Limitation of benefits rule restricts treaty benefits to qualified residents meeting ownership and substance tests. Limitation of benefits confines treaty advantages to resident entities that are qualified persons-governmental entities; companies listed on a recognised stock exchange or at least half owned by resident individuals or qualifying resident entities; partnerships with at least half beneficial interests owned by such residents; or charitable/tax exempt entities operating principally in a Contracting State-subject to a proviso denying benefits if over half of gross income is paid to non residents as deductible payments (with exceptions). Benefits also arise where the resident actively carries on business in its State and income from the other State is connected or incidental to that business; competent authorities may deny or permit benefits based on principal purpose and anti avoidance considerations.