TaxTMI 
TaxTMI 
Convnention between the Government of Republic of India and the Government of the Hungarian People's Republic for the avoidance of double taxation with respect to taxes on income
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.... India. ANNEXURE CONVENTION BETWEEN THE GOVERNMENT OF THE REPUBLIC OF INDIA AND THE GOVERNMENT OF THE HUNGARIAN PEOPLE'S REPUBLIC FOR THE AVOIDANCE OF DOUBLE TAXATION WITH RESPECT TO TAXES ON INCOME. The Government of the Republic of India and the Government of the Hungarian People's Republic: Desiring to further expand and facilitate mutual economic relations, have resolved to conclude a Convention for the avoidance of double taxation with respect to taxes on income and 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. This Convention shall apply to taxes on income imposed on behalf of each Contracting State or of its political sub-divisions or local authorities, irrespective of the manner in which they are levied. 2. The taxes to which this Convention shall apply are: (a) In the case of India: (1) income-tax including any surcharge thereon; (2) surtax; (hereinafter referred to as " Indian tax "). (b) In the case of the Hungarian People....
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....n, respectively, an enterprise carried on by a resident of a Contracting State and an enterprise carried on by a resident of a Contracting State and an enterprise carried on by a resident of the other Contracting State; (g) the term " national " of a Contracting State means: (i) any individual possessing the nationality of a Contracting State; (ii) any legal person, partnership or association deriving its status as such from the law in force in a Contracting State; (h) 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 ^7[aircraft] is operated solely between the places in the other Contracting State; (i) the term " competent authority " means, in the case of India, the Central Government in the Ministry of Finance (Department of Revenue); and in the case of the Hungarian People's Republic, the Ministry of Finance. 2. In the application of the provisions of this Convention by one of the Contracting States, any term not defined herein shall, unless the context otherwise requires, have the me....
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....atural resources; (g) a building site or construction, installation or assembly project or supervisory activities in connection therewith, where such site, project or supervisory activity continues for a period of more than six months, or where such project or supervisory activity, being incidental to the sale of machinery or equipment, continues for a period not exceeding 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. Notwithstanding the preceding provisions of this Article, the term " permanent establishment " shall be deemed not 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 merchandis....
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....te either company a permanent establishment of the other. ARTICLE 6 INCOME FROM IMMOVABLE PROPERTY 1. Income from immovable property may be taxed in the Contracting State in which such property is situated. 2. The term " immovable property " shall be defined in accordance with the law of the Contracting State in which the property is situated. The term shall in any case include property accessory to immovable property, livestock and 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, ^8[oil wells], quarries and other places of extraction of natural resources, Ships, boats and aircraft shall not be ^9[regarded] as immovable property. 3. The provisions of paragraph 1 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, shall also apply to the income from immovable property of an enterprise and to income from immovable property used for the performance of p....
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....ent 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, knowhow or other rights, or by way of commission or other charges, for specific services performed or for management, or except in the case of a banking enterprise, by way of interest on moneys lent to the permanent establishment. Likewise, no account shall be taken, in the determination of the profits of a permanent establishment, for amounts charged (otherwise than towards reimbursements 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, know-how or other rights, or by way of commission or other charges for specific services performed or for management, or, except in the case of a banking enterprise, by way of interest on moneys lent to the head office of the enterprise or any of its other offices. 5. No profits shall be attributed to a permanent establishment by reason of the mere purchase by that permanent establishment of goods or merchandise for the purpos....
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....which would have accrued to the enterprise of the first-mentioned State if the conditions made between the two enterprises had been those which would have been made between independent enterprises, then that other State shall make an appropriate adjustment to the amount of the tax charged therein on those profits. In determining such adjustment, due regard shall be had to the other provisions of this Convention and the competent authorities of the Contracting States shall, if necessary, consult each other. ARTICLE 10 DIVIDENDS 1. Dividends paid by a company which is a resident of a Contracting State to a resident of the other Contracting State may be taxed in that other State. 2. However, such dividends may also be taxed in the Contracting State of which the company paying the dividends is a resident, and according to the laws of that State, but if the recipient is the beneficial owner of the dividends and the dividends relate to a new contribution, the tax so charged shall not exceed fifteen per cent. of the gross amount of the dividends if the beneficial owner is a company which owns at least ten per cent. of the shares of the company paying the dividends. This par....
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....in the Contracting State in which it arises, and according to the laws of that State, but if the recipient is the beneficial owner of the interest and the interest is paid in respect of a loan or debt first created after the date of entry into force of this Convention, the tax so charged shall not exceed 15 per cent. of the gross amount of interest. 3. Notwithstanding the provisions of paragraph 2, -- (a) interest arising in a Contracting State shall be exempt from tax in that State provided it is derived and beneficially owned by: (i) the Government, a political sub-division or a local authority of the other Contracting State; or (ii) the Central Bank of the other Contracting State; (b) interest arising in a Contracting State shall be exempt from tax in that State if it is beneficially owned by a resident of the other Contracting State and is derived in connection with a loan or credit extended or endorsed by: (i) in the case of Hungarian People's Republic, the Magyar Kulkereskedelmi Bank Rt., to the extent such interest is attributable to financing of exports and imports only; (ii) in the case of India, the Export-Impor....
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....nt in the absence of such ^15[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 Convention. ARTICLE 12 ROYALTIES AND FEES FOR TECHNICAL SERVICES 1. Royalties and fees for technical services arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State. 2. However, such royalties and fees for technical services may also be taxed in the Contracting State in which they arise and according to the law of that State; provided that where the royalties or fees for technical services are paid to a resident of the other Contracting State who is the beneficial owner thereof and they are paid in respect of a right or property which is first granted, or under a contract which is signed, after the date of entering into force of this Convention, the tax so charged shall not exceed,-- (a) in the case of royalties, 40 per cent. of the gross amount thereof; (b) in the case of fees for technical services, 20 ....
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....e, then the royalties or fees for technical services shall be deemed to arise in the Contracting State in which the permanent establishment or the fixed base is situated. 7. Where, owing to a special relationship between the payer and beneficial owner or between both of them and some other person, the amount of the royalties or fees for technical services paid exceeds for whatever reason the amount which would have been paid 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 Convention. ARTICLE 13 CAPITAL GAINS 1. Gains derived by a resident of a Contracting State from the alienation of immovable property referred to in Article 6 and situated in the other Contracting State may be taxed in the other State. 2. Gains from the alienation of movable property forming part of the business property of a permanent establishment which an enterprise of a Contracting State has in the other Contracting State or of movable property pertaining to a fixed....
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....other Contracting State. If the employment is so exercised, such remuneration as is derived therefrom may be taxed in that other Contracting State. 2. Notwithstanding the provisions of paragraph 1, remuneration derived by a resident of a Contracting State in respect of an employment exercised in the other 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 relevant " previous year " or " taxable year ", as the case may be, 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 aboard a ship or aircraft operated in international traffic may be taxed in the Contracting State in which the place of effective management of the enterprise is situated. ARTICLE 16 DIRECTORS' FEES Directors' fees and similar payments d....
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....ension) paid by the Government of the Hungarian People's Republic to any individual who is a citizen of the Hungarian People's Republic to any individual who is a citizen of the Hungarian People's Republic 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 one of the Contracting States to any individual shall be taxable in that Contracting State. 4. The provisions of paragraphs 1, 2 and 3 of this Article shall not apply to payments in respect of services rendered in connection with any business carried on by the Government of either of the Contracting States for the purposes of profit. 5. For the purposes of this Article, the term " Government " shall include any State Government, a political sub-division or a local authority of either Contracting State and, in particular, the Reserve Bank of India and the National Bank of Hungary. ARTICLE 20 STUDENTS 1. An individual who is or was immediately before visiting the other Contracting State a resident of a Contracting State and who visits the other Contracting State solely as a student at an approved ....
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....racting State or of a university or other approved institution situated in that other Contracting State, visits that other Contracting State for the primary purpose of teaching or engaging in research, or both at a university or other approved institution shall be exempt from tax in that other Contracting State on his income from personal services for teaching or research at the university or the approved institution, for a period not exceeding 24 months from the date of his arrival in the latter Contracting State. 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. 3. For the purposes of paragraph 1, " approved institution " means an educational or research institution which has been approved in this regard by the competent authority of the concerned Contracting State. ARTICLE 22 OTHER INCOME 1. Items of income of a resident of a Contracting State, wherever arising, not dealt with in the foregoing Articles of this Convention shall be taxable only in that State. 2. The provisions of paragraph 1 shall not apply to income, other than income from immovable property a....
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....so taken into account. ARTICLE 24 NON-DISCRIMINATION 1. The nationals of a Contracting State shall not be 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 and under the same conditions are or may be subjected. 2. The taxation on a permanent establishment which an enterprise of a Contracting State has in the 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 obliging a Contracting State to grant to residents of the other Contracting State any personal allowances, reliefs and reductions for taxation purposes on account of civil status or family responsibilities which it grants to its own residents. 3. Enterprises of a Contracting State, the capital of which is wholly or partly owned or controlled, directly or indirectly, by one or more residents of the other Contracti....
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....ective taxation laws and obtained in the normal course of administration) as is necessary for carrying out the provisions of this Convention or for the prevention of fraud or prevention or detection of evasion or avoidance of the taxes or the administration of statutory provisions against legal avoidance in relation to the taxes which are the subject of this Convention. Any information or documents so exchanged shall be treated as secret but may be disclosed to persons (including a court or administrative body) concerned with assessment, collection, enforcement, investigation or prosecution in respect of taxes which are the subject of this Convention or any fraud connected therewith, or to persons with respect to whom the information or document relates. 2. The exchange of information or documents shall be either on a routine basis or on request with reference to particular cases or both. The competent authorities of the Contracting States shall agree from time to time on the list of the information or documents which shall be furnished on a routine basis. 3. In no case shall the provisions of paragraph 1 be construed so as to impose on a Contracting State the obligation: ....
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....n. In witness whereof the undersigned, being duly authorised thereto, have signed the present Convention. Done in duplicate at New Delhi this Thirtieth day of October one thousand nine hundred and eighty-six in the English language. FOR THE GOVERNMENT OF THE REPUBLIC OF INDIA FOR THE GIVERNMENT OF THE HUNGARIAN PEROPLE's REPUBLC Sd/- VISHWANATH PRATAP SINGH FINANCE MINISTER Sd/- Dr. ISTVAN HETENYI FINANCE MINISTER PROTOCOL The Government of the Republic of India and the Government of the Hungarian People's Republic. Having entered into a Convention for the Avoidance of Double Taxation with respect to Taxes on Income. Have agreed, at the time of signing the said Convention, on the following provisions which shall constitute an integral part thereof: Concerning Article 5, ^21[the] term " permanent establishment " shall be deemed not to include the use of facilities or the maintenance of a stock of goods or of merchandise solely for the purpose of storage, display or delivery of spare parts or components required by way of replacement under any warranty provisions of a contract under which any machinery or equipment is suppl....