Agreement for avoidance of Double Taxation between the Govt. of India and the Govt. of Singapore - 022(E) - Income Tax

Agreement for avoidance of Double Taxation between the Govt. of India and the Govt. of Singapore Notification Number: 022(E) Dated 18-01-1982 File Number: 11/31/69 -FTD Whereas the annexed Agreement between the Government of the Republic of India and the Government of the Republic of Singapore for the avoidance of double taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income has been ratified and the Instruments of Ratification exchanged, as required by Article 28 of the said Agreement. Now, therefore, in exercise of the powers conferred by section 90 of the Income-tax Act, 1961, (43 of 1961) and section 24A of the Companies (Profits) Surtax Act, 1964 (7 of 1964), the Central Government hereby directs that all the provisions of the said Agreement shall be given effect to in the Union of India. ANNEXURE Agreement between the Government of the Republic of India and the Government of the Republic of Singapore for the Avoidance of Double Taxation and the prevention of fiscal evasion with respect to taxes on income. The Government of the Republic of India and the Government of the the Republic of Singapore. DESIRING to conclude an Agreement for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income, HAVE AGREED as follows: CHAPTER I Scope of the Agreement ARTICLE 1 Personal Scope This Agreement shall apply to persons who are resident of one or both of the Contracting States. ARTICLE 2 Taxes covered 1. The taxes to which this Agreement shall apply are: (a) in the case of India: (i) the income-tax and any surcharge on income-tax imposed under the Income-tax Act, 1961 (43 of 1961); (ii) the surtax imposed under the Companies (Profits) Surtax Act, 1964 (7 of 1964); (hereinafter referred to as " Indian tax "). (b) in the case of Singapore: the income-tax (hereinafter referred to as " Singapore tax "). 2. This agreement shall also apply to any identical or substantially similar taxes which are subsequently imposed in addition to, or in place of, the taxes referred to in paragraph 1 of this Article. 3. The competent authorities of the Contracting States shall notify to each other, within reasonable time, any significant changes which have been made in their respective taxation laws and furnish copies of relevant enactments. CHAPTER II Definitions ARTICLE 3 General Definitions 1. In this agreement, unless the context otherwise requires: (a) the terms " a Contracting State " and " the other Contracting State " mean India or Singapore, as the context requires; (b) the term " tax " means Indian tax or Singapore tax, as the context requires; (c) the term " person " includes an individual, a company and any other entity which is treated as a taxable unit under the taxation laws of the respective Contracting States; (d) the term " company " means any body corporate or any entity which is treated as a company under the taxation laws of the respective Contracting States; (e) the term " 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 " competent authority " means in the case of India, the Central Government in the Ministry of Finance (Department of Revenue); and in the case of Singapore, the Minister for Finance or his authorised representative; (g) the term " international traffic " means any transport by a ship or aircraft operated by an enterprise which has its control and management in a Contracting State, except when the ship or aircraft is operated solely between places in the other Contracting State. 2. In the application of the provisions of this Agreement by either Contracting State, any term not defined herein shall, unless the context otherwise requires, have the meaning which it has under the laws in force in that State relating to the taxes to which this Agreement applies. ARTICLE 4 Fiscal Domicile 1. For the purposes of this Agreement, the term " resident of a Contracting State " means any person who is a resident of a Contracting State in accordance with the taxation laws of that State. 2. Where by reason of the provisions of paragraph 1 of this Article, an individual is a resident of both Contracting States, then his residential status for the purposes of this Agreement shall be determined in accordance with the following rules; (a) he shall be deemed to be a resident of the Contracting State in which he has a permanent home available to him. If he has a permanent home available to him in both Contracting States, he shall be deemed to be a resident of the Contracting State with which his personal and economic relations are closer; (b) if the Contracting State with which his personal and economic relations are closer cannot be determined, or if he has not a permanent home available to him in either Contracting State, he shall be deemed to be a resident of the Contracting State in which he has an habitual abode; (c) if he has an habitual abode in both Contracting States or in neither of them, the competent authorities of the Contracting States shall determine the question by mutual agreement. Where by reason of the provisions of paragraph 1 of this Article, a person other than an individual is a resident of both Contracting States, then it shall be deemed to be a resident of the Contracting State in which its place of effective management is situated. ARTICLE 5 Permanent Establishment 1. For the purposes of this Agreement, the term " permanent establishment " means a fixed place of business in which the business of the enterprise is wholly or partly carried on. 2. The term " permanent establishment " shall include: (a) a place of management; (b) a branch; (c) an office; (d) a factory; (e) a workshop; (f) a mine, a quarry, an oil well or other place of extraction of natural resources; (g) a farm or a plantation; (h) a building site or a construction or installation or assembly project which exists for more than six months. 3. The term " permanent establishment " shall not be deemed to include: (a) the use of facilities solely for the purpose of storage, display or delivery of goods or merchandise belonging to the enterprise; (b) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of storage, display or delivery; (c) the maintenance 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 for collecting information for the enterprise; (e) the maintenance of a fixed place of business solely for the purpose of advertising, for the supply of information, for scientific research or for similar activities which have a preparatory or auxiliary character, for enterprise. 4. An enterprise of a Contracting State, notwithstanding it has no fixed place of business in the other Contracting State, shall be deemed to have a permanent establishment in that other Contracting State if- (a) it carries on supervisory activities in that other Contracting State, for more than six months in connection with a construction or installation or assembly project which is being undertaken therein; or (b) it provides the services of public entertainers (such as stage, motion picture, radio or television artistes and musicians) or athletes in that other Contracting State unless the enterprise is supported, wholly or substantially, from the public funds of the Government of the first-mentioned contracting State in connection with the provision of such services. For the purposes of this sub-paragraph, the term " Government " shall include a State Government, a political sub-division or a local or statutory authority of either Contracting State. 5. Subject to the provisions of paragraph 6 of this Article, a person acting in a Contracting State for or on behalf of an enterprise of the other Contracting State shall be deemed to be a permanent establishment of that enterprise in the first-mentioned State if: (i) he has, and habitually exercises in that State, an authority to conclude contracts for or on behalf of the enterprise, unless the activities of the persons are limited to the purchase of goods or merchandise for the enterprise; or (ii) he maintains in the first-mentioned Contracting State a stock of goods or merchandise belonging to the enterprise from which he regularly fills orders for or on behalf of the enterprise; or (iii) he habitually secures orders in the first-mentioned Contracting State exclusively or almost exclusively, for the enterprise or any other enterprise which is controlled by it or has a controlling interest in it. 6. An enterprise 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 Contracting State through a broker, a general commission agent or any other agent of an independent status, where such persons are acting in the ordinary course of their business. 7. The fact that a company which is a resident of a Contracting State controls or is controlled by a company which is a resident of the other Contracting State, or which carries on business in that other Contracting State (whether through a permanent establishment or otherwise), shall not of itself constitute for either company a permanent establishment of the other. CHAPTER II Taxation of Income ARTICLE 6 Income from immovable property 1. Income from immovable property may be taxed in the Contracting State in which such property is situated. 2. The term " immovable property " shall be defined in accordance with the law of the Contracting State in which the property 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 of 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 of this Article 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 of this Article shall also apply to the income from immovable property of an enterprise and to income from immovable property used for the performance of professional services. ARTICLE 7 Business Profits 1. The income or profits of an enterprise of a Contracting State shall be taxable only in that Contracting State unless the enterprise carries on business in the other Contracting State through a permanent establishment situated therein, if the enterprise carries on business as aforesaid the income or profits of the enterprise may be taxed in the other Contracting State but only so much of such income of profits as is attributable to that permanent establishment. 2. Where an enterprise of a Contracting State carries on business in the other Contracting State through a permanent establishment situated therein, there shall in each Contracting State be attributed to that permanent establishment the income or profits which it might be expected to make if it were an independent enterprise engaged in the same or similar activities under the same or similar conditions and deal wholly and independently with the enterprise of which it is a permanent establishment. In any case, where the correct amount of profits attributable to a permanent establishment is incapable of determination or the ascertainment thereof presents exceptional difficulties, the profits attributable to the permanent establishment may be estimated on a reasonable basis. 3. In the determination of the income or profits of a permanent establishment, there shall be allowed as deductions expenses which are incurred for the purposes of the permanent establishment including executive and general administrative expenses so incurred, whether in the State in which the permanent establishment is situated or elsewhere. 4. No income or 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 purpose of this Article, the term " income or profits " means income derived by an enterprise from the conduct of a trade or business; but does not include income derived by an enterprise in the form of rents, royalties, technical service fees, interest, dividends, capital gains, fees for the management of the business of another enterprise, or remuneration or fees received by an enterprise for the furnishing to another enterprise of the services of its technical, skilled or other personnel except where the property or other right giving rise to any such item of income is effectively connected with the permanent establishment of the enterprise. The term " income or profits " shall not also include income from the operation of ships or aircraft. 6. Where items of income 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 no specific provision is made in the other Articles of this Agreement in respect of any item of income excluded from the term " income or profits " in this Article the laws in force in either of the Contracting States shall govern the assessment and taxation of such income in the respective Contracting State. ARTICLE 8 Air Transport 1. Income derived from the operation of aircraft in international traffic by an enterprise of a Contracting State shall be exempt from tax in the other Contracting State, unless the aircraft is operated solely between places within the other Contracting State. 2. The provisions of paragraph 1 shall also apply to profits derived from the participation in a pool, or a joint business or in an international operating agency. 3. For the purposes of paragraphs 1 and 2 of this Article income derived by an enterprise of a Contracting State from the operation of aircraft from the other Contracting State shall mean income from the carriage of passengers, mail, livestock or goods loaded into an aircraft in that other Contracting State. ARTICLE 9 Shipping 1. Income of an enterprise of a Contracting State derived from the other Contracting States from the operation of ships in international traffic may be taxed in that other Contracting State, but the tax chargeable in that Contracting State on such income shall be reduced by an amount equal to fifty per cent. of such tax. 2. For the purposes of paragraph 1 of this Article income derived by an enterprise of a Contracting State from the operation of ships from the other Contracting State shall mean income from the carriage of passengers, mail, livestock or goods shipped in that other Contracting State. 3. Paragraph 1 shall not apply to profits arising as a result of coastal traffic. ARTICLE 10 Associated Enterprises 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, or (b) 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 income or 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 income or profits of that enterprise and taxed accordingly. ARTICLE 11 Dividends 1. 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 the first-mentioned Contracting State. 2. Where a company which is a resident of a Contracting State derives income or profits from the other Contracting State that other Contracting State may not impose any tax on the dividends paid by the company to persons who are not resident of that other Contracting State, or subject the company's undistributed profits to a tax on undistributed profits even if the dividends paid or the undistributed profit consist wholly or partly of profits or income arising in that other Contracting State. 3. (a) Where a dividend was paid by a company which was resident in both Singapore and Malaysia and the meeting at which the dividend was declared was held in Singapore, or where a dividend was paid by a company which was resident in Malaysia and at the time of payment of that dividend the company declared itself to be a resident of Singapore for the purposes of Article VII of the Agreement between the Government of the Republic of Singapore and the Government of Malaysia for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income signed in Singapore on 26th December, 1968, the dividend shall be deemed to have been paid by a company resident in Singapore. (b) Where a dividend was paid by a company which was resident in both Singapore and Malaysia and the meeting at which the dividend was declared was held in Malaysia, or where a dividend was paid by a company which was resident in Singapore and at the time of payment of that dividend, the company declared itself to be a resident of Malaysia for the purposes of Article VII of the Agreement between the Government of the Republic of Singapore and the Government of Malaysia for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income signed in Singapore on 26th December, 1968, the dividend shall be deemed to have been paid by a company resident in Singapore. ARTICLE 12 Interest 1. Interest arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in the first-mentioned Contracting State. 2. Interest shall be deemed to arise in a Contracting State when the payer is that Contracting State itself, a political sub-division, a local or a statutory authority or a resident of that Contracting 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. 3. Where, owing to a special relationship between the payer and the recipient or between both of them and some other person, the amount of the interest paid, having regard to the debt-claim for which it is paid, exceeds the amount which would have been agreed upon by the payer and the recipient in the absence of such relationship, the provisions of this Article shall apply only to the last-mentioned amount. In that case, the excess part of the payments shall remain taxable according to the law of each Contracting State, due regard being had to the other provisions of this Agreement. 4. The term " interest " as used in this Article means income from Government securities, bonds or debentures, whether or not secured by mortgage and whether or not carrying a right to participate in profits and debt-claims of every kind as well as all other income assimilated to income from money lent by the taxation law of the Contracting State in which the income arises. ARTICLE 13 Royalties 1. Royalties arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in the first-mentioned Contracting State. 2. Royalties shall be deemed to arise in a Contracting State when the payer is that Contracting State itself, a political sub-division, a local or statutory authority or a resident of that Contracting State. Where, however, the person paying the royalties, whether he is a resident of a Contracting State or not, has in a Contracting State a permanent establishment in connection with which the liability to pay the royalties was incurred, and such royalties are borne by such permanent establishment, then such royalties shall be deemed to arise in the Contracting State in which the permanent establishment is situated. 3. Where, owing to a special relationship between the payer and the recipient or between both of them and some other person, the amount of the royalties paid, having regard to the use, right or information for which they are paid, exceeds the amount which would have been agreed upon by the payer and the recipient in the absence of such relationship, the provisions of this Article shall apply only to the last-mentioned amount. In that case, the excess part of the payments shall remain taxable according to the laws of each Contracting State, due regard being had to the other provisions of this Agreement. 4. 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 motion picture films, or films or tapes for radio or television broadcasting), any patent, trademark, 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, but does not include variable or fixed payments as consideration for the working of, or the right to work, mineral deposits, sources and other natural resources which are dealt with under Article 6 of this Agreement. ARTICLE 14 DEPENDENT PERSONAL SERVICES 1. Subject to the provisions of Articles 15, 16, 18, 19, 20 and 21, salaries, wages and other similar remuneration derived by a resident of a Contracting State in respect of an employment shall be taxable only in that Contracting 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 Contracting State. 2. Notwithstanding the provisions of paragraph 1, remuneration derived by a resident of Singapore in respect of an employment exercised in India shall not be taxed in India if: (a) he is present in India for a period or periods not exceeding in the aggregate 183 days during the " previous year " concerned; and (b) the remuneration is paid by, or on behalf of an employer who is a resident of Singapore; (c) the remuneration is not borne by a permanent establishment which the employer has in India. 3. Notwithstanding the provisions of paragraph 1, remuneration derived by a resident of India in respect of an employment exercised in Singapore shall not be taxed in Singapore if: (a) he is present in Singapore for a period or periods not exceeding in the aggregate 183 days during the calendar year concerned; and (b) the remuneration is paid by, or on behalf of an employer who is a resident of India; and (c) the remuneration is not borne by a permanent establishment which the employer has in Singapore. 4. Notwithstanding the preceding provisions of this Article, remuneration in respect of an employment exercised abroad a ship or aircraft operated by an enterprise of a Contracting State in international traffic shall be taxable only in that Contracting State. ARTICLE 15 Directors' Fees 1. Director's fees and 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 Contracting State. 2. The remuneration which a person, to whom paragraph 1 applies, derives from the company in respect of the discharge of day-to-day functions of a managerial or technical nature, may be taxed in accordance with the provisions of Article 14. ARTICLE 16 Public Entertainers and Athletes 1. Notwithstanding the provisions of Article 14, income derived by public entertainers (such as stage, motion picture, radio or television artistes and musicians) or athletes, from their personal activities as such may be taxed in the Contracting State in which these activities are performed: Provided that such income shall not be taxed in the said Contracting State if the visit of the public entertainers or athletes to that State is supported, wholly or substantially, from the public funds of the Government of the other Contracting State. 2. For the purposes of this Article, the term " Government " includes a State Government, a political sub-division, or a local or statutory authority of either Contracting State. ARTICLE 17 Pensions and Annuities 1. Subject to the provisions of paragraphs 1 and 2 of Article 18, pensions or annuities derived by a resident of a Contracting State shall be taxable only in that Contracting State. 2. The term " pensions " means periodic payments made in consideration of past employment or by way of compensation for injuries received. 3. The term " annuities " means a stated sum payable periodically at stated times, during life or during a specified or ascertainable period of time, under an obligation to make the payments in return for adequate and full consideration in money or money's worth. ARTICLE 18 Governmental Functions 1. Remuneration or pensions paid by, or out of funds, created by a Contracting State, or a political sub-division or a local or statutory authority thereof, to any individual in respect of services rendered to that State or political sub-division or local or statutory authority in discharge of functions of a governmental nature shall be taxable only in that Contracting State. If, however, the employment is exercised in the other Contracting State by a resident of that other State not being a citizen or national of the first-mentioned State, the remuneration shall be taxable only in that other State. 2. The provisions of paragraph 1 of this Article shall also apply to remuneration or pensions paid by the Reserve Bank of India and the Monetary Authority of Singapore. 3. Save as provided in paragraph 2, the provisions of this Article shall not apply to payments in respect of services in connection with any trade or business carried on by either of the Contracting States or political sub-division or a local authority or statutory authority thereof for purposes of profit. ARTICLE 19 Students, Trainees and Apprentices 1. An individual who is a resident of a Contracting State and who is temporarily present in the other Contracting State solely as a student at a recognised university, college, school or other educational institution in that other Contracting State or as a business or technical apprentice therein, for a period not exceeding six years from the date of his first arrival in that other Contracting State in connection with that visit, shall be exempt from tax in that other Contracting State on- (a) all remittances from the first-mentioned Contracting State for the purposes of his maintenance, education or training; and (b) any remuneration (not exceeding 7,500 Indian rupees or its equivalent sum in Singapore currency per annum) for personal services rendered in that other Contracting State with a view to supplementing the resources available to him for such purposes. 2. An individual who is a resident of a Contracting State and who is temporarily present in the other Contracting State for the purpose of study, research or training solely as a recipient of a grant, allowance or award from the Government of either of the Contracting States or from a scientific, educational, religious or charitable organisation or under a technical assistance programme entered into by the Government of either of the Contracting State for a period not exceeding three years from the date of his first arrival in that other Contracting State in connection with that visit shall be exempt from tax in that other Contracting State on- (a) the amount of such grant, allowance or award; (b) all remittances from the first-mentioned Contracting State for the purposes of his maintenance, education or training; and (c) any remuneration (not exceeding 7,500 Indian Rupees or its equivalent sum in Singapore currency per annum) in respect of services in that other Contracting State if the services are performed in connection with his study, research, training or are incidental thereto. 3. An individual who is a resident of a Contracting State and who is temporarily present in the other Contracting State solely as an employee of, or under contract with, an enterprise of the first-mentioned Contracting State solely for the purpose of acquiring technical, professional or business experience from a person other than such enterprise, for a period not exceeding twelve months from the date of his first arrival in that other Contracting State in connection with that visit shall be exempt from tax in that other Contracting State on- (a) all remittances from the first-mentioned Contracting State for the purposes of his maintenance, education or training; and (b) any remuneration, so far as it is not in excess of 12,500 Indian Rupees or its equivalent sum in Singapore currency per annum, for personal services rendered in that other Contracting State, provided such services are in connection with the acquisition of such experience. 4. An individual who is a resident of a Contracting State and who is temporarily present in the other Contracting State under arrangement with the Government of that other Contracting State solely for the purpose of training or study shall be exempt from tax in that other Contracting State in respect of remuneration received by him on account of such training or study. 5. For the purposes of this Article and Article 20- (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 Singapore or in the immediately preceding " previous year "; (ii) an individual shall be deemed to be a resident of Singapore if, immediately before visiting India, he is a resident of Singapore; (b) the term " recognised " in relation to a university, college, school or other educational institution in a Contracting State shall, in the case of doubt, be determined by the competent authority of that State. ARTICLE 20 Professors, Teachers and Researchers 1. An individual who is a resident of a Contracting State immediately before making a visit to the other Contracting State, and who, at the invitation of any university, college, school or other similar educational institution, which in the case of Singapore is approved by the competent authority in that State and in the case of India is recognised by the Government, a political sub-division or a local or statutory authority of that State, visits that other Contracting State for a period not exceeding two years solely for the purpose of teaching or research or both at such educational institution, shall be exempt from tax in that other Contracting State on his remuneration for such teaching or research. 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. ARTICLE 21 Income of Government and Institutions 1. The Government of one of the Contracting States shall be exempt from tax in the other Contracting State in respect of any income derived by such Government from that other Contracting State. 2. For the purposes of paragraph 1 of this Article, the term " Government "- (a) in the case of India, means the Government of India and shall include- (i) the Government of the States and the Union Territories of India; (ii) the Reserve Bank of India; (iii) any such institution or body as may be agreed from time to time between the two Contracting States. (b) in the case of Singapore, means the Government of Singapore and shall include- (i) the Monetary Authority of Singapore; (ii) the Board of Commissioners of currency; (iii) any such institution or body as may be agreed from time to time between the two Contracting States. ARTICLE 22 Income not Expressly Mentioned Items of income which are not expressly mentioned in the foregoing Articles of the Agreement may be taxed in accordance with the taxation laws of the respective Contracting States. ARTICLE 23 Limitation of Relief Where this Agreement provides (with or without other conditions) that income from sources in a Contracting State shall be exempt from tax, or taxed at a reduced rate in that Contracting State and under the laws in force in the other Contracting State the said income is subject to tax by reference to the amount thereof which is remitted to or received in that other Contracting State and not by reference to the full amount thereof, then the exemption or reduction of tax to be allowed under this Agreement in the first-mentioned Contracting State shall apply to so much of the income as is remitted to or received in that other Contracting State. CHAPTER IV Method for Elimination of Double Taxation ARTICLE 24 Avoidance of Double Taxation 1. 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. Where income is subject to tax in both Contracting States, relief from double taxation shall be given in accordance with the following paragraphs of this Article. 2. (a) The amount of Singapore tax payable, under the laws of Singapore, and in accordance with the provisions of this Agreement, whether directly or by deduction, by a resident of India, in respect of income from sources within Singapore which has been subjected to tax both in India and Singapore, shall be allowed as a credit against the Indian tax payable in respect of such income but in an amount not exceeding that proportion of Indian tax which such income bears to the entire income chargeable to Indian tax. (b) For the purposes of credit referred to in sub-paragraph (a) above, there shall be deemed to have been paid by the resident of India the amount of Singapore tax which would have been payable but for the deduction allowed in computing the assessable income, reduction of or exemption from tax under- (i) (aa) the provisions of the Economic Expansion Incentives (Relief from Income Tax) Act. (bb) the provisions of sections 13(1)(t), 13(1)(u), 13(1)(v), 13(2), 13A, 14B and 43A of the Income-tax Act, so far as they were in force and have not been modified since the date of signature of this Agreement, or have been modified in minor respects so as not to affect their general character. (ii) 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 in minor respects so as not to affect its general character. 3. (a) The amount of Indian tax payable, under the laws of India and in accordance with the provisions of this Agreement, whether directly or by deduction, by a resident of Singapore, in respect of income from sources within India which has been subjected to tax both in India and Singapore, shall be allowed as a credit against Singapore tax payable in respect of such income, but in an amount not exceeding that proportion of Singapore tax which such income bears to the entire income chargeable to Singapore tax. (b) For purposes of the credit referred to in sub-paragraph (a) above, there shall be deemed to have been paid by the resident of Singapore the amount which would have been payable as Indian tax but for a deduction allowed in computing the taxable income or an exemption or reduction of tax granted for that year under:- (i) sections 10(4), 10(4A), 10(15)(iv), 32A, 33A, 35C, 54E, 80CC, 80HH, 80J and 80K of the Income-tax Act, 1961 (43 of 1961), so far as they were in force and have not been modified since the date of signature of this Agreement, or have been modified in minor respects so as not to affect their general character. (ii) any other provisions which may subsequently be made granting an exemption or reduction from 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 in minor respects so as not to affect its general character. CHAPTER V Special Provisions ARTICLE 25 Non-discrimination 1. Nationals or citizens 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 or citizens of that other Contracting State in the same circumstances and under the same conditions are or may be subjected. This provision shall not be construed as obliging a Contracting State to grant to nationals of the other Contracting State not resident in the first-mentioned Contracting State those personal allowances, reliefs and reductions for tax purposes which are by law available only to citizens of the first-mentioned Contracting State or to such other persons as may be specified therein who are not resident in that Contracting State. 2. The term " nationals or citizens " means: (a) all individuals possessing the nationality or citizenship of a Contracting State; and (b) all legal persons, partnerships and associations deriving their status as such from the law in force in a Contracting State. 3. 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 Contracting State than the taxation levied on enterprises of that Contracting State carrying on the same activities in the same circumstances or under the same conditions. 4. The provisions of this Article 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. 5. 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 Contracting 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 that first-mentioned Contracting State are or may be subjected in the same circumstances and under the same conditions. 6. In this Article, the term " taxation " means taxes which are the subject of this Agreement. ARTICLE 26 Mutual agreement procedure 1. 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 the case to the competent authority of the Contracting State of which he is a resident. The case must be presented within three years from the date of the assessment or of the withholding of tax at the source, whichever is later. 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 this Agreement. They may also consult together for the elimination of double taxation in cases not provided for in this Agreement. 4. The competent authorities of the Contracting States may communicate with each other directly for the purposes of applying the provisions of this Agreement. 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 27 Exchange of information The competent authorities of the Contracting States shall exchange such information as is necessary for carrying out the provisions of this Agreement or for the prevention or detection of evasion of the taxes which are the subject of this Agreement. Any information so exchanged shall be treated as secret but may be disclosed only to persons (including a court or administrative body) concerned with the assessment, collection, enforcement, investigation or prosecution in respect of the taxes which are the subject of this Agreement, or to persons with respect to whom the information relates. 2. The exchange of information may also be on request with reference to particular cases. 3. 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 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. CHAPTER VI Final Provisions ARTICLE 28 Entry into force 1. This Agreement shall be ratified and the instruments of ratification shall be exchanged at Singapore. 2. This Agreement shall enter into force on the date of the exchange of the instruments of ratification and its provisions shall have effect: (a) in India, in respect of income assessable for the assessment year commencing on the 1st day of April, 1979, and subsequent assessment years. (b) in Singapore, for the year of assessment commencing on the 1st day of January, 1979, and subsequent years of assessment. ARTICLE 29 Termination This Agreement shall continue in effect indefinitely but either of the Contracting States, may, on or before the thirtieth day of June in any calendar year after the year 1985 give notice of termination to the other Contracting State and, in such event, this Agreement shall cease to be effective: (a) in India, in respect of income assessable for the assessment year commencing on the 1st day of April in the second calendar year following the calendar year in which the notice is given and the subsequent assessment years. (b) in Singapore, in respect of income assessable for the year of assessment commencing on the 1st day of January in the second calendar year following the calendar year in which the notice is given and the subsequent years of assessment. In witness whereof the undersigned, being duly authorised thereto, have signed the present Agreement. Done in duplicate at Singapore this 20th day of April of the year one thousand nine hundred and eighty-one in the English language. Sd/- B. M. Oza Sd/- Hsu Tse-Kwang For the Govt. of India For the Govt. of Singapore [F. No. 11/31/69-FTD]