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TMI BlogConvention between the Government of Republic of India and the Council of Ministers of Serbia and Montenegro for the Avoidance of Double TaxationX X X X Extracts X X X X X X X X Extracts X X X X ..... And whereas the date of entry into force of the said Convention is the 23rd day of September, 2008, being the date of later of the notifications of completion of the procedures as required by the respective laws for entry into force of this convention, in accordance with paragraph 2 of Article 30 of the said convention; And whereas sub-paragraph (2) of paragraph 2 of Article 30 of the said Convention provides that the provisions of the Convention shall have effect in India in respect of the taxes on income derived and taxes on capital owned in each fiscal year beginning on or after the first day of April in the calendar year next following the year in which the Convention enters into force; Now, therefore, in exercise of the powers conferred by section 90 of the Income-Act, 1961 (43 of 1961) and section 44A of the Wealth-tax Act, 1957 (27 of 1957), the Central Government hereby directs that all the provisions of the said Convention shall be given effect to in the Union of India. Annexure CONVENTION BETWEEN THE GOVERNMENT OF THE REPUBLIC OF INDIA AND THE COUNCIL OF MINISTERS OF SERBIA AND MONTENEGRO FOR THE AVOIDANCE OF DOUBLE TAXATION WITH RESPECT TO TAXES ON INCOME AND ON ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontinental shelf outside the outer limit of the territorial sea over which Serbia and Montenegro exercises its sovereign rights for the purposes of exploration and exploitation of their natural resources in accordance with its internal legislation and international laws; 3) the term "India" means the territory of India and includes the territorial sea and airspace above it, as well as any other maritime zone in which India has sovereign rights, other rights and jurisdiction, according to the Indian law and in accordance with international law, including the U.N. Convention on the Law of the Sea; 4) the term "political subdivisions", in the state community Serbia and Montenegro, means Member States; 5) the term "national" means: - any individual possessing the nationality of a Contracting State; - any legal person, partnership or association deriving its status as such from the laws in force in a Contracting State. 6) the term "person" includes an individual, a company, a body of persons and, in the case of India, any other entity which is treated as a taxable unit under the taxation laws in force in that country; 7) the term &qu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent home available to him in both States, he shall be deemed to be a resident only of the State with which his personal and economic relations are closer (centre of vital interests); 2) 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 only of the State in which he has an habitual abode; 3) If he has an habitual abode in both States or in neither of them, he shall be deemed to be a resident only of the State of which he is national; 4) If he is a national of both States of neither of them, the competent authorities of the Contracting States shall settle the question by mutual agreement. 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 only of the State in which its place of effective management is situated. If the State in which its place of effective management is situated cannot be determined, then the competent authorities of the Contracting States shall settle the question by mutual agreement. ARTICLE 5 PERMANENT ESTAB ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an enterprise of the other Contracting State, that enterprise shall be deemed to have a permanent establishment in the first mentioned Contracting State in respect of any activities which that person undertakes for the enterprise, if such a person: 1) has and habitually exercises in that State an authority to conclude contracts in the name of the enterprise, unless the activities of such person are limited to those mentioned in paragraph 4 which, if exercised through a fixed place of business, would not make this fixed place of business a permanent establishment under the provisions of that paragraph; or 2) has no such authority, but habitually maintains in the first mentioned State a stock of goods or merchandise from which he regularly delivers goods or merchandise on behalf of the enterprise. 6. Notwithstanding the preceding provisions of this Article, an insurance enterprise of a Contracting State shall, except in regard to re-insurance, be deemed to have a permanent establishment in the other Contracting State if it collects premiums in the territory of that other State or insures risks situated therein through a person other than an agent of an independent status to who ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies on business as aforesaid, the profits of the enterprise may be taxed in the other State but only so much of them as is attributable to that permanent establishment. 2. Subject to the provisions of paragraph 3, 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 profits which it might be expected to make if it were a distinct and separate enterprise engaged in the same or similar activities under the same or similar conditions and dealing wholly independently with the enterprise of which it is a permanent establishment. 3. In determining 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 and subject to the limitations of domestic tax laws of that State. However, no such deduction shall be allowed in respect of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ses of this Article, profits from the operation of ships or aircraft in international traffic shall mean the profits derived by an enterprise referred to in paragraph 1, from transportation by sea or air of passengers, goods, mail or livestock. 3. Profits derived by an enterprise referred to in paragraph 1, which is a resident of a Contracting State from the use or rental of containers (including trailers and other equipment for the transport of containers) used for the transport of goods or merchandise by that enterprise in international traffic shall be taxable only in that Contracting State unless the containers are used solely within the other Contracting State. 4. For the purposes of this Article, interest on funds directly connected with the operation of ships or aircraft in international traffic shall be regarded as profits derived from the operation of such ships or aircraft, if they are incidental to the carrying on of such business, and the provisions of Article 11 shall not apply in relation to such interest. 5. The provisions of paragraph 1 shall also apply to profits from the participation in a pool, a joint business or an international operating agency. ARTICLE 9 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eement settle the mode of application of these limitations. This paragraph shall not affect the taxation of the company in respect of the profits out of which the dividends are paid. 3. The terms "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 company making the distribution is a resident. 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 company paying the dividends is a resident, through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the holding in respect of which the dividends are paid is effectively connected with such permanent establishment or fixed base. In such case the provisions of Article 7 or Article 15, as the case may be, shall apply. 5. Where a company which is a resident of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt personal services from a fixed base situated therein, and the debt-claim in respect of which the interest is paid is effectively connected with such permanent establishment or fixed base. In such case the provisions of Article 7 or Article 15, as the case may be, shall apply. 6. Interest shall be deemed to arise in a Contracting State when the payer is a resident of that State. Where, however the person paying the interest, whether he is resident of a Contracting State or not, has in a Contracting State a permanent establishment or a fixed base in connection with which the indebtedness on which the interest is paid was incurred, and such interest is borne by such permanent establishment or fixed base; then such interest shall be deemed to arise in the State in which the permanent establishment or fixed base 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such royalties shall be deemed to arise in the State in which the permanent establishment or fixed base is situated. 6. Where, by reason of special relationship between the payer and the beneficial owner or between both of them and some other person the amount of the royalties, 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 beneficial owner in the absence of such relationship, the provision 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 Convention. ARTICLE 13 FEES FOR TECHNICAL SERVICES 1. 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 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 beneficial owner of the fees for technical services is a resident of the other Contracting State, the tax so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the other provisions of this Convention. ARTICLE 14 CAPITAL GAINS 1. 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 an enterprise of a Contracting State has in the other Contracting State or of movable property pertaining to a fixed base available to a resident of a Contracting State in the other Contracting State for the purpose of performing independent personal services, including such gains from the alienation of such a permanent establishment (alone or with the whole enterprises) or of such fixed base, may be taxed in that other State. 3. Gains derived by an enterprise of a Contracting State 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 that State. 4. Gains from the alienation of shares of the capital stock of a company the property of which consists directly or indirectly prin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther State for a period or periods not exceeding in the aggregate 183 days in any twelve months period commencing or ending in the fiscal year concerned, and 2) the remuneration is paid by or, on behalf of an employer who is not a resident of the other state; and 3) the remuneration is not borne by a permanent establishment or a fixed base which the employer has in the other State. 2. Notwithstanding the preceding provisions of this Article, remuneration derived in respect of an employment exercised aboard a ship or aircraft operated in international traffic by an enterprise of a Contracting State may be taxed in the State. ARTICLE 17 DIRECTORS' FEES Directors' fees and other 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 State. ARTICLE 18 ENTERTAINERS AND SPORT PERSONS 1. Notwithstanding the provision of Articles 15 and 16, 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 a sportsperson, from personal activit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a local authority thereof. ARTICLE 21 STUDENTS 1. Payments which a student or business apprentice 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 that State, provided that such payments arise from sources outside that State. 2. In respect of grants, scholarships and remuneration from employment not covered by paragraph 1, a student or business apprentice referred to in paragraph 1 shall, in addition, be entitled during such education or training to the same exemptions relief's or reductions in respect of taxes available to residents of the Contracting State which he is visiting. 3. The benefit of this Article shall extend only for such period of time as may be reasonable or customarily required to complete the education or training undertaken, but in no event shall any individual have the benefits of this Article for more than five years from the date of his first arrival in that other Contracting State. ARTICLE 22 PROFESSORS, TEA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting State or by movable property pertaining to a fixed base available to a resident of a contracting State in the other Contracting State for the purpose of performing independent personal services, may be taxed in that other State. 3. Capital represented by ships and aircraft operated in international traffic, and by movable property pertaining to the operation of such ships and aircraft shall be taxable only in the Contracting State of which the enterprises owning such property is a resident. 4. All other elements of capital of a resident of a Contracting State shall be taxable only in that State. ARTICLE 25 ELIMINATION OF DOUBLE TAXATION 1. Where a resident of a Contracting State derives income or owns capital which, in accordance with the provisions of this Convention, may be taxed in the other Contracting State, the first-mentioned State shall allow: - as a deduction from the tax on the income of that resident, an amount equal to the income tax paid in that other State; - as a deduction from the tax on the capital of that resident, an amount equal to the capital tax paid in that other State. Such deduction in either case shall not, however, exceed that part of the i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es, reliefs and reductions for taxation purposes on account of civil status or family responsibilities which it grants to its own residents. 3. Except where the provisions of Article 9, paragraph 7 of Article 11, or paragraph 6 of Article 12, apply interest, royalties and other disbursements paid by an enterprise of a Contracting State to a residents of the other Contracting State shall, for the purpose of determining the taxable profits of such enterprise, be deductible under the same conditions as if they had been paid to a resident of the first-mentioned State. Similarly, any debts of an enterprise of a Contracting state to a resident of the other Contracting State shall, for the purpose of determining the taxable capital of such enterprise, be deductible under the same conditions as if they had been contracted to a resident of the first-mentioned State. 4. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing 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. 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 and shall be disclosed only to persons or authorities (including courts and administrative bodies) concerned with the assessment or collection of, the enforcement or prosecution in respect of, or the determination of appeals in relation to, the taxes covered by the Convention. Such persons or authorities shall use the information only for such purposes. They may disclose the information in public court proceedings or in judicial decisions. 2. In no case shall the provisions of paragraph 1 be construed so as to impose on the competent authority of a Contracting State the obligation: 1) to carry out administrative measures at variance with the laws and administrative practice of that or of the other Contracting State; 2) to supply information which is not obtainable under the laws or in the normal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... igned, being duly authorized thereto, have signed this Convention. DONE in duplicate at New Delhi this 8th day of February 2006 in the English, Hindi and Serbian languages, all three texts being equally authentic. In case of any divergence of interpretation, the English text shall prevail. FOR THE GOVERNMENT OF THE REPUBLIC OF INDIA Sd/- Shri P. Chidambaram Finance Minister FOR THE COUNCIL OF MINISTER OF SERBIA AND MONTENEGRO Sd/- Prof. Dr Predrag Ivanovic Minister for International Economic Relations PROTOCOL At the moment of signing the Convention between the Council of Ministers of Serbia and Montenegro and the Government of the Republic of India for the Avoidance of Double Taxation with respect to taxes on Income and on Capital, the undersigned have agreed that the following provision shall form an integral part of the Convention. Ad, Articles 6 and 14 With reference to paragraphs 1 of Article 6 and Article 14, it is understood that income from immovable property and capital gains on alienation of immovable property respectively may be taxed in both Contracting States. IN WITNESS whereof the undersigned, being duly authorized thereto, have signed this Protocol. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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