TaxTMI 
TaxTMI 
Agreement between the Government of the Republic of India and the Government of the State of Israel for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes
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.... provisions of the said convention shall be given effect to in the Union of India. ANNEXURE CONVENTION BETWEEN THE REPUBLIC OF INDIA AND THE STATE OF ISRAEL FOR THE AVOIDANCE OF DOUBLE TAXATION AND FOR THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME AND ON CAPITAL The Government of the Republic of India and the Government of the State of Israel, Desiring to conclude a Convention for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and on capital, 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 a contracting State or of its political sub-divisions or local authorities and to taxes on capital imposed on behalf of a contracting State, irrespective of the manner in which they are levied. 2. There shall be regarded as taxes on income and on capital all taxes imposed on total income, on total capital, or on elements of income or of capital, including taxes on gains from the alienati....
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.... the terms "a contracting State" and "the other Contracting State" mean the Republic of India or the State of Israel as the context requires; (f) the terms "enterprise of a contracting State" and "enterprise of the other contracting State" mean respectively 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 terms `international traffic' means any transport by a ship or aircraft operated by an enterprise which is a resident of a contracting State, except when the ship or aircraft is operated solely between places in the other contracting State; (h) the term `competent authority' means : (i) in India : the Central Government in the Ministry of Finance (Department of Revenue) or their authorised representative; (ii) in Israel : the Minister of Finance or his authorised representative; (i) the term "national" 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 laws....
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....interests); (b) if the State in which he has the centre of vital interests cannot be determined, or if he has not a permanent home available to him in either State, he shall be deemed to be a resident of the State in which he has an habitual abode; (c) if he has an habitual abode in both States or in neither of them, he shall be deemed to be a resident of the State of which he is a national; (d) if he is a national of both States or of neither of them, the competent authorities of the contracting States shall settle the question by mutual agreement. 3. Where by reason of the provisions of paragraph 1 a person other than an individual is a resident of both contracting States, then it shall be deemed to be a resident of the State in which its place of effective management is situated. If the State in which its place of effective management is situated cannot be determined, then the competent authorities of the contracting States shall settle the question by mutual agreement. ARTICLE 5 PERMANENT ESTABLISHMENT 1. For the purposes of this Convention, the term "permanent establishment" means a fixed place of business through whi....
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....exercised through a fixed place of business, would not make this fixed place of business a permanent establishment under the provisions of that paragraph. 6. An enterprise shall not be deemed to have a permanent establishment in a contracting State merely because it carries on business in that State through a broker, general commission agent or any other agent of an independent status, provided that such persons are acting in the ordinary course of their business, and in their commercial and financial relations with the enterprise, no conditions are agreed or imposed which differ from those usually agreed between independent persons. 7. The fact that a company which is a resident of a contracting State controls or is controlled by a company which is a resident of the other contracting State, or which carries on business in that other State (whether through a permanent establishment or otherwise), shall not of itself constitute either company a permanent establishment of the other. ARTICLE 6 INCOME FROM IMMOVABLE PROPERTY 1. Income derived by a resident of a contracting State from immovable property (including income from agriculture or forestry) situated in the other....
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....ofar as it has been customary in a contracting State to determine the profits to be attributed to a permanent establishment on the basis of an apportionment of the total profits of the enterprise to its various parts, nothing in paragraph 2 shall preclude that contracting State from determining the profits to be taxed by such an apportionment as may be customary; the method of apportionment adopted shall, however, be such that the result shall be in accordance with the principles contained in this article. 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 enterprise. 6. For the purposes of the preceding paragraphs, the profits to be attributed to the permanent establishment shall be determined by the same method year by year unless there is good and sufficient reason to the contrary. 7. Where profits include items of income which are dealt with separately in other articles of this Convention, the provisions of those articles shall not be affected by the provisions of this article. ARTICLE 8 SHIPPING AND AIR TRANSPORT 1. Profits from the operation of ships an....
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....tate--and taxes accordingly--profits on which an enterprise of the other contracting State has been charged to tax in that other State and the profits so included are profits 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 where that other State considers the adjustment justified. 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 the tax so charged shall not excee....
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....graphs 1 and 2, interest arising in a contracting State and paid to a resident of the other contracting State shall be taxable only in that other State, if the interest is paid in respect of-- (a) a bond, debenture or other similar obligation of the Government of the first-mentioned contracting State or a political sub-division or local authority thereof, or (b) a loan made, refinanced, guaranteed or insured, or a credit extended, refinanced, guaranteed or insured by-- (i) in the case of India, the Reserve Bank of India, (ii) in the case of Israel, the Bank of Israel, or (iii) other governmental agencies or lending institutions as may be specified and agreed in an exchange of notes between the competent authorities of the contracting States. 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 de....
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....oss amount of the royalties. 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 any patent, trade mark, design or model, plan, secret formula or process, or for information concerning industrial, commercial or scientific experience. 4. The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the royalties, being a resident of a contracting State, carries on business in the other contracting State in which the royalties arise, through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the right or property in respect of which the royalties are paid in effectively connected with such permanent establishment or fixed base. In such case the provisions of Article 7 or Article 15, as the case may be, shall apply. 5. Royalties shall be deemed to arise in a contracting State when the payer is that State itself, a political sub-division, a local authority or a resident of that State. ....
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....ct in respect of which the fees for technical services are paid is effectively connected with such permanent establishment or fixed base. In such case, the provisions of Article 7 or Article 15, as the case may be, shall apply. 5. Fees for technical services shall be deemed to arise in a contracting State when the services are rendered in that State and the payer is that State itself, a political sub-division, a local authority or a resident of that State. Where, however, the person paying the fees for technical services, whether he is a resident of a contracting State or not, has in a contracting State a permanent establishment or a fixed base in connection with which the liability to pay the fees for technical services was incurred, and such fees for technical services are borne by such permanent establishment or fixed base, then such fees for technical services shall be deemed to arise in the State in which the permanent establishment or fixed base is situated. 6. Where, by reason of special relationship between the payer and the beneficial owner or between both of them and some other person, the amount of fees for technical services paid exceeds the amount whi....
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....vable property situated in a Contracting State, may also be taxed in that state. 5. Gains derived by a resident of a contracting State from the sale, exchange or other disposition, directly or indirectly, or shares other than those mentioned in paragraph 4, or similar rights in a company which is a resident of the other contracting State may also be taxed in that other State. 6. Gains from the alienation of any property other than that referred to in paragraphs 1 to 5, shall be taxable only in the contracting State of which the alienator is a resident. ARTICLE 15 Independent personal services 1. Income derived by a resident of a contracting State in respect of professional services or other activities of an independent character shall be taxable only in that State except in the following circumstances, when such income may also be taxed in the other contracting State: (a) if he has a fixed base regularly available to him in the other contracting State for the purpose of performing his activities; in that case, only so much of the income as is attributable to that fixed base may be taxed in that other State; or (b) if his stay in the other State is f....
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...., such as a theatre, motion picture, radio or television artiste, or a musician, or as a sportsperson, from his personal activities as such exercised in the other contracting State, may be taxed in that other State. 2. Where income in respect of personal activities exercised by an entertainer or a sportsperson in his capacity as such accrues not to the entertainer or sportsman himself but to another person, that income may, notwithstanding the provisions of Articles 7, 15 and 16, be taxed in the contracting State in which the activities of the entertainer of sportsperson are exercised. 3. Notwithstanding the provisions of paragraph 1, income derived by an entertainer or a sportsperson who is a resident of a contracting State from his personal activities as such exercised in the other contracting State, shall be taxable only in the first-mentioned contracting State, if the activities in the other contracting State are supported wholly or substantially from the public funds of the first-mentioned contracting State, including any of its political sub-divisions or local authorities. 4. Notwithstanding the provisions of paragraph 2 and Articles 7, 15 and 16, where income in res....
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....ned State. This exemption shall be granted for a period that shall not exceed two years from the date on which the teacher or researcher first entered the first-mentioned State for the purpose of engaging in scientific research or for teaching. This article shall not apply to income from research if such research is undertaken not in the public interest but primarily for the private benefit of a specific person or persons. 2.(a) Payments which a student or business apprentice who is or was immediately before visiting a contracting State a resident of the other contracting State and who is present in the first-mentioned State solely for the purpose of his education or training receives for the purpose of his maintenance, education or training shall not be taxed in that State, provided that such payments arise from sources outside that State. (b) Payments which a student or business apprentice receives as remuneration from employment in the first-mentioned State, in an amount not exceeding a sum equivalent to 3,000 US dollars in the currency of the first mentioned State during any fiscal year shall be exempt from tax in the first-mentioned State. The benefit....
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....tracting State shall be taxable only in that State. ARTICLE 24 ELIMINATION OF DOUBLE TAXATION 1. Subject to the laws of Israel from time to time in force regarding the allowance as a credit against Israeli tax or tax paid in any country other than Israel (which shall not affect the general provision contained in this paragraph), Indian tax paid in respect of income derived from or capital owned in India shall be allowed as a credit against Israeli tax payable in respect of that income or capital. The credit shall not, however, exceed that portion of Israeli tax which the income or capital from sources within India bears to the entire income or capital, as the case may be, subject to Israeli tax. 2. Where a resident of India derives income or owns capital which, in accordance with the provisions of this convention, may be taxed in Israel, India shall allow : (a) as a deduction from the tax on the income of that resident, an amount equal to the income-tax paid in Israel, whether directly or by deduction. (b) as a deduction from the tax on the capital of that resident, an amount equal to the capital tax paid in Israel. Such deduction in....
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....provision of paragraph 3 of Article 7 of the Convention. 3. Except where the provisions of paragraph 1 of Article 9, paragraph 7 of Article 11, paragraph 6 of Article 12, or paragraph 6 of Article 13, apply, interest, royalties and other disbursements paid by an enterprise of a contracting State to a resident of the other contracting State shall, for the purpose of determining the taxable profits of such enterprise, be deductible under the same conditions as if they had been paid to a resident of the first-mentioned State. Similarly, any debts of an enterprise of a contracting State to a resident of the other contracting State shall, for the purpose of determining the taxable capital of such enterprise be deductible under the same conditions as if they had been contracted to a resident of the first-mentioned State. 4. 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 contracting State, shall not be subjected in the first-mentioned State of any taxation or any requirement connected therewith which is other or more burdensome than the taxation and connected requir....
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....or the prevention of fraud or evasion of such taxes. The exchange of information is not restricted by Article 1. Any information received by a Contracting State shall be treated as secret in the same manner as information obtained under the domestic laws of that State and shall be disclosed only to persons or authorities (including courts and administrative bodies) involved in the assessment or collection of, the enforcement or prosecution in respect of, or the determination of appeals in relation to, the taxes covered by the Convention. Such persons or authorities shall use the information only for such purposes. They may disclose the information in public court proceedings or in judicial decisions. 2. In no case shall the provisions of paragraph 1 be construed so as to impose on a Contracting State the obligation : (a) to cany out administrative measures at variance with the laws and administrative practice of that or of the other Contracting State; (b) to supply information which is not obtainable under the laws or in the normal course of the administration of that or of the other Contracting State ; (c) to supply information which would disclo....
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....interest, royalties and fees for technical services, as defined in Articles 10, 11, 12 and 13, respectively, for amounts paid or credited on or after the first day of April next following the calendar year in which the notice of termination is given; and (ii) in respect of taxes on income, and taxes on capital, for fiscal years beginning on or after the first day of April next following the calendar year in which the notice of termination is given; and (b) in the State of Israel : (i) in respect of taxes withheld at source on dividends, interest, royalties and fees for technical services, as defined in Articles 10, 11, 12 and 13, respectively, for amounts paid or credited on or after the first day of January next following the calendar year in which the notice of termination is given; and (ii) in respect of taxes on income, and taxes on capital, for taxable periods beginning on or after the first day of January, next following the calendar year in which the notice of termination is given. IN WITNESS WHEREOF the undersigned, duly authorised hereto, have signed this Convention. DONE at New Delhi on 29th January, 1996....