Article 25 - Elimination of Double Taxation - Bangladesh

CHAPTER IV METHOD FOR THE ELIMINATION OF DOUBLE TAXATION ARTICLE 25 ELIMINATION OF DOUBLE TAXATION (1) In the case of a resident of India, double taxation shall be avoided as follows: Subject to the provisions of Indian tax laws regarding the allowance as a credit against Indian tax of tax payable in any country other than India (which shall not affect the general principle hereof) the Bangladesh tax payable (excluding in the case of a dividend, tax payable in respect of the profits out of which the dividend is paid) under the laws of Bangladesh and in accordance with this Convention, whether directly or by deduction in respect of income from sources within Bangladesh which has been subjected to tax both in Bangladesh and India shall be allowed as a credit against Indian tax payable in respect of that income. The credit shall not, however, exceed that proportion of Indian tax which the income from sources within Bangladesh bears to the entire income subject to Indian tax : PROVIDED that such credit shall not exceed Indian tax (as computed before allowing any such credit), which is appropriate to the income derived from sources within Bangladesh, so however, that where such resident is a company by which surtax is payable in India the credit aforesaid shall be allowed in the first instance, against income-tax payable by the company in India and as to the balance, if any, against surtax payable by it in India. (2) For the purposes of paragraph (1), the term Bangladesh tax payable shall be deemed to include the amount of Bangladesh tax which would have been payable if the Bangladesh tax had not been exempted or reduced in accordance with the following provisions of Bangladesh law: (a) clause ( x) of section 29(1), section 45 and section 46 of the Income-tax Ordinance, 1984; (b) paragraph 7 of the Third Schedule to the Income-tax Ordinance, 1984; (c) paragraphs 10, 11, 12, 13, 15 and 22 of Part B of the Sixth Schedule to the Income-tax Ordinance, 1984; (d) paragraphs (c), (e), (f), (g) and (h) of Notification number S.R.O. 417A-L/76, dated 29 November, 1976, and paragraphs (a), (b) and (d) of the said Notification so far as the exemption or belief relates to loans made with a view to promoting economic development in Bangladesh; So far as they were in force on, and have not been modified since, the date of signature of this Convention, or have been modified only in minor respects so as not to affect their general character; or (e) under any other provision which may subsequently be made granting an exemption or reduction of tax which is agreed by the competent authorities of the Contracting States to be of a substantially similar character, if it has not been modified thereafter or has been modified only in minor respects so as not to affect its general character: PROVIDED that the amount of the tax referred to in this paragraph shall not, however, exceed: (a) in the case of dividends an amount equal to 10 per cent of the gross amount of such dividends in the case of dividends referred to in paragraph 2(a) of Article 11 and 15 per cent of the gross amount of dividends in the case of dividends referred to in paragraph 2(b) of Article 11; (b) in the case of interest an amount equal to 10 per cent of the gross amount of such interest; and (c) in the case of royalties an amount equal to 10 per cent of the gross amount of such royalties. (3) In the case of a resident of Bangladesh, double taxation shall be avoided as follows : Subject to the provisions of the law of Bangladesh regarding the allowance as a credit against Bangladesh tax of tax payable in any country other than Bangladesh (which shall not affect the general principle hereof), the Indian tax payable (excluding in the case of dividends, tax payable in respect of profits out of which the dividend is paid) under the law of India and in accordance with this Convention, whether directly or by deduction, by a resident of Bangladesh in respect of income from sources within India which has been subjected to tax both India and Bangladesh shall be allowed as a credit against Bangladesh tax payable in respect of such income, but in an amount not exceeding that proportion of Bangladesh tax which such income bears to the entire income chargeable to Bangladesh tax. (4) For the purpose of paragraph (3) of this Article the term Indian tax payable shall be deemed to include any amount which would have been payable as Indian tax for any year but for an exemption or reduction of tax granted for that year or any part thereof under : (a) any of the following provisions, that is to say, sections 10(4), 10(4A), 10(6)(viia), 10(15)(iv), 10A, 32A, 33A, 35C, 35CC, 54E, 80CC, 80HH, 80HHA, 80-I, 80J, 80K, 80L of the Income Tax Act, 1961; or (b) any other provisions which may subsequently be made granting an exemption or reduction of tax which is agreed by the competent authorities of the Contracting States to be of a substantially similar character if it has not been modified thereafter or has been modified only in minor respects so as not to affect its general character: PROVIDED that the amount of the tax referred to in this paragraph shall not, however, exceed: (a) in the case of dividends an amount equal to 10 per cent of the gross amount of such dividends in the case of dividends referred to in paragraph 2(a) of Article 11 and 15 per cent of the gross amount of dividends in the case of dividends referred to in paragraph 2(b) of Article 11; (b) in the case of interest an amount equal to 10 per cent of the gross amount of such interest; and (c) in the case of royalties an amount equal to 10 per cent of the gross amount of such royalties.