Turkmenistan - Legal Draft

Notification

No. G. S. R. 567(E), dated 25th September, 1997.Whereas

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

Government of Turkmenistan for the avoidance of double taxation and the

prevention of fiscal evasion with respect to taxes on income and on capital has

entered into force on the seventh day of July, 1997, after the notification by

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

by its law for bringing into force of the said Convention in accordance with

Article 30 of the said Convention;Now,

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

Act, 1961 (43 of 1961), and section 44A of the Wealth-tax Act, 1957 (27 of

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

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

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

FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH

RESPECT TO TAXES ON INCOME AND ON CAPITALThe

Government of the Republic of India and the Government of Turkmenistan desiring

to conclude a Convention for the avoidance of double taxation and the

prevention of fiscal evasion with respect to taxes on income and on capital and

with a view to promoting economic cooperation between the two countries.Have

agreed as follows:Article

1PERSONAL

SCOPEThis

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

Contracting States.Article

2TAXES

COVERED1. This Convention shall

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

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

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

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

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

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

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

appreciation.3. The taxes to which

the Convention shall apply are in particular:a. In Turkmenistan;i.

the

profits (income) tax;ii.

the

personal income-tax from the individuals;iii.

the

tax on natural resources;iv.

the

tax on the property of the enterprises;v.

the

payment for the lands,(hereinafter

referred to as "Turkmen tax");a.b. In India:i.

the

income-tax including any surcharge thereon;ii.

the

wealth-tax;(hereinafter

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

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

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

the taxes referred to in paragraph 3. The competent authorities of the Contracting

States shall notify each other of significant changes which have been made in

their respective taxation laws.Article

3GENERAL

DEFINITIONS1. For the purposes of

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

"Turkmenistan" means Turkmenistan and, when used in a geographical

sense, includes any area beyond the territorial waters of Turkmenistan which in

accordance with international law and the laws of Turkmenistan is an area

within which Turkmenistan may exercise rights with respect to the sea bed and

subsoil and their natural resources;b. the term

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

and airspace above it, and other maritime zones in which India has sovereign

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

accordance with international law, including the UN Convention on the Law of

the Sea;c. the term

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

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

force in the respective Contracting States;d. the term

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

a body corporate for tax purposes;e. 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;f. the term

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

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

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

"competent authority" means:--i.

in

Turkmenistan, the Head of the Main State Tax Inspectorate or his authorised

representative;ii.

in

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

Revenue) or their authorised representative;a.b.c.d.e.f.g.h. the term

"national" means:i.

any

individual possessing the nationality of a Contracting State;ii.

any

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

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

year" means:i.

in

the case of Turkmenistan, the calendar year from 1st of January to 31st of

December of the year under review;ii.

in

the case of India, the "previous year" as defined under section 3 of

the Income-tax Act, 1961;a.b.c.d.e.f.g.h.i.j. the term

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

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

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

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

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

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

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

applies.Article

4RESIDENT1. For the purposes of

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

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

his domicile, residence, place of management or any other criterion of a similar

nature. But this term does not include any person who is liable to tax in that

State in respect only of income from sources in that State or capital situated

therein.2. Where by reason of

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

5PERMANENT

ESTABLISHMENT1. For the purposes of

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

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

partly carried on.2. The term

"permanent establishment" includes especially:a. a place of

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

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

to a person providing storage facilities for others.1.2.3. The term

"permanent establishment" likewise encompasses a building site, a

construction, assembly or installation project or supervisory activities in

connection therewith, but only when such site, project, or activities continue

for a period of more than six months.4. 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 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 of collecting information, for the enterprise;e. the maintenance of a

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

enterprise, any other activity of a preparatory or auxiliary character;f. the maintenance of a

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

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

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

auxiliary character.1.2.3.4.5. Notwithstanding the

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

independent status to whom paragraph 7 applies -- is acting in a Contracting

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

enterprise shall be deemed to have a permanent establishment in the

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

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

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

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

in paragraph 4 which, if exercised through a fixed place of business, would not

make this fixed place of business a permanent establishment under the

provisions of that paragraph; orb. has no such

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

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

behalf of the enterprise.1.2.3.4.5.6. 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 Contracting State if it collects premiums in the

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

person other than an agent of an independent status to whom paragraph 7

applies.7. An enterprise shall

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

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

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

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

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

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

within the meaning of this paragraph.8. The fact that a

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

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

on business in that other State (whether through a permanent establishment or

otherwise), shall not of itself constitute either company a permanent

establishment of the other.Article

6INCOME

FROM IMMOVABLE PROPERTY1. Income derived by a

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

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

taxed in that other State.2. The term

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

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

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

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

provisions of general law respecting landed property apply, 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 and aircraft shall not be regarded as immovable

property.3. The provisions of

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

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

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

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

independent personal services.Article

7BUSINESS

PROFITS1. The profits of an

enterprise of a Contracting State shall be taxable only in that State unless

the enterprise carries on business in the other Contracting State through a

permanent establishment situated therein. If the enterprise carries on business

as aforesaid, the profits of the enterprise may be taxed in the other State but

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

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

on business in the other Contracting State through a permanent establishment

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

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

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

activities under the same or similar conditions and dealing wholly

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

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

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

including executive and general administrative expenses so incurred, whether in

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

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

laws of that State.4. No profits shall be

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

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

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

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

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

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

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

provisions of this article.Article

8SHIPPING

AND AIR TRANSPORT1. Profits derived by an

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

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

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

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

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

in international traffic shall be taxable only in that Contracting State unless

the containers are used solely within the other Contracting State.3. 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

ENTERPRISES1. Where,a. an enterprise of a

Contracting State participates directly or indirectly in the management,

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

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

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

State;and

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

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

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

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

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

enterprise and taxed accordingly.1.2. Where a Contracting

State includes in the profits of an enterprise of that State--and taxes

accordingly--profits on which an enterprise of the other Contracting State has

been charged to tax in that other State and the profits so included are profits

which would have accrued to the enterprise of the first-mentioned State if the

conditions made between the two enterprises had been those which would have

been made between independent enterprises, then that other State shall make an

appropriate adjustment to the amount of the tax charged therein on those

profits. In determining such adjustment, due regard shall be had to the other

provisions of this Convention and the competent authorities of the Contracting

States shall if necessary consult each other.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 10 per cent. of the gross amount of the dividends. The

competent authorities of the Contracting States shall by mutual agreement

settle the mode of application of this limitation. This paragraph shall not

affect the taxation of the company in respect of the profits out of which the

dividends are paid.3. The term

"dividends" as used in this article means income from shares or other

rights, not being debt-claims, participating in profits, as well as income from

other corporate rights which is subjected to the same taxation treatment as

income from shares by the laws of the State of which the company making the

distribution is a resident.4. The provisions of

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

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

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

through a permanent establishment situated therein, or performs in that other

State independent personal services from a fixed base situated therein, and the

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

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

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

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

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

paid by the company, except in so far as such dividends are paid to a resident

of that other State or in so far as the holding in respect of which the

dividends are paid is effectively connected with a permanent establishment or a

fixed base situated in that other 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 10 per cent. of the

gross amount of the interest. The competent authorities of the Contracting

States shall by mutual agreement settle the mode of application of this

limitation.3. Notwithstanding the

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

exempt from tax in that State provided it is derived and beneficially owned

by:--i.

the

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

Contracting State; orii.

the

Central Bank of the other Contracting State, or any other bank that may be

mutually agreed upon between the two Contracting States.1.2.3.4. The term

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

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

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

Government securities and income from bonds or debentures, including premiums

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

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

article.5. The provisions of

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

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

Contracting State in which the interest arises, through a permanent

establishment situated therein, or performs in that other 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 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

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

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

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

State in which the permanent establishment or fixed base is situated.7. Where, by reason of a

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

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

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

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

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

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

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

being had to the other provisions of this Convention.Article

12ROYALTIES

AND FEES FOR TECHNICAL SERVICES1. Royalties or fees for

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

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

or fees for technical services may also be taxed in the Contracting State in

which they arise and according to the laws of that State, but if the recipient

is the beneficial owner of the royalties or fees for technical services the tax

so charged shall not exceed 10 per cent. of the gross amount of the royalties

or fees for technical services.3.a. The term

"royalties" as used in this article means payments of any kind

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

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

recordings on any means of reproduction for use in connection with radio or

television broadcasting, computer software, 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;b. The term "fees

for technical services" means payments of any kind in consideration for

the rendering of any managerial, technical or consultancy services including

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

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

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

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

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

technical services arise, through a permanent establishment situated therein,

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

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

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

permanent establishment or fixed base. In such case the provisions of Article 7

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

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

payer is that State itself, a political subdivision, or local authority or a

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

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

has in any State a permanent establishment or a fixed base in connection with

which the liability to pay the royalties or fees for technical services was

incurred, and such royalties or fees for technical services are borne by such

permanent establishment or fixed base, then such royalties or fees for

technical services shall be deemed to arise in the State in which the permanent

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

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

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

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

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

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

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

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

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

provisions of this Convention.Article

13CAPITAL

GAINS1. Gains derived by a

resident of a Contracting State from the alienation of immovable property

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

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

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

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

operated in international traffic, or movable property pertaining to the

operation of such ships or aircraft shall be taxable only in that State.4. Gains from the

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

consists directly or indirectly principally of immovable property situated in a

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

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

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

14INDEPENDENT

PERSONAL SERVICES1. Income derived by a

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

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

except in the following circumstances, when such income may also be taxed in

the other Contracting State:a. if he has a fixed

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

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

attributable to that fixed base may be taxed in that other State; orb. if his stay in the

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

in any 12-month period commencing or ending in the fiscal year concerned; in

that case only so much of the income as is derived from his activities

performed in that other State in the year may be taxed in that other State.1.2. The term

"professional services" includes especially independent scientific,

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

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

dentists and accountants.Article

15DEPENDENT

PERSONAL SERVICES1. Subject to the

provisions of Articles 16, 18 and 19, salaries, wages and other similar

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

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

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

such remuneration as is derived therefrom may be taxed in that other State.2. Notwithstanding the

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

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

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

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

aggregate 183 days in any 12-month period commencing or ending in the fiscal

year concerned, andb. the remuneration is

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

andc. the remuneration is

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

in the other State.1.2.3. Notwithstanding the

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

employment exercised aboard a ship or aircraft operated in international

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

16DIRECTORS'

FEESDirectors'

fees and other similar payments derived by a resident of a Contracting State in

his capacity as a member of the board of directors of a company which is a

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

17ARTISTES

AND SPORTSMEN1. Notwithstanding the

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

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

artiste, or a musician, or as a sportsman, from his personal activities as such

exercised in the other Contracting State, may be taxed in that other State.2. Where income in

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

his capacity as such accrues not to the entertainer or sportsman 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 sportsman are exercised.3. The provisions of

paragraphs 1 and 2 shall not apply to income derived from activities performed

in a Contracting State by entertainers or sportsmen if the visit to that State

is substantially supported by public funds of one or both of the Contracting

States or of political sub-divisions or local authorities thereof. In such a

case, the income is taxable only in the Contracting State of which the

entertainer or sportsman is a resident.Article

18PENSIONSSubject

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

remuneration paid to a resident of a Contracting State in consideration of past

employment shall be taxable only in that State.Article

19GOVERNMENT

SERVICE1.a. Remuneration, other

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

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

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

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

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

State who:--i.

is

a national of that State; orii.

did

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

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

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

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

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

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

resident of, and a national of, that State.3. The provisions of

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

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

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

20STUDENTS

AND APPRENTICES1. A student or business

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

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

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

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

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

maintenance, education or training; andb. remuneration from

employment in that other State, in an amount not exceeding US Dollar 500 or its

equivalent amount during any fiscal year,as

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

studies or is undertaken for the purpose of his maintenance.1.2. The benefits of this

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

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

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

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

Contracting State.Article

21PROFESSORS,

TEACHERS AND RESEARCH SCHOLARS1. A professor or teacher

who is or was a resident of the Contracting State immediately before visiting

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

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

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

other 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 State.2. This article shall

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

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

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

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

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

fiscal year.4. For the purposes of

paragraph 1 "approved institution" means an institution which has

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

Contracting State.Article

22OTHER

INCOME1. Subject to the

provisions of paragraph 2, items of income of a resident of a Contracting

State, wherever arising, which are not expressly dealt with in the foregoing

articles of this Convention, shall be taxable only in that State.2. The provisions of

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

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

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

other Contracting State through a permanent establishment situated therein, or

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

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

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

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

shall apply.3. Notwithstanding the

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

Contracting State not dealt with in the foregoing articles of this Convention

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

State.Article

23CAPITAL1. Capital represented

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

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

that other State.2. Capital represented

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

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

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

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

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

State.3. Capital owned by an

enterprise of a Contracting State and represented by ships and aircraft

operated in international traffic, and by movable property pertaining to the

operation of such ships and aircraft, shall be taxable only in that State.4. All other elements of

capital of a resident of a Contracting State shall be taxable only in that

State.Article

24ELIMINATION

OF DOUBLE TAXATION1. The laws in force in

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

and capital in the respective Contracting States except where provisions to the

contrary are made in this Convention.2. Where a resident of

India derives income or owns capital which, in accordance with the provisions

of this Convention, may be taxed in Turkmenistan, India shall allow as a

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

income-tax paid in Turkmenistan, whether directly or by deduction; and as a

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

capital tax paid in Turkmenistan. Such deduction in either case shall not,

however, exceed that part of income-tax or tax on capital (as paid before the

deduction is given), which is attributable to the income or the capital which

may be taxed in Turkmenistan.3. In the case of

Turkmenistan, the double taxation shall be avoided by a method which is

identical to that mentioned in paragraph 2.4. For the purposes of

paragraphs 2 and 3 of this article, the tax payable in the Contracting State

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

tax incentives according to which such tax is not payable under the laws of the

Contracting State and which are designed to promote economic development.5. Income which in

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

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

tax to be imposed in that Contracting State.Article

25NON-DISCRIMINATION1. Nationals of a

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

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

burdensome than the taxation and connected requirements to which nationals of

that other State in the same circumstances, in particular with respect to

residence, are or may be subjected. This provision shall, notwithstanding the

provisions of Article 1, also apply to persons who are not residents of one or

both of the Contracting States.2. The taxation on a

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

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

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

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

Contracting State to grant to residents of the other Contracting State any

personal allowances, reliefs and reductions for taxation purposes on account of

civil status or family responsibilities which it grants to its own residents.

This provision shall not be construed as preventing a Contracting State from

charging the profits of a permanent establishment which an enterprise of the

other Contracting State has in the first-mentioned Contracting State at a rate

higher than that imposed on the profits of a similar enterprise of the

first-mentioned State, nor as being in conflict with the provisions of

paragraph 3 of Article 7 of this Convention.3. Except where the

provisions of paragraph 1 of Article 9, paragraph 6 of Article 11, or paragraph

6 of Article 12, apply, interest, royalties, fees for technical services and

other disbursements paid by an enterprise of a Contracting State to a resident

of the other Contracting State shall, for the purpose of determining the

taxable profits of such enterprise, be deductible under the same conditions as if

they had been paid to a resident of the first-mentioned State. Similarly, any

debts of an enterprise of a Contracting State to a resident of the other

Contracting State shall, for the purpose of determining the taxable capital of

such enterprise, be deductible under the same conditions as if they had been

contracted to a resident of the first-mentioned State.4. 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 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 the first-mentioned State are or may be subjected.5. The provisions of

this article shall, notwithstanding the provisions of Article 2, apply to taxes

of every kind and description.Article

26MUTUAL

AGREEMENT PROCEDURE1. Where a person

considers that the actions of one or both of the Contracting States result or

will result for him in taxation not in accordance with the provisions of this

Convention, he may, irrespective of the remedies provided by the domestic law

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

State of which he is a resident or, if his case comes under paragraph 1 of

Article 25, to that of the Contracting State of which he is a national. The

case must be presented within three years from the first notification of the

action resulting in taxation not in accordance with the provisions of 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 a satisfactory 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 Convention. Any agreement reached shall be implemented notwithstanding any

time limits in the domestic law of the Contracting States.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 purpose of reaching an agreement in the sense of the preceding

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

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

consisting of representatives of the competent authorities of the Contracting

States.Article

27EXCHANGE

OF INFORMATION1. The competent

authorities of the Contracting States shall exchange such information

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

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

covered by the Convention in so far as the taxation thereunder is not contrary

to the Convention. The exchange of information is not restricted by Article 1.

Any information received by a Contracting State shall be treated as secret in

the same manner as information obtained under the domestic laws of that 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 only for such purposes. They may disclose the

information in public court proceedings or in judicial decisions.2. In no case shall the

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

the obligation:--a. to carry out

administrative measures at variance with the laws and 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 Statec. to supply information

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

28COLLECTION

ASSISTANCE1. The Contracting

States undertake to lend assistance to each other in the collection of taxes to

which this Convention relates, together with interest, costs, and civil

penalties relating to such taxes, referred to in this article as a

"revenue claim".2. Request for

assistance by the competent authority of a Contracting State in the collection

of a revenue claim shall include a certification by such authority that, under

the laws of that State, the revenue claim has been finally determined. For the

purposes of this article, a revenue claim is finally determined when a Contracting

State has the right under its internal law to collect the revenue claim and the

taxpayer has no further rights to restrain collection.3. Amounts collected by

the competent authority of a Contracting State pursuant to this article shall

be forwarded to the competent authority of the other Contracting State.

However, the first-mentioned Contracting State shall be entitled to

reimbursement of costs, if any, incurred in the course of rendering of such

assistance to the extent mutually agreed between the competent authorities of

the two States.4. Nothing in this

article shall be construed as imposing on either Contracting State the

obligation to carry out administrative measures of a different nature from

those used in the collection of its own taxes or those which would be contrary

to its public policy.Article

29DIPLOMATIC

AGENTS AND CONSULAR OFFICERSNothing

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

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

provisions of special agreements.Article

30ENTRY

INTO FORCE1. Each of the

Contracting States shall notify to the other the completion of the procedures

required by its law for the bringing into force of this Convention. This

Convention shall enter into force on the date of the later of these

notifications and shall thereupon have effect:--a. in India, in respect

of income or capital arising in any fiscal year beginning on or after the first

day of April next following the calendar year in which the Convention enters

into force; andb. in Turkmenistan, in

respect of income or capital arising in any fiscal year beginning on or after

the first day of January next following the calendar year in which the

Convention enters into force.Article

31TERMINATIONThis

Convention shall remain in force indefinitely until terminated by a Contracting

State. Either Contracting State may terminate the Convention, through

diplomatic channels, by giving notice of termination at least six months before

the end of any calendar year beginning after the expiration of five years from

the date of entry into force of the Convention. In such event, the Convention

shall cease to have effect:--a. in India, in respect

of income arising in any previous year beginning on or after the 1st April next

following the calendar year in which the notice is given in respect of capital

which is held at the expiry of any previous year beginning on or after the 1st

April next following the calendar year in which the notice of termination is

given;b. in Turkmenistan, in

respect of income arising in any year of income beginning on or after the 1st

January next following the calendar year in which the notice is given and in

respect of capital which is held at the expiry of any year of income next

following the calendar year in which the notice of termination is given.In

witness whereof,

the undersigned, being duly authorised thereto, have signed this Convention.Done in duplicate at New

Delhi this 25th day of February, 1997, in the Turkmen, Hindi and English

languages, all three texts being equally authentic. In case of divergence between

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

the Government of the Republic of India(I.

K. Gujral)For

the Government of Turkmenistan(Shikhiev

Ilaman)PROTOCOLAt

the signing of the Convention between the Government of the Republic of India

and the Government of Turkmenistan for the Avoidance of Double Taxation and for

the Prevention of Fiscal Evasion with Respect to Taxes on Income and on

Capital, the undersigned have agreed that the following shall form an integral

part of the Convention.With

reference of Article 7:In

respect of paragraphs 1 and 2 of Article 7, where an enterprise of one of the

Contracting States sells goods or merchandise or carries on business in the

other Contracting State through a permanent establishment situated therein, the

profits of that permanent establishment shall not be determined on the basis of

the total amount received by the enterprise, but shall be determined only on

the basis of the remuneration which is attributed to the actual activity of the

permanent establishment for such sales or business. For instance, in the case

of contracts for the survey, supply, installation or construction of

industrial, commercial or scientific equipment or premises, or of public works,

when the enterprise has a permanent establishment, the profits of such

permanent establishment shall not be determined on the basis of the total

amount of the contract, but shall be determined only on the basis of that part

of the contract which is effectively carried out by the permanent establishment

in the Contracting State where the permanent establishment is situated.In

witness whereof

the undersigned, being duly authorised thereto, have signed this Protocol.Done in duplicate at New

Delhi this 25th day of February, 1997 in the