Turkmenistan
Notification
No. G. S. R. 567(E), dated 25th September, 1997.
Whereas
the annexed Convention between the Government of the Republic of India and the
Government of Turkmenistan for the avoidance of double taxation and the
prevention of fiscal evasion with respect to taxes on income and on capital has
entered into force on the seventh day of July, 1997, after the notification by
the Contracting States to each other of the completion of procedures required
by its law for bringing into force of the said Convention in accordance with
Article 30 of the said Convention;
Now,
therefore, in exercise of the powers conferred by section 90 of the Income-tax
Act, 1961 (43 of 1961), and section 44A of the Wealth-tax Act, 1957 (27 of
1957), the 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 GOVERNMENT OF REPUBLIC OF INDIA AND THE GOVERNMENT OF TURKMENISTAN
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 Turkmenistan 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 and
with a view to promoting economic cooperation between the two countries.
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 and on capital 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. 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 alienation of movable or immovable property, taxes on the total
amounts of wages or salaries paid by enterprises, as well as taxes on capital
appreciation.
3. The taxes to which
the Convention shall apply are in particular:
a. In Turkmenistan ;
i.
the
profits (income) tax;
ii.
the
personal income-tax from the individuals;
iii.
the
tax on natural resources;
iv.
the
tax on the property of the enterprises;
v.
the
payment for the lands,
(hereinafter
referred to as "Turkmen tax");
b. In India:
i.
the
income-tax including any surcharge thereon;
ii.
the
wealth-tax;
(hereinafter
referred to as "Indian tax").
1.
2.
3.
4. The Convention shall
apply also to any identical or substantially similar taxes which are imposed
after the date of signature of the Convention in addition to, or in place of,
the taxes referred to in paragraph 3. The competent authorities of the Contracting
States shall notify each other of significant changes which have been made in
their respective taxation laws.
Article
3
GENERAL
DEFINITIONS
1. For the purposes of
this Convention, unless the context otherwise requires:--
a. the term
"Turkmenistan" means Turkmenistan and, when used in a geographical
sense, includes any area beyond the territorial waters of Turkmenistan which in
accordance with international law and the laws of Turkmenistan is an area
within which Turkmenistan may exercise rights with respect to the sea bed and
subsoil and their natural resources;
b. the term
"India" means the territory of India and includes the territorial sea
and airspace above it, and other maritime zones in which India has sovereign
rights, other rights and jurisdictions, according to the Indian law and in
accordance with international law, including the UN Convention on the Law of
the Sea;
c. the term
"person" includes an individual, a company, a body of persons and any
other entity which is treated as a taxable unit under the taxation laws in
force in the respective Contracting States;
d. the term
"company" means any body corporate or any entity which is treated as
a body corporate for tax purposes;
e. 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;
f. the term
"international traffic" means any transport by a ship or aircraft
operated by an enterprise of a Contracting State, except when the ship or
aircraft is operated solely between places in the other Contracting State;
g. the term
"competent authority" means:--
i.
in
Turkmenistan, the Head of the Main State Tax Inspectorate or his authorised
representative;
ii.
in
India, the Central Government in the Ministry of Finance (Department of
Revenue) or their authorised representative;
a.
b.
c.
d.
e.
f.
g.
h. 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 in force in a Contracting State;
a.
b.
c.
d.
e.
f.
g.
h.
i. the term "fiscal
year" means:
i.
in
the case of Turkmenistan, the calendar year from 1st of January to 31st of
December of the year under review;
ii.
in
the case of India, the "previous year" as defined under section 3 of
the Income-tax Act, 1961;
a.
b.
c.
d.
e.
f.
g.
h.
i.
j. the term
"tax" means Indian tax or Turkmen 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.
1.
2. As regards the
application of the Convention 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 Convention
applies.
Article
4
RESIDENT
1. For the purposes of
this Convention, the term "resident of a Contracting State" means any
person who, under the laws of that State, is liable to tax therein by reason of
his domicile, residence, place of management or any other criterion of a similar
nature. But this term does not include any person who is liable to tax in that
State in respect only of income from sources in that State or capital situated
therein.
2. Where by reason of
the provisions of paragraph 1, an individual is a resident of both Contracting
States, then his status shall be determined as follows:--
a. he shall be deemed to
be a resident of the State in which he has a permanent home available to him;
if he has a permanent home available to him in both States, he shall be deemed
to be a resident of the State with which his personal and economic relations
are closer (centre of vital interests);
b. if the State in which
he has his 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.
1.
2.
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. sales outlet;
h. warehouse in relation
to a person providing storage facilities for others.
1.
2.
3. The term
"permanent establishment" likewise encompasses a building site, a
construction, assembly or installation project or supervisory activities in
connection therewith, but only when such site, project, or activities continue
for a period of more than six months.
4. 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
merchandise or of collecting information, for the enterprise;
e. the maintenance of a
fixed place of business solely for the purpose of carrying on, for the
enterprise, any other activity of a preparatory or auxiliary character;
f. the maintenance of a
fixed place of business solely for any combination of activities mentioned in
sub-paragraphs (a) to (e), provided that the overall activity of the fixed
place of business resulting from this combination is of a preparatory or
auxiliary character.
1.
2.
3.
4.
5. Notwithstanding the
provisions of paragraphs 1 and 2, where a person -- other than an agent of an
independent status to whom paragraph 7 applies -- is acting in a Contracting
State on behalf of an enterprise of the other Contracting State, that
enterprise shall be deemed to have a permanent establishment in the
first-mentioned Contracting State in respect of any activities which that
person undertakes for the enterprise, if such a person:--
a. has and habitually
exercises in that State an authority to conclude contracts in the name of the
enterprise, unless the activities of such person are limited to those mentioned
in paragraph 4 which, if exercised through a fixed place of business, would not
make this fixed place of business a permanent establishment under the
provisions of that paragraph; or
b. 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.
1.
2.
3.
4.
5.
6. Notwithstanding the
preceding provisions of this article, an insurance enterprise of a Contracting
State shall, except in regard to reinsurance, be deemed to have a permanent
establishment in the other Contracting State if it collects premiums in the
territory of that other State or insures risks situated therein through a
person other than an agent of an independent status to whom paragraph 7
applies.
7. 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. However, when
the activities of such an agent are devoted wholly or almost wholly on behalf
of that enterprise, he will not be considered an agent of an independent status
within the meaning of this paragraph.
8. 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 Contracting State may also be
taxed in that other State.
2. The term
"immovable property" shall have the meaning which it has under the
law of the Contracting State in which the property in question 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, sources and other
natural resources; ships and aircraft shall not be 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
independent personal services.
Article
7
BUSINESS
PROFITS
1. The profits of an
enterprise of a Contracting State shall be taxable only in that 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 State but
only so much of them as is attributable to 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 determining 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 elsewhere, in
accordance with the provisions of and subject to the limitations of the tax
laws of that State.
4. 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.
5. 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.
6. Where profits include
items of income which are dealt with separately in other articles of this
Convention, then the provisions of those articles shall not be affected by the
provisions of this article.
Article
8
SHIPPING
AND AIR TRANSPORT
1. Profits derived by an
enterprise of a Contracting State from the operation of ships or aircraft in
international traffic shall be taxable only in that State.
2. Profits derived by a
transportation enterprise which is a resident of a Contracting State from the
use, maintenance, or rental of containers (including trailers and other equipment
for the transport of containers) used for the transport of goods or merchandise
in international traffic shall be taxable only in that Contracting State unless
the containers are used solely within the other Contracting State.
3. The provisions of
paragraph 1 shall also apply to profits from the participation in a pool, a
joint business or an international operating agency.
Article
9
ASSOCIATED
ENTERPRISES
1. 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.
1.
2. Where a Contracting
State includes in the profits of an enterprise of that State--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. 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 exceed 10 per cent. of the gross amount of the dividends. The
competent authorities of the Contracting States shall by mutual agreement
settle the mode of application of this limitation. This paragraph shall not
affect the taxation of the company in respect of the profits out of which the
dividends are paid.
3. The term
"dividends" as used in this article means income from shares or other
rights, not being debt-claims, participating in profits, as well as income from
other corporate rights which is subjected to the same taxation treatment as
income from shares by the laws of the State of which the company making the
distribution is a resident.
4. The provisions of
paragraphs 1 and 2 shall not apply if the beneficial owner of the dividends,
being a resident of a Contracting State, carries on business in the other
Contracting State of which the company paying the dividends is a resident,
through a permanent establishment situated therein, or performs in that other
State independent personal services from a fixed base situated therein, and the
holding in respect of which the dividends are paid is effectively connected
with such permanent establishment or fixed base. In such case the provisions of
Article 7 or Article 14, as the case may be, shall apply.
5. Where a company which
is a resident of a Contracting State derives profits or income from the other
Contracting State, that other State may not impose any tax on the dividends
paid by the company, except in so far as such dividends are paid to a resident
of that other State or in so far as the holding in respect of which the
dividends are paid is effectively connected with a permanent establishment or a
fixed base situated in that other State, nor subject the company's
undistributed profits to a tax on the company's undistributed profits, even if
the dividends paid or the undistributed profits consist wholly or partly of
profits or income arising in such other State.
Article
11
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 the tax so charged shall not exceed 10 per cent. of the
gross amount of the interest. The competent authorities of the Contracting
States shall by mutual agreement settle the mode of application of this
limitation.
3. Notwithstanding the
provisions of paragraph 2, 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, or any other bank that may be
mutually agreed upon between the two Contracting States.
1.
2.
3.
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 debentures. Penalty charges
for late payment shall not be regarded as interest for the purpose of this
article.
5. The provisions of
paragraphs 1 and 2 shall not apply if the beneficial owner of the interest,
being a resident of a Contracting State, carries on business in the other
Contracting State in which the interest arises, through a permanent
establishment situated therein, or performs in that other State independent
personal services from a fixed base situated therein, and the debt-claim in
respect of which the interest is paid is effectively connected with such
permanent establishment or fixed base. In such case the provisions of Article 7
or Article 14, as the case may be, shall apply.
6. Interest 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. Where,
however, the person paying the interest, 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 indebtedness on which the interest
is paid was incurred, and such interest is borne by such permanent
establishment or fixed base, then such interest shall be deemed to arise in the
State in which the permanent establishment or fixed base is situated.
7. Where, by reason of a
special relationship between the payer and the beneficial owner or between both
of them and some other person, the amount of the interest, having regard to the
debt-claim for which it is paid, exceeds the amount which would have been
agreed upon by the payer and the beneficial owner in the absence of such
relationship, the provisions of this article shall apply only to the
last-mentioned amount. In such 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
12
ROYALTIES
AND FEES FOR TECHNICAL SERVICES
1. Royalties or 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
or 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 if the recipient
is the beneficial owner of the royalties or fees for technical services the tax
so charged shall not exceed 10 per cent. of the gross amount of the royalties
or fees for technical services.
3.
a. 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, or
recordings on any means of reproduction for use in connection with radio or
television broadcasting, computer software, 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;
b. The term "fees
for technical services" means payments of any kind in consideration for
the rendering of any managerial, technical or consultancy services including
the provision of services by technical or other personnel but does not include
payments for services mentioned in Articles 14 and 15 of this Convention.
1.
2.
3.
4. The provisions of
paragraphs 1 and 2 shall not apply if the beneficial owner of the royalties or
fees for technical services, being a resident of a Contracting State, carries
on business in the other Contracting State in which the royalties or fees for
technical services 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
or 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 14, as the case may be, shall apply.
5. Royalties or fees for
technical services shall be deemed to arise in a Contracting State when the
payer is that State itself, a political subdivision, or local authority or a
resident of that State. Where, however, the person paying the royalties or fees
for technical services, whether he is a resident of a Contracting State or not,
has in any State a permanent establishment or a fixed base in connection with
which the liability to pay the royalties or fees for technical services was
incurred, and such royalties or fees for technical services are borne by such
permanent establishment or fixed base, then such royalties or 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 a
special relationship between the payer and the beneficial owner or between both
of them and some other person, the amount of the royalties or fees for
technical services, having regard to the use, right or information for which
they are paid, exceeds the amount which would have been agreed upon by the
payer and the beneficial owner in the absence of such relationship, the
provisions of this article shall apply only to the last mentioned amount. In
such 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
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 (alone or with the whole
enterprise) or of such fixed base, may be taxed in that other State.
3. Gains derived by an
enterprise of a Contracting State from the alienation of ships or aircraft
operated in international traffic, or movable property pertaining to the
operation of such ships or aircraft shall be taxable only in that State.
4. Gains from the
alienation of shares of the capital stock of a company the property of which
consists directly or indirectly principally of immovable property situated in a
Contracting State may be taxed in that State.
5. Gains from the
alienation of shares other than those mentioned in paragraph 4 in a company
which is a resident of a Contracting State may be taxed in that State.
6. Gains from the
alienation of any property other than that referred to in paragraphs 1, 2, 3, 4
and 5 shall be taxable only in the Contracting State of which the alienator is
a resident.
Article
14
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 Contracting State is for a period or periods aggregating 183 days or more
in any 12-month period commencing or ending in the fiscal year concerned; in
that case only so much of the income as is derived from his activities
performed in that other State in the year may be taxed in that other State.
1.
2. The term
"professional services" includes especially independent scientific,
literary, artistic, educational or teaching activities as well as the
independent activities of physicians, lawyers, engineers, architects, surgeons,
dentists and accountants.
Article
15
DEPENDENT
PERSONAL SERVICES
1. Subject to the
provisions of Articles 16, 18 and 19, 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 the other State for a period or periods not exceeding in the
aggregate 183 days in any 12-month period commencing or ending 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.
1.
2.
3. Notwithstanding the
preceding provisions of this article, remuneration derived in respect of an
employment exercised aboard a ship or aircraft operated in international
traffic by an enterprise of a Contracting State may be taxed in that State.
Article
16
DIRECTORS'
FEES
Directors'
fees and other similar payments derived by a resident of a Contracting State in
his capacity as a member of the board of directors of a company which is a
resident of the other Contracting State may be taxed in that other State.
Article
17
ARTISTES
AND SPORTSMEN
1. Notwithstanding the
provisions of Articles 14 and 15, income derived by a resident of a Contracting
State as an entertainer, such as a theatre, motion picture, radio or television
artiste, or a musician, or as a sportsman, 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 sportsman 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,
14 and 15, be taxed in the Contracting State in which the activities of the
entertainer or sportsman are exercised.
3. The provisions of
paragraphs 1 and 2 shall not apply to income derived from activities performed
in a Contracting State by entertainers or sportsmen if the visit to that State
is substantially supported by public funds of one or both of the Contracting
States or of political sub-divisions or local authorities thereof. In such a
case, the income is taxable only in the Contracting State of which the
entertainer or sportsman is a resident.
Article
18
PENSIONS
Subject
to the provisions of paragraph 2 of Article 19, pensions and other similar
remuneration paid to a resident of a Contracting State in consideration of past
employment shall be taxable only in that State.
Article
19
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 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.
1.
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 the individual is a
resident of, and a national of, that State.
3. The provisions of
Articles 15, 16 and 18 shall apply to remuneration and pensions in respect of
services rendered in connection with a business carried on by a Contracting
State or a political sub-division or a local authority thereof.
Article
20
STUDENTS
AND APPRENTICES
1. A student or business
apprentice who is or was a resident of a Contracting State immediately before
visiting the other Contracting State and who is present in that other
Contracting State solely for the purpose of his education or training shall be
exempt from tax in that other State on:
a. payments made to him
by persons residing outside that other State for the purposes of his
maintenance, education or training; and
b. remuneration from
employment in that other State, in an amount not exceeding US Dollar 500 or its
equivalent amount during any fiscal year,
as
the case may be, provided that such employment is directly related to his
studies or is undertaken for the purpose of his maintenance.
1.
2. The benefits of this
article shall extend only for such period of time as may be reasonable or
customarily required to complete the education or training undertaken, but in
no event shall any individual have the benefits of this article for more than
five consecutive years from the date of his first arrival in that other
Contracting State.
Article
21
PROFESSORS,
TEACHERS AND RESEARCH SCHOLARS
1. A professor or teacher
who is or was a resident of the Contracting State immediately before visiting
the other Contracting State for the purpose of teaching or engaging in
research, or both, at a university, college, school or other approved
institution in that other Contracting State shall be exempt from tax in that
other State on any remuneration for such teaching or research for a period not
exceeding two years from the date of his arrival in that other 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
this article and Article 20, an individual shall be deemed to be a resident of
a Contracting State if he is a resident in that State in the fiscal year in
which he visits the other Contracting State or in the immediately preceding
fiscal year.
4. For the purposes of
paragraph 1 "approved institution" means an institution which has
been approved in this regard by the competent authority of the concerned
Contracting State.
Article
22
OTHER
INCOME
1. Subject to the
provisions of paragraph 2, items of income of a resident of a Contracting
State, wherever arising, which are not expressly 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 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 case the provisions of Article 7 or Article 14, 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
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 other State.
2. Capital represented
by 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 by 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, may be taxed in that other
State.
3. Capital owned by an
enterprise of a Contracting State and represented by ships and aircraft
operated in international traffic, and by movable property pertaining to the
operation of such ships and aircraft, shall be taxable only in that State.
4. All other elements of
capital of a resident of a Contracting State shall be taxable only in that
State.
Article
24
ELIMINATION
OF DOUBLE TAXATION
1. The laws in force in
either of the Contracting States will continue to govern the taxation of income
and capital in the respective Contracting States except where provisions to the
contrary are made in this Convention.
2. Where a resident of
India derives income or owns capital which, in accordance with the provisions
of this Convention, may be taxed in Turkmenistan, India shall allow as a
deduction from the tax on the income of that resident, an amount equal to the
income-tax paid in Turkmenistan, whether directly or by deduction; and as a
deduction from the tax on the capital of that resident, an amount equal to the
capital tax paid in Turkmenistan. Such deduction in either case shall not,
however, exceed that part of income-tax or tax on capital (as paid before the
deduction is given), which is attributable to the income or the capital which
may be taxed in Turkmenistan.
3. In the case of
Turkmenistan, the double taxation shall be avoided by a method which is
identical to that mentioned in paragraph 2.
4. For the purposes of
paragraphs 2 and 3 of this article, the tax payable in the Contracting State
shall be deemed to include the tax which would have been payable but for the
tax incentives according to which such tax is not payable under the laws of the
Contracting State and which are designed to promote economic development.
5. Income which in
accordance with the provisions of this Convention, is not to be subjected to tax
in a Contracting State, may be taken into account for calculating the rate of
tax to be imposed in that Contracting State.
Article
25
NON-DISCRIMINATION
1. 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, in particular with respect to
residence, are or may be subjected. This provision shall, notwithstanding the
provisions of Article 1, also apply to persons who are not residents of one or
both of the Contracting States.
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. 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.
This provision shall not be construed as preventing a Contracting State from
charging the profits of a permanent establishment which an enterprise of the
other Contracting State has in the first-mentioned Contracting State at a rate
higher than that imposed on the profits of a similar enterprise of the
first-mentioned State, nor as being in conflict with the provisions of
paragraph 3 of Article 7 of this Convention.
3. Except where the
provisions of paragraph 1 of Article 9, paragraph 6 of Article 11, or paragraph
6 of Article 12, apply, interest, royalties, fees for technical services 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 to any
taxation or any requirement connected therewith which is other or more
burdensome than the taxation and connected requirements to which other similar
enterprises of the first-mentioned State are or may be subjected.
5. The provisions of
this article shall, notwithstanding the provisions of Article 2, apply to taxes
of every kind and description.
Article
26
MUTUAL
AGREEMENT PROCEDURE
1. Where a person
considers that the actions of one or both of the Contracting States result or
will result for him in taxation not in accordance with the provisions of this
Convention, he may, irrespective of the remedies provided by the domestic law
of those States, present his case to the competent authority of the Contracting
State of which he is a resident or, if his case comes under paragraph 1 of
Article 25, to that of the Contracting State of which he is a national. The
case must be presented within three years from the first notification of the
action resulting in taxation not in accordance with the provisions of the
Convention.
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 a satisfactory 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 which is not in accordance with
the Convention. Any agreement reached shall be implemented notwithstanding any
time limits in the domestic law of the Contracting States.
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 Convention. They may also consult together for the elimination of double
taxation in cases not provided for in the Convention.
4. The competent
authorities of the Contracting States may communicate with each other directly
for the purpose of reaching an agreement in the sense of the preceding
paragraphs. When it seems advisable in order to reach agreement to have an oral
exchange of opinions, such exchange may take place through a Commission
consisting of representatives of the competent authorities of the Contracting
States.
Article
27
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 this
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. 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 carry out
administrative measures at variance with the laws and administrative practice
of that or of the other Contracting State;
b. to supply information
or documents which are 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 disclose any trade, business, industrial, commercial or
professional secret or trade process, or information, the disclosure of which
would be contrary to public policy.
Article
28
COLLECTION
ASSISTANCE
1. The Contracting
States undertake to lend assistance to each other in the collection of taxes to
which this Convention relates, together with interest, costs, and civil
penalties relating to such taxes, referred to in this article as a
"revenue claim".
2. Request for
assistance by the competent authority of a Contracting State in the collection
of a revenue claim shall include a certification by such authority that, under
the laws of that State, the revenue claim has been finally determined. For the
purposes of this article, a revenue claim is finally determined when a Contracting
State has the right under its internal law to collect the revenue claim and the
taxpayer has no further rights to restrain collection.
3. Amounts collected by
the competent authority of a Contracting State pursuant to this article shall
be forwarded to the competent authority of the other Contracting State.
However, the first-mentioned Contracting State shall be entitled to
reimbursement of costs, if any, incurred in the course of rendering of such
assistance to the extent mutually agreed between the competent authorities of
the two States.
4. Nothing in this
article shall be construed as imposing on either Contracting State the
obligation to carry out administrative measures of a different nature from
those used in the collection of its own taxes or those which would be contrary
to its public policy.
Article
29
DIPLOMATIC
AGENTS AND CONSULAR OFFICERS
Nothing
in this Convention shall affect the fiscal privileges of diplomatic agents or
consular officers under the general rules of international law or under the
provisions of special agreements.
Article
30
ENTRY
INTO FORCE
1. Each of the
Contracting States shall notify to the other the completion of the procedures
required by its law for the bringing into force of this Convention. This
Convention shall enter into force on the date of the later of these
notifications and shall thereupon have effect:--
a. in India, in respect
of income or capital arising in any fiscal year beginning on or after the first
day of April next following the calendar year in which the Convention enters
into force; and
b. in Turkmenistan, in
respect of income or capital arising in any fiscal year beginning on or after
the first day of January next following the calendar year in which the
Convention enters into force.
Article
31
TERMINATION
This
Convention shall remain in force indefinitely until terminated by a Contracting
State. Either Contracting State may terminate the Convention, through
diplomatic channels, by giving notice of termination at least six months before
the end of any calendar year beginning after the expiration of five years from
the date of entry into force of the Convention. In such event, the Convention
shall cease to have effect:--
a. in India, in respect
of income arising in any previous year beginning on or after the 1st April next
following the calendar year in which the notice is given in respect of capital
which is held at the expiry of any previous year beginning on or after the 1st
April next following the calendar year in which the notice of termination is
given;
b. in Turkmenistan, in
respect of income arising in any year of income beginning on or after the 1st
January next following the calendar year in which the notice is given and in
respect of capital which is held at the expiry of any year of income next
following the calendar year in which the notice of termination is given.
In
witness whereof ,
the undersigned, being duly authorised thereto, have signed this Convention.
Done in duplicate at New
Delhi this 25th day of February, 1997, in the Turkmen, Hindi and English
languages, all three texts being equally authentic. In case of divergence between
the texts, the English text shall be the operative one.
For
the Government of the Republic of India
(I.
K. Gujral)
For
the Government of Turkmenistan
(Shikhiev
Ilaman)
PROTOCOL
At
the signing of the Convention between the Government of the Republic of India
and the Government of Turkmenistan for the Avoidance of Double Taxation and for
the Prevention of Fiscal Evasion with Respect to Taxes on Income and on
Capital, the undersigned have agreed that the following shall form an integral
part of the Convention.
With
reference of Article 7:
In
respect of paragraphs 1 and 2 of Article 7, where an enterprise of one of the
Contracting States sells goods or merchandise or carries on business in the
other Contracting State through a permanent establishment situated therein, the
profits of that permanent establishment shall not be determined on the basis of
the total amount received by the enterprise, but shall be determined only on
the basis of the remuneration which is attributed to the actual activity of the
permanent establishment for such sales or business. For instance, in the case
of contracts for the survey, supply, installation or construction of
industrial, commercial or scientific equipment or premises, or of public works,
when the enterprise has a permanent establishment, the profits of such
permanent establishment shall not be determined on the basis of the total
amount of the contract, but shall be determined only on the basis of that part
of the contract which is effectively carried out by the permanent establishment
in the Contracting State where the permanent establishment is situated.
In
witness whereof
the undersigned, being duly authorised thereto, have signed this Protocol.
Done in duplicate at New
Delhi this 25th day of February, 1997 in the