Thailand - Legal Draft

Double Taxation

Avoidance AgreementAgreement between the

Government of India and the Government of the Kingdom of Thailand for the

Avoidance of Double Taxation and the prevention of fiscal evasion with respect

to taxes on income.Notification

No. G.S.R.915(E),dtd. 27.6.1986.Whereas

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

Government of the Kingdom of Thailand for the avoidance of double taxation and

the prevention of fiscal evasion with respect to taxes on income has been

ratified and the instruments of ratification exchanged as required by Article

28 of the said Convention on 13th March, 1986.Now,

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

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

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

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

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

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

FISCAL EVASION WITH RESPECT TO TAXES ON INCOMEThe

Government of the Republic of India and the Government of the Kingdom of

Thailand,DESIRING to conclude a

Convention for the Avoidance of Double Taxation and the Prevention of fiscal

Evasion with Respect to Taxes on Income,HAVE

AGREED

as follows:CHAPTER

ISCOPE

OF THE CONVENTIONArticle

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 imposed on behalf of each 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 all taxes imposed on total income, or on elements

of income, including taxes on gains from the alienation of movable or immovable

property, as well as taxes on the total amounts of wages or salaries paid by

enterprises.3. The existing taxes to

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

the

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

1961 (43 of 1961). andii.

the

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

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

Thailand:i.

the

income-tax; andii.

the

petroleum income-tax,(hereinafter

referred to as " Thai tax ").1.2.3.4. The Convention shall

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

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

addition to, or in place of, the taxes referred to in paragraph 3 of this

Article. The competent authorities of the Contracting States shall notify each

other of significant changes which have been made in their respective taxation

laws.CHAPTER

IIDEFINITIONSArticle

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 referred to in the

Territorial Waters, Continental Shelf, Exclusive Economic Zone and other

Maritime Zones Act, 1976 (Act No. 80 of 1976), in which India has sovereign

rights and to the extent that these rights can be exercised therein in

accordance with international law, as if such maritime zone is a part of the

territory of India;b. the term "

Thailand " means the Kingdom of Thailand and includes any maritime area

adjacent to the territorial waters of the Kingdom of Thai land which by Thai

legislation, and in accordance with international law, has been or may

hereafter be designated as an area within which the rights of the Kingdom of

Thailand may be exercised;c. the terms " a

Contracting State " and " the other Contracting State " mean

India or Thailand as the context requires;d. the term " tax

" means Indian tax or Thai tax, as the context requires;e. the term "

person " includes an individual, a company and any other entity which is

treated as a taxable unit under the taxation laws in force in the respective

Contracting States;f. the term "

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

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

Contracting States;g. the 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;h. the term "

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

in the Ministry of Finance (Development of Revenue) or their authorised

representative; and in the case of Thailand, the Minister of Finance or his

authorised representative;i. the term "

national " means any individual possessing the nationality of a

Contracting State and any legal person, partnership, association and any other

entity deriving its status as such from the laws in force in a Contracting

State;j. the term "

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

by an enterprise of a Contracting State, except where the ship or aircraft is

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

the provisions of this Convention by one of the Contracting States, any term

not defined herein shall unless the context otherwise requires, have the

meaning which it has for the purposes of the laws in force in that State

relating to the taxes which are the subject of this Convention.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 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 Convention shall

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

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

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

Contracting States, 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. Whereby reason of the

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

both Contracting States, then the competent authorities of the Contracting

States shall settle the question by mutual agreement.Article

5PERMANENT

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 " shall include:i.

a

place of management;ii.

a

branch;iii.

an

office;iv.

a

factory;v.

a

workshop;vi.

a

mine, a quarry, an oil or gas well or other place of extraction of natural

resources;vii.

a

farm, plantation or other place where agricultural, forestry, plantation or

related activities are carried on;viii.

a

building site or construction or assembly project or supervisory activities in

connection therewith, where such site, project or activity continues for the

same or a connected project for a period or periods aggregating more than 183

days;ix.

a

warehouse, in relation to a person providing storage facilities for others;x.

the

furnishing of services, including consultancy services, by a resident of one of

the Contracting States through employees or other personnel, provided

activities of that nature continue (for the same or a connected project) within

the other Contracting State for a period or periods aggregating more than 183

days.1.2.3. Notwithstanding the

preceding provisions of this Article, the term " permanent establishment

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

solely for the purpose of storage, display or delivery of goods or merchandise

belonging to the enterprise;b. the maintenance of a

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

purpose of storage, display or delivery;c. the maintenance e 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 advertising, for the supply

of information, for scientific research, or for similar activities which have a

preparatory or auxiliary character, for the enterprise.1.2.3.4. Notwithstanding the

provisions of the preceding paragraphs a person (other than a broker, general

commission agent or any other agent of an independent status to whom paragraph

5 applies) acting in a Contracting State on behalf of an enterprise of the

other Contracting State shall be deemed to be a permanent establishment in the

first-mentioned Contracting State, if:a. he has and habitually

exercises in the first-mentioned Contracting State in authority to conclude

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

to the purchase of goods or merchandise for the enterprise;b. he habitually

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

merchandise belonging to that enterprise from which he regularly delivers goods

or merchandise on behalf of the enterprise; orc. he habitually secures

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

or for the enterprise and other enterprises which are controlled by it or have

a controlling interest in it.1.2.3.4.5. An enterprise of a

Contracting State shall not be deemed to have a 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. This shall not apply if such broker or agent carries on in that

other State an activity descripted in paragraph 4 wholly or almost wholly for

the enterprise itself or for the enterprise and other enterprises which are

controlled by or have a controlling interest in it.6. The fact that a

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

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

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

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

company a permanent establishment of the other.7. Notwithstanding the

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

State shall, except in regard to reinsurance, be deemed to have a permanent

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

that State or insures risks situated therein through an employee or through a

representative who is not an agent of an independent status within the meaning

of paragraph 5 of this Article.CHAPTER

IIITAXATION

OF INCOMEArticle

6INCOME

FROM IMMOVABLE PROPERTY1. Income from immovable

property (including income from agriculture of forestry) may be taxed in the

Contracting State in which such propery is situated.2. The term "

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

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

in any case include property accessory to immovable property, livestock and

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

general law respecting landed property apply, usufruct of immovable property

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

or the right to work, mineral deposits, sources and other natural resources; ships,

boats and aircraft shall not be regarded as immovable property.3. The provisions of

paragraph 1 shall 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 income or 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 income or profits of the enterprise may be taxed

in the other State but only so much of them as is attributable to-a. that permanent

establishment;b. sales in that other

State of goods or of the same or similar kind as those sold though that

permanent establishment; orc. other business

activities carried on in that other State of the same or similar kind as those

effected through that permanent establishment.1.2. 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 income or

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 income or profits of a permanent establishment, there shall be allowed

as deductions expenses which are incurred for the purposes of the business of

the permanent establishment including executive and general administrative

expenses so incurred, whether in the State in which the permanent establishment

is situated or elsewhere.4. Insofar as it has

been customary in a Contracting State to determine the income or profits to be

attributed to a permanent establishment on the basis of a certain percentage of

the gross receipts of the enterprise or on the basis of an apportionment of the

total income or profits of the enterprise to its various parts, nothing in

paragraph 2 of this Article shall preclude that Contracting State from

determining the income or profits to be taxed by such an apportionment as may

be customary; the method of apportionment adopted shall, however, be such that

the result shall be in accordance with the principles contained in this

Article.5. No income or profits

shall be attributed to a permanent establishment by reason of the mere purchase

by that permanent establishemnt of goods or merchandise for the enterprise.6. For the purposes of

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

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

is good and sufficient reason to the contrary.7. Where income or

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. Income derived by an

enterprise of a Contracting State from the operation of aircraft in

international traffic shall be taxable only in that Contracting State.2. Income derived by an

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

traffic may be taxed in the other Contracting State, but the tax imposed in

that other Contracting State shall be reduced by an amount equal to 50 per cent

thereof.3. The provisions of

paragraphs 1 and 2 of this Article shall also apply to income from the

participation in a pool, a joint business or an international operating agency

in the operation of aircraft or ships.4. For the purposes of

paragraphs 1 and 2, interest on funds connected with the operation of ships or

aircraft in international traffic shall be regarded as income from the operation

of such ships or aircraft.5. The term "

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

persons, mail, livestock or goods by the ships or aircraft, including the

incidental lease of ships or aircraft and any other activity directly connected

with such transportation.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 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 beneficial owner of the dividends is a company which is a resident

of the other Contracting State, the tax shall not exceed-a. 15 per cent of the

gross amount of dividends, in a case where the company paying the dividends is

engaged in an industrial undertaking and the beneficial owner of the dividends

is a company of the other Contracting State owning at least 10 per cent of the

voting shares of the company paying the dividends.b. in the case not

covered by sub-paragraph (a) above, 20 per cent of the gross amount of

dividends if the company paying the dividends is engaged in an industrial undertaking

or if the beneficial owner of the dividends is a company of the other

Contracting State owing at least 25 percent of the voting shares of the company

paying the dividends.1.2.3.a. 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 assimilated to income from shares according to the

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

distribution is a resident.b. In this Article, the

term " industrial undertaking " means an undertaking falling under

any of the classes mentioned below:i.

manufacturing,

assembling and processing;ii.

construction,

civil engineering and shipbuilding;iii.

production

of electricity, hydraulic power or gas or the supply of water;iv.

agriculture,

forestry and fishery and the carrying on of a plantation;v.

any

other undertaking entitled to the privileges accorded under the laws of either

Contracting State on the promotion of industrial investment; andvi.

any

other undertaking which may be declared to be an " industrial undertaking

" for the purposes of this Article by the competent authority of the

Contracting State in which the undertaking is situated.1.2.3.4. 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 a 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 be taxed in the Contracting State in which it arises, and

according to the laws of that State, but the tax so charged shall not exceed:a. 10 per cent of the

gross amount of the interest if it is received by any financial institution

(including an insurance company);b. in all other cases,

25 per cent of the gross amount of the interest.1.2.3. Notwithstanding the

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

exempt from tax in that State if -a. the recipient of the

interest is the government, or local authority or the Central Bank of the other

Contracting State; orb. the interest is paid

to any agency or insitution including a financial institution which may be

agreed upon for the purposes of this paragraph by 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 mortage and whether or not carrying a right to

participate in the dedtor's profits, and in particular, income from government

securities and income from bonds or debentures, inculding premiums and prizes

attaching to such securities, bonds or debentures, as well as income

assimilated to income from money lent by the taxation laws of the contracting

State in which the income arises.5. The provisions of

paragraph 1 and 2 shall not apply if the recipient of the interest, being a

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

State in which the interest arises, through a permanent establishment situated

therein, or perfroms 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 that Contracting State

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

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

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

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

the interest is paid was incurred, and such interest is borne by that permanent

establishment or fixed base, then such interest shall be deemed to arise in the

Contracting State in which the permanent establishment or fixed base is

situated.7. Where, owing to a

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

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

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

agreed upon by the payer and the recipient in the absence of such relationship,

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

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

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

provisions of this Convention.Article

12ROYALTIES1. Royalties arising in

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

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

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

tax so charged shall not exceed 15 per cent of the gross amount of royalties.3. The term "

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

a consideration for the alienation or the use of, or the right to use, any

copyright of literary, artistic or scientific work (including cinematograph

films, phonographic records, and films or tapes for radio or television

broadcasting), any patent, trade mark, design or model, plan, secret formula or

process, or for the use of, or the right to use industrial, commercial or

scientific equipment, or for information concerning industrial, commercial or

scientific experience.4. The provisions of

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

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

State in which the royalties arise, through a permanent establishment situated

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

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

royalties are paid is effectively connected with such permanent establishment

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

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

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

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

State. Where, however, the person paying the royalties, whether he is a

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

establishment or fixed base in connection with which the liability to pay the

royalties was incurred, and such royalties are borne by such permanent

establishment or fixed base, then such royalties shall be deemed to arise in the

Contracting State in which the permanent establishment or fixed base is

situated.6. Where owing to a

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

them and some other the amount of royalties paid, having regard to the use,

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

have been agreed upon by the payer and the recipient in the absence of such

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

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

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

had to the other provisions of this Convention.Article

13CAPITAL

GAINS1. Gains from the

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

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

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

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

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

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

for the purpose of performing independent personal services, including such

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

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

State.3. Notwithstanidng the

provisions of paragraph 2, gains derived by an enterprise of a Contracting

State from the alienation of ships or aircraft which it operates in

international traffic or movable property pertaining to the operation of such

ships or aircraft shall be taxable only in that State.4. Gains derived by a

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

those mentioned in paragraphs 1,2 and 3 above and Article 12 shall be taxable

only in that State.ARTICLE

14INDEPENDENT

PERSONAL SERVICES1. Income derived by a

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

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

State unless such activites were performed in the other Contracting State.

Income in respect of professional services or independent activities performed

within that other State may be taxed by that other State.2. Notwithstanding the

provisions of paragraph 1, income derived by a resident of a Contracting State

in respect of professional services or other independent activities performed

in the other Contracting State shall not be taxable in the other State if:a. the recipent is

present in the other State for a period or periods nor exceeding the aggregate

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

concerned, as the case may be.b. the recipent does not

maintain a fixed base in the other State for a period or periods exceeding in

the aggregate 183 days in such year, andc. the income is not

borne by an enterprise or a permanent establishment situated in that other

State.1.2.3. The term "

professional services " includes especially independent scientific,

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

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

dentists and accountants.ARTICLE

15DEPENDENT

PERSONAL SERVICES1. Subject to the

provisions of Articles 16, 17, 18, 19, 20 and 21, salaries, wages and other

similar remuneration derived by a resident of a Contracting State in respect of

an employment shall be taxable only in that State unless the employment is

exercised in the other Contracting State. If the employement is so exercised,

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

State.2. Notwithstanding the

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

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

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

presents in the other State for or periods not exceeding in the aggregate 183

days in the relevant " previous year " or " tax year "

concerned as the case may be, 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 an enterprise of the other Contracting State or 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 operated in international traffic by an enterprise

of a Contracting State shall be taxable only a that State.Article

16DIRECTORS'FEES

AND REMUNERATION OF TOP-LEVEL MANAGERIAL OFFICIALS1. Directors' 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.2. Salaries, wages and

other similar remuneration derived by a resident of a Contracting State in his

capacity as an official in a top-level managerial position of a company which

is a resident of the other Contracting State may be taxed in that other State.Article

17ARTISTES

AND ATHELETES1. Notwithstanding the

provisions of Articles 14 and 15, income derived by public entertainers, such

as theatre, motion picture, radio or television artistes, and musicians, and by

athletes, from their personal activities as such may be taxed in the Contracting

State in which these activities are performed.2. Where income in

respect of personal activities exercised by an entertainer or an athlete in his

capacity as such accrues no to the entertainer or athlete himself but to

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

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

entertainer or athlete are exercised.3. Notwithstanding the

provisions of Article 7, where the activities mentioned in paragraph 1 of this

Article are provided in a Contracting State by an enterprise of the other

Contracting State the profits derived from providing these activities by such

an enterprise may be taxed in the first-mentioned Contracting State unless the

enterprise is substantially supported by the public funds of the other

Contracting State, including any political sub-division, local authority or

statutory body thereof, in connection which the provisions of such activities.4. The provisions of

paragraphs 1 and 2 of this Article shall apply to remuneration or profits,

salaries, wages and similar income derived from activities performed in a

Contracting State by public entertainers or athletes if the visit to that

Contracting State is substantially supported by public funds of the other

Contracting State, including any political sub-division, local authority,

statutory body thereof.Article

18GOVERNMENTAL

FUNCTIONS1. Remuneration (not

being 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 Contracting State.2. Any pension paid by

the Government of one of the Contracting States to any individual may be taxed

in that Contracting State.3. The provisions of

paragraphs 1 and 2 shall not apply to remuneration and pensions in respect of

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

of either of the Contracting States for the purposes of profit4. For the purposes of

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

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

particular the Reserve Bank of India and the Bank of Thailand.Article

19NON-GOVERNMENT

PENSIONS AND ANNUITIES1. Any Pension (other

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

Contracting State from sources within the other Contracting State may be taxed

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

pension " means a periodic payment made in consideration of services

rendered in the past or as compensation for injuries related in the course of

performance of services.3. The term "

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

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

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

money's worth.Article

20Students

and ApprenticesA

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 Contracting State solely far the purpose of his

education or training, shall be exempt from tax in the first-mentioned

Contracting State on:a. the grant, allowance

or award for the purposes of his maintenance, education or training;b. payments made to him

by persons residing outside that first-mentioned Contracting State for the

purposes of his maintenance, education or training; andc. remuneration from

employment in that first-mentioned Contracting State, in an amount not in

excess of Rs. 15,000 or its equivalent in Thai currency during any "

previous year " or " tax 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.Article

21PROFESSORS,

TEACHERS AND RESEARCH SCHOLARS1. A professor, teacher

or research scholar who is or was a resident of one of the Contracting States

immediately before visiting the other Contracting State at the invitation of

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

approved institution in that other Contracting State for the purpose of

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

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

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

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

Contracting State.2. This Article shall

only apply to income from research it such research is undertaken by the

individual for the public interest and not primarily for the benefit of some

other private person or persons.3. For the purposes of this

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

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

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

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

previous year " or the " tax year ".4. For the purposes of

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

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

Contracting State.Article

22Other

IncomeItems

of income of a resident of a Contracting State, wherever arising, not expressly

dealt with in the foregoing Articles may be taxed in that State. Such items of

income may also be taxed in the Contracting State where the income arises.CHAPTER

IVMETHODS

FOR ELIMINATION OF DOUBLE TAXATIONArticle

23ELIMINATION

OF DOUBLE TAXATION1. The laws in force in

either of the Contacting States shall continue to govern the taxation of income

in the respective Contracting States except where provisions to the contrary

are made in this Convention.2. The amount of Thai

tax payable, under the laws of Thailand and in accordance with the provisions

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

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

to tax both in India and in Thailand, shall be allowed as a credit aganist the

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

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

credit) which is appropriate to the profits or income arising Thailand Further,

where such resident is a company by which sur-tax is payable in India, the

credit aforesaid shall be allowed in the first instance against income-tax payable

by the company in India and as to the balance, if any, against surtax payable

by it in India.3. For the purposes of

the credit referred to in paragraph 2, the term " Thai tax payable "

shall be deemed to include any amount which would have been payable as Thai tax

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

any part thereof under the provisions of the Investment Promotion Act (B.E.

2520) or of the Revenue Code (B.E. 2481) which are designed to promote economic

development in Thailand or which may be introduced hereafter in modification

of, or in addition to, the existing laws for promoting economic development in

Thailand.4. The amount of Indian

tax payable under the laws of India and in accordance with the provisions of this

Convention, whether directly or by deduction, by a resident of Thailand, in

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

both in India and Thailand, shall be allowed as a credit against Thai tax

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

not exceed the Thai tax (as computed before allowing any such credit) which is

appropriate to the profits or income arising in India.5. For the purposes of

the credit referred to in paragraph 4, the term " Indian tax payable

" shall be deemed to include any amount which would have been payable as

Indian tax for any assessment year but for an exemption or reduction of tax

granted for that year or any part thereof by the special incentive measures

under the provisions of the Income-Tax Act, 1961 (43 of 1961). which are

designed to promote economic development, or which may be introduced hereafter

in modification of, or in addition to, the existing provisions for promoting

economic development in India.6. Where under this

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

Contracting State in respect of income derived from the other Contracting

State, then the firstmentioned Contracting State may, in calculating tax on the

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

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

had not been so exempted.CHAPTER

VSPECIAL

PROVISIONSArticle

24NON-DISCRIMINATION1. The nationals of a

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

taxation or any requirement connected therewith which is other or more

burdensome than the taxation and connected requirements to which nationals of

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

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

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

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

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

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

person not resident in that State any person allowances, reliefs and reductions

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

resident.4. Enterprises of a

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

controlled, directly or indirectly, by one 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 requirement to which other

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

the same circumstances.5. In this Article the

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

Convention.Article

25MUTUAL

AGREEMENT PROCEDURE1. Where a resident of a

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

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

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

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

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

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

in accordance with the Convention.2. The competent

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

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

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

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

Convention.3. The competent

authorities of the Contracting, States shall endeavour to resolve by mutual

agreement any difficulties or doubts arising as to the interpretation or

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

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

authorities of the Contracting States may communicate with each other directly

for the pruposes 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 Commission

consisting of representatives of the competent authorities of the Contracting

States.Article

26EXCHANGE

OF INFORMATION1. The competent

authorities of the Contracting States shall exchange such information or

document as is carrying out the provisons of this convention or for the

prevention of fraud or evasion of taxes which are the subject of this

Convention. Any information or document received by a Contracting State shall

be treated as secret in the same manner as information or document obtained

under the domestic laws of that State and shall be disclosed only to persons or

authorities (including courts and administrative bodies) involved in the

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

the determination of appeals in relation to, the taxes covered by the Convention.

Such persons or authorities shall use the information or document only for such

purposes. They may disclose the information or document in public court

proceedings or in judicial decisions.2. The exchange of

information or document shall either on a routine basis or on request with

reference to particular cases or both. The competent authorities of the

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

or documents which shall be furnished on a routine basis.3. In no case shall the

provisions of paragraph 1 be construed so to impose on a Contracting State the

obligation:a. To carry out

administrative measures at variance with the laws or administrative practice of

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

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

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

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

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

would be contrary to public policy.Article

27DIPLOMATIC

AND CONSULAR ACTIVITIESNothing

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

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

provisions of special agreement.CHAPTER

VIIFINAL

PROVISIONSArticle

28ENTRY

INTO FORCE1. This Convention shall

be ratified and the instruments of ratification shall be exchanged at Banfkok

as soon as possible.2. This Convention shall

enter into force upon the exchange of the instruments of ratification and shall

have effect:a. in India, in respect

of income derived during the " previous year " begining on or after

the first day of January of the calender year next following the calender year

in which the instruments of ratification are exchanged;b. in Thailand, in

respect of income derived during " tax years " or " accounting

periods " beginning on or after the first day of January of the calender

year next following the calendar year in which the insturments of ratification

are exchanged.Article

29TERMINATIONThis

Convention shall remain in force indefinitely but either Contracting State may

terminate the Convention, through diplomatic channels, by giving to the other

Contracting State, written notice of termination on or before June 30th of any

calender year after the expiration of five years from the year in which the

Convention entered into force. In such event, the Convention shall cease to

have effect:a. in India, in respect

of income derived during the " previous year " begining on or after

the first day of January of the calender year next following the calender year

in which the notice is given;b. in Thailand, in

respect of income derived during " tax years " or " accounting

periods " beginning, on or after the first day of January of the calender

year next following the calendar year in which the notice is given.In

witness whereof the undersigned, duly authorised thereto by their respective

governemnts, have signed this Convention.Done

at New Delhi on this 22nd day of march, one of thousand nine hundred and eighty

five, in six originals, two each in the Hindi, Thai and English languages, all

texts being equally authentic, except in case of divergence when the English

text shall prevail.For

the government of Republic of IndiaFor

the Government of the Kingdom of Thailand(VISWANATH

PRATAP SINGH) Air Chief MarshalMinister

of Finance (SIDDHI SAVETSILA)Minister

of Foreign AffairsMemorandum

of Understanding with respect to the Double taxation Convention between the

Kingdom of Thailand and the Republic of IndiaIt

is understood that:1. The term " tax

" as defined in paragraph 1 (d) of Article 3 of this amount Convention

shall be interpreted not to 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.2. Nothing in paragraph

5 of Article 10 of this Convention shall be construed so as to prevent Thailand

from impossing tax on the disposal of profits (not in the form of dividends) in

accordance with Section 70 bis of theThai Revenue Code.3. With reference to

paragraph 2 of Article 26, any agreement reached by the two competent

authorities shall be implemented notwithstanding any time limits in the

domestic laws of the Contracting States provided that the implementation of

such agreement will be beneficial to the tax-payer concerned.4. In case Thailand

grants reduction from tax of an amount more than 50 per cent thereof on income

derived from the operation of ships in international traffic by a resident of

any country, paragraph 2 of Article 8 of the Convention shall be reconsidered

with a view to granting, on the basis of reciprocity, the same reduction from

tax on income of shipping companies which are residents of India.For

the government of Republic of IndiaFor

the Government of the Kingdom of Thailand(VISWANATH

PRATAP SINGH) Air Chief MarshalMinister

of Finance (SIDDHI SAVETSILA)Minister

of Foreign Affairs(F.

No. 145/4/71-FTD)Notification

No.6780V.

U. ERADI, Jt. SecyNotification

No.6780 (F. No. 145/4/71--- FTD)