AGREEMENT BETWEEN THE
GOVERNMENT OF THE REPUBLIC OF INDIA AND THE GOVERNMENT OF THE UNION OF SOVIET
SOCIALIST REPUBLICS FOR THE AVOIDANCE OF DOUBLE TAXATION OF INCOMENotification
No. G. S. R. 812(E), dated 4th September, 1989.Whereas
the annexed Agreement between the Government of the Republic of India and the
Government of the Union of Soviet Socialist Republics for the avoidance of
double taxation of income has come into force on the 5th June, 1989, after the
notification by both the Contracting States to each other of the completion of
the procedures required under their laws for bringing into force of the said
Agreement in accordance with article 28 of the said Agreement;Now,
therefore, in exercise of the powers conferred by section 90 of the Income-tax
Act, 1961 (43 of 1961), the Central Government hereby directs that all the
provisions of the said Agreement shall be given effect to in the Union of
India.ANNEXUREAGREEMENT
BETWEEN THE GOVERNMENT OF THE REPUBLIC OF INDIA AND THE GOVERNMENT OF THE UNION
OF SOVIET SOCIALIST REPUBLICS FOR THE AVOIDANCE OF DOUBLE TAXATION OF INCOME.The
Government of the Republic of India and the Government of the Union of Soviet
Socialist Republics,led
by the desire to strengthen and develop friendly relations in economic,
industrial, technical and cultural spheres,have
resolved to conclude an Agreement for the avoidance of double taxation of
incomeand
have agreed as follows:Article
1SCOPE
OF THE AGREEMENT1. This Agreement shall
apply to persons who for the purposes of taxation are deemed to be residents of
one or both of the Contracting States.2.a. This Agreement shall
apply to the territory of each Contracting State, including its territorial
sea, to its economic zone and its continental shelf, adjacent to the limits of
its territorial sea, in respect of which it exercises, in conformity' with
international law, sovereign rights for the purpose of exploration and
exploitation of natural resources of such areas;b. For the purposes of
this Agreement, any reference to either Contracting State shall be deemed as
reference to the territory of the respective State, including its territorial
sea, to its economic zone and the regions of the continental shelf adjacent to
the limits of the territorial sea of this State, which are mentioned in
sub-paragraph (a).Article
2TAXES
COVERED1. The taxes to which
this Agreement shall apply are:a. in the Republic of
India, the income-tax including any surcharge thereon (hereinafter referred to
as " Indian tax ");b. in the Union of
Soviet Socialist Republics;i.
income-tax
on foreign legal persons;ii.
income-tax
on population; andiii.
tax
on part of profits of a foreign participant of a joint venture imposed when it
is transferred abroad (hereinafter referred to as " the USSR tax ").1.2. The Agreement shall
also apply to any identical or substantially similar taxes which are imposed by
either Contracting State after the date of signature of the present Agreement
in addition to, or in place of, the taxes referred to in paragraph 1.3. Taxes mentioned in
this article shall not include any penalty or interest imposed by either
Contracting State relating to the taxes covered by this Agreement.Article
3GENERAL
DEFINITIONS1. In this Agreement,
unless the context otherwise requires:a. the terms " a
Contracting State " and " the other Contracting State " mean the
Republic of India (India) or the Union of Soviet Socialist Republics (the
USSR), as the context requires;b. the term "
person " means an individual, andi.
in
the case of India, also a company or any other entity which is treated as a
taxable unit under the taxation laws in force in India;ii.
in
the case of the USSR, also any legal person or other organisation, created
under the laws of the USSR or any Union Republic and treated as a legal person
for the purposes of taxation in the USSR;a.b.c. the term "
competent authority " means;i.
in
the case of India, the Ministry of Finance (Central Government, Department of
Revenue) or its authorized representative;ii.
in
the case of the USSR, the Ministry of Finance of the USSR or its authorized
representative;a.b.c.d. the term "
national " means:i.
in
the case of India, any individual possessing the nationality of India and any
legal person, partnership or association deriving its status from the laws in
force in India;ii.
in
the case of the USSR, any individual possessing the citizenship of the USSR and
any legal person deriving its status from the laws in force in the USSR;a.b.c.d.e. the term "
international traffic " means any transport by a ship or aircraft operated
by a resident of a Contracting State except when the ship or aircraft is
operated solely between places in the other Contracting State;f. the term "
fiscal year " means:i.
in
the case of India, the " previous year ", as defined in the
Income-tax Act, 1961;ii.
in
the case of the USSR, the period commencing on the 1st January and ending on
the 31st of December.a.b.c.d.e.f.g. As regards the
application of the Agreement by a Contracting State, any term not defined
therein shall, unless the context otherwise requires, have the meaning which it
has under the law of that State concerning the taxes to which the Agreement
applies.Article
4RESIDENT1. For the purposes of
this Agreement, the term " resident of a Contracting State " means
any person who, under the laws of that State, is liable to tax therein by
reason of his domicile, residence, 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 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 is a national;d. if each Contracting
State regards him as a national of that State or if he is a national 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 Agreement, the term " permanent establishment " means any fixed
place of business through which a resident of a Contracting State carries on,
wholly or partly, business in the other Contracting State.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 extrac tion of natural resources;g. a warehouse in
relation to a person providing storage facilities for others;h. a premises used as a
sales outlet or for receiving or soliciting orders;i. an installation or
structure used for the exploration or exploitation of natural resources;j. a building site or
construction, installation or assembly project or supervisory activities in
connection therewith, where such site, project or activities (together with
other such sites, projects or activities, if any) continue for a period of more
than 6 months or where such project or supervisory activity, being incidental
to the sale of machinery or equipment, continues for a period not exceeding six
months and the charges payable for the project or supervisory activity exceed
10 per cent. of the sale price of the machinery and equipment.However,
the competent authorities of the Contracting States may in particular cases and
by mutual agreement consider such activities as not constituting a permanent
establishment also in cases when the duration of works on a building site or a
construction or assembly project exceeds six months:Provided
that for the purpose of this paragraph a resident of a Contracting State shall
be deemed to have a permanent establishment in the other Contracting State and
to carry on business through that permanent establishment if it provides
services or facilities in connection with or supplies plant and machinery on
hire used or to be used in, the prospecting for, or extraction or production of
mineral oils in that other State.1.2.3. Notwithstanding the
preceding provisions of this article, the term " permanent establishment
" shall not include:a. the use of facilities
solely for the purpose of storage or display of merchandise for the resident;b. the maintenance of a
stock of goods belonging to the resident, only for the purpose of storage or
display;c. the maintenance of a
stock of goods or merchandise, belonging to the resident, solely for the
purpose of processing by another person;d. the maintenance of a
fixed place of business solely for the purchase of goods or merchandise or for
collecting information for the resident;e. subject to the
provisions of sub-paragraph (j) of paragraph 2 of this article, carrying out of
mere supervision for a period not exceeding six months over construction and assembly
works;f. the maintenance of a
fixed place of business solely for the purpose of carrying out of advertising
or scientific research or any other activity of a preparatory or an auxiliary
character, for the resident;g. the maintenance of a
fixed place of business for the display of goods and merchandise, belonging to
the resident, at occasional exhibitions;h. the maintenance of a
fixed place of business solely for carrying out, for the resident, of one or
several kinds of activities enumerated in sub-paragraphs (a) to (g), if the
overall activity, being the result of carrying out of these kinds of
activities, is of a preparatory or an auxiliary character.However,
the provisions of sub-paragraphs (a) to (h) shall not be applicable where the
resident of a Contracting State maintains any other fixed place of business in
the other Contracting State for any purposes other than the purpose; specified
in the said sub-paragraphs.1.2.3.4. Notwithstanding the
provisions of paragraphs 1 and 2 where a person --other than an agent of an
independent status to whom paragraph 5 applies--is acting in a Contracting
State on behalf of a resident of the other Contracting State, that resident
shall be deemed to have a permanent establishment in the first-mentioned State,
ifa. he has and habitually
exercises in that State an authority to conclude contracts on behalf of the
resident, unless his activities are limited to the purchase of goods or
merchandise for the residentb. he has no such
authority, but habitually maintains in the firstmentioned State a stock of
goods or merchandise from which he regularly delivers goods or merchandise on
behalf of the resident;c. he habitually secures
orders in the first-mentioned State, wholly or almost wholly for the resident
itself or for the resident and other residents controlling, controlled by, or
subject to the same common control, as that resident; ord. in so acting, he
manufactures or processes in that State for the resident goods or merchandise
belonging to the resident.1.2.3.4.5. A resident of a
Contracting State shall not be deemed to have a permanent establishment in the
other Contracting State merely because it carries on business in that other
State through a broker, general commission agent or any other agent of an
independent status provided that such persons are acting in the ordinary course
of their business.6. The fact that a
person (other than an individual) who is a resident of a Contracting State
controls or is controlled by a person (other than an individual), who is a
resident of the other Contracting State or who carries on business in that
other State (either through a permanent establishment or otherwise) shall not
constitute one of those persons a permanent establishment of the other.Article
6INCOME
FROM IMMOVABLE PROPERTY1. Income derived by a
resident of a Contracting State from immovable property (including income from
agriculture or forestry) situated in the other Contracting State may be taxed
in that other State.2. The term "
immovable property " shall have the meaning which it has under the law of
the Contracting State in which the property in question is situated. The term,
in the case of India, 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 also 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 a
resident and to income from immovable property used for the performance of
independent personal services.Article
7BUSINESS
PROFITS1. The profits of a
resident of a Contracting State shall be taxable only in that State unless the
resident carries on business in the other Contracting State through a permanent
establishment situated therein. If the resident carries on business as
aforesaid, the profits of the resident may be taxed in the other State but only
so much of them as is directly or indirectly attributable to that permanent
establishment.2. Subject to the
provisions of paragraph 3, where a resident 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 resident engaged in the same or similar activities
under the same or similar conditions and dealing wholly independently with the
resident of which it is a permanent establishment.3. In the determination
of the 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, in accordance with the provisions of and subject to the
limitations of the taxation 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 of merchandise for the resident.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
Agreement, then the provisions of those articles shall not be affected by the
provisions of this article.7. Where:a. a resident of a
Contracting State participates directly or indirectly in the management,
control or capital of a resident of the other Contracting State, orb. the same persons
participate directly or indirectly in the management, control or capital of a
resident of a Contracting State and a resident of the other Contracting State,and
in either case conditions are made or imposed between the two such residents in
their commercial or financial relations which differ from those which would be
made between independent residents, then any profits which would, but for those
conditions, have accrued to one of the residents, but, by reason of those
conditions, have not so accrued, may be included in the profits of that resident
and taxed accordingly.Article
8AIR
TRANSPORT1. Profits derived by a
resident of a Contracting State from the operation of aircraft in international
traffic shall be taxable only in that State.2. The provisions of
paragraph 1 shall also apply to profits from the participation in a pool, a
joint business or an international operating agency.3. For the purposes of
this article, interest on funds connected with the operation of aircraft in
international traffic shall be regarded as profits derived from the operation
of such aircraft, and the provisions of article 11 shall not apply in relation
to such interest.4. The term "
operation of aircraft " shall mean business of transportation by air of
passengers, mail, livestock or goods carried on by the owners or lessees or
charterers of aircraft, including the sale of tickets for such transportation
on behalf of other enterprises, the incidental lease of aircraft and any other
activity directly connected with such transportation.Article
9SHIPPING1. Income derived by a
resident of a Contracting State from the operation of ships in international
traffic shall be taxable only in that State.2. Notwithstanding the
provisions of paragraph 1 of this article and article 15 of the Agreement
between the Government of the Republic of India and the Government of the Union
of Soviet Socialist Republics on merchant shipping, dated 19th July, 1976,
income derived by a resident of a Contracting State from the operation of ships
between the ports of the other Contracting State and the ports of third
countries (in both directions) may be taxed in that other State, but the tax
imposed in that other State shall be reduced by an amount equal to two thirds
thereof.3. The provisions of
paragraph 1 of this article shall also apply to income from participation in a
pool, a joint business or an international operating agency engaged in the
operation of ships.4. For the purposes of
this article:a. interest on funds
connected with the operation of ships in international traffic shall be
regarded as income from the operation of such ships and the provisions of
article 11 shall not apply in relation to such interest; andb. income from the
operation of ships includes income derived from the use, maintenance or rental
of containers (including trailors and related equipment for the transport of
containers) in connection with the transport of goods or merchandise in
international traffic.Article
10DIVIDENDS1. Dividends paid by a
legal person (in the case of India, a company) which is 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 legal person
(in the case of India, a company) paying the dividends is a resident and
according to the laws of that State, but if the recipient is the beneficial
owner of the dividends, the tax so charged shall not exceed 15% of the gross amount
of the dividends.This
paragraph shall not affect the taxation of the legal person (in the case of
India, a company) in respect of the profits out of which the dividends are
paid.1.2.3. The term "
dividends " as used in this article means income from shares or other
rights, not being debt claims, participating in profits, as well as income from
other corporate rights which is subjected to the same taxation treatment as
income from shares by the laws of the State of which the legal person (in the
case of India, a company) making the distribution is a resident. In the case of
the USSR, this term means especially part of profits of a joint venture
established in conformity with the laws of the USSR which is attributable to
its participant who is a resident of India, transferred from the USSR.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 legal person (in the case of India, a company)
paying the dividends is a resident, through a permanent establishment situated
therein, and the holding in respect of which the dividends are paid is
effectively connected with such permanent establishment. In such case, the provisions
of article 7 shall apply.Article
11INTEREST1. Interest arising in a
Contracting State and paid to a resident of the other Contracting State may be
taxed in that other State.2. However, such
interest may also be taxed in the Contracting State in which it arises and
according to the laws of that State, but if the recipient is the beneficial
owner of the interest, the tax so charged shall not exceed 15 per cent. of the
gross amount of the interest.3. Notwithstanding the
provisions of paragraph 2,--a. 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 sub-division or a local authority of the other Contracting State;
orii.
the
central bank of that other State;a.b. interest arising in a
Contracting State shall be exempt from tax in that State to the extent approved
by the Government of that State if it is derived and beneficially owned by any
person (other than a person referred to in sub-paragraph (a)) who is a resident
of the other Contracting State provided that the transaction giving rise to the
debt-claim has been approved in this regard by the Government of the
first-mentioned State.1.2.3.4. The term "
interest " when used in this article means income from debt-claims of
every kind, bank deposits, government loans as well as any other income which
is treated as interest in accordance with the laws of the State where such
income arises. 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, and the debt-claim in respect of which the interest is paid
is effectively connected with such permanent establishment. In such case the
provisions of article 7 shall apply.6. Interest shall be
deemed to arise in a Contracting State when the payer is that Contracting State
itself, a sub-division, a local authority or a resident of that State. Where,
however, the person paying the interest, whether he is a resident of a
Contracting State or not, has in a Contracting State a permanent establishment
in connection with which the indebtedness on which the interest is paid was
incurred, and such interest is borne by such permanent establishment, then such
interest shall be deemed to arise in the Contracting State in which the permanent
establishment is situated.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 a case, the excess part of the payments shall
remain taxable according to the laws of each Contracting State, due regard
being had to the other provisions of this Agreement.Article
12ROYALTIES
AND FEES FOR TECHNICAL SERVICES1. Royalties and fees
for technical services arising in a Contracting State and paid to a resident of
the other Contracting State may be taxed in that other State.2. However, such
royalties and fees for technical services may also be taxed in the Contracting
State in which they arise and according to the laws of that State, but if the
recipient is the beneficial owner of the royalties, or fees for technical
services, the tax so charged shall not exceed:a. Fifteen per cent. of
the gross amount of the royalties relating to copyrights of literary, artistic
or scientific works, other than cinematograph films or films or tapes used for
radio or television broadcasting; andb. Twenty per cent. of
the gross amount of the royalties in all other cases or fees for technical
services.1.2.3. 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 films or tapes
used for radio or television broadcasting, any patent, trade mark, design or model,
plan, 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 term " fees
for technical services " as used in this article means payments of any
kind to any person other than payments to an employee of a person making
payments, in consideration for the services of a managerial, technical or
consultancy nature, including the provision of services of technical or other personnel.5. 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,
and the right, property or contract in respect of which the royalties or fees
for technical services are paid is effectively connected with such permanent
establishment. In such case the provisions of article 7 shall apply.6. Royalties and fees
for technical services shall be deemed to arise in a Contracting State when the
payer is that State itself, a sub-division, a 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 a Contracting State a permanent establishment 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, then such royalties or fees for technical services shall be
deemed to arise in the State in which the permanent establishment 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 royalties or fees for technical
services paid exceeds the amount which would have been paid in the absence of
such relationship, the provisions of this article shall apply only to the
last-mentioned amount. In such case the excess part of the payments shall
remain taxable according to the laws of each Contracting State, due regard
being had to the other provisions of this Agreement.Article
13GAINS
FROM ALIENATION OF PROPERTY1. 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 a resident of a Contracting State has in the
other Contracting State including such gains from the alienation of such a
permanent establishment (alone or with the whole property) may be taxed in that
other State.3. Gains from the
alienation of ships or aircraft operated in international traffic or movable
property pertaining to the operation of such ships or aircraft shall be taxable
only in the Contracting State of which the alienator is a resident.4. Gains from the
alienation of shares of the capital stock of a legal person (in the case of
India, a company) which is a resident of a Contracting State may be taxed in
that State.5. Gains from the
alienation of any property other than that mentioned in paragraphs 1, 2, 3 and
4 shall be taxable only in the Contracting State of which the alienator is a
resident.Article
14INDEPENDENT
PERSONAL SERVICES1. Income derived by an
individual who is a resident of a Contracting State from the performance of
professional services or other independent activities of a similar character
shall be taxable only in that State unless he is present in the other
Contracting State for a period or periods amounting to or exceeding in the
aggregate 90 days in the relevant fiscal year: in that case, such income may
also be taxed in that other State, but only so much of it as is derived from
his activities performed in that other State.2. The term "
professional services " includes especially independent personal services
of an individual in his capacity as a physician, teacher, architect, engineer
and accountant.Article
15INCOME
FROM EMPLOYMENT1. Subject to the
provisions of articles 16, 17, 18, 19 and 20, 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 firstmentioned State if:a. the recipient is
present in the other State for a period or periods not exceeding in the
aggregate 183 days in the relevant fiscal year; 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 which the employer has in the other
State.1.2.3. Notwithstanding the
preceding provisions in this article, remuneration derived in respect of an
employment exercised aboard a ship or aircraft operated in international
traffic by a resident of a Contracting State may be taxed in that State.Article
16DIRECTOR'S
FEESDirector's
fees and similar payments derived by a resident of a Contracting State in his
capacity as a member of the board of directors or similar body of a company or
any other legal person which is a resident of the other Contracting State may
be taxed in that other State.Article
17INCOME
EARNED BY ENTERTAINERS AND ATHLETES1. 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 an athlete, from his personal activities as such
exercised in the other Contracting State may be taxed in that other State.2. Where such income in
respect of personal activities exercised by an entertainer or athlete in his
capacity as such accrues not 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 paragraph 1, income derived by an entertainer or an athlete who
is a resident of a Contracting State from his personal activities as such
exercised in the other Contracting State shall be taxable only in the
first-mentioned State, if more than 50 per cent. of the expenses for such
activities are supported from the public funds of the first-mentioned State,
including any of its sub-divisions or local authorities.4. Notwithstanding the
provisions of paragraph 2 and articles 7, 14 and 15, where income in respect of
personal activities exercised by an entertainer or an athlete in his capacity
as such in a Contracting State accrues not to the entertainer or athlete
himself but to another person, that income shall be taxable only in the other
Contracting State, if more than 50 per cent. of the expenses of such person are
supported from the public funds of that other State, including any of its
sub-divisions or local authorities.Article
18REMUNERATION
AND PENSIONS IN RESPECT OF GOVERNMENT SERVICES1.a. Remuneration, other
than a pension, paid by a Contracting State, or a sub-division or a local
authority thereof to an individual in respect of services rendered to that
State or sub-division or authority shall be taxable only in that State.b. However, such
remuneration shall be taxable only in the other Contracting State, if the
services are rendered in that other State and the individual is a resident of
that State who:i.
is
a national of that State, orii.
did
not become a resident of that State solely for the purposes of rendering the
services.1.2.a. Any pension paid by,
or out of funds created by a Contracting State, or a 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 other State.1.2.3. The provisions of
articles 15, 16 and 19 shall apply to remuneration and pensions in respect of
services rendered in connection with commercial activities.Article
19PENSIONSAny
pension, other than a pension referred to in article 18, derived by a resident
of a Contracting State from sources within the other Contracting State may be
taxed only in the first-mentioned State.Article
20PAYMENTS
RECEIVED BY STUDENTS, APPRENTICES, PROFESSORS, TEACHERS AND RESEARCH SCHOLARS1. A student or business
apprentice who is or was a resident of one of the Contracting States
immediately before visiting the other Contracting State and who is present in
that other State solely for the purpose of his education or training, shall be
exempt from tax in that other State on payments derived from sources outside
that other State for the purposes of his maintenance, education or training.2. Remuneration derived
by a professor, a teacher or a research scholar who was, immediately before the
visit to a Contracting State, a resident of the other Contracting State and
visits the first-mentioned State with the aim of promoting his education,
conducting research or teaching in an educational institution or a school shall
not be taxable in the first-mentioned State during first two years of his
activity.3. The provisions of
paragraph 2 shall not apply to income from research if such research is
undertaken primarily for the private benefit of a specific person or persons.Article
21OTHER
INCOME1. Items of income of a
resident of a Contracting State which are not expressly dealt with in the
foregoing articles of this Agreement shall be taxable only in that State.
However, such items of income arising in the other Contracting State may also
be taxed in that other 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, and
the right or property in respect of which the income is paid is effectively
connected with such permanent establishment. In such cases, the provisions of
article 7 shall apply.Article
22ELIMINATION
OF DOUBLE TAXATION1. The laws in force in
either of the Contracting States will continue to govern the taxation of income
in the respective Contracting States except where provisions to the contrary
are made in this Agreement.2. In the case of India,
double taxation shall be avoided as follows:a. where a resident of
India derives income which, in accordance with the provisions of this
Agreement, may be taxed in the USSR, India, shall allow as a deduction from the
tax on the income of that resident an amount equal to the income-tax paid in
the USSR, whether directly or by deduction. Such deduction shall not, however,
exceed that part of income-tax (as paid before the deduction is given), which
may be attributable to the income which may be taxed in the USSR;b. where a resident of
India derives income which, in accordance with the provisions of this
Agreement, shall be taxable only in the USSR. India may include this income in
the tax base but shall allow as a deduction from the income-tax that part of
the income-tax which is attributable to the income derived from the USSR.1.2.3. In the USSR, double
taxation shall be eliminated in accordance with the laws of the USSR, due
regard being had to the taxes paid or spared in India.Article
23NON-DISCRIMINATION1. A Contracting State
may not exercise in respect of a resident of the other Contracting State a
higher or more burdensome taxation than taxation which that State would
exercise in respect of a resident of a third State with which it did not
conclude an agreement for the avoidance of double taxation.2. In this article, the
term " taxation " means taxes covered by this Agreement.Article
24MUTUAL
AGREEMENT PROCEDURE1. Where a resident of a
Contracting State considers that the actions of one or both of the Contracting
States result or will result for him in taxation not in accordance with this
Agreement, he may, notwithstanding the remedies provided by the national laws
of those States, present his case to the competent authority of the Contracting
State of which he is a resident. This case must be presented within three years
of the date of receipt of notice of the action which gives rise to taxation not
in accordance with the Agreement.2. The competent
authority shall endeavour, if the objection appears to it to be justified and
if it is not itself able to arrive at an appropriate solution, to resolve the
case by mutual agreement with the competent authority of the other Contracting
State, with a view to the avoidance of taxation not in accordance with the
Agreement. Any agreement reached shall be implemented notwithstanding any time
limits in the national laws 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 Agreement. They may also consult together for the
elimination of double taxation in cases not provided for in the Agreement.4. The competent
authorities of the Contracting States may communicate with each other, under
the established procedure, 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
25EXCHANGE
OF INFORMATION1. The competent
authorities of the Contracting States shall exchange, to the extent permitted
by their domestic laws, such information (including documents) as is necessary
for carrying out the provisions of this Agreement or of the domestic laws of
the Contracting States concerning taxes covered by the Agreement, in so far as
the taxation thereunder is not contrary to the Agreement, in particular for the
prevention of fraud or evasion of such taxes. Any information received by a
Contracting State shall be treated as confidential in the same manner as
information obtained under the domestic laws of that State. However, if the
information is originally regarded as confidential in the transmitting State,
it 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 which are the subject of the Agreement. Such persons or
authorities shall use the information only for such purposes but may disclose
the information in public court proceedings or in judicial decisions. The
exchange of information or documents shall also be on request with reference to
particular cases.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 or administrative practice of
that or of the other Contracting State;b. to supply information
which is not obtainable under the laws or in the normal course of the
administration of that or the other Contracting State;c. to supply information
which would disclose any trade, industrial, commercial or professional secret
or trade process or information the disclosure of which would be contrary to
the interests of the first-mentioned State.1.2.3. The competent
authorities of the Contracting States shall notify each other of the changes
which are made in their tax laws.Article
26DIPLOMATIC
AND CONSULAR ACTIVITIESNothing
in this Agreement shall affect the fiscal privileges of diplomatic or consular
officials under the general rules of international law or under the provisions
of special agreements.Article
27EXISTING
AGREEMENTSNothing
in this Agreement shall affect the provisions of existing agreements between
the Contracting States to the extent that they have effect in respect of the
taxes to which this Agreement applies. However, where any greater relief from
these taxes is afforded by any provision of this Agreement, that provision
shall apply.Article
28ENTRY
INTO FORCEEach
of the Contracting States shall notify each other of the completion of the
procedures required by its law for the bringing into force of this Agreement.
This Agreement shall enter into force on the date of receipt of the later of
these notifications and shall thereupon have effect:a. in India, in respect
of income arising in any fiscal year beginning on or after the first day of
April next following the calendar year in which the agreement enters into
force;b. in the USSR, in
respect of income arising in any fiscal year beginning on or after the first
day of January next following the calendar year in which the Agreement enters
into force.Article
29TERMINATION1. This Agreement shall
remain in force indefinitely, but either of the Contracting States may, on or
before the thirtieth day of June in any calendar year beginning after the
expiration of a period of five years from the date of its entry into force,
give the other Contracting State, through diplomatic channels, written notice
of termination, and, in such event, this Agreement shall cease to have effect:a. in India, in respect
of income arising in any fiscal year beginning on or after the first day of
April next following the calendar year in which the notice of termination is
given;b. in the USSR, in
respect of income arising in any fiscal year beginning on or after the first
day of January next following the calendar year in which the notice of
termination is given.In
witness whereof
the undersigned, being duly authorised thereto, have signed the present
Agreement.Done
in
duplicate at New Delhi this 20th day of November one thousand nine hundred and
eighty-eight in the Hindi, Russian and English languages, all the texts being
equally authentic. In case of divergence between any of the texts, the English
text shall be the operative one.For
the Government of the Republic of India(Sd.)
P. K. AppachooJoint
Secretary to the Government of India.For
the Government of the Union of Soviet Socialist Republics,(Sd.)
V. M. Kamentsev.[No.
8442/F.No.503/1/88-FTD]ANNEXURETEXT
OF NOTIFICATION NO. GSR 952(E) DATED 30TH DECEMBER, 1992 GIVING EFFECT TO THE
DECISION THAT THE AGREEMENTS CONCLUDED BY THE ERESTWHILE USSR WILL REMAIN IN
FULL FORCE BETWEEN INDIA AND THE RUSSIAN FEDERATION.WHEREAS
the agreements mentioned in the Schedule hereto were entered into between the
Government of the Republic of India and the Government of the Union of the
Soviet Socialist Republics;AND
WHEREAS the Russian Federation has expressed its desire to exercise the rights
and fulfil the obligations arising from the aforesaid Agreements concluded by
the erstwhile Union of the Soviet Socialist Republics and to remain a party to
the aforesaid Agreements;AND
WHEREAS the Government of the Republic of Indiahas accepted and confirmed that
the aforesaid Agreements shall remain in full force and effect between India
and the Russian Federation;AND
WHEREAS the Government of the Republic of India and the Russian Federation have
agreed that the references in the aforesaid Agreements to "USSR", or
"Union of Soviet Socialist Republics", or "SOVIET UNION",
wherever they occur, shall be construed as references to "Russian
Federation";NOW,
THEREFORE, in exercise of the powers conferred by section 90 of the Income-tax
Act, 1961 (43 of 1961), the Central Government hereby directs that all the
provisions of the aforesaid Agreements between the Government of the Republic
of India and the Russian Federation shall be given effect to in the Union of
India.SCHEDULEi.
Agreement
between the Government of India and the Union of Soviet Socialist Republics on
Merchant Shipping signed at New Delhi on 19th July, 1976, and notified vide
Government of India, Ministry of Finance (Department of Revenue) Notification
No. 1588 (F. No. 501/1/73-73-FTD)/GSR No. 943(E), dated 23rd December, 1976,
and modified by Notification F. No. 480/1/81-FTD/GSR No. 419(E), dated 31st
May, 1984; andii.
Agreement
between the Government of the Republic of India and the Government of the Union
of Soviet Socialist Republics for the avoidance of double taxation of income
signed at New Delhi on 20th November, 1988 and notified vide Government of
India, Ministry of Finance (Department of Revenue) (Foreign Tax Division)
Notification No. 8442 (F. No. 503/1/88-FTD)/GSR No. 812(E) dated 4th September
FOR AVOIDANCE OF DOUBLE TAXATION OF INCOME FROM MERCHANT SHIPPING WITH RUSSIAN
FEDERATIONWhereas
the annexed Agreement between the Government of India and the Union of Soviet
Socialist Republics on merchant shipping has been concluded; And where as Article
XV of the said Agreement provides for the avoidance of double taxation in
respect of taxes on income derived from the carriage of cargo;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 the provisions of
the said Article of the said Agreement shall be given effect to in the Union of
India.Notification:
No. GSR 943(E), dated 23rd December, 1976 as modified by GSR 419(E), dated 31
st May, 1984.TEXT
OF AGREEMENT DATED 19TH JULY, 1976 REFERRED TO ABOVEThe
Government of the Republic of India and the Government of the Union of the
Soviet Socialist Republics, being guided by the provisions of the Treaty of
Peace, Friendship and Co-operation between the Republic of India and the Union
of Soviet Socialist Republics, dated 9th August, 1971, proceedings from the
common aspiration for all possible expansion and deepening of mutually beneficial
economic and trade co-operation between the two countries as envisaged in the
Agreement on the further Development of Economic and Trade Co-operation, dated
29th November, 1973, and desirous of developing merchant shipping of the two
countries, have agreed as follows:ARTICLE
IFor
the purposes of this Agreement,----1. the term "
vessel " of the Contracting party shall mean any merchant vessel playing
under the national flag of the Party in accordance with its legislation. This
definition excludes warships and fishing vessels from the sphere of application
of this Agreement;2. the term "
member of the crew " shall mean the master and any other person actually
employed for duties on board during a voyage in the working or service of a
vessel and included in the crew list.ARTICLE
2The
Contracting Parties shall grant all possible assistance to the vessels of the
two countries and shall refrain from taking any action which might cause harm
to the development of merchant shipping.ARTICLE
3The
Contracting Parties shall continue their efforts to maintain and develop
effective working relationships between the authorities responsible for
maritime affairs in their countries. In particular, the Contractin