount

of the interest.4. Notwithstanding the

provisions of paragraphs 2 and 3,a. interest arising in

Switzerland and paid to a resident of India shall be taxable only in India if

it is paid in respect of a loan made, guaranteed or insured, or a credit extended,

guaranteed or insured by the Export-Import Bank of India and by any institution

specified and agreed in letters exchanged between the competent authorities of

the Contracting States.b. interest arising in

India and paid to a resident of Switzerland shall be taxable only in

Switzerland if it is paid in respect of a loan made, guaranteed or insured, or

a credit extended, guaranteed or insured under the Swiss provisions regulating

the Export or Investment Risk Guarantee or by any institution specified and

agreed in letters exchanged between the competent authorities of the

Contracting States;c. interest arising in a

Contracting State and paid to a resident of the other Contracting State engaged

in the operation of aircraft in international traffic shall be taxable only in

that other State to the extent that such interest is paid on funds connected

with such activity;d. interest arising in

India and paid to a resident of Switzerland shall be exempt from Indian tax if

the loan or other indebtedness in respect of which the interest is paid is an

approved loan. The term "approved loan" means any loan or other

indebtedness approved by the Government of India in this behalf.1.2.3.4.5. The term

"interest" as used in this Article means income from debtclaims 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.6. 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, and the debt-claim in respect of which the

interest is paid is effectively connected with such permanent establishment. In

such a case the provisions of Article 7 shall apply.7. Interest shall be

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

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

however, the person paying the interest, whether he is a resident of a

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

in connection with which the indebtedness on which the interest is paid was

incurred, and such interest is borne by such permanent establishment, then such

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

permanent establishment is situated.8. Where, owing to a

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

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

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

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

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

last-mentioned amount. In that case, the excess part of the payments shall

remain taxable according to the law of each Contracting State, due regard being

had to the other provisions of this Agreement.Article

12ROYALTIES

AND FEES FOR INCLUDED SERVICES1. Royalties and fees

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

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

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

State in which they arise and according to the laws of that State; but if the

beneficial owner of the royalties or fees for included services in a resident

of the other Contracting State, the tax so charged shall not exceed:a. in the case of royalties

referred to in sub-paragraph (a) of paragraph 3 and fees for included services

referred to in sub-paragraph (b) of paragraph 4 of this Article:i.

during

the first five taxable years for which this Agreement has effect,A. 15 per cent of the

gross amount of the royalties or fees for included services as defined in this

Article, where the payer of the royalties or fees is the Government of that

Contracting State, a political sub-division or a public sector company; andB. 20 per cent of the

gross amount of the royalties or fees for included services in all other cases;

andi.ii.

during

the subsequent years, 15 per cent of the gross amount of royalties or fees for

included services; anda.b. in the case of the

royalties referred to in sub-paragraph (b) of paragraph 3 and fees for included

services referred to in sub paragraph (a) of paragraph 4 of this Article, 10

per cent of the gross amount of such royalties or fees for included services.1.2.3. The term

"royalties" as used in this Article means:a. payments of any kind received

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

literary, artistic, or scientific work, including cinematograph films or work

on film, tape or other means of reproduction for use in connection with radio

or television broadcasting, any patent trademark, design or model, plan, secret

formula or process, or for information concerning industrial, commercial or

scientific experience; andb. payments of any kind

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

commercial, or scientific equipment.1.2.3.4. For purposes of this

Article, the term "fees for included services" meansa. payments of any kind

to any person in consideration for the rendering of any technical or

consultancy services (including through the provision of services of technical

or other personnel), if such services are ancillary and subsidiary to the

application or enjoyment of the right, for which a payment described in

sub-paragraph (b) of paragraph 3 is received;b. payments of any kind

to any person in consideration for the rendering of any technical or

consultancy services (including through the provision of services of technical

or other personnel) if such services:i.

are

ancillary and subsidiary to the application or enjoyment of the right, property

or information for which a payment described in sub-paragraph (a) of paragraph

3 is received; orii.

make

available technical knowledge, experience, skill, know-how or processes, or

consist of the development and transfer of a technical plan or technical

design.1.2. Notwithstanding

paragraph 4, "fees for included services" does not include amounts

paid:a. for services that are

ancillary and subsidiary, as well as inextricably and essentially linked, to

the sale of property;b. for teaching in or by

educational institutions:c. for services for the

personal use of the individual or individuals making the payment; ord. to an employee of the

person making the payments or to any individual or firm of individuals (other

than a company) for professional services falling under Article 14.1.2.3. The provisions of

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

fees for included services, being a resident of a Contracting State, carries on

business in the other Contracting State in which the royalties or fees for

included services arise, through a permanent establishment situated therein and

the contract in respect of which the royalties or fees for included services

are paid is effectively connected with such permanent establishment. In such

case, the provisions of Article 7 shall apply.4. Royalties and fees

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

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

resident of that State. Where, however, the person paying the royalties or fees

for included services, whether he is a resident of a Contracting State or not,

has in a Contracting State a permanent establishment in connection with which

the liability to pay the royalties or fees for included services was incurred,

and such royalties or fees for included services are borne by such permanent

establishment, then such royalties or fees for included services shall be

deemed to arise in the State in which the permanent establishment is situated.5. 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

included services paid exceeds the amount which would have been paid 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

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 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, including such gains from the alienation of such a

permanent establishment (alone or with the whole enterprise), may be taxed in

that other 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, shall be

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

management of the enterprise is situated.4. Gains from the

alienation of shares of a company, the property of which consists principally

of immovable property situated in a Contracting State, may be taxed in that

State.5.a. Gains from the

alienation of shares in a company which is a resident of a Contracting State

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

resident.b. Notwithstanding the

provision of sub-paragraph (a), India may tax gains from the alienation of

shares in a company which is a resident of India,i.

if

the shares form part of at least a 10 per cent interest in the capital stock of

that company, orii.

in

other cases if the alienation takes place to a resident of that State.In

these cases the provisions of paragraph 1, sub-paragraph (b) of Article 21

shall apply.1.2.3.4.5.6. Gains from the

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

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

a resident.Article

14PERSONAL

SERVICES1. Subject to the

provisions of Articles 15, 17, 18, 19 and 20, salaries, wages and other similar

remuneration in respect of an employment as well as income in respect of

professional services or other activities of an independent character, derived

by an individual resident of a Contracting State, shall be taxable only in that

State, unless the employment, services or activities are exercised or performed

in the other Contracting State. If the employment, services or activities are

so exercised or performed, such remuneration or income as is derived therefrom

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

provisions of paragraph 1, remuneration or income derived by a resident of a

Contracting State in respect of an employment, services or activities exercised

or performed 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 the fiscal year, andb. the remuneration or

income is paid by, or on behalf of, a person who is not a resident of the other

State, andc. the remuneration or

income is not borne by a permanent establishment which that person 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 shall be taxable only in the Contracting State in which the place of effective

management of the enterprise is situated.Article

15DIRECTORS'

FEESDirectors'

fees and 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 shall be taxable only in that other Contracting

State.Article

16ARTISTES

AND ATHLETES1. Notwithstanding the

provisions of Articles 7 and 14, income derived by entertainers (such as stage,

motion picture, radio or television artistes and musicians) or athletes, from

their personal activities as such shall be taxable only in the Contracting

State in which these activities are exercised.2. Where income as a

result of personal activities as such exercised in a Contracting State by an

entertainer or athlete accrues not to that entertainer or athlete himself but

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

7 and 14, be taxed in that Contracting State.3. The provisions of

paragraphs 1 and 2 shall not apply if the visit to a Contracting State of the

entertainer or the athlete is directly or indirectly supported, wholly or

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

any political sub-division, local authority or statutory body of that other

State.Article

17PENSION

AND ANNUITIES1. Any pension (other

than a pension referred to in Article 18) or annuity derived by a resident of a

Contracting State shall be taxable only in that State.2. The term

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

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

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

18GOVERNMENT

REMUNERATION AND PENSIONS1. Remuneration, other

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

who is a citizen of that State in respect of services rendered in the discharge

of governmental functions in the other Contracting State shall be taxable only

in the first-mentioned State.2. Any pension paid by

the Government of a Contracting State to any individual in respect of services

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

paragraphs 1 and 2 of this Article shall not apply to payments in respect of

services rendered in connection with any business carried on by the Government

of either of the Contracting States for the purpose of profit.4. For the purposes of

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

Government, canton or local or statutory authority of either Contracting State

and in particular the Reserve Bank of India and the Swiss National Bank.Article

19STUDENTS

AND APPRENTICES1. Payments which a

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

Contracting State a resident of the other Contracting State and who is present

in the first-mentioned State solely for the purpose of his education or

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

shall not be taxed in that State, provided that such payments arise from

sources outside that State.2. In respect of grants,

scholarships and remuneration from employment not covered by paragraph 1, a

student or business apprentice described in paragraph 1 shall, in addition, be

entitled during such education or training to the same exemptions, reliefs or

reductions in respect of taxes available to residents of the State which he is

visiting.Article

20PROFESSORS,

TEACHERS AND RESEARCHERS1. An individual who is

or was a resident of a Contracting State and who visits the other Contracting

State for a period not exceeding 24 months for the primary purpose of teaching

or engaging in research, or both, at a university or other recognised

educational institution shall be exempt from tax in that other Contracting

State on his income from personal services for teaching or research at the

university or the recognised educational institution.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

21ELIMINATION

OF DOUBLE TAXATION1.a. Subject to any

provisions of the law of India which may from time to time be in force and

which relates to the relief of taxes paid in a country outside India, where a

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

this Agreement, may be taxed in Switzerland, India shall allow as a deduction

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

paid in Switzerland 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

Switzerland.b. Where a resident of

Switzerland derives gains from the alienation of shares which may be taxed in

India according to Article 13, paragraph 5, sub-paragraph (b), India shall

allow as a deduction from tax on that income, an amount equal to the income-tax

paid in Switzerland on these capital gains. The deduction shall not, however,

exceed that part of the Indian income-tax, which is imposed on these capital

gains.1.2.a. Where a resident of

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

Agreement may be taxed in India, Switzerland shall, subject to the provisions

of sub-paragraphs (b), (c) and (d), exempt such income from tax but may, in

calculating tax on the remaining income of that resident, apply the rate of tax

which would have been applicable if the exempted income had not been so

exempted; provided, however, that such exemption shall apply to gains referred

to in paragraph of Article 13 only if actual taxation of such gains in India is

demonstrated.b. Where a resident of

Switzerland derives dividends, interest, royalties or fees for included

services which, in accordance with the provisions of Articles 10, 11 and 12,

may be taxed in India, Switzerland shall allow, upon request, a relief to such

resident. The relief may consist ofi.

a

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

the tax levied in India in accordance with the provisions of Articles 10, 11

and 12; such credit shall not, however, exceed that part of the Swiss tax, as

computed before the credit is given, which is appropriate to the income which

may be taxed in India; orii.

a

lump sum reduction of the Swiss tax; oriii.

a

partial exemption of such dividends, interest, royalties or fees for included

services from Swiss tax, in any case consisting at least of the deduction of

the tax levied in India from the gross amount of the dividends, interest,

royalties or fees for included services.Switzerland

shall determine the applicable relief and regulate the procedure in accordance

with the Swiss provisions relating to the carrying out of international

conventions of the Swiss Confederation for the avoidance of double taxation.a.b.a.b.c. Notwithstanding the

provisions of sub-paragraph (b), where a resident of Switzerland derives

interest, royalties or fees for included services which, in accordance with

Articles 11, paragraph 2 and 12, paragraph 2, sub-paragraph (a) may be taxed in

India, Switzerland shall allow, upon request, a relief to such resident which

may consist ofA. a deduction of 5 per

cent of the gross amount of such interest referred to in Article 11, paragraph

2;B. during the first five

calendar years for which this Agreement has effect,1. for royalties and

fees for included services referred to in Article 12, paragraph 2,

sub-paragraph (a)(i)(A):aa. a deduction of 5 per

cent of the gross amount of royalties or of fees for included services covered

by Article 12, paragraph 4, sub-paragraph (b)(i);ab.bb. a deduction of 10 per

cent of the gross amount of fees for included services covered by Article 12,

paragraph 4, sub-paragraph (b)(ii);1.2. for royalties and

fees for included services referred to in Article 12, paragraph 2,

sub-paragraph (a)(i)(B):aa. a deduction of 10 per

cent of the gross amount of royalties or of fees for included services covered

by Article 12, paragraph 4, sub-paragraph (b)(i);ab.bb. a deduction of 15 per

cent of the gross amount of fees for included services covered by Article 12,

paragraph 4, sub-paragraph (b)(ii);A.B.C. during the subsequent

years for which this Agreement has effect:aa. a deduction of 5 per

cent of the gross amount of royalties referred to in Article 12, paragraph 2,

sub-paragraph (a)(ii) or of fees for included services covered by Article 12,

paragraph 4, sub-paragraph (b)(i);ab.bb. a deduction of 10 per

cent of the gross amount of fees for included services covered by Article 12,

paragraph 4, sub-paragraph (b)(ii);i.

a

credit from the Swiss tax on the income of that resident, as computed by

reference to the relief referred to in the foregoing sub-paragraph of an amount

ofA. 10 per cent of the

gross amount of the interest referred to in Article 11, paragraph 2;B. 10 per cent of the

gross amount of the royalties referred to in Article 12, paragraph 2,

sub-paragraph (a), and of the fees for included services covered by Article 12,

paragraph 4, sub-paragraph (b)(i);C. 5 per cent of the

gross amount of the fees for included services covered by Article 12, paragraph

4 sub-paragraph (b)(ii).Such

credit shall, however, be determined pursuant to the general principles of the

relief referred to in sub-paragraph (b) of this paragraph.a.

Where

a resident of Switzerland derives interest dealt with in sections 10(4) and

10(15)(iv)(c) of the Indian Income-Tax Act of 1961 and referred to in Article

11, paragraph 4, sub-paragraph (d), Switzerland shall allow, upon request, a

relief to such resident of an amount equal to 10 per cent of the gross amount

of the interest.Article

22NON-DISCRIMINATION1. The nationals of a

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

taxation or any requirement connected therewith which is other or more

burdensome than the taxation and connected requirements to which nationals of

that other State in the same circumstances and under the same conditions are or

may be subjected.2. Nothing contained in

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

persons not residents in that State any personal allowances, reliefs and

reductions for taxation purposes which are by law available only to persons who

are so resident.3. Enterprises of a

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

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

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

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

more burdensome than the taxation and connected requirements to which other

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

the same circumstances and under the same conditions.4. In this Article, the

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

23MUTUAL

AGREEMENT PROCEDURE1. Where a resident of a

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

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

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. The case must be presented within three years

from the first notification of the action giving 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 which is not in accordance with

the Agreement.3. The competent

authorities of the Contracting States shall endeavour to resolve by mutual

agreement any difficulties or doubts arising as to the interpretation or

application of the Agreement. They may also consult together for the

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

authorities of the Contracting States shall settle the limitations provided for

in Articles 10, 11 and 12.5. 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

24EXCHANGE

OF INFORMATION1. The competent

authorities of the Contracting States shall exchange such information (being

information which is at their disposal under their respective taxation laws in

the normal course of administration) as is necessary for carrying out the

provisions of this Agreement in relation to the taxes which are the subject of

this Agreement. Any information so exchanged shall be treated as secret and

shall not be disclosed to any persons other than those concerned with the

assessment and collection of the taxes which are the subject of this Agreement.

No information as aforesaid shall be exchanged which would disclose any trade,

business, industrial or professional secret or trade process.2. In no case shall the

provisions of this Article be construed as imposing upon either of the

Contracting States the obligation to carry out administrative measures at

variance with the regulations and practice of either Contracting State or which

would be contrary to its sovereignty, security or public policy or to supply

particulars which are not procurable under its own legislation or that of the

State making application.Article

25DIPLOMATIC

AND CONSULAR OFFICIALSNothing

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

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

of special agreements.Article

26ENTRY

INTO FORCE1. This Agreement shall

come into force when the Contracting States have notified each other through

diplomatic channels that all legal requirements and procedures for giving

effect to this Agreement have been satisfied.2. This Agreement shall

enter into force upon the date of such notifica