TMI BlogConvention between the Republic of India and the Kingdom of Norway for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and on capitalX X X X Extracts X X X X X X X X Extracts X X X X ..... of 1957), section 90 of the Income-tax Act, 1961 (43 of 1961) and Central Government hereby directs that all the provisions of the said Convention shall be given effect to in the Union of India. ANNEXURE CONVENTION BETWEEN THE REPUBLIC OF INDIA AND THE KINGDOM OF NORWAY FOR THE AVOIDANCE OF DOUBLE TAXATION AND 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 Kingdom of Norway desiring to conclude a Convention for the avoidance of double taxation and prevention of fiscal evasion with respect of 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. The existing taxes to which the Convention shall apply are in particular: (a) In India: (i) the income-tax including any surcharge thereon imposed under the Income-tax Act, 1961 (43 of 1961); (ii) the surtax imposed under the Companies (Profits) Surtax Act, 1964 (7 of 1964); (iii) the wealth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ay exercise her rights with respect to the seabed and sub-soil and their natural resources; the term does not comprise Svalbard, Jan Mayen and the Norwegian dependencies outside Europe; (c) the terms a Contracting State and the other Contracting State mean India or Norway as the context requires; (d) the term tax means Indian tax or Norwegian tax, as the context requires, but shall not include any amount which is payable in respect of any default or omission in relation to the taxes to which this Convention applies or which represents a penalty imposed relating to those taxes; (e) the term person includes an individual, a company and any other entity which is treated as a taxable unit under the taxation laws in force in the respective Contracting States; (f) the term company means any body corporate or any entity which is treated as a company or body corporate under the taxation laws in force in the respective Contracting States; (g) 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 c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l 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. Article 5 PERMANENT ESTABLISHMENT 1. For the purposes of this Convention, the term permanent establishment means a fixed place of business through which the business of an enterprise is wholly or partly carried on. 2. The term permanent establishment includes especially: (a) a place of management; (b) a branch; (c) an office; (d) a factory; (e) a workshop; (f) a mine, an oil or gas well, a quarry or any other place of extraction of natural resources; (g) a warehouse in relation to a person providing storage facilities for others; (h) a farm, plantation or other place where agricultural, forestry, plantation or related activities are carried on; (i) a premises used as a sales outlet or for receiving or soliciting orders; (j) an installation or structure used for the exploration of natural resources; (k) a buildin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... goods or merchandise for the enterprise; (b) he has no such authority, but habitually maintains in the first-mentioned State a stock of goods or merchandise from which he regularly delivers goods or merchandise on behalf of the enterprise; or (c) he habitually secures orders in the first-mentioned State, wholly or almost wholly for the enterprise itself or for the enterprise and other enterprise controlling, controlled by, or subject to the same common control as, that enterprise. 5. An enterprise of a Contracting State shall not be deemed to have a permanent establishment in the other Contracting State merely because it carries on business in that other 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. However, when the activities of such an agent are devoted wholly or almost wholly on behalf of that enterprise itself or on behalf of that enterprise and other 5 [ enterprises ] controlling, controlled by, or subject to the same common control as, that enterprise, he shall not be considered as an agent of an independent status within the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anent establishment; (b) sales in that other State of goods or merchandise of the same or similar kind as those sold through that permanent establishment; or (c) other business activities carried on in that other State of the same or similar kind as those effected through that permanent establishment. 2. Subject to the provisions of paragraph 3, 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 enterprise of which it is a permanent establishment. 3. In the determination of the profits of a permanent establishment, there shall be allowed as deductions expenses which are incurred for the purposes of the permanent establishment, including executive and general administrative expenses so incurred, whether in the State in which the permanent establishment is situated or el ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t be affected by the provisions of this article. Article 8 AIR TRANSPORT 1. Profits derived by an enterprise of a Contracting State from the operation of aircraft in international traffic shall be taxable only in that State. 2. The provisions of paragraph 1 shall also apply to profits from the participation in a pool, a joint business or an international operating agency. 3. The provisions of paragraphs 1 and 2 shall apply to profits derived by the joint Norwegian, Danish and Swedish air transport consortium, Scandinavian Airlines System (SAS), but only in so far as profits derived by Det Norske Luftfartsselskap A/S (DNL), the Norwegian partner of the Scandinavian Airlines System (SAS), are in proportion to its share in that organisation. 4. For the purposes of this article, interest on funds connected with the operation of aircraft in international traffic shall be regarded as profits derived from the operation of such aircraft, and the provisions of article 12 shall not apply in relation to such interest. 5. The term operation of aircraft shall mean business of transportation by air of passengers, mail, livestock or goods c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Article 10 ASSOCIATED ENTERPRISES Where (a) an enterprise of a Contracting State participates directly or indirectly in the management, control or capital of an enterprise of the other Contracting State, or (b) the same persons participate directly or indirectly in the management, control or capital of an enterprise of a Contracting State and an enterprise of the other Contracting State, and in either case conditions are made or imposed between the two enterprises in their commercial or financial relations which differ from those which would be made between independent enterprises, then any profits which would, but for those conditions, have accrued to one of the enterprises, but, by reason of those conditions, have not so accrued, may be included in the profits of that enterprise and taxed accordingly. Article 11 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 accord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this Convention by a company which is a resident of a Contracting State, and beneficially owned by a resident of the other Contracting State. Article 12 INTEREST 1. Interest 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 interest may also be taxed 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 it 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 the 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 Contracting State to the extent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ence of such relationship, the provisions of this article shall apply only to the last-mentioned amount. In such a case, the excess part of the payments shall remain taxable according to the laws of each Contracting State, due regard being had to the other provisions of this Convention. Article 13 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 laws of that State. But in so far as fees for technical services are considered, to the extent such fees are paid in respect of a contract which is signed after the date of entry into force of this Convention, the tax so charged shall not exceed 20 per cent. of such fees. For the purposes of this paragraph, if a lower rate of Indian tax is agreed upon with any other State than Norway after the entry into force of this Convention, such rate shall be applied. 3. The term royalties as used in this article m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er or between both of them and some other persons, the amount of royalties or fees for technical services paid exceeds 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 such a case, the excess part of the payments shall remain taxable according to the laws of each Contracting State, due regard being had to the other provisions of this Convention. Article 14 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 that 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 base available to a resident of a Contracting State in the other Contracting State for the purpose of performing independent personal services, including such gains from the alienation of such a permanent establishment (along or with the whole enterp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ect to the provisions of articles 17, 18, 19, 20, 21 and 22, 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, 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 that other State for a period or periods not exceeding in the aggregate 183 days in any two consecutive years of income; and (b) the remuneration is paid by, or on behalf of, an employer who is a resident of the State of which the recipient is a resident; and (c) the remuneration is not reasonably connected with the activities of a permanent establishment or a fixed base which the employer has in the other State. 3. Notwithstanding the preceding provisions of this article, remuneration derived in resp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ION AND PENSIONS IN RESPECT OF GOVERNMENT SERVICE 1. (a) Remuneration, other than a pension paid by a Contracting State or a political sub-division or a local authority thereof to an individual in respect of services rendered to that State or sub-division or authority thereof in the discharge of functions of a governmental nature shall be taxable only in that State. (b) However, such remuneration shall be taxable only in the other Contracting State if the services are rendered in that State and the individual is a resident of that State who: (i) is a national of that State; or (ii) did not become a resident of that State solely for the purpose of rendering the services. 2. (a) Any pension paid by, or out of funds created by a Contracting State or a political sub-division or a local authority thereof to an individual in respect of services rendered to that State or sub-division or authority shall be taxable only in that State. (b) However, such pension shall be taxable only in the other Contracting State if: (i) the individual is a resident of, and a national of that other State; or (ii) such pension is exempt from tax in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provisions of paragraph 1 shall not apply to income, other than income from immovable property as defined in paragraph 2 of article 6, if the recipient of such income, being a resident of a Contracting State, carries on business in the other Contracting State 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 income is paid is effectively connected with such permanent establishment or fixed base. In such a case, the provisions of article 7 or article 15, as the case may be, shall apply. 3. Notwithstanding the provisions of paragraphs 1 and 2, items of income of a resident of a Contracting State not dealt with in the foregoing articles of this Convention and arising in the other Contracting State may also be taxed in that other State. Article 23 OFFSHORE ACTIVITIES 1. The provisions of this article have effect notwithstanding any other provision of this Convention. 2. A person who is a resident of a Contracting State and carries on activities offshore in the other Contracting State in connection w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... subsoil and their natural resources situated in the other Contracting State shall, to the extent that the duties are performed offshore in that other State, be taxable only in that other State provided that the employment offshore is carried on for a period exceeding 30 days in the aggregate in any 12 months' period. (b) Salaries, wages and similar remuneration derived by a resident of the Contracting State in respect of an employment exercised aboard a ship or aircraft engaged in the transportation of supplies or personnel to a location, or between locations, where activities connected with the exploration or exploitation of the seabed and subsoil and their natural resources are being carried on in a Contracting State, or in respect of an employment exercised aboard tugboats or other vessels operated auxiliary to such activities, shall be taxable only in the Contracting State in which the place of effective management of the enterprise is situated. Article 24 CAPITAL 1. Capital represented by immovable property referred to in article 6, owned by a resident of a Contracting State and situated in the other Contracting State may be taxed in that o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Where a resident of Norway derives items of income which, in accordance with the provisions of articles 9, 11, 12, 13, 14, paragraphs 5, 17, 22 and 23 may be taxed in India, Norway shall allow as a deduction from the tax on the income of that person an amount equal to the tax paid in India. Such deduction shall not, however, exceed that part of the tax, as computed before the deduction is given, which is attributable to such items of income derived from India. 5. For the purposes of the deduction referred to in paragraph 4, the term income-tax paid in India shall be deemed to include any amount which would have been payable as Indian tax under the law of India and in accordance with this Convention for any year but for an exemption from, or reduction of, tax granted for that year under:- (a) sections 10(4), 10(4A), 10(4B), 10(6)(viia), 10(15)(iv) and 80L 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 the signature of this Convention, or have been modified only in minor respects so as not to affect their general character; or (b) any other provisions which may be enacted after 11th No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of that other State carrying on the same activities in the same circumstances and under the same conditions. 4. Nothing containing in this article shall be construed as obliging a Contracting State to grant to persons not resident in that State any personal allowances, reliefs, reductions and deductions for taxation purposes which are by law available only to persons who are so resident. 5. Except where the provisions of article 9, paragraph 7 of article 12 or paragraph 7 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. 6. Enterprises of a Contracting State the capital of which is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the sense of the preceding paragraphs. When it seems advisable in order to reach an agreement to have an oral exchange of options, such exchange may take place through a Commission consisting of representatives of the competent authorities of the Contracting States. Article 28 EXCHANGE OF INFORMATION 1. The competent authorities of the Contracting States shall exchange such information (including documents) as is necessary for carrying out the provisions of the Convention or of the domestic laws of the Contracting States concerning taxes covered by the Convention, in so far as the taxation thereunder is not contrary to the Convention, in particular for 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. However, if the information is originally regarded as secret in the transmitting State, it shall be disclosed only to persons or authorities (including courts and administrative bodies) involved in the assessment or collection of, the enforcemen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t will be sent by the Central Board of Direct Taxes, Department of Revenue to the Ministry of Finance, Government of the Kingdom of Norway, and, in the case of Norwegian tax, the request will be sent by the Ministry of Finance to the Central Board of Direct Taxes, Department of Revenue, in India. 5. Where the tax claim has not become final by reason of being subject to appeal or any other proceeding, a Contracting State may, in order to protect its revenues, request the other Contracting State to take such interim measures as are lawful under the laws of that other Contracting State. 6. A request for assistance in collection of taxes due from a taxpayer shall be made only if adequate assets of that taxpayer are not available for recovering the taxes from him in the Contracting State making the request. 7. The Contracting State in which tax is recovered in pursuance of paragraphs 1, 2 and 5 of this article shall immediately thereafter remit the amount so recovered to the other Contracting State. Article 30 DIPLOMATIC AND CONSULAR OFFICIALS Nothing in this Convention shall affect the fiscal privileges of diplomatic or consular officials u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eighty six in the Hindi, Norwegian and English languages, all texts being equally authentic. In case of divergence between any of the texts, the English text shall be the operative one. For the Government of For the Government of the Republic of India the Kingdom of Norway (Sd.) Chand K. Tikku (Sd.) Kaare Daehlen PROTOCOL At the signing today of the Convention between the Government of the Republic of India and the Government of the Kingdom of Norway for the avoidance of double taxation and prevention of fiscal evasion with respect to taxes on income and capital, the undersigned have agreed upon the following provisions which shall form an integral part of the Convention. 1. To article 16. Where an enterprise engaged in the operation of ships or aircraft in international traffic is carried on by an unlimited partnership one or more partners of which are residents of a Contracting State and one or more partners of which are residents of the other Contracting State and the competent auth ..... X X X X Extracts X X X X X X X X Extracts X X X X
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