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TMI BlogConvention between the Government of the Republic of India and the Government of Mauritius for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and capital gainsX X X X Extracts X X X X X X X X Extracts X X X X ..... Convention, shall be given effect to in the Union of India. CONVENTION BETWEEN THE GOVERNMENT OF THE REPUBLIC OF INDIA AND THE GOVERNMENT OF MAURITIUS FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME AND CAPITAL GAINS The Government of the Republic of India and the Government of Mauritius. DESIRING to conclude a Convention for the avoidance of double taxation and the prevention of fiscal evasion with respect to 2[taxes on income] and capital gains and for the encouragement of mutual trade and investment. HAVE AGREED as follows: CHAPTER I SCOPE OF THE CONVENTION Article 1 PERSONAL SCOPE This Convention shall apply to persons who are residents of one or both of the Contracting States. Article II TAXES COVERED 1. The existing taxes to which this Convention shall apply are: (a) in the case of India: (i) the income-tax including any surcharge thereon 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 Mauritius: the income-tax (hereinafter referred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s a company or a body corporate under the taxation laws in force in the respective Contracting State; (g) The terms ' enterprise of a Contracting State ' and ' enterprise of the other Contracting State, mean respectively an industrial, mining, commercial, plantation or agricultural enterprise or similar undertaking carried on by a resident of a Contracting State and an industrial, mining, commercial, plantation or agricultural enterprise or similar undertaking carried on by a resident of the other Contracting State; (h) the term ' competent authority ' means, in the case of India, the Central Government in the Ministry of Finance (Department of Revenue) or their authorised representative, and in the case of Mauritius, the Commissioner of Income Tax or his authorised representative; (i) the term ' national ' means any individual possessing the nationality of a Contracting State and any local person, partnership or association deriving its status from the laws in force in the Contracting State; (j) the term ' international traffic ' means any transport by a ship or aircraft operated by an enterprise which has its place of effective manageme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1. For the purposes of this Convention, the term ' permanent establishment ' means a fixed place of business through 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 warehouse in relation to a person providing storage facilities for others; (g) a mine, an oil or gas well, a quarry or any other place of extraction of natural resources; (h) a farm, plantation or other place where agricultural, forestry, plantation or related activities are carried on; (i) a building site or construction or assembly project or supervisory activities in connection therewith, where such site, project or supervisory activity continues for a period of more than nine months. 3. Notwithstanding the preceding provisions of this article, the term ' permanent establishment ' shall be deemed not to include: (a) the use of facilities solely for the purpose of storage or display of merchandise belonging to the enterprise; (b) the maintenance of a stock of goods or merchandise belonging to the enterpri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 and usage 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 agricultural and forestry, rights to which the provisions of general law respecting landed property apply, usufruct of immovable property and rights to variable or fixed payments as consideration for the working of, or the right to work, mineral deposits, oilwells, quarries and other places of extraction of natural resources, ships, boats and aircraft shall not be regarded as immovable property. 3. The provisions of paragraph 1 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 shall also apply to the income from immovable property of an enterprise and to income from immovable property used for the performance of independent personal services. Article 7 BUSINESS PROFITS 1. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tuated. 2. If the place of effective management of a shipping enterprise is 12[aboard] a ship, then it shall be deemed to be situated in the Contracting State in which the home harbour of the ship is situated, or, if there is no such home harbour, in the Contracting State of which the operator of the ship 13[is a resident]. 3. The provisions of paragraph 1 of this Article shall also apply to profits from the participation in a pool, a joint business or an international operating agency. 4. For the purposes of paragraph 1, interest on funds connected with the operation of ships or aircraft in international traffic shall be regarded as profits from the operation of such ships or aircraft, and the provisions of Article 11 shall not apply in relation to such interest. 5. The term " operation of ships or aircraft " shall mean business of transportation of persons, mail, livestock or goods, carried on by the owners or lessees or charterers of the ships or aircraft, including the sale of tickets for such transportation on behalf of other enterprises, the incidental lease of ships or aircraft and any other activity directly connected with such transportation. Article 9 ASSO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Contracting State of which the company making the distribution is a resident. 5. The provisions of paragraphs 1, 2 and 3 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 a case, the provisions of Article 7 or Article 14, as the case may be, shall apply. 6. Where a company which is a resident of a Contracting State derives profits or income from the other Contracting State, that other State may not impose any tax on the dividends paid by the company, except in so far as such dividends are paid to a resident of that other State or in so far as the holding in respect of which the dividends are paid is effectively connected with a permanent establishment or a fixed base situated in that other State, nor subject the company's undistribute ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fixed base. In such case, the provisions of Article 7 or Article 14, as the case may be, shall apply. 7. Interest shall be deemed to arise in a Contracting State when the payer is that Contracting State itself, a political sub-division, a local authority or a resident of that 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 that permanent establishment, then such interest shall be deemed to arise in the Contracting State in which the permanent establishment is situated. 8. Where, by reason of 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 16[accordi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Convention. Article 13 CAPITAL GAINS 1. Gains from the alienation of immovable property, as defined in paragraph 2 of article 6, may be taxed in the Contracting State in which such property is situated. 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 together with the whole enterprise) or of such a fixed base may be taxed in that other State. 3. Notwith ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e relevant " previous year " or " year of income ", and (b) the remuneration is paid by, or on behalf of, an employer who is not a resident of the other State, and (c) the remuneration is not borne by a permanent establishment or a fixed base which the employer has in the other State. 3. Notwithstanding the preceding provisions of this Article, remuneration in respect of an employment exercised 17[aboard] a ship or aircraft in international traffic, may be taxed only in the Contracting State in which the place of effective management of the enterprise is situated. Article 16 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 Contracting State. Article 17 ARTISTES AND ATHLETES 1. Notwithstanding the provisions of Articles 14 and 15, income derived by public entertainers such as theatre, motion picture, radio or television artistes and musicians, and by athletes, from their personal activities as much may be taxed in the Contracting State in which the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontracting State with the consent of that other State. 5. For the purposes of this Article, the term " Government " shall include any State Government or local or statutory authority of either Contracting State and, in particular, the Reserve Bank of India and the Bank of Mauritius. Article 19 Non-Government Pensions and Annuities 1. Any pension, other than a pension referred to in Article 18, or any annuity derived by a resident of a Contracting State from sources within the other Contracting State shall be taxed only in the first mentioned Contracting State. 2. The term " pension " means a periodic payment made in consideration of past services or by way of compensation for injuries received in the course of performance of services. 3. 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. Article 20 Students and Apprentice 1. A student or business apprentice who is or was a resident of one of the Contracting States immediately before vis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ved institution " means 22[an] institution which has been approved in this regard by the competent authority of the concerned Contracting State. Article 22 OTHER INCOME 1. Subject to the provisions of paragraph 2 of this Article, 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. 2. The provisions of paragraph 1 shall not apply to income, other than income from immovable property as defined in paragraph 2 of Article 6, if the recipient of such 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 right or property in respect of which the income is paid is effectively connected with such permanent establishment or fixed base. In such case, the provisions of Article 7 or Article 14, as the case may be, shall apply. CHAPTER IV METHODS FOR ELIMINATION OF DOUBLE TAXATION Article 23 ELIMINATION OF DOUBLE TAXATION 1. The laws i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Mauritius shall be allowed as a credit against Mauritius tax payable in respect of such profits or income provided that such credit shall not exceed the Mauritius tax (as computed before allowing any such credit) 26[which is appropriate] to the profits or income arising in India. (b) In the case of a dividend paid by a company which is a resident of India to a company which is a resident of Mauritius and which owns at least 10 per cent. of the shares of the company paying the dividend, the credit shall take into account (in addition to any Indian Tax for which credit may be allowed under the provisions of sub-paragraph (a) of this paragraph) the Indian tax payable by the company in respect of the profits out of which such dividend is paid.) 5. For the purposes of the credit referred to in paragraph 4, the term ' Indian Tax payable ' shall be deemed to include any amount by which tax has been reduced by the special incentive measures under: (i) 27[sections] 10(4), 10(4A), 10(6)(viia), 10(15)(iv), 10(28), 10A, 32A, 33A, 35B, 54E, 80HH, 80HHA, 80-I or 80L of the Indian Income-tax Act, 1961 (43 of 1961); (ii) any other provision which may subsequently be enacted grantin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ided by the national laws of those States, present his case to the competent authority of the Contracting State of which he is a resident. 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. 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 Convention. Any agreement reached shall be implemented notwithstanding any time limits in the 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 the Convention. They may also consult together for in the elimination of double taxation in cases not provided for the Convention. 4. The 29[competent] authorities of the Contracting States may communicate with each other directly for the purpose of reaching an a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... force on the date of the later of these notifications and shall thereupon have effect: (a) in India, in respect of income and capital gains assessable for any assessment year commencing on or after 1st April, 1983; (b) in Mauritius, in respect of income and capital gains assessable for any assessment year commencing on or after 1st July, 1983. Article 29 Termination 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 its entry into force, 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 India, in respect of income and capital gains assessable for the assessment year commencing on 1st day of April, in the second calendar year next following the calendar year in which the notice is given, and subsequent years; (b) in Mauritius, in respect of income and capital gains assessable for the assessment year commencing on 1st day of July, in the second calendar year next following the calendar ye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... read as, "accerding" 17. Corrected vide Notification No. G.S.R. 816 (E) Dated 18-12-1984 before it was read as, "a board" 18. Corrected vide Notification No. G.S.R. 816 (E) Dated 18-12-1984 before it was read as, "Constituting" 19. Corrected vide Notification No. G.S.R. 816 (E) Dated 18-12-1984 before it was read as, "the Contracting" 20. Corrected vide Notification No. G.S.R. 816 (E) Dated 18-12-1984 before it was read as, "income" m" 21. Corrected vide Notification No. G.S.R. 816 (E) Dated 18-12-1984 before it was read as, "on" 22. Corrected vide Notification No. G.S.R. 816 (E) Dated 18-12-1984 before it was read as, "in" 23. Corrected vide Notification No. G.S.R. 816 (E) Dated 18-12-1984 before it was read as, "tad" 24. Corrected vide Notification No. G.S.R. 816 (E) Dated 18-12-1984 before it was read as, "section" 25. Corrected vide Notification No. G.S.R. 816 (E) Dated 18-12-1984 before it was read as, "development)" 26. Corrected vide Notification No. G.S.R. 816 (E) Dated 18-12-1984 before it was read as, "is appropri ..... X X X X Extracts X X X X X X X X Extracts X X X X
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