Agreement between the
Republic of India and the Islamic Republic of Pakistan for the avoidance of
double taxation of income derived from International Air Transport
G.S.R. No. 792(E), dtd. 29.08.1989.
the annexed Agreement between the Republic of India and the Islamic Republic of
Pakistan for the avoidance of double taxation of income derived from
international air transport has entered into force on the 1st day of August,
1989, on the notification by both the Contracting States to each other of
completion of the procedures required by their respective laws, as required by
article 5 of the said Agreement.
therefore, in exercise of the powers conferred by section 90 of the Income-tax
Act, 1961 (43 of 1961), and section 24A of the Companies (Profits) Surtax Act,
1964 (7 of 1964), the Central Government hereby directs that all the provisions
of the said Agreement shall be given effect to in the Union of India.
BETWEEN THE REPUBLIC OF INDIA AND THE ISLAMIC REPUBLIC OF PAKISTAN FOR THE
AVOIDANCE OF DOUBLE TAXATION OF INCOME DERIVED FROM INTERNATIONAL AIR
Government of the Republic of India and the Government of the Islamic Republic
to conclude an agreement for the avoidance of double taxation of income derived
from international air transport:
agreed as follows:
1. This Agreement shall
apply to taxes on income imposed on behalf of a Contracting State or of its
political sub-divisions or local authorities irrespective of the manner in
which they are levied.
2. The existing taxes to
which this Agreement shall apply are:
a. In the case of
referred to as " Pakistan tax ");
b. In the case of India:
income-tax including surcharge thereon; and
referred to as " Indian tax ").
3. This Agreement shall
also apply to any identical or substantially similar taxes which are imposed after
the date of signature of this Agreement in addition to, or in place of, the
taxes referred to in paragraph 2 of this article. The competent authority of a
Contracting State shall, as soon as possible or at least at the end of each
year, notify the other of any substantive changes which are made in its
1. In this Agreement,
unless the context otherwise requires:
a. the terms " a
Contracting State " and " the other Contracting State " mean
Pakistan or India, as the context requires;
b. the term " tax
" means " Pakistan tax ", or " Indian tax ", as the
c. the term "
enterprise of a Contracting State " means:
airline designated by the Government of that State in pursuance of the
Agreement between the Government of the Islamic Republic of Pakistan and the
Government of the Republic of India relating to air services, dated 16th July,
1976 (as amended or revised from time to time); or
airline which is authorised by the Government of that State by a general or special
arrangement between the two Contracting States to operate chartered flights
between or beyond their territories;
d. the term "
international traffic " means any transport by an aircraft operated by an
enterprise of a Contracting State, except when the aircraft is operated solely
between places in the other Contracting State;
e. the term "
competent authority " means:
the case of India, the Central Government in the Ministry of Finance
(Department of Revenue) or their authorised representative; and
the case of Pakistan, the Central Board of Revenue or their authorised
2. As regards the
application of the Agreement by a Contracting State, any term not defined
therein shall, unless the context otherwise requires, have the meaning which it
has under the law of that State concerning the taxes to which the Agreement
OF DOUBLE TAXATION
1. Profits derived by an
enterprise of a Contracting State from the operation of aircraft in
international traffic shall be exempt from tax in the other Contracting State.
2. The provisions of
paragraph 1 shall also apply to the profits from the participation in a pool, a
joint business or an international operating agency.
3. For the purposes of
paragraph 1, interest on funds connected with the operation of aircraft in
international traffic shall be regarded as profits derived from the operation
of such aircraft.
laws in force in either of the Contracting States will continue to govern the
assessment and taxation of income in the Contracting States except where an
express provision to the contrary is made in this Agreement.
Contracting State shall notify to the other the completion of the procedure
required by its law for the bringing into force of this Agreement. The
Agreement shall enter into force on the first day of the second month following
the month in which the later of these notifications has been given and shall
have effect in respect of income derived on or after the 1st day of July, 1986.
1. This Agreement shall
continue in effect indefinitely but either Contracting State may, on or before
the thirtieth day of June in any calendar year beginning not earlier than the
expiry of a period of five years from the date of its entry into force, give
notice of termination to the other Contracting State and in such event this
Agreement shall cease to be effective:
a. In Pakistan, in
respect of any assessment year on or after the 1st day of July of the second calendar
year following the year in which the notice is given;
b. In India, in respect
of any assessment year commencing on or after the 1st day of April of the
second calendar year following the year in which the notice is given.
2. In case a
comprehensive agreement for the avoidance of double taxation with respect to
taxes on income, including inter alia, income derived from International Air
Transport is concluded between the Contracting States, then, notwithstanding
anything to the contrary in paragraph 1, this Agreement shall cease to have
effect from the date on which such comprehensive Agreement enters into force.
the undersigned, duly authorised thereto, have signed this Agreement.
at Islamabad on this thirty-first day of December, one thousand nine hundred
and eighty eight in two originals, each in the Hindi and English languages,
both texts being equally authentic. In case of divergence between the two
texts, the English text shall be the operative one.
the Government of the For the Government of the Islamic
of India, Republic of Pakistan
S. K. Singh, (Sd.) Niaz A. Naik,
of India to Pakistan. Ambassador of Pakistan to India.
P. K. Appachoo,
Secretary to the Government of India.
8438/F. No. 501/9/76-FTD]