TaxTMI 
TaxTMI 
Agreement between the Government of India and the Government of Italy for the Avoidance of Double Taxation and the prevention of fiscal evasion with respect to taxes on income
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.... DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME The Government of India and the Government^ ^2[of Italy,] desiring to conclude an agreement for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income. Have agreed as follows: CHAPTER I SCOPE OF THE AGREEMENT ARTICLE 1 PERSONAL SCOPE This agreement shall apply to persons who are residents of one or both of the Contracting States. ARTICLE 2 TAXES COVERED 1. The taxes to which this agreement shall apply are: (a) In the case of India: 1. the income-tax including any surcharge thereon imposed under the Income-tax Act, 1961 (43 of 1961); 2. the surtax imposed under the Companies (Profits) Surtax Act, 1964 (7 of 1964); (hereafter referred to as " Indian tax "). (b) In the case of Italy: 1. the personal income-tax (1 ' imposta sul reddito delle persone fisiche); 2. the corporate income-tax (1 ' imposta sul reddito delle persone giuridiche); 3. the local income-tax (1 ' imposta locale ^3[sul reddito]); even if they are collected by withholdi....
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.... (h) the term "fiscal year" in relation to Indian tax means "previous year" as defined in the Income-tax Act, 1961 (43 of 1961); (i) the term "international traffic" means any transport by a ship or aircraft operated by an 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 "competent authority" means in the case of India, the Central Government in the Department of Revenue; and in the case of Italy, the Ministry of Finance. 2. In the application of the provisions of this agreement by one of the Contracting State, any term not defined herein shall, unless the context otherwise requires, have the meaning which it has under the laws in force in that State relating to the taxes which are the subject of this agreement. ARTICLE 4 FISCAL DOMICILE 1. For the purposes of this ^7[Agreement, the term "resi]-dent of a Contracting State" means any person who is a resident of that State in accordance with the taxation laws of that State. 2. Where by reason of the provisions of paragraph 1, an individual is a reside....
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....ge or display of goods or merchandise belonging to the enterprises; (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 merchandise, or for collecting ^10[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. 4. A person acting in a Contracting State for or on behalf of an enterprise of the other Contracting State-other than an agent of an independent status to whom paragraph 5 applies-shall be deemed to be a permanent establishment of that enterprise in the first-mentioned State if: (a) he has and habitually exercises in that State, an authority to conclude ^11[contracts] for or on behalf of the....
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....and 3 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 Contracting 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 Contracting State but only so much of them as is attributable to that permanent establishment. 2. Where an enterprise of a Contracting State carries on business in the other Contracting State through a permanent establishment situated therein, there shall in each Contracting State be attributed to that permanent establishment, the profits which it might be expected to make if it were a distinct and separate enterprise engaged in the same or similar activities under the same or similar conditions and dealing wholly independently with the ^15[enterprise] of which it is a permanent establishment. 3. In so far as it has been customary in a Contracting....
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....tion by air of persons, livestock, goods or mail, carried on by the owners or lessees or charterers of aircraft, including the sale of tickets for such transportation on behalf of other enterprises, the incidental lease of aircraft and any other activity directly connected with such transportation. ARTICLE 9 SHIPPING 1. Income of an enterprise of one of the Contracting State derived from the other Contracting State from the operation of ships in international traffic may be taxed in that other Contracting State, but the tax chargeable in that other Contracting State on such income shall be reduced by an amount equal to fifty per cent. of such tax. 2. For the purposes of paragraph 1 of this article, income from the operation of ships in international traffic shall include: (a) profits derived from the rental on a full or bareboat basis of ships if such rental profits are incidental to the operation of ships in international traffic; and (b) profits derived from the use, maintenance or rental of containers (including trailers and related equipment for the transport of containers) in connection with the transport of goods or merchandise in international t....
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....cting State. 2. Notwithstanding the provisions of paragraph 1, the tax chargeable in a Contracting State on interest arising in that State and paid to a resident of the other Contracting State in respect of loans or debts shall not exceed 15 per cent. of the gross amount of such interest. 3. Notwithstanding the provisions of paragraph 2, interest arising in a Contracting State shall be exempt from tax in that State if: (a) the payer of the interest is the Government of that Contracting State or a local authority thereof; or (b) the interest is paid to any agency or instrumentality (including a financial institution) which may be agreed upon in this behalf by the two Contracting States. 4. The term "interest" as used in this article means income from Government securities, bonds or debentures, whether or not secured by mortgage and whether or not carrying a right to participate in profits, and debt-claims of every kind as well as all other income assimilated to income from money lent by the taxation law of the State in which the income arises. 5. The provisions of paragraph 1 and 2 shall not apply if the recipient of the interest, being a resident of a ....
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....he Contracting State in which the permanent establishment is situated. 3. The term " royalties " as used in this article means payments of any kind received as a consideration for the use of, or the right to use, any copyright of literary, artistic or scientific work including cinematograph films and films or tapes for radio or television broadcasting, any patent, trade mark, design or model, plan, secret formula or process, or for the use of, or the right to use, industrial, commercial or scientific equipment or for information concerning industrial, commercial or scientific experience. 4. Where, owing to a special relationship between the payer and the recipient or between both of them and some other person, the amount of the royalties paid, having regard to use, right or information for which they are paid, exceeds the amount which would have been agreed upon by the payer and the recipient in the absence of such relationship, the provisions of this article shall apply only to the last mentioned amount. In that case, the excess part of the payments shall remain taxable according to the law of each Contracting State, due regard being had to the other provisions of this agree....
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....Contracting State shall be taxable only in the first-mentioned State if: (a) the recipient is present in the other State for a period or periods not exceeding in the aggregate 183 days in the fiscal year concerned, and (b) the remuneration is paid by, or on behalf of, an employer who is not a resident of the other State, and (c) the remuneration is not borne by a permanent establishment or a fixed base which the employer has in the other State. 3. Notwithstanding the preceding provisions of this article, remuneration in respect of an employment exercised ^21[abroad] a ship or aircraft in international traffic, may be taxed in the Contracting State in which the place of effective management of the enterprise is situated. ARTICLE 17 DIRECTORS' FEES Directors' fees and similar payments derived by a resident of a Contracting State in his capacity as a member of the Board of ^22[Directors] of a company which is a resident of the other Contracting State may be taxed in that other Contracting State. ARTICLE 18 ARTISTES AND ATHLETES 1. Notwithstanding the provisions of articles 15 and 16, income derived by public entertainers (su....
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....l or an administrative sub-division or a local authority thereof. ARTICLE 21 PROFESSORS, TEACHERS AND RESEARCHERS 1. A professor or teacher who makes a temporary visit to a Contracting State for a period not exceeding two years for the purpose of teaching or conducting research at a university, college, school or other educational institution, owned by the Government or non-profit organisations, and who is, or immediately before such visit was, a resident of the other Contracting State shall be exempt from tax in the first-mentioned Contracting State in respect of remuneration for such teaching or research. 2. This article shall not apply to income from research if such research is undertaken primarily for the private benefit of a specific person or persons. ARTICLE 22 STUDENTS AND TRAINEES 1. An individual who is a resident of a Contracting State and visits the other Contracting State solely: (a) as a student at a university, college or other recognised educational institution of that other Contracting State, or (b) as a business apprentice, or (c) for the purpose of study, research or training, as a recipient of a grant, allowance o....
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....ed 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. (a) If a resident of Italy owns items of income which are taxable in the Republic of India, Italy, in determining its income taxes specified in article 2 of this agreement, may include in the basis upon which such taxes are imposed the said items of income, unless specific provisions of this agreement otherwise provide. In such a case, Italy shall deduct from the taxes so calculated the Indian tax on income, but in an amount not exceeding that proportion of the aforesaid Italian tax which such items of income bear to the entire income. On the contrary no deduction will be granted if the item of income is subjected in ^28[Italy to a] final withholding tax by request of the recipient of the said income in accordance with the Italian law. (b) For the purpose of paragraph 2 and 3 of this article, where tax on business profits, dividends, interest or royalties arising in a Contracting State is exempted or reduced in accordance with the taxation laws of that State, such tax which has been....
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....lt or will result for him in taxation not in accordance with this agreement, he may, notwithstanding the remedies provided by the national laws of ^31[those] States, present his case to the competent authority of the Contracting State of which he is a resident. The claim must be lodged within two years from the date of the assessment or of the withholding of tax at the source whichever is later. 2. The competent authority shall endeavour, if the objection appears to it to be justified and if it is not itself able to arrive at an appropriate solution to resolve the case by mutual agreement with the competent authority of the other Contracting State, with a view to the avoidance of taxation not in accordance with the agreement. 3. The competent authorities of the Contracting States shall endeavour to resolve by mutual agreement any difficulties or doubts arising as to the interpretation or application of the agreement. They may also consult together for the elimination of double taxation in cases not provided for in the agreement. 4. The competent authorities of the Contracting States may communicate with each other directly for the purpose of reaching an agreement in the se....
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....s soon as possible. 2. This Agreement shall enter into force on the date of the exchange of the instruments of ratification and its provisions shall have effect: (a) in India, in respect of income assessable for any taxable period ("previous year") commencing on or after the 1st day of April, 1977. (b) in Italy, in respect of income assessable for any taxable period commencing on or after the 1st January, 1977. 3. The existing Agreement for the avoidance of double taxation of income of enterprise operating aircraft dated the 3rd February, 1970, shall cease to have effect upon the entry into force of this agreement. ARTICLE 30 TERMINATION This Agreement shall remain in force ^35[indefinitely, but] either of the Contracting States may on or before 30th June in any calendar year beginning after the expiration of a period of five years from the date of its entry into force give to the other Contracting State, through diplomatic channels, written notice of termination. In such event, the agreement shall cease to have effect: (a) in India, in respect of income assessable for any taxable period ("previous year") commencing on or after the 1st d....
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....ncludes fees for technical services; (e) that, with reference to article 24, paragraph 4, " tax exempted or reduced " ^43[means, in] the case of India, 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 under:- (i) sections 10(4), 10(4A), 10(15)(iv), 32A, 33A, 80HH, 80J and 80K of the Income-tax Act, 1961, (43 of 1961), so far as they were in force on and have been modified since the date of signature of this agreement or have been modified only in minor respects so as not to affect their general character; (ii) any other provision which may subsequently be made granting an exemption or reduction from tax which is agreed by the competent authorities of the Contracting States to be of a substantially similar character if it has not been modified thereafter or has been modified only in minor respects so as not to affect its general character. (f) that, with reference to article ^44[26 paragraph 1, the] expression " notwithstanding the remedies provided by the national laws " means that the mutual agreement procedure is not alter....
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....e 12th January, 1981, and the Protocol to the agreement signed in Rome on the 12th January, 1981, and to state that in para (e) of the Protocol after the word " payable " appearing in the third line, the words" ^53[in respect of taxable]' have been added before the words ' as Indian tax '. The English text will now read as "payable in respect of taxable year as Indian tax". The corresponding Italian text will read: "corrisposte in relazione ad un anno imponibile come imposta Indiana". The corresponding Hindi text reads: "Kishi kar yogya varsh kay sambhand may bhartiya kar ke roop may deye". I have the honour to propose that the letter and your Excellency's reply concurring therein will constitute an integral part of the Protocol to the agreement mentioned above. " I have the honour to inform you that the Government of Italy agrees on the contents of the letter. Yours Sincerely, Sd/- (Amb. Renato Ruggiero) Mr. N. Subramanian, Additional Secretary, Deptt. of Revenue, Ministry of Finance, Govt. of India. ^54[New Delhi] [No. 6647/F. No. 501/10/73-FTD] V. U. ERADI, Jt. Secy. ******....
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....(E) dated 31-03-1987 before it was read as, "royalities" 20. Corrected vide Notification No. G.S.R. 346(E) dated 31-03-1987 before it was read as, "18, and 20" 21. Corrected vide Notification No. G.S.R. 346(E) dated 31-03-1987 before it was read as, "abroad" 22. Corrected vide Notification No. G.S.R. 346(E) dated 31-03-1987 before it was read as, "Director" 23. Corrected vide Notification No. G.S.R. 346(E) dated 31-03-1987 before it was read as, "sub-division" 23A. Corrected vide Notification No. G.S.R. 346(E) dated 31-03-1987 before it was read as, "sub-division" 23B. Corrected vide Notification No. G.S.R. 346(E) dated 31-03-1987 before it was read as, "sub-division" 23C. Corrected vide Notification No. G.S.R. 346(E) dated 31-03-1987 before it was read as, "sub-division" 24. Corrected vide Notification No. G.S.R. 346(E) dated 31-03-1987 before it was read as, "organisation." 25. Corrected vide Notification No. G.S.R. 346(E) dated 31-03-1987 before it was re....