Double taxation agreement: Between India and USSR signed - PRESS NOTE - Income Tax

Double taxation agreement: Between India and USSR signed Notification Number: PRESS NOTE Dated 20/11/1988 An Agreement for the avoidance of double taxation of income was signed today, the 20th November, 1988, between the Government of the Republic of India and the Government of the Union of Soviet Socialist Republics. Mr. S. B. Chavan, Union Finance Minister, signed it on behalf of the Government of India while Mr. V. M. Kamentsev, Deputy Chairman of the USSR Council of Ministers, signed it on behalf of the Government of the USSR. 2. Under this Agreement, business profits of a resident of one country shall be taxable in the other country only if it maintains a permanent establishment like a branch, office, factory, place of management, etc., in that other country. 3. The Agreement provides for the mutual exemption of profits from the operation of aircraft in international traffic. In respect of shipping profits, while the income from bilateral trade will be totally exempt in the source country, profits from third country trade (in both directions) will be exempted up to two-thirds of the tax thereon. Income from dividends, interest, royalties and fees for technical services will be taxed in the source country at concessional rates as laid down in the Agreement. 4. In the case of India, double taxation shall be avoided by the credit method under which India will allow credit to its residents for the taxes paid in the USSR on the doubly taxed income. In the USSR, double taxation would be eliminated in accordance with the laws of the USSR. For this purpose, the USSR will take into account taxes paid or spared in India. The Agreement will come into force after both the countries complete the formalities necessary to bring into force this Agreement. The Agreement will help in the modernisation and growth of Indian industry by encouraging the flow of technology and capital in essential areas. It is also expected to increase our export capability. File Number: 503/1/88-FTD