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TMI BlogAgreement between the Government of the Republic of India and the Government of the Union of Soviet Socialist Republics for the avoidance of double taxation of incomeX X X X Extracts X X X X X X X X Extracts X X X X ..... N OF SOVIET SOCIALIST REPUBLICS FOR THE AVOIDANCE OF DOUBLE TAXATION OF INCOME. The Government of the Republic of India and the Government of the Union of Soviet Socialist Republics, led by the desire to strengthen and develop friendly relations in economic, industrial, technical and cultural spheres, have resolved to conclude an Agreement for the avoidance of double taxation of income and have agreed as follows: ARTICLE 1 SCOPE OF THE AGREEMENT 1. This Agreement shall apply to persons who for the purposes of taxation are deemed to be residents of one or both of the Contracting States. 2. (a) This Agreement shall apply to the territory of each Contracting State, including its territorial sea, to its economic zone and its continental shelf, adjacent to the limits of its territorial sea, in respect of which it 1[exercises], in conformity with international law, sovereign rights for the purpose of exploration and exploitation of natural resources of such areas; (b) For the purposes of this Agreement, any reference to either Contracting State shall be deemed as reference to the territory of the respective State, including its territorial sea, to its economic zone and the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eriving its status from the laws in force in the USSR; (e) the term " international traffic " means any transport by a ship or aircraft operated by a resident of a Contracting State except when the ship or aircraft is operated solely between places in the other Contracting State; (f) the term " fiscal year " means: (i) in the case of India, the " previous year ", as defined in the Income-tax Act, 1961; (ii) in the case of the USSR, the period commencing on the 1st January and ending on the 31st of December. 2. As regards the application of the Agreement by a Contracting State, any term not defined therein shall, unless the context otherwise requires, have the meaning which it has under the law of that State concerning the taxes to which the Agreement applies. ARTICLE 4 RESIDENT 1. For the purposes of this Agreement, the term " resident of a Contracting State " means any person who, under the laws of that State, is liable to tax therein by reason of his domicile, residence, place of management or any other criterion of a similar nature. 2. Where, by reason of the provisions of paragraph 1, an individual is a resident of both Contr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... period not exceeding six months and the charges payable for the project or supervisory activity exceed 10 per cent. of the sale price of the machinery and equipment. However, the competent authorities of the Contracting States may in particular cases and by mutual agreement consider such activities as not constituting a permanent establishment also in cases when the duration of works on a building site or a construction or assembly project exceeds six months: Provided that for the purpose of this paragraph a resident of a Contracting State shall be deemed to have a permanent establishment in the other Contracting State and to carry on business through that permanent establishment if it provides services or facilities in connection with or supplies plant and machinery on hire used or to be used in, the prospecting for, or extraction or production of mineral oils in that other State. 3. Notwithstanding the preceding provisions of this article, the term " permanent establishment " shall not include: (a) the use of facilities solely for the purpose of storage or display of merchandise for the resident; (b) the maintenance of a stock of goods belonging to the resident, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct to the same common control, as that resident; or (d) in so acting, he manufactures or processes in that State for the resident goods or merchandise belonging to the resident. 5. A resident 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 State through a broker, general commission agent or any other agent of an independent status provided that such persons are acting in the ordinary course of their business. 6. The fact that a person (other than an individual) who is a resident of a Contracting State controls or is controlled by a person (other than an individual), who is a resident of the other Contracting State or who carries on business in that other State (either through a permanent establishment or otherwise) shall not constitute one of those persons a permanent establishment of the other. ARTICLE 6 INCOME FROM IMMOVABLE PROPERTY 1. Income derived by a resident of a Contracting State from immovable property (including income from agriculture or forestry) situated in the other Contracting State may be taxed in that other State. 2. The term " immovable pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation laws of that State. 4. No profits shall be attributed to a permanent establishment by reason of the mere purchase by that permanent establishment of 4[goods] of merchandise for the resident. 5. For the purposes of the preceding paragraphs, the profits to be attributed to the permanent establishment shall be determined by the same method year by year unless there is good and sufficient reason to the contrary. 6. Where profits include items of income which 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: (a) a resident of a Contracting State participates directly or indirectly in the management, control or capital of a resident of the other Contracting State, or (b) the same persons participate directly or indirectly in the management, control or capital of a resident of a Contracting State and a resident of the other Contracting State, and in either case conditions are made or imposed between the two such residents in their commercial or financial relations which differ from those which would be made between independent residents, then any profits whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come from the operation of ships includes income derived from the use, maintenance or rental of containers (including trailors and related equipment for the transport of containers) in connection with the transport of goods or merchandise in international traffic. ARTICLE 10 DIVIDENDS 1. Dividends paid by a legal person (in the case of India, a company) which is resident of a Contracting State to a resident of the other Contracting State may be taxed in 6[that] other State. 2. However, such dividends may also be taxed in the Contracting State of which the legal person (in the case of India, a company) paying the dividends is a resident and according to the laws of that State, but if the recipient is the beneficial owner of the dividends, the tax so charged shall not exceed 15% of the gross amount of the dividends. This paragraph shall not affect the taxation of the legal person (in the case of India, a company) in respect of the profits out of which the dividends are paid. 3. The term " 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. Penalty charges for late payment shall not be regarded as interest for the purpose of this article. 5. The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the interest, being a resident of a Contracting State, carries on business in the other Contracting State in which the interest arises, through a permanent establishment situated therein, and the debt-claim in respect of which the interest is paid is effectively connected with such permanent establishment. In such case the provisions of article 7 shall apply. 6. Interest shall be deemed to arise in a Contracting State when the payer is that Contracting State itself, a 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 such permanent establishment, then such interest shall be deemed to arise in the Contracting State in which the permanent establishment is situated. 7. Where, by reason of a special relationship between t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... being a resident of a Contracting State, carries on business in the other Contracting State in which the royalties or fees for technical services arise, through a permanent establishment situated therein, and the right, property or contract in respect of which the royalties or fees for technical services are paid is effectively connected with such permanent establishment. In such case the provisions of article 7 shall apply. 6. Royalties and fees for technical services shall be deemed to arise in a Contracting State when the payer is that State itself, a sub-division, a local authority or a resident of that State. Where, however, the person paying the royalties or fees for technical services, whether he is a resident of a Contracting State or 10[not], has in a Contracting State a permanent establishment in connection with which the liability to pay the royalties or fees for technical services was incurred, and such royalties or fees for technical services are borne by such permanent establishment, then such royalties or fees for technical services shall be deemed to arise in the State in which the permanent establishment is situated. 7. Where, by reason of a special relationship ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... teacher, architect, engineer and accountant. ARTICLE 15 INCOME FROM EMPLOYMENT 1. Subject to the provisions of articles 16, 17, 18, 19 and 20, 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 State unless the employment is so exercised in the other Contracting State. If the employment is so exercised, such remuneration as is derived therefrom may be taxed in that other State. 2. Notwithstanding the provisions of paragraph 1, remuneration derived by a resident of a Contracting State in respect of an employment exercised in the other Contracting State shall be taxable only in the first-mentioned State if: (a) the recipient is present in the other State for a period or periods not exceeding in the aggregate 183 days in the relevant fiscal year; 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 which the employer has in the other State. 3. Notwithstanding the preceding provisions in this article, remuneration derived in respect of an employment exercis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respect of services rendered to that State or sub-division or authority shall be taxable only in that State. (b) However, such remuneration shall be taxable only in the other Contracting State, if the services are rendered in that other State and the individual is a resident of that State who: (i) is a national of that State, or (ii) did not become a resident of that State solely for the purposes of rendering the services. 2. (a) Any pension paid by, or out of funds created by a Contracting State, or a sub-division or a local authority thereof to an individual in respect of services rendered to that State or sub-division or authority shall be taxable only in that State. (b) However, such pension shall be taxable only in the other Contracting State if the individual is a resident of, and a national of that other State. 3. The provisions of articles 15, 16 and 19 shall apply to remuneration and pensions in respect of services rendered in connection with commercial activities. ARTICLE 19 PENSIONS Any pension, other than a pension referred to in article 18, derived by a resident of a Contracting State from sources within the other Contracting State may be taxed only in the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llow as a deduction from the tax on the income of that resident an amount equal to the income-tax paid in the USSR, whether directly or by deduction. Such deduction shall not, however, exceed that part of income-tax (as paid before the deduction is given), which may be attributable to the income which may be taxed in the USSR; (b) where a resident of India derives income which, in accordance with the provisions of this Agreement, shall be taxable only in the USSR. India may include this income in the tax base but shall allow as a deduction from the income-tax that part of the income-tax which is attributable to the income derived from the USSR. 3. In the USSR, double taxation shall be eliminated in accordance with the laws of the USSR, due regard being had to the taxes paid or spared in India. ARTICLE 23 NON-DISCRIMINATION 1. A Contracting State may not exercise in respect of a resident of the other Contracting State a higher or more burdensome taxation than taxation which that State would exercise in respect of a resident of a third State with which it did not conclude an agreement for the avoidance of double taxation. 2. In this article, the term " taxation " mea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ame manner as information obtained under the domestic laws of that State. However, if the information is originally regarded as confidential in the transmitting State, it shall be disclosed only to persons or authorities (including courts and administrative bodies) involved in the assessment or collection of, the enforcement or prosecution in respect of, or the determination of appeals in relation to, the taxes which are the subject of the Agreement. Such persons or authorities shall use the information only for such purposes but may disclose the information in public court proceedings or in judicial decisions. The exchange of information or documents shall also be on request with reference to particular cases. 2. 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 the other Contracting State; (c) to supply information which would disclose any trade, industri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tness whereof the undersigned, being duly authorised thereto, have signed the present Agreement. Done in duplicate at New Delhi this 20th day of November one thousand nine hundred and eighty-eight in the Hindi, Russian and English languages, all the texts being equally authentic. In case of divergence between any of the texts, the English text shall be the operative one. For the Government of the Republic of India. Sd/- (S. B. CHAVAN) For the Government of the Union of Soviet Socialist Republics Sd/- (V. M. KAMENTSEV) [Notification No. 8442/F. No. 5O3/1/88-FTD] P. K. APPACHOO, Jt. Secy. **************** NOTES:- 1. Corrected vide Corrigenda No. G.S.R. 928(E) dated 29-11-1990 before it was read as, "execises" 2. Corrected vide Corrigenda No. G.S.R. 928(E) dated 29-11-1990 before it was read as, "he" 3. Corrected (Omitted) vide Corrigenda No. G.S.R. 928(E) dated 29-11-1990 before it was read as, "activity, being the result of carrying out" 4. Corrected vide Corrigenda No. G.S.R. 928(E) dated 29-11-1990 before it was read as, "good" 5. Corrected vide Corrigenda No. G.S.R. 928(E) dated 29-11-1990 before it was r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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