TaxTMI 
TaxTMI 
Convention between the Govt. of India and the Govt. of the United Kingdom of Great Britain and Northern Ireland for the avoidance of double taxation and prevention of fiscal evasion with respect to taxes on income and capital gains
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....ns of the said Convention shall be given effect to in the Union of India. CONVENTION BETWEEN THE GOVERNMENT OF INDIA AND THE GOVERNEMNT OF THE UNITED KINGDOM OF GREAT BRITAN AND NORTHERN IRELAND FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL WITH RESPECT TO TAXES ON INCOME AND CAPITAL GAINS The Government of India and the Government of the United Kingdom of Great Britain and Northern Ireland; Desiring to conclude a Convention for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and capital gains: Have agreed as follows: ARTICLE 1 PERSONAL SCOPE This Convention shall apply to persons who are residents of one or both of the Contracting States. ARTICLE 2 TAXES COVERED 1. The taxes which are the subject of this Convention are: (a) in the United Kingdom of Great Britain and Northern Ireland: (i) the income tax; (ii) the corporation tax; (iii) the capital gains tax; (iv) the petroleum revenue tax; and (v) the development land tax; (hereinafter referred to as " United Kingdom tax "); (b) in ....
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.... enterprise which has its place of effective management in a Contracting State except when the ship or aircraft is operated solely between places in the other Contracting State; (j) the term "Government" means the Government of a Contracting State or a political sub-division or local authority thereof. In relation to the United Kingdom, the term " political sub-division " shall include Northern Ireland. 2. As regards the application of this Convention by a Contracting State any term not otherwise defined shall, unless the context otherwise requires, have the meaning which it has under the laws of that Contracting State relating to the taxes which are the subject of this Convention. ARTICLE 4 FISCAL DOMICILE 1. For the purposes of this Convention, the term "resident of a Contracting State" means any person who, under the law of that State, is liable to taxation 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 of this article an individual is a resident of both Contracting States, then his status shall be determined in accordance with the following ....
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....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. 3. The term "permanent establishment" shall not be deemed to include: (a) the use of facilities solely for the purpose of storage or display of goods or merchandise belonging to the enterprise; (b) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of storage or display; (c) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of processing by another enterprise; (d) the maintenance of a fixed place of business solely for the purpose of purchasing goods or ^2[merchandise, or] for collecting information, for the enterprise; (e) the maintenance of a fixed place of business solely for the purpose of advertising, for the supply of information or for scientific research, being activities solely of a preparatory or auxiliary character in the trade or business of the enterprise. However, this provision shall not be applicable where the enterprise maintains any other fixed place of business in the other....
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....d equipment used in agriculture and forestry, rights to which the provisions of general law respecting landed property apply, usufruct of immovable property and rights to variable or fixed payments as consideration for the working of, or the right to work mineral deposits, sources and other natural resources. Ships and aircraft shall not be regarded as immovable property. 3. The provisions of paragraph 1 of this Article shall apply to income derived from the direct use, letting, or use in any other form of immovable property. 4. The provisions of paragraphs 1 and 3 of this Article shall also apply to the income from immovable property of an enterprise and to income from immovable property used for the performance of professional services. ARTICLE 7 BUSINESS PROFITS 1. The profits of an enterprise of a Contracting State shall be taxable only in that State unless the enterprise carries on business in the other Contracting State through a permanent establishment situated therein. If the enterprise carries on business as aforesaid, the profits of the enterprise may be taxed in the other State but only so much of them as is attributable to that permanent establishment. ....
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....rms. (b) However, no such deduction shall be allowed in respect of amounts, if any, paid (otherwise than towards reimbursement of actual expenses) by the permanent establishment to the head office of the enterprise or any of its other offices, by way of royalties, fees or other similar payments in return for the use of patents or other rights, or by way of commission, for specific services performed or for management, or, except in the case of a banking enterprise by way of interest on monies lent to the permanent establishment. Likewise, no account shall be taken in the determination of the profits of a permanent establishment of amounts charged (otherwise than towards reimbursement of actual expenses) by the permanent establishment to the head office of the enterprise or any of its other offices, by way of royalties, fees or other similar payments in return for the use of patents or other rights, or by way of commission, for specific services performed or for management, or, except in the case of a banking enterprise, by way of interest on monies lent to the head office of the enterprise or any of its other offices. 5. No profits shall be attributed to a permanent establish....
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....d in a Contracting State. 4. For the purposes of this Article, income from the operation of ships includes income derived from the rental on a bareboat basis of ships if such rental income is incidental to the income described in paragraph 1 of this Article. 5. Notwithstanding the provisions of Article 7 (Business profits), the provisions of paragraphs ^8[1, 2] and 3 of this Article shall likewise apply to income of an enterprise of a Contracting State from the use, maintenance or rental of containers (including trailers and related equipment for the transport of containers) used for the transport of goods or merchandise. 6. The provisions of this Article shall apply also to income derived from participation in a pool, a joint business or an international operating agency. 7. Gains derived by an enterprise of a Contracting State from the alienation of ships or containers owned and operated by the enterprise shall be taxed only in that State if either the income from the operation of the alienated ships or containers was taxed only in that State, or the ships or containers are situated outside the other Contracting State at the time of the alienation. ARTICLE 10 AS....
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....his purpose two companies shall be deemed to be associated if one is controlled directly or indirectly by the other, or both are controlled directly or indirectly by a third company. 4. A dividend paid by a company which is a resident of India to a resident of the United Kingdom may be taxed in the United Kingdom. The dividend may also be taxed in India but, where the dividend relates in whole or in part to a new contribution, the Indian tax so charged shall not exceed 15 per cent of the gross amount of the dividend attributable to the new contribution. 5. The preceding paragraphs of this Article shall not affect the taxation of the company in respect of the profits out of which the dividend is paid. 6. The provisions of paragraphs 1, 2 and 3 or, as the case may be, paragraph 4 of this Article shall not apply if the beneficial owner of the dividend, being a resident of a Contracting State, as in the other Contracting State of which the company paying the dividend is a resident, a permanent establishment or fixed base with which the holding by virtue of which the dividend is paid is effectively connected. In such a case the provisions of Article 7 (Business profits) or Arti....
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....g State in which the interest arises shall not exceed 10 per cent of the gross amount of the interest; (b) where the interest is paid to the Government of one of the Contracting States or a political subdivision or local authority of that State or the Reserve Bank of India, it shall not be subject to tax by the State in which it arises. 4. The term "interest" as used in this Article means income from debt-claims of every kind, whether or not secured by mortgage and whether or not carrying a right to participate in the debtor's profits, and in particular, income from government securities and income from bonds or debentures, including premiums and prizes attaching to such securities, bonds or debentures. 5. The provisions of paragraphs 1, 2 and 3 of this Article 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, or performs in that other State independent personal services from a fixed base situated therein, and the debt-claim in respect of which the interest is paid is effectively connec....
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.... (b) industrial, commercial or scientific equipment, or information concerning industrial, commercial or scientific experience; (c) any copyright of literary, artistic or scientific work, cinematographic films, and films or tapes for radio or ^10[television] broadcasting; but does not include royalties or other amounts paid in respect of the operation of mines or quarries or of the extraction or removal of natural resources. 4. The term "fees for technical services" as used in this Article means payments of any kind to any person, other than payments to an employee of the person making the payments and to any individual for independent personal services mentioned in Article 15 (Independent personal services), in consideration for services of a managerial, technical or consultancy nature, including the provision of services of technical or other personnel. 5. The provisions of paragraphs 1 and 2 of this Article shall not apply if the beneficial owner of the royalties or fees for technical services, 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 perma....
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.... (b) he has a fixed base regularly available to him in that other State for the purpose of ^13[performing] his activities; but in each case only so much of the income as is attributable to those services. 2. The term "professional services" includes independent scientific, literacy, artistic, educational or teaching activities as well as the independent activities of physicians, surgeons, lawyers, engineers, architects, dentists and accountants. ARTICLE 16 ^14[DEPENDANT] PERSONAL SERVICES 1. Subject to the provisions of Articles 17 (Directors' fees), 18 (Artistes and athletes), 19 (Governmental ^15[remuneration] and pensions), 20 (Students and trainees) and 21 (Teachers), 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 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 of this Article, remuneration derived by a resident of the United Kingdom in respect of an employment exercised i....
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.... provisions of paragraphs 1 and 2 of this Article shall not apply if the visit to a Contracting State of the entertainer or the athlete is directly or indirectly supported, wholly or substantially, from the public funds of the other Contracting State, including a political sub-division or local authority of that other State. ARTICLE 19 GOVERNMENTAL REMUNERATION AND PENSIONS 1. Remuneration, other than a pension, paid by the Government of India to any individual who is a national of India in respect of services rendered in the discharge of governmental functions in the United Kingdom shall be exempt from United Kingdom tax. 2. Remuneration, other than a pension, paid by the Government of the United Kingdom to any individual who is a national of the United Kingdom in respect of services rendered in the discharge of governmental functions in India shall be exempt from Indian tax. 3. Any pension paid by the Government of a Contracting State to any individual in respect of services rendered to that Government shall be taxable only in that Contracting State. 4. The provisions of this Article shall not apply to remuneration or ^20[pensions] in respect of services rendere....
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....ntracting State for that period in an amount not exceeding GBP 1,500 sterling or its equivalent in Indian currency. 4. An individual who is a resident of a Contracting State or was a resident of that State immediately before visiting the other Contracting State and who is temporarily present in that other State for a period not exceeding 12 months as a participant in a programme sponsored by the Government of the other Contracting State, for the primary purpose of training, research or study, shall not be subject to tax by that other Contracting State in respect of payments made by the Government of the first-mentioned Contracting State for the purposes of his maintenance, training, research, or study. ARTICLE 21 TEACHERS 1. An individual who visits a Contracting State for a period not exceeding two years for the purpose of teaching or engaging in research at a university, college or other recognised educational institution in that State, and who was immediately before that visit a resident of the other Contracting State, shall be exempted from tax by the first-mentioned Contracting State on any remuneration for such teaching or research for a period not exceeding two y....
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....me but in an amount not exceeding that proportion of Indian tax which such income bears to the entire income chargeable to Indian tax. In no case shall credit for United Kingdom tax be given against the additional income-tax on undistributed income of companies. For the purposes of the credit referred to in this paragraph, where the resident of India is a company by which surtax is payable, the credit to be allowed against Indian tax shall be allowed in the first instance against the income-tax payable by the company in India and as to the balance, if any, against the surtax payable by it in India. 3. For the purposes of paragraph 1 of this Article the term ' Indian tax payable ' shall be deemed to include any amount which would have been payable as Indian tax but for a deduction allowed in computing the taxable income or an exemption or reduction of tax granted for that year ^22[under:] (a) sections 10(4), 10(4A), 10(6)(viia), 10(15)(iv), 32A, 33A, 35B, 35CC, 80HH, 80J and 80K of the Income-tax Act, 1961 (43 of 1961), so far as they were in force on and have not been modified since the date of signature of this Convention or have been modified only in minor ....
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....e subjected in the other Contracting State to any taxation or any requirement connected therewith which is other or more burdensome than the taxation and connected requirements to which nationals of that other State in the same circumstances are or may be subjected. 2. The taxation on a permanent establishment which an enterprise of a Contracting State has in other Contracting State shall not be less favourably levied in that other State than the taxation levied on enterprises of that other State carrying on the same activities in the same circumstances or under the same conditions. This provision shall not be construed as preventing a Contracting State from charging the profits of a permanent establishment which an enterprise of the other Contracting State has in the first-mentioned State at a rate of tax which is higher than that imposed on the profits of a similar enterprise of the first-mentioned Contracting State, nor as being in conflict with the provisions of paragraph 4 of Article 7 of this Convention. 3. Nothing contained in this Article shall be construed as obliging a Contracting State to grant to ^23[individuals] not resident in that State any personal allowances,....
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.... as secret but may be disclosed to persons (including a court or administrative body) concerned with assessment, collection, enforcement or prosecution in respect of taxes which are the subject of this Convention. No information or documents shall be exchanged which would disclose any trade, business, industrial or professional secret or any trade process. ARTICLE 26 DIPLOMATIC AND CONSULAR OFFICIALS 1. Nothing in this Convention shall affect the fiscal privileges of diplomatic or consular officials under the general rules of international law or under the provisions of special agreements. 2. Notwithstanding the provisions of paragraph 1 of article 4 (Fiscal domicile), an individual who is a member of the diplomatic, consular or permanent mission of a Contracting State which is situated in the other Contracting State and who is subject to tax in that other State only if he derives income from sources therein, shall not be deemed to be a resident of that other State for the purposes of this Convention. ARTICLE 27 ENTRY INTO FORCE Each of the Contracting States shall notify to the other the completion of the procedures required by its law for the bringing into fo....
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.... on or after 1st April, in the calendar year next following that in which the notice is given; and (b) in India, in respect of income arising in any fiscal year beginning on or after the first day of April, next following the calendar year in which the notice is given. In witness whereof the undersigned, duly authorised thereto by their respective Governments, have signed this Convention. Done on this 16th day of April, 1981, in New Delhi on two original copies each in the Hindi and English languages, both the texts being equally authentic. In case of divergence between the two texts, the English text shall be the operative one. FOR THE GOVERNMENT OF INDIA G. RAMACHANDRAN FOR THE GOVERNMENT OF THE UNITED KINGDOM OF GREAT BRITAIN AND NORTHERN IRELAND J. A. THOMSON [No. 501/6/75-FTD] R.R. KHOSLA, Jt. Secy. ***************** NOTES:- 1. Corrected vide Corrigenda No. G.S.R. 772(E) dated 23-11-1981 before it was read as, "out let" 2. Corrected vide Corrigenda No. G.S.R. 772(E) dated 23-11-1981 before it was read as, "merohandise or" 3. Corrected vide....