Taxation of interest: source state may levy capped withholding; government payments exempt and PE connection shifts taxation to business profits. The DTAA allows the resident State to tax interest and permits source State withholding subject to a 10 per cent cap; interest paid to the other State, its local authorities, the Central Bank or wholly owned agencies is exempt. Interest connected with the recipient's permanent establishment in the source State is taxed as business profits. Interest is defined to include securities, bonds, debentures and other debt claims. Deeming rules assign source by payer or by the location of the permanent establishment that bore the indebtedness. Related party excess interest is confined to an arm's length amount, with excess treated under domestic law.
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.
Taxation of interest: source state may levy capped withholding; government payments exempt and PE connection shifts taxation to business profits.
The DTAA allows the resident State to tax interest and permits source State withholding subject to a 10 per cent cap; interest paid to the other State, its local authorities, the Central Bank or wholly owned agencies is exempt. Interest connected with the recipient's permanent establishment in the source State is taxed as business profits. Interest is defined to include securities, bonds, debentures and other debt claims. Deeming rules assign source by payer or by the location of the permanent establishment that bore the indebtedness. Related party excess interest is confined to an arm's length amount, with excess treated under domestic law.
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