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Article 30 – Termination

TERMINATION OF TREATY

 

ARTICLE 31 OF THE INDIA – US TREATY

This Convention 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 the entry into force of the Convention,
give the other Contracting State through diplomatic channels,
written notice of termination and,
in such event, this Convention shall cease to have effect : –

(a)in the United States –
(i) in respect of taxes withheld at source, for amounts paid or credited on or after the first day of January next following the calendar year in which the notice of termination is given; and
(ii) in respect of other taxes, for taxable periods beginning on or after the first day of January next following the calendar year in which the notice of termination is given; and
(b) in India, in respect of income arising in any taxable year beginning on or after the first day of April next following the calendar year in which the notice of termination is given.

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CHARACTERISTICS

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Article 29 – Entry into Force

PROCESS OF ENTERING INTO A TREATY

 

ARTICLE 30(1) OF THE INDIA – US TREATY

Each Contracting State
shall notify the other Contracting State
in writing, through diplomatic channels,
upon the completion of their respective legal procedures
to bring this Convention into force.

 

ARTICLE 30(2) OF THE INDIA – US TREATY

The Convention shall enter into force on the date of the letter of such notifications and its provisions shall have effect : –
(a) in the United States
(i) in respect of taxes withheld at source, for amounts paid or credited on or after the first day of January next following the date on which the Convention enters into force;
(i) in respect of other taxes, for taxable periods beginning on or after the first day of January next following the date on which the Convention enters into force; and
(b) in India, in respect of income arising in any taxable year beginning on or after the first day of April next following the calendar year in which the Convention enters into force.

 

CASE STUDY

ENTRY INTO FORCE AND EFFECTIVE DATE

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TREATY CLAUSE

 

 

TAXABILITY OF INCOME

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Article 28 – Member of Diplomatic Mission and Consular Posts

ARTICLE 29– INDIA USA TREATY

Nothing in this Convention
shall affect the fiscal privileges
of diplomatic agents or consular offices
under the general rules of international law or
under the provisions of special agreements.

CHARACTERISTICS

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FISCAL PRIVILEGE UNDER INTERNATIONAL LAW

ARTICLE 34 OF 1961 VIENNA CONVENTION – DIPLOMATIC RELATIONS

ARTICLE 49 OF THE 1963 VIENNA CONVENTION – WHO ALL ARE EXEMPT ?

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ARTICLE 49 OF THE 1963 VIENNA CONVENTION

OTHER POINTS

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Artilce 27 – Assistance in the collection of taxes

EFFORTS BY INDIAN GOVERNMENT TO COLLECT TAXES FROM OVERSEAS ASSETS

 

ARTICLE 28(1) – INDIA POLAND TREATY

The Contracting States shall lend assistance to each other

in the collection of revenue claims.

This assistance is not restricted by Articles 1 and 2.

The competent authorities of the Contracting States may by mutual agreement settle the mode of application of this Article.

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ARTICLE 28(2) – MEANING OF REVENUE CLAIM – INDIA POLAND TREATY

The term “revenue claim” as used in this Article means

an amount owed in respect of taxes of every kind and description

imposed on behalf of the Contracting States, or of their political subdivisions or local authorities,

insofar as the taxation thereunder is not contrary to this Agreement

or any other instrument to which the Contracting States are parties,

as well as interest, administrative penalties and costs of collection or conservancy related to such amount.

 

REVENUE CLAIMS – CHARACTERSTICS & INCLUSIONS

COVERS

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ARTICLE 27(3) – TAX TO BE COLLECTED AS IF IT WERE OWN TAX OF OTHER CS – INDIA POLAND TREATY

When a revenue claim of a Contracting State is enforceable under the laws of that State and is owed by a person who, at that time, cannot, under the laws of that State, prevent its collection,

that revenue claim shall, at the request of the competent authority of that State, be accepted for purposes of collection by the competent authority of the other Contracting State.

That revenue claim shall be collected by that other State in accordance with the provisions of its laws applicable to the enforcement and collection of its own taxes as if the revenue claim were a revenue claim of that other State.

ARTICLE 13(1) – ISSUES FOR CONSIDERATION

 

ARTICLE 28(4) – MEASURE OF CONSERVANCY – INDIA POLAND TREATY

When a revenue claim of a Contracting State is a claim in respect of which that State may, under its law,

take measures of conservancy with a view to ensure its collection,

that revenue claim shall, at the request of the competent authority of that State, be accepted for purposes of taking measures of conservancy by the competent authority of the other Contracting State.

That other State shall take measures of conservancy in respect of that revenue claim in accordance with the provisions of its laws as if the revenue claim were a revenue claim of that other State even if,

at the time when such measures are applied, the revenue claim is not enforceable in the first-mentioned State or is owed by a person who has a right to prevent its collection.

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ARTICLE 28(5) – FREEZING OF ASSETS PRIOR TO RAISING A CLAIM – INDIA POLAND TREATY

When a Contracting State, under its law,

takes interim measures of conservancy by freezing assets before a revenue claim is raised against a person,

the competent authority of the other Contracting State, if requested by the competent authority of the first-mentioned State,

shall take interim measures for freezing the assets of that person in that other Contracting State

to the extent permitted in the provisions of its law.

ARTICLE 28(6) – PRIORITY OF REVENUE CLAIM INDIA POLAND TREATY

Notwithstanding the provisions of paragraphs 3 and 4, a revenue claim accepted by a Contracting State for purposes of paragraph 3 or 4 shall not, in that State,

be subject to the time limits or

accorded any priority applicable to a revenue claim under the laws of that State by reason of its nature as such.

In addition, a revenue claim accepted by a Contracting State for the purposes of paragraph 3 or 4 shall not, in that State, have any priority applicable to that revenue claim under the laws of the other Contracting State.

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ARTICLE 28(7) – PROCEEDINGS BEFORE COURTS – INDIA POLAND TREATY

Proceedings with respect to the existence, validity or the amount of a revenue claim of a Contracting State

shall only be brought before the courts or administrative bodies of that State.

Nothing in this Article shall be construed as creating or providing any right to such proceedings

before any court or administrative body of the other Contracting State.

 

ARTICLE 28(8) – REVENUE CLAIM CEASES TO EXIST – INDIA POLAND TREATY

Where, at any time after a request has been made by a Contracting State under paragraph 3 or 4 and before the other Contracting State has collected and remitted the relevant revenue claim to the first-mentioned State, the relevant revenue claim ceases to be —

a)in the case of a request under paragraph 3, a revenue claim of the first-mentioned State that is enforceable under the laws of that State and is owed by a person who, at that time, cannot, under the laws of that State, prevent its collection, or

b)in the case of a request under paragraph 4, a revenue claim of the first-mentioned State in respect of which that State may, under its laws, take measures of conservancy with a view to ensure its collection

the competent authority of the first-mentioned State shall promptly notify the competent authority of the other State of that fact and, at the option of the other State, the first-mentioned State shall either suspend or withdraw its request.

ARTICLE 28(9) – INDIA POLAND TREATY

In no case shall the provisions of this Article 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 carry out measures which would be contrary to public policy (ordre public);

c)to provide assistance if the other Contracting State has not pursued all reasonable measures of collection or conservancy, as the case may be, available under its laws or administrative practice;

d)to provide assistance in those cases where the administrative burden for that State is clearly disproportionate to the benefit to be derived by the other

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Angle Sum Property of a Quadrilateral

Angle sum property of a quadrilateral – The sum of the angles of a quadrilateral is 360˚.

A Quadrilateral is a four-sided enclosed figure.

Properties of Quadrilateral 

A quadrilateral has:

  • Four Sides (Edges)
  • Four Corners (Vertices).
  • Four Angles ( Sum of Angles is 360˚ )

Angle sum property of Quadrilateral Examples

Question 1

The three angles of quadrilateral are 60˚ , 70˚ , 90˚ . Find the fourth angle?

Explanation

Let the measure of the fourth angle be x

According to the angle sum property of a Quadrilateral

The sum of all angles of a quadrilateral = 360˚

60˚ + 70˚ + 90˚ + x = 360˚

220˚ + x = 360˚

x = 360˚ – 220˚

x = 140˚

Hence, the fourth angle of the quadrilateral is 140˚

Question 2

If the four angles of quadrilateral are in the ratio of 9 : 8 : 4 : 15, find the measures of each angle?

Explanation

The ratio of the angles of quadrilateral are = 9 : 8 : 4 : 15

Let, the measures of each angle be 9a , 8a , 4a , 15a

According to Angle sum property of a Quadrilateral

The sum of all angles of a quadrilateral = 360˚

9a + 8a + 4a + 15a = 360˚

36a = 360˚

a = \cfrac{360}{36}

a = 10˚

So, 1st angle = 9a = 9 x 10˚ = 90˚

2nd angle = 8a = 8 x 10˚ = 80˚

3rd angle = 4a = 4 x 10˚ = 40˚

4th angle = 15a = 15 x 10˚ = 150˚

Hence, angles of Quadrilateral are 90˚ , 80˚ , 40˚ and 150˚

 

Question 3

If the measure of two angles of a quadrilateral are 55˚ and 75˚ and the other two angles are equal, find the measure of each of the equal angles?

Explanation

Let the measure of each of the equal angle be x

According to Angle sum property of a Quadrilateral

The sum of all angles of a quadrilateral = 360˚

55˚ + 75˚ + x + x = 360˚

130˚ + 2x = 360˚

2x = 230˚

x = \cfrac{230}{2}

x = 115˚

Hence, the measure of equal angles is 115˚

Question 4

If three angles of quadrilateral are equal and the measure of the fourth angle is 30˚ , find the measure of each of the equal angle?

Explanation

Let the measure of each of the equal angle be x

According to Angle sum property of a Quadrilateral

The sum of all angles of a quadrilateral = 360˚

30˚ + x + x + x = 360˚

30˚ + 3x = 360˚

3x = 360˚ – 30˚

3x = 330˚

x = \cfrac{330}{3}

x = 110˚

Hence, the measure of each equal angle is 110˚

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Article 26 – Exchange of information

SCOPE

ARTICLE 28(1) OF INDIA USA TREATY – OBLIGATION TO EXCHANGE INFORMATION

The competent authorities of the Contracting State 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 insofar as the taxation thereunder is not contrary to the Convention,

in particular, for the prevention of fraud or evasion, of such taxes.

The exchange of information is not restricted by Article 1 (General Scope).

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CHARACTERSTICS – ARTICLE 28 (1)

 

ARTICLE 28(1) OF THE INDIA USA TREATY – USE AND SECRECY OF INFORMATION

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.

However, if the information is originally regarded as secret in the transmitting State, it shall be disclosed only to persons or authorities (including Courts and administrative bodies) involved in the assessment, collection, or administration of, the enforcement or prosecution in respect of or the determination of appeals in relation to, the taxes which are the subject of the Convention.

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 competent authorities shall, through consultation, develop appropriate conditions, methods and techniques concerning the matters in respect of which such exchange of information shall be made, including, where appropriate, exchange of information regarding tax avoidance.

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INFORMATION – SECRECY AND PURPOSE OF USE

NATURE OF REQUESTED INFORMATION

 

DOES NOT CONSTITUTE A FISHING EXPEDITION IF

ARTICLE 28(2) OF THE INDIA USA TREATY – FREQUENCY OF EXCHANGE

The exchange of information or documents shall be

either on a routine basis or

on request with reference to particular cases or otherwise.

The competent authorities of the Contracting States shall agree from time to time on

the list of information or documents which shall be furnished on a routine basis.

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FREQUENCY OF EXCHANGE OF INFORMATION AND DOCUMENTS

INFORMATION DISCLOSURE

 

ARTICLE 28(3) OF THE INDIA USA TREATY – NO OBLIGATION OF REQUESTED STATE

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 which is not obtainable under the laws or in the normal course of the administration of that or of the other Contracting State;

c.to supply information 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 (ordre public).

 

CONTRACTING STATE NOT OBLIGED TO

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ARTICLE 28(4) OF THE INDIA USA TREATY

If information is requested by a Contracting State in accordance with this Article,

the other Contracting State shall obtain the information to which the request relates in the same manner and in the same form as if the tax of the first-mentioned State were the tax of that other State and were being imposed by that other State.

if specifically requested by the competent authority of a Contracting State, the competent authority of the other Contracting State shall provide information under this Article in the form of depositions of witnesses and authenticated copies of unedited original documents (including books, papers, statements, records accounts and writings),

to the same extent such depositions and documents can be obtained under the laws and administrative practices of that other State with respect to its own taxes.

 

ARTICLE 28(5) OF THE INDIA USA TREATY – TAXES COVERED UNDER ARTICLE

For the purposes of this Article, the Convention shall apply, notwithstanding the provisions of Article 2 (Taxes Covered) : –

a. in the United States, to all taxes imposed under Title 26 of the United States Code; and

b. in India, to the income-tax, the wealth-tax and the gift-tax.

 

DECLINE INFORMATION RELATING TO BANKING

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Article 24 – Non-Discrimination & Article 25 – Mutual Agreement Procedure (MAP)

 

MUTUAL AGREEMENT PROCEDURE – DEFINITION

MAP is a special facilitative procedure
set out in various tax treaties
that allows designated government representatives of Treaty partners (”referred to as Competent Authorities”)
to work together, and resolve
international tax disputes, including cases of double taxation
arising out of application of the Convention.

 

APPLICABILITY OF MAP TO VARIOUS ARTICLE

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IMPLEMENTATION OF MAP UNDER INDIAN DOMESTIC LAWS

RULE 44G – APPLICATION FOR GIVING EFFECT TO THE TERMS OF ANY AGREEMENT

RULE 44H – ACTION BY INDIAN COMPETENT AUTHORITY ON REFERENCE FROM FOREIGN COMPETENT AUTHORITY

ARTICLE 27(1) OF INDIA US TREATY

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 national.
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 Convention.

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ARTICLE 25(1) – KEY CHARACTERISTICS

ACTIONS OF CONTRACTING STATE

 

IF TAXATION NOT AS PER CONVETION, REMEDIES TO TAXPAYER IN INDIA

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ARTICLE 27(2) OF INDIA US TREATY

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 or other procedural limitations in the domestic law of the Contracting States.

WHEN SHALL COMPETENT AUTHORITY ENDEAVOUR

 

ARTICLE 27(3) OF INDIA US TREATY

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.

SCOPE OF ARTICLE 27(3)

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ARTICLE 27(4) OF INDIA US TREATY

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.
The competent authorities, through consultations,
shall develop appropriate bilateral procedures, conditions, methods and techniques for the implementation of the mutual agreement procedure provided for in this Article.
In addition, a competent authority may devise appropriate unilateral procedures, conditions, methods and techniques to facilitate the above-mentioned bilateral actions and the implementation of the mutual agreement procedure.

 

BILATERAL PROCEDURES – PAYMENT OF DISPUTED TAX DEMAND PENDING MAP FINALISATION

 

INDIA – USA TREATY – MOU FOR STAY OF DEMAND – APPLICABILITY

FACTS CONSIDERED BY AO BEFORE GRANT OF STAY

ARBITRATION CLAUSE IN TREATY

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KEY ISSUES / CHALLENGES

APPLICATION OF MAP FOR SUBSEQUENT YEARS

 

ARTICLE 24 – NON DISCRIMINATION

 

WHAT IS NON DISCRIMINATION?

Differences in tax treatment of two taxpayers
who are placed in identical/comparable situations
which result in Double taxation for the taxpayer
is Discrimination for tax purpose.

However, where the Treaty itself provides for different treatment
it is not covered under Article 24.

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TYPES OF NON – DISCRIMINATION COVERED

 

ARTICLE 26 (1) – INDIA USA TREATY NON-DISCRIMINATION BASED ON NATIONALITY

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 that other State
in the same circumstances are or may be subjected.
This provision shall apply to persons who are not residents of one or both of the
Contracting States.

 

ARTICLE 24(1) – KEY CHARACTERISTICS

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SAME CIRCUMSTANCES ?

“Are the circumstances same between A, B and C ?

“Are the entities under same circumstances ?

ARTICLE 26 (2) – INDIA USA TREATY DISCRIMINATION FOR PE TAXATION

Except where the provisions of paragraph 3 of Article 7 (Business Profits) apply,
the taxation on a permanent establishment which an enterprise of a Contracting State has in the other
Contracting State
shall not be less favorably 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.

ARTICLE 26 (2) – INDIA USA TREATY PE TAXATION

PE – STAND ON THE FOLLOWING ASPECTS ?

ARTICLE 26 (3) – INDIA USA TREATY NON-DISCRIMINATION DEDUCTION OF EXPENSES

Except where the provisions of paragraph 1 of article 9 (Associated Enterprises), paragraph 7 of article 11 (Interest), or
paragraph 8 of article 12 (Royalties and Fees for Included Services) apply,
interest, royalties, and other disbursements paid by a resident of a Contracting State to a resident of the other Contracting
State shall,
for the purposes of determining the taxable profits of the first-mentioned resident, be deductible under the same
conditions as if they had been paid to a resident of the first-mentioned State.

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ARTICLE 26 (3) – INDIA USA TREATY DEDUCTION OF EXPENSES

 

ARTICLE 26 (3) – INDIA USA TREATY DEDUCTION OF EXPENSES

ARTICLE 26 (4) – INDIA USA TREATY OWNERSHIP OF FOREIGN COMPANY

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 connected requirements to which other similar enterprises of the first-mentioned State are
or may be subjected.

 

NON APPLICABILITY OF ARTICLE 26(4)

INDIA GERMANY TREATY – DAIMLER CHRYSLER CASE

ARTICLE 26 (5) – INDIA USA TREATY

Nothing in this article shall be construed as preventing either Contracting State
from imposing the taxes described in Article 14 (Permanent Establishment Tax) or
the limitations described in paragraph 3 of Article 7 (Business profits).

NON DISCRIMINATION – SPECIFIC EXAMPLES

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Article 23 – Elimination of Double Taxation

APPLICABILITY OF ARTICLE 23

TYPES OF RELIEF FROM DOUBLE TAXATION

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UNILATERAL RELIEF – SECTION 91

UNDERLYING CREDIT

  • In present case, taxes may be paid by :-
    ICO; and
    Shareholders on dividend distributed out of remaining

 

  • For underlying credit clause, State of Residence grants credit of : –
    Corporate taxes paid by ICO $ 30;
    WHT on dividends $ 7.

India USA Treaty Clause : –

“in the case of a United States company owning at least 10 per cent of the voting stock of a company which is a resident of India and from which the United States company receives dividends, the income-tax paid to India by or on behalf of the distributing company with respect to the profits out of which the dividends are paid”

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TAX SPARING

METHODS OF PROVIDING CREDIT

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ARTICLE 25 (1) – INDIA USA TREATY – CREDIT BY USA

In accordance with the provisions and subject to the limitations of the law of the United States (as it may be amended from time to time without changing the general principle hereof),
the United States shall allow to a resident or citizen of the United States as a credit against the United States tax on income —
a. the income-tax paid to India by or on behalf of such citizen or resident ; and
b. in the case of a United States company owning at least 10 per cent of the voting stock of a company which is a resident of India and from which the United States company receives dividends, the income-tax paid to India by or on behalf of the distributing company with respect to the profits out of which the dividends are paid.
For the purposes of this paragraph, the taxes referred to in paragraphs 1(b) and 2 of Article 2 (Taxes Covered) shall be considered as income taxes.

 

KEY FEATURES

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ARTICLE 25 (2) – INDIA USA TREATY

Where a resident of India derives income which, in accordance with the provisions of this Convention, may be taxed in the United States,
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 United States, whether directly or by deduction.
Such deduction shall not, however, exceed that part of the income-tax (as computed before the deduction is given) which is attributable to the income which may be taxed in the United States.
Further, where such resident is a company by which a surtax is payable in India, the deduction in respect of income-tax paid in the United States shall be allowed in the first instance from income-tax payable by the company in India and as to the balance, if any, from surtax payable by it in India.

 

KEY FEATURES

EXAMPLE ON CREDIT METHOD – QUANTUM

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ARTICLE 25 (3) – INDIA USA TREATY – WHERE DOES INCOME ARISE

For the purposes of allowing relief from double taxation pursuant to this article, income shall be deemed to arise as follows :
a. income derived by a resident of a Contracting State which may be taxed in the other Contracting State in accordance with this Convention [other than solely by reason of citizenship in accordance with paragraph 3 of Article 1 (General Scope)] shall be deemed to arise in that other State ;
b. income derived by a resident of a Contracting State which may not be taxed in the other Contracting State in accordance with the Convention shall be deemed to arise in the first-mentioned State.
Notwithstanding the preceding sentence, the determination of the source of income for purposes of this Article shall be subject to such source rules in the domestic laws of the Contracting States as apply for the purpose of limiting the foreign tax credit.

 

ARTICLE 25 (3) – INDIA USA TREATY – NON APPLICABILITY

The preceding sentence shall not apply with respect to income dealt with in article 12 (Royalties and Fees for Included Services).
The rules of this paragraph shall not apply in determining credits against United States tax for foreign taxes other than the taxes referred to in paragraphs 1(b) and 2 of article 2 (Taxes Covered).

 

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OTHER ASPECTS WORTH KNOWING

 

IMPACT OF VARIOUS EVENTS IN SOURCE STATE ON CREDIT/ EXEMPTION OF TAXES

 

HOW CAN ONE CLAIM CREDIT ?

TRIANGULAR TREATY CASES

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Article 21 – Other Income

APPLICABILITY OF ARTICLE 21 – OTHER INCOME

INCOME NOT COVERED UNDER FOLLOWING ARTICLE

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INCOME NOT COVERED UNDER FOLLOWING ARTICLE

ARTICLE 23(1) OF THE INDIA – US TREATY

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 Contracting State

KEY CHARACTERISTICS – ARTICLE 23(1) OF THE INDIA – US TREATY

 

WHAT IS MEANT BY “DEALT WITH”

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INCOME COVERED UNDER ARTICLE 21

TAXABILITY OF INCOME AS “OTHER INCOME” WHEN RELEVANT CLAUSE ABSENT – ROYALTY

EXCESS PAYMENT TO RELATED PARTY

ARTICLE 23(2) OF THE INDIA – US TREATY

The provisions of paragraph 1 shall not apply to income, other than income from immovable property as defined in paragraph 2 of Article 6 [Income from Immovable Property (Real Property)],
if the beneficial owner of the 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 income is attributable to such permanent establishment or fixed base.
In such case the provisions of Article 7 (Business Profits) or Article 15 (Independent Personal Services), as the case may be, shall apply

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KEY CHARACTERISTICS – ARTICLE 23(2) OF THE INDIA – US TREATY

ARTICLE 21(3) OF THE INDIA US TREATY

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.

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Article 20 – Students

SETTING THE CONTEXT

WHAT IS COVERED UNDER ARTICLE 20 ? 

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ARTICLE 20 – INDIA CANADA TREATY

Payments which a student, apprentice or business trainee
who is, or was immediately before visiting a Contracting State,
a resident of the other Contracting State and
who is present in the first-mentioned State solely for the purpose of his education or training receives for the purpose of his maintenance, education or training
shall not be taxed in the first-mentioned State, provided that such payments are made to him from sources outside that State.

CONDITIONS TO CLAIM BENEFIT UNDER ARTICLE 20

RESIDENT – “IS” OR “ WAS IMMEDIATELY BEFORE VISITING” ?

ARTICLE 20(5)(A) OF THE INDIA- UAE TAX WHO IS RESIDENT ?

For the purposes of this Article and Article 21,—
(a)
(i) an individual shall be deemed to be a resident of India if he is resident in India in the ‘previous year’ in which he visits UAE or in the immediately preceding ‘previous year’ ;
(ii) an individual shall be deemed to be a resident of UAE if, immediately before visiting India, he is a resident of UAE ;

WAS IMMEDIATELY BEFORE, RESIDENT OF OTHER CONTRACTING STATE

“SOURCES” OUTSIDE THE HOST STATE

TAXATION & PURPOSE OF VISIT OF STUDENT

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Article 19 – Government Services

ARTICLE 19(1)(A) – INDIA-NETHERLANDS TREATY

Remuneration, other than a pension
paid by one of the States 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
may be taxed in that State

 

CHARACTERISTICS

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REMUNERATION PAID TO AN INDIVIDUAL

SALARIES, WAGES AND OTHER SIMILAR REMUNERATION ?

WHO COULD BE THE PAYOR ?

GOVERNMENT ORGANIZATIONS COVERED AS PER INDIA – KOREA TREATY

Article 20(4)
The provisions of paragraph (1) of this article shall likewise apply in respect of
remuneration or pensions paid,
in the case of Korea, by the Bank of Korea, the Export-Import Bank of Korea and the Korea Trade Promotion Corporation and
in the case of India, by the Reserve Bank of India and the EXIM Bank of India,
and by organizations recognized by and agreed between the competent authorities of the Contracting States.

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INDIA – JAPAN TREATY – SERVICES RENDERED FOR DISCHARGE OF FUNCTION OF GOVERNMENT NATURE

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 Contracting State, or a political sub-division or a local authority thereof, in the discharge of functions of a governmental nature,
shall be taxable only in that Contracting State.

 

ARTICLE 19(1)(B) INDIA – NETHERLANDS TREATY

However, such remuneration shall be taxable only in the other State
if the services are rendered in that State and
the individual is a resident of that State who:
1. is a national of that State; or
2. did not become a resident of that State solely for the purpose of rendering the services.

 

TAXABILITY

ARTICLE 19(2)(A) – INDIA – NETHERLANDS TREATY

Any pension paid by, or out of funds created by
one of the States or a political sub-division or a local authority thereof
to an individual
in respect of services rendered to that State of sub-division or authority
may be taxed in that State.

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MEANING OF PENSION

ARTICLE 19(2)(B) AS PER INDIA – NETHERLANDS TREATY

However, such pension
shall be taxable only in the other State
if the individual is a resident of
and a national of that State

 

ARTICLE 19(3) – INDIA – NETHERLANDS TREATY

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
one of the States or a political sub-division or a local authority thereof.

SUMMARY OF TAXATION – ARTICLE 19(1)(B)

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Article 18 – Pension and Other Social Security Payments

ARTICLE 18 (1) OF INDIA NETHERLANDS TREATY

Subject to the provisions of paragraph 2 of Article 19,
pensions and other similar remuneration
paid to a resident of one of the States
in consideration of past employment
as well as any annuity paid to such a resident ,
shall be taxable only in that State.

 

CHARACTERISTICS

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TYPE OF PENSION COVERED

 

PENSION AND OTHER SIMILAR REMUNERATION – COVERAGE ?

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CONSIDERATION FOR PAST EMPLOYEMENT

ARTICLE 18(2) OF NETHERLANDS TREATY

However,
where such remuneration is not of a periodical nature and
it is paid in consideration of past employment in the other State,
it may be taxed in that other State

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ARTICLE 18(3) OF NETHERLANDS TREATY

Any pension
paid out under the provisions of a social security system
of one of the States
to a resident of the other State
may be taxed in the first-mentioned State

The term ‘annuity’ means
a stated sum payable periodically
at stated times during life or
during a specified or ascertainable period of time,
under an obligation to make the payments
in return for adequate and full consideration in money or money’s worth

 

[2008] 26 Sot 574 (Mumbai)

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