Dividend taxation: cross-border allocation of taxing rights and tax credit, with source-state levy limits for new capital.

Dividends paid by a UK resident company to an Indian resident may be taxed in India; the beneficial owner resident in India is entitled to a tax credit equivalent to that available to a UK resident and to payment of any excess over UK tax. The tax-credit relief is inapplicable where the beneficial owner company controls, alone or with associated companies, at least ten percent of voting power. Dividends paid to a UK resident by an Indian company may be taxed in the UK and in India, but Indian tax on amounts attributable to new contributions is subject to a source-state limit. Dividend rules yield to profit taxation where the holding is effectively connected with a permanent establishment.

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