Interest withholding limits protect beneficial owners, allowing source taxation subject to caps and exemptions under treaty rules. The DTAA permits the residence State to tax interest paid to its residents while allowing source taxation subject to a withholding tax limitation where the beneficial owner is resident in the other Contracting State; competent authorities shall agree the mode of application. Exemptions from source taxation include interest beneficially owned by Governments, political subdivisions, central banks, specified export-import banks, residents in cases of loans guaranteed or insured by those banks, and other mutually agreed banks or financial institutions. Interest is defined broadly and penalty charges for late payment are excluded.
Cases where this provision is explicitly mentioned in the judgment/order text; may not be exhaustive. To view the complete list of cases mentioning this section, Click here.
Provisions expressly mentioned in the judgment/order text.
Interest withholding limits protect beneficial owners, allowing source taxation subject to caps and exemptions under treaty rules.
The DTAA permits the residence State to tax interest paid to its residents while allowing source taxation subject to a withholding tax limitation where the beneficial owner is resident in the other Contracting State; competent authorities shall agree the mode of application. Exemptions from source taxation include interest beneficially owned by Governments, political subdivisions, central banks, specified export-import banks, residents in cases of loans guaranteed or insured by those banks, and other mutually agreed banks or financial institutions. Interest is defined broadly and penalty charges for late payment are excluded.
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