DIRECT TAXATION TRANSFER PRICING - SUBSTANTIVE PROVISION

1. Section 92(1) provides that:

1. There must be “income arising”;
2. Such income must arise “from” an “international transaction”;
3. Such income “shall” be computed having regard to the “arm’s length price”.

2. The Finance Act, 2012 extended the scope of applicability of Transfer Pricing Provisions to “specified domestic transactions” where the aggregate value of such transaction exceed ₹ 50 million. The Finance Act, 2015 has raised the limit to ₹ 200 million.

3. Allowance for any expenses or interest arising from an international transaction or specified domestic transaction is also to be determined having regard to arm’s length price. Further, the application of arm’s length price results in reducing the chargeable income or increasing the loss from an Indian Income-tax perspective, then the income, expense, interest or other allocation or apportionment of expenses need not be calculated at such arm’s length price.

4. Section 92(2) provides that cost sharing arrangements between “associated enterprises” (“AEs”) arising from international transaction as well as specified domestic Transfer Pricing will also be subject to the arm’s length rule.

5. The term “international transaction” is defined in section 92B. The salient features of this definition are as under :

1. Use of word “means” shows that it is an exhaustive definition;
2. The term “transaction” is defined in an inclusive manner in section 92F(v);
3. The transaction has to be between two or more “associated enterprises” (“AEs”). “Associated enterprise” is defined in section 92A;
4. All or any one of the AEs must be a “non-resident”. The section states “either or both of whom are non-resident”. Section 2(30) defines the term non-resident and for the purposes of section 92 includes a resident but not ordinarily resident;
5. The transaction may be in the nature of commercial transaction such as:
   • Purchase, sale, transfer, lease or use of tangible or intangible property including building, transportation vehicle, machinery, equipment, tools, plant, furniture, commodity or any other article, product or thing; or
   • The purchase, sale, transfer, lease or use of intangible property, including the transfer of ownership or the provision of use of rights regarding land use, copyrights, patents, trade marks, licences, franchises, customer lists, marketing channel, brand, commercial secret, know-how, industrial property right, exterior design or practical and new design or any other business or commercial rights of similar nature; or
   • Capital financing, including any type of long-term or short-term borrowing, lending or guarantee, purchase or sale of marketable securities or any type of advance, payments or deferred payment or receivable or any other debt arising during the course of business; or
   • Provision of services including provision of market research, market development, marketing management, administration, technical service, repairs, design, consultation, agency, scientific research, legal or accounting service; or
   • A transaction of business restructuring or reorganisation, entered into by an enterprise with an associated enterprise, irrespective of the fact that it has bearing on the profit, income, losses or assets of such enterprises at the time of the transaction or at any future date; or
   • Any other transaction having a bearing on profits, income, losses or assets of an AE.
   • Cost sharing arrangement, that is, a mutual agreement or arrangement between AEs for the allocation or apportionment of, or contribution to any cost or expense incurred in connection with a “benefit, service or facility” provided to the AE.

The expression intangible property shall include:

1. Marketing related intangible assets, such as, trade marks, trade names, brand names, logos;
2. Technology related intangible assets, such as, process patents, patent applications, technical documentation such as laboratory notebooks, technical know-how;
3. Artistic related intangible assets, such as, literary works and copyrights, musical compositions, copyrights, maps, engravings;
4. Data processing related intangible assets, such as, proprietary computer software, software copyrights, automated databases, and integrated circuit masks and masters;
5. Engineering related intangible assets, such as, industrial design, product patents, trade secrets, engineering drawing and schematics, blueprints, proprietary documentation;
6. Customer related intangible assets, such as, customer lists, customer contracts, customer relationship, open purchase orders;
7. Contract related intangible assets, such as, favourable supplier, contracts, licence agreements, franchise agreements, non-compete agreements;
8. Human capital related intangible assets, such as, trained and organised work force, employment agreements, union contracts;
9. Location related intangible assets, such as, leasehold interest, mineral exploitation rights, easements, air rights, water rights;
10. Goodwill related intangible assets, such as, institutional goodwill, professional practice goodwill, personal goodwill of professional, celebrity goodwill, general business going concern value;
11. Methods, programmes, systems, procedures, campaigns, surveys, studies, forecasts, estimates, customer lists, or technical data;
12. Any other similar item that derives its value from its intellectual content rather than its physical attributes.

6. Section 92B(2) deems a transaction between two unrelated enterprises to be an international transaction between two associated enterprises under certain circumstances. The Finance No. 2 Act, 2014 has amended the aforesaid provision. Presently any transaction entered into by an enterprise (say A) with a person other than an associated enterprises (say B) is deemed to be a transaction between two associated enterprises if there exists a prior agreement between B and the associated enterprise (say C). It is now clarified that where either A or C or both are non-residents, irrespective of whether B is a resident or non-resident, the transaction between A and B will be deemed to be an international transaction between two associated enterprises.

7. Section 92BA defines the term “Specified Domestic Transaction”. The salient feature of this definition are as under:-

1. Use of word “means” shows that it is an exhaustive definition;
2. The term “transaction” is defined in an inclusive manner in section 92F(v);
3. It covers any of the following transactions (other than an international transaction):-
   • Payment of expenditure to a person referred to in section 40A(2)(b);
   • Any transaction relating to transfer of goods or services between two undertaking or units of the same entity referred to in section 80A (dealing with deductors under section 10A/10AA/10B/10BA or in any other provisions of Chapter VIA) or section 80-IA(8);
   • Any business transacted between the assessee and any other person as referred to in section 80-IA(10);
   • Any transaction referred to in any other section under chapter VIA or section 10AA to which the provisions of section 80-IA(8) or section 80-IA(10) are applicable;
   • Any other transaction as may be prescribed.

8. The term “arm’s length price” is defined in section 92F(ii) to mean—

• The price which is applied; or
• Is proposed to be applied
• In a transaction between persons other than AEs;
• In uncontrolled conditions.

9. Section 92C provides the mechanism of determining the "arm’s length price" by any of the following five methods, being the most appropriate method taking in to consideration the nature or class of the transaction functions performed or such other factors as laid down in rule 10B:
a. Comparable uncontrolled price method:

• Comparison of price charged or paid for property transferred or services provided in a comparable uncontrolled transaction;
• Used mainly in respect of transfer of goods, provision of services, intangibles, loans, provision of finance.

b. Resale-price method:

• Considers the price at which property purchased or services obtained by the enterprise from an AE is resold or are provided to an unrelated enterprise.
• Used mainly in case of distribution of finished goods or other goods involving no or little value addition.

c. Cost-plus method:

• Considers direct and indirect costs of production incurred by an enterprise in respect of property transferred or services provided and an appropriate mark-up.
• Used mainly in respect of provision of services, joint facility arrangements, transfer of semi finished goods, long-term buying and selling arrangements.

d. Profit-split method:

• Considers combined net profit of the AEs arising from the international transaction and is split amongst them;
• Used mainly in report of transactions involving integrated services provided by more than one enterprise, transfer of unique intangibles, multiple inter-related transactions, which cannot be separately evaluated.

e. Transactional net margin method:

• Considers net profit margin realised by the enterprise from an international transaction entered into with an AE.
• Used in respect of transactions for provision of services, distribution of finished products where resale price method cannot be adequately applied, transfer of semi-finished goods.

f. Any other method as prescribed by the CBDT. The CBDT notified the “Other Method” vide Rule 10AB of the Income tax Rules 1962 on May 23, 2012 with effect from April 1, 2012. The other method shall be any method which takes into account the price which has been charged or paid, or would have been charged or paid, for similar uncontrolled transaction, with or between non-associated enterprises, under similar circumstances, considering all relevant facts.

g. The Rules for determination of the arm’s length price in respect of domestic transfer pricing regulations are not separately prescribed. It seems that the aforesaid rules will mutas mutandis apply to domestic transfer pricing transactions.

The most appropriate method from the above method shall be applied for determination of the arm’s length price in the manner laid down in Rule 10C.

Where the variation between the arm’s length price determined and the price at which the international transaction or specified domestic transaction has been undertaken (transfer price) does not exceed such percentage as may be notified by the Central Government which shall not exceed 3% of the transfer price, then the transfer price is deemed to be the arm’s length price.

The Finance No. 2 Act, 2014 has provided that where more than one price is determined, the arm’s length price shall be computed in such manner as prescribed. Subject to the Rules to be notified the Finance Minister in his budget speech had announced that an inter-quartile range concept for determination of the arm’s length price in addition to the arithmetic mean concept will be introduced. Detailed rules in this regard will be prescribed

10. The term “enterprise” is defined in section 92F(iii) to mean a “person” including a “permanent establishment” of a person who is, or has been or is proposed to be “engaged in” certain specified activities. These activities are in relation to :

• Production storage, supply, distribution, acquisition or control of:
• Articles or goods; or
• Know-how, patents, copyrights, trade marks, licences, franchises or any other business or commercial rights of similar nature; or
• Any data, documentation, drawing or specification relating to any patent, invention, model, design, secret formula or process:
  • of which the other enterprise is the owner; or
  • in respect of which the other enterprise has exclusive rights; or
  • provision of services of any kind; or
  • carrying out any work in pursuance of a contract; or
  • investment or
  • providing loan or
  • business of acquiring, holding, underwriting or dealing with shares, debentures or other securities of any other body corporate.

Such activity or business may be carried on directly or through one or more of the units or divisions or subsidiaries, which may be located at the same place where the enterprise is located or at a different place(s).

11. The term “Permanent Establishment” is defined to include a fixed place of business through which the business of the enterprise is wholly or partly carried on.

12. An “enterprise” is an AE :

• Which participates directly or indirectly in the management or control or capital of the other enterprise. This can be explained as under:
  
• If any person who participates in the management or control or capital of an enterprise also participates in the management or control or capital of the other enterprise. This can be explained as under: 
  

13. In respect of international transaction in the following circumstances, two enterprises shall be deemed to be AEs if at any time during the year:

A holds at least 26% of the voting power of B; or	(A & B are AEs)
A holds at least 26% of the voting power of B & C; or	(B & C are AEs)
A advances a loan to B, constituting at least 51% of the book value of total assets of B; or	(A & B are AEs)
A guarantees at least 10% of the total borrowings of B; or	(A & B are AEs)
A appoints, more than half the directors of B; or one or more executive directors of B; or	(A & B are AEs)
A appoints, more than half the directors of B & C; or one or more executive directors of B & C; or	(B & C are AEs)
The manufacture or processing of goods or articles or business carried on by A is wholly dependent on the use IPRs (know how etc.) belonging to B or in respect of which B has exclusive rights; or	(A & B are AEs)
At least 90% of the raw materials and consumables required for the manufacturing or processing of goods or articles carried out by A, are supplied by B or by persons specified by B, and the prices and other conditions relating to the supply are influenced by B; or	(A & B are AEs)
The goods manufactured or processed by A are sold to B or persons specified by B, and the prices and other conditions relating thereto are influenced by ‘B’; or	(A & B are AEs)
Where A is controlled by B (an individual) a transaction between A and C, if C is controlled by B or his relative or jointly by B and his relative; or	(A & C are AEs)
Where A is controlled by B HUF, a transaction between A and C, if C is controlled by a member of B HUF or by a relative of a member of B HUF or jointly by such member and his relative; or	(A & C are AEs)
Where A is a firm, AOP or BOI and B holds at least 10% interest in A; or	(A & B are AEs)
There exists any relationship of mutual interest between A and B as may be prescribed.	(A & B are AEs)

Sub-section 2 of Section 92(A) clarifies that mere participation by A in the management, control or capital of B or the commonality of control, management or capital of A and B per se may not be sufficient to make A and B associated enterprises unless one or more of the conditions specified in paragraph 10 above are satisfied.
14. The expenditure in respect of payment made to the following person by an assessee say C will be subject to domestic transfer pricing regulations :—

Where C is an individual	Any relative of C
Where C is a company	Any director of C
Where C is a firm	Any partner of C
Where C is an AOP or HUF	Any member of AOP or HUF
Where C is carrying on any business or profession	Any individual having a substantial interest in C or any relative of such individual; Any company, firm or AOP or HUF having a substantial interest in C or any director, partner or member of such company, firm, AOP or HUF or any relative of such director, partner or member of AOP or HUF or any other company carrying on business or profession in which the first mentioned company has a substantial interest; Any company, firm, AOP or HUF of which a director, partner or member has a substantial interest in the business or profession of C or any director, partner or member of such company, firm, AOP or HUF or any relative of such director, partner, or member.

Further the following person would also be covered

• Any person say D carrying on a business or profession, —
  1. Where C being an individual, or his relative has a substantial interest in the business or profession of D
  2. Where C being a company, firm, AOP or HUF, or any director, partner, member of C, or any relative of C’s director, partner or member, has a substantial interest in the business or profession of D.
• A person shall be deemed to have a substantial interest in a business or profession, if,—
  1. In a case where the business or profession is carried on by a company, such person is, at any time during the previous year, the beneficial owner of shares (not being shares entitled to a fixed rate of dividend whether with or without a right to participate in profits) carrying not less than 20% of the voting power; and
  2. In any other case, such person is, at any time during the previous year, beneficially entitled to not less than 20% of the profits of such business or profession.

15. Section 92C(3) provides that an Assessing Officer (“AO”), after having provided an opportunity to the assessee of being heard, may determine the arm’s length price, on the basis of material or information in his possession, if he is of the opinion that,

• The price charged or paid in an international transaction or specified domestic transaction has not been determined in accordance with the transfer pricing provisions, or
• If any information and document relating to an international transaction or specified domestic transaction has not been maintained in accordance with the provisions, or
• If the information and data used in computation of arm’s length price is not reliable or correct, or
• If the assessee has failed to furnish, within the specified time, any information or document which he was required to furnish by a notice under section 92D(3).

Under such circumstances, the A.O. may compute the total income of the assessee having regard to the price so determined.
In cases where the total income is enhanced as a result of such computation of income, no deduction under sections 10A, 10AA or section 10B or under Chapter VI-A is allowed in respect of the amount of income by which the total income of the assessee is enhanced.
Further, in cases where the total income of an AE is computed by the A.O. on determination of arm’s length price paid to another AE from which tax has been deducted or was deductible under Chapter XVIIB, the income of the other associated enterprise shall not be recomputed by reason of such determination.
16. The AO also has powers to refer the computation of arm’s length price to a Transfer Pricing Officer (TPO) with previous approval of the CIT. The TPO would then pass an order determining the arm’s length price after hearing the assessee. Thereafter, the A.O. will compute the total income having regard to the arm’s length price determined by the TPO (S. 92CA). The MOF has issued instructions (No. 3/2003) dated 20th May, 2003 giving guidelines on references to TPO, the role of TPO and related issues. The text thereof is reproduced on the CD. The Assessing Officer while completing their assessment in respect of assessments involving transfer pricing are now bound to compute the total income of the asseessee in conformity with the arm’s length price determined by the TPO.
TPO are empowered to determine arm’s length price of an international transaction noticed by him in the course of transfer pricing proceedings, even where the transfer pricing report was not furnished by the assessee.
Section 92CB provides for the determination of arm’s length price subject to safe harbour rules. Safe harbour is defined to mean circumstances in which the Income Tax authorities shall accept the transfer price declared by the assessee. The Central Board of Direct Taxes introduced the safe harbour rules on September 18, 2013. Rules 10TA to 10TG contain the procedure for adopting the safe harbour, the transfer price to be adopted, the compliance procedure etc. The safe harbour margin/price which have been prescribed based on which the transfer price declared by an eligible assessee shall be accepted by the Transfer Pricing Officer is contained in the CD enclosed herewith.
17. The jurisdiction of the transfer pricing officer (TPO) is extended to determine the arm’s length price in respect of international transactions not referred to him by the Assessing Officer and which comes to his notice during the transfer pricing assessment proceedings.
18. TPO permitted to exercise powers of survey under section 133A of the Act.

19. Section 94A inter alia provides that if an assessee enters into a transaction where one of the parties to the transaction is a person located in a “notified jurisdictional area” then all the parties to the transaction to be deemed to be associated enterprises and any transaction entered into with them to be regarded as an international transaction and transfer pricing provisions to apply accordingly

DIRECT TAXATION - DOUBLE TAXATION AVOIDANCE AGRREMENT

Sl. No.	Country DTAA between India and	Effective date in India	Tax rate on				Remarks
			Dividend (other than u/s. 115-O) (%)	Interest (%)	Royalties (%) See Note 4	Technical Service Fees (%) See Note 4
1	Albania 355 ITR 80	01.04.2014 A. Y. 2015-16	10 @	10 @	10 @	10 @	Agreement between Republic of India and Republic of Albania was notified by way of Press Release dated 8 July 2013.
2	Armenia 271 ITR 72	01.04.2005 A. Y. 2006-07	10 @	10 @	10 @	10 @	Interest derived and beneficially owned by following entities is exempt (a) the Government, a political sub-division o r a local authority; or (b) RBI and the Central Bank of Armenia or any other institutions as may be agreed upon. For Limitation Of Benefits (‘LOB’) Clause – Refer Note 6.
3	Australia 194 ITR 241 Modified via Protocol 358 ITR 15	01.04.1992 A.Y. 1993-94	15 @	15 @	[See Note 2]	[See Note 2]	Protocol amends Article 3 (Definitions), Article 5 (Permanent Establishment), Article 7 (Business Profits), Article 24A (Non-Discrimination), Article 26 (Exchange of Information) and Article 26A (Assistance in Collection of Taxes).
4	Austria 251 ITR 97	01.04.2002 A.Y. 2003-04	10 @	10 @	10 @	10 @	—
5	Bangladesh 198 ITR 99 Modified via Protocol 355 ITR 97	01.04.1992 A.Y. 1993-94	10 @ 15 @	10 @	10 @	No separate provision	10% tax on dividends if at least 10% of the capital is owned by Company; in other cases 15%. Protocol amends Article 21 (Students) and Article 28 (Exchange of Information).
6	Belarus 233 ITR 4	01.04.1999 A.Y. 2000-01	10 @ 15 @	10 @	15 @	15 @	10% tax on dividends if at least 25% of the capital is directly and beneficially owned by a company; in other cases 15%.
7	Belgium 228 ITR 79 247 ITR 39	01.04.1998 A.Y. 1999-2000	15 @	15 @ 10 @	10 @	10 @	10% tax on interest if loan granted by bank, other cases 15%. 10% tax on royalties and technical services fees w.e.f. 1.4.1998. Modification also restricts scope of royalties.
8	Bhutan Notification No. 42/2014 F.No. 503/4/2004-FTD-II dated 5 September 2014	01.04.2015 A.Y. 2016-17	10 @	10 @	10 @	10 @	Interest derived and beneficially owned by following entities is exempt (a) the Government, a political sub-division or a local authority of the other Contracting state; or (b) (i) in case of India, the RBI and the Export-Import Bank of India or (ii) in case of Bhutan, The Royal Monetary Authority and Bhutan Development Bank Limited (c) any other institution as may be agreed upon from time to time between the competent authorities of the Contracting states through exchange of letters For Limitation Of Benefits (‘LOB’) Clause – Refer Note 5.
9	Botswana 302 ITR 277	01.04.2009 A.Y. 2010-11	7.5 @ 10 @	10 @	10 @	10 @	7.5% tax on dividends if at least 25% of the capital is owned by Company; in other cases 10%. Interest derived and beneficially owned by following entities is exempt (a) the Government, a political sub-division or a local authority; or (b) Reserve Bank of India and the Central Bank of Botswana or any other bank or Governmental financial institutions or agencies that may be mutually agreed.
10	Brazil 195 ITR 73	01.04.1993 A.Y. 1994-1995	15 @	15 @	25 @ 15 @	25 @ 15 @ Fees for Technical Services are covered under Royalty article as per protocol	Royalties arising from use or right to use trademarks taxable at 25%, in other cases tax rate is 15%.
11	Bulgaria 220 ITR 30	01.04.1996 A.Y. 1997-98	15 @	15 @	15 @ 20 @	20 @	Royalties relating to Copyrights etc. taxable at 15%, in all other cases 20@
12	Canada 229 ITR 44	01.04.1998 A.Y. 1999-2000	15 @ 25 @	15 @	[See Note 2]	[See Note 2]	15% tax on dividends if at least 10% of capital is owned by a Co., in other cases 25%
13	China 214 ITR 160	01.04.1995 A.Y. 1996-97	10 @	10 @	10 @	10 @	—
14	Colombia Notification No. 44/2014 F.No. 501/3/99-FTD-II dated 23 September 2014	01.04.2015 A.Y. 2016-17	5 @	10 @	10 @	10 @	Interest derived and beneficially owned by following entities is exempt (a) the Government, a political sub-division or a local or territorial authority of the other Contracting state; or (b) (i) in case of India, the RBI and the Export-Import Bank of India or (ii) in the case of Colombia, the Banco de la Republica and the Bancoldex (c) any other institution as may be agreed upon from time to time between the competent authorities of the contracting states through exchange of letters. For Limitation Of Benefits (‘LOB’) Clause – Refer Note 5.
15	Croatia Notification No. 24/2015 F.No. 501/09/1995-FTD-I dated 17 March 2015	01.04.2016 A.Y. 2017-2018	5 @ 15 @	10 @	10 @	10 @	5% tax on dividends if at least 10% of the capital is directly owned by the Company, in other cases 15%. Interest derived and beneficially owned by following entities is exempt (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 or governmental financial institutions / agencies that may be mutually agreed upon between the two Contracting state. As per protocol – notwithstanding the provisions of the agreement, a company resident in the Contracting state in which persons who are not residents of that state hold, directly or indirectly, a participation of more than 50% of the share capital, shall not be entitled to relieves provided by the agreement in respect of dividends, interest, royalties arising in the other Contracting state. This provision shall not apply where the said Company is engaged in substantive business operations, other than mere holding of shares or property, in the Contracting state of which it is a resident.
16	Cyprus 218 ITR 70	01.04.1993 A.Y. 1994-95	10 @ 15 @	10 @	15 @	10 / 15* @	10% tax on dividends if at least 10% of the capital is owned by Company; in other cases 15%. * Technical Fees are taxable at 10% under Article 13, Fees for included services taxable at 15% under Article 12
17	Czech Republic 241 ITR 90	01.04.2000 A.Y. 2001-02	10 @	10 @	10 @	10 @	—
18	Denmark 180 ITR 1	01.04.1990 A.Y. 1991-92	15 @ 25 @	10 + 15 +	20 @	20 @	15% tax on dividends if at least 25% of the capital is owned by Company; in other cases 25%. Interest is taxable at 10% on loan from bank; in other cases it is taxable at 15%.
19	Estonia 346 ITR 143	01.04.2013 A.Y 2014-15	10 @	10 @	10 @	10@	Interest derived and beneficially owned by following entities is exempt the Government, a political sub-division or a local authority of the other contracting state (i) in case of India, the Reserve Bank of India and (ii) in case of Estonia, the Bank of Estonia any other institution as may be agreed upon from time to time between the competent authorities of the contracting states For LOB Clause – Refer Note 5.
20	Ethiopia 353 ITR 78	01.04.2013 A.Y. 2014-15	7.5 @	10 @	10 @	10 @	Interest derived and beneficially owned by following entities is exempt The Government, a political sub-division or a local authority of the other contracting state (i) in case of India, the Reserve Bank of India and (ii) in case of Ethiopia, the National Bank of Ethiopia Any other institution as may be agreed upon from time to time between the competent authorities of the contracting states For LOB Clause – Refer Note 5
21	Fiji Notification No.35/2014/F.No 503/11/2005-FTD-II dated 12 August 2014	01.04.2015 A.Y. 2016-17	5 @	10 @	10 @	10 @	Interest derived and beneficially owned by following entities is exempt the Government, a political sub-division or a local authority of the other contracting state (i) in case of India, the Reserve Bank of India, the Export-Import Bank of India, the National Housing Bank and (ii) in case of Fiji,the Reserve Bank of Fiji, the Fiji Development Bank any other institution as may be agreed upon from time to time between the competent authorities of the Contracting states For LOB Clause – Refer Note 5
22	Finland 324 ITR 1	01.04.2011 A.Y. 2012-13	10 @	10 @	10 @	10 @	Interest arising in India and paid to state of Finland, or a local authority or a statutory body thereof, Finnfund, Finn Vera Fund and other specified entities would be exempt from tax in India. Interest arising in Finland and paid to Government of India, a political sub-division, local authority or statutory body thereof, RBI, NHB, EXIM Bank and other specified entities will be exempt from Finnish tax For LOB Clause – Refer Note 6
23	French Republic 209 ITR 130 244 ITR 134	01.04.1995 A.Y. 1996-97	10 @	10 @	10 @	10 @	10% tax on dividend, interest, royalties and technical services fees w.e.f. 1-4-1997. Modification reflects the position in Protocol.
24	Georgia 341 ITR 1	01.04.2012 A.Y 2013-14	10 @	10 @	10 @	10 @	Interest will be exempt from tax if it is derived and beneficially owned by (a) In case of India, (i) the Government, a political sub-division or a local authority (ii) the Reserve Bank of India, the Export Import Bank of India, the National Housing Bank. (b) In case of Georgia, (i) the Government or local authority (ii) The National Bank of Georgia (c) any other institution government agencies, political administrative sub-divisions as agreed from time to time. For LOB Clause – Refer Note 5
25	Germany (Federal Republic of Germany) 223 ITR 130	01.04.1997 A.Y. 1998-99	10 @	10 @	10 @	10 @	Treaty has some of the lowest withholding rates. It also effectively lowers from 29.10.1996, withholding rates of India’s Treaties with other OECD countries such as France, Netherlands, Norway, Spain, etc.
26	Greece 64 ITR 86	01.04.1963 A.Y. 1964-65	*	*	*	No separate provision	* Dividend, interest and royalty income is chargeable as per domestic law in source country only.
27	Hungary 274 ITR 74	01.04.2006 A.Y. 2007-08	10 @	10 @	10 @	10 @	Interest derived and beneficially owned by following entities is exempt Government, political sub-division or local authority of other Contracting state, Central Bank of other Contracting states the Hungarian Exim Bank or a resident of Hungary if the interest is paid in respect of a loan made, guaranteed or insured or a credit extended guaranteed or insured by the Hungarian Bank, Export Import Bank of India or a resident of India if the interest is paid in respect of a loan made, guaranteed or insured or a credit extended, guaranteed or insured by the Exim Bank Any other bank or government financial institution that may be mutually agreed upon between the two contracting states.
28	Iceland 298 ITR 2	01.04.2008 A.Y 2009-10	10 @	10 @	10 @	10 @	Interest derived and beneficially owned by following entities is exempt the Government, a political sub-division or a local authority RBI, EXIM bank and NHB of India, Central Bank of Iceland and any other institution as may be agreed upon. For LOB Clause – Refer Note 6
29	Indonesia 171 ITR 27	01.04.1988 A.Y. 1989-90	10 @ 15 @	10 @	15 @	No separate provision	10% tax on dividends if at least 25% of the capital is owned by Company; in other cases 15%.
30	Israel 222 ITR 10	1.6.96/1.4.94	10 @	10 @	10 @	10 @	For TDS on dividend, interest, royalties and technical service fees effective date is 1.6.1996, for taxes on Income and Capital effective date is 1.4.1994.
31	Ireland 254 ITR 245 255 ITR 95	01.04.2002 A.Y. 2003-04	10 @	10 @	10 @	10 @	—
32	Italy 220 ITR 3	01.04.1996 A.Y. 1997-98	15 @ 25 @	15 +	20 @	20 @	15% tax on dividends if at least 10% of the capital is owned by Company; in other cases 25%.Protocol amending the DTAA with Italy has been signed on 13th December, 2005 and awaiting notification, pursuant to which the tax rates would change to 10% for Dividends, Interest, Royalties and Fees for Technical Services. Concepts of Service PE and conditions to treat Insurance PEs to be introduced.
33	Japan 182 ITR 380 245 ITR 15 284 ITR 64 345 ITR 91	01.04.1990 A.Y. 1991-92	10 @	10 @	10 @	10 @	10% rate is applicable with effect from 1 April 2007 vide Notification No. 186/2006 dated 19 July 2006. Interest derived by following entities is exempt: The Government, a political sub-division or a local authority of the other contracting state; (i) in case of Japan, the Bank of Japan; Japan Bank for international Co-operation; the Japan International Co-operation Agency; such other financial institutions the capital of which is wholly owned by the Government of Japan as may be agreed upon from time to time between the governments of the two Contracting states; (ii) in case of India, the reserve Bank of India; the Export-Import Bank of India; such other financial institutions the capital of which is wholly owned by the Government of India as may be agreed upon from time to time between the governments of the two Contracting states and By any resident of the other Contracting state with respect to Debt-claims guaranteed or indirectly financed (a) and (b) above.
34	Jordan 241 ITR 69	01.04.2000 A.Y. 2001-02	10 @	10 @	20 @	20 @	—
35	Kazakhstan 228 ITR 162	01.04.1998 A.Y. 1999-2000	10 @	10 @	10 @	10 @	—
36	Kenya 157 ITR 8	01.04.1984 A.Y. 1985-86	15 @	15 +	20 +	No separate provision	There is a specific clause for management and professional fees which is taxable income @ 17.5 %.
37	Korea (South) 165 ITR 191 PIB press release dated 6 May 2015	01.04.1986 A.Y. 1987-88	15 @ 20 @	15 @ 10 @	15 @	15 @	15% tax on dividend if at least 20% of the capital is owned by co.; in other cases 20%. For interest at 10% if received by bank or government, other cases it is 15%. The Union Cabinet has given its approval for revising DTAA between India and Korea. The revised DTAA is awaited
38	Kuwait 295 ITR 44	01.04.2008 A.Y. 2009-10	10 @	10 @	10 @	10 @	Interest derived and beneficially owned by following entities is exempt the Government, a political sub-division or a local authority Central Banks of India and Kuwait and any other Government agency or financial institution as may be agreed upon. For LOB Clause – Refer Note 6.
39	Kyrgyz Republic 248 ITR 218	01.04.2002 A.Y. 2003-04	10 @	10 @	15 @	15 @	Interest paid to government or government F.I. or Central Bank exempt. See protocol for other articles.
40	Latvia 363 ITR 177	01.04.2014 A.Y. 2015-16	10 @	10 @	10 @	10 @	Interest arising and beneficially owned by the following shall be exempt (a) The Government, a political sub-division or a local authority; (b)(i) in case of India, the RBI, EXIM Bank, the National Housing Bank (ii) In case of Latvia, the Bank of Latvia, the Mortgage and Land Bank of Lativa and the Latvian Guarantee Agency or (c) any other similar institution, as may be agreed upon from time to time between the competent authorities of the Contracting States through exchange of letters (d) a resident of India, if the interest is paid in respect of a loan made, guaranteed or insured or a credit extended, guaranteed or insured by the Government, a political sub-division or a local authority of India or by any of the bodies mentioned in (b)(i) or (c) or (e) a resident of Latvia, if the interest is paid in respect of a loan made, guaranteed or insured or a credit extended, guaranteed or insured by the Government or a local authority of Latvia or by any of the bodies mentioned in (b) (ii) or (c). For LOB Clause – Refer Note 6
41	Libya 137 ITR 27	01.04.1983 A.Y. 1984-85	*	*	*	No separate provision	* Dividend, interest, royalty will be taxable as per domestic law of source country.
42	Lithuania 346 ITR 116	01.04.2013 A.Y 2014-15	*5 @ 15 @	**10 @	10 @	10 @	*5% tax on dividends if at least 10% of the capital is owned by Company; in other cases 15%. ** Interest derived and beneficially owned by following entities is exempt The Government, a political sub-division or a local authority (i) in case of India, the Reserve Bank of India, the Export-Import Bank of India, the National Housing Bank and (ii) in case of Lithuania, the Bank of Lithuania Any other financial institution wholly owned by the Government as agreed upon from time to time between the competent authorities of the Contracting states. For LOB Clause – Refer Note 6
43	Luxembourg 318 ITR 9	01.4.2010 A.Y. 2011-12	10 @	10 @	10 @	10 @	Interest derived and beneficially owned by following entities exempt: The Government, a political sub-division or a local authority of Luxembourg In case of India, the RBI, EXIM and NHB Any other institutions as may be agreed from time to time between the competent authorities of the Contracting States. For LOB Clause – Refer Note 5
44	Malaysia 353 ITR 53	01.04.2013 A.Y. 2014-15	5 @	10 @	10 @	10 @	Interest derived and beneficially owned by following entities is exempt (a) In case of Malaysia, Government of Malaysia; Government of the States; Bank Negara Malaysia, the local authorities, the statutory bodies wholly owned by the Government; Export-Import Bank of Malaysia Berhad (EXIM Bank); Bank Pembangunan Malaysia Berhad (Development Bank of Malaysia Berhad); Bank Perusahaan Kecil & Sederhana Malaysia Berhad (Small & Medium Enterprise Bank of Malaysia Berhad); and Malaysia Industrial Development Finance Berhad (b) In case of India, the Government, political sub-divisions, statutory bodies wholly owned by the Government; local authorities, EXIM Bank, RBI, IFCI, IDBI, NHB, SIDBI and (c) Any other institutions as may be agreed from time to time between the competent authorities of the Contracting states. For LOB Clause – Refer Note 5
45	Malta Notification No.34/2014/F.No.504/06/2003-FTD-I dated 5 August 2014	01.04.2015 A.Y 2016-17	10 @*	10 @	10 @	10 @	*As per para 1 of the protocol, under the full imputation system adopted by Malta, there is no withholding tax on dividends in addition to the tax chargeable in respect of the profits or income of the company out of which the dividends are paid.
							Interest derived and beneficially owned by following entities is exempt (a) the Government, a political sub-division or a local authority of the other Contracting state; or (b) (i) in case of India, the RBI, the Export-Import Bank of India and the National Housing Bank or (ii) in case of Malta, the Central Bank of Malta. (c) any other institution as may be agreed upon from time to time between the competent authorities of the Contracting states through exchange of letters. For Limitation Of Benefits (‘LOB’) Clause – Refer Note 5.
46	Mauritius 146 ITR 214 243 ITR 25	01.04.1982 A.Y. 1983-84	5 @ 15 @	* @	15 +	No separate provision	5% tax on dividends if at least 10% of the capital is owned by Company, in other cases 15%.* Interest exempt if beneficially owned by Government or bank carrying bona fide banking business, in other cases rate as per domestic laws.
47	Mexico 329 ITR 7	01.04.2011 A.Y. 2012-13	10 @	10 @	10 @	10 @	Interest arising in either state would be exempt from tax if it is derived / paid by the Government, political sub-division, local authority or central bank of the other state Interest arising in Mexico and paid to RBI, EXIM bank and NHB will be exempt from Mexican tax. Interest arising in India and paid to Banco de Mexico, Banco Nacional de Comercio Exterior, S.N.C, Nacional Financiera S.N.C. and Banco Nacional de Obras y Servicios, S.N.C. will be exempt from Indian tax. For LOB Clause – Refer Note 6
48	Mongolia 222 ITR 44	01.04.1994 A.Y. 1995-96	15 @	15 @	15 @	15 @	—
49	Montenegro 308 ITR 42	01.04.2009 A.Y. 2010-11	5 @ 15 @	10 @	10 @	10 @	5% tax on dividends if at least 25% of the capital is owned by Company; in other cases 15%. Interest derived and beneficially owned by following entities is exempt the Government, a political sub-division or a local authority; or RBI and the Central Bank of Montenegro.
50	Morocco 243 ITR 26	01.04.2001 A.Y. 2002-03	10 @	10 @	10 @	10 @	Interest exempt if beneficially owned by Government or Government owned banks
51	Mozambique 335 ITR 65	01.04.2012 A.Y 2013-14	7.5 @	10 @	10 @	No separate provision *	Interest derived and beneficially owned by following entities will be exempt The Government, a political sub-division or a local authority (i) In case of India, the Reserve Bank of India, the Export-Import Bank of India, the National Housing Bank and (ii) in case of Mozambique, the Bank of Mozambique Any other institution as agreed upon from time to time between the competent authorities. *Any remuneration for technical assistance relating to the use of or the right to use the right or property referred to in the definition of property is included in the term royalty. For LOB Clause – Refer Note 6
52	Myanmar 314 ITR 6	01.04.2010 A.Y. 2011-12	5 @	10 @	10 @	No separate provision	Interest derived and beneficially owned by following entities is exempt the Government, a political sub-division or a local authority (i) in case of Myanmar, the Central Bank of Myanmar, Myanmar Foreign Trade Bank, Myanmar Investment and Commercial Bank, Myanmar Economic Bank (ii) in case of India, the RBI, EXIM Bank, NHB, SIDBI any other institutions as may be agreed from time to time between the competent authorities of the Contracting states. For LOB Clause – Refer Note 6
53	Namibia 236 ITR 230	01.04.2000 A.Y. 2001-02	10 @	10 @	10 @	10 @	–Unique LOB clause - Each country gets right to tax income exempted from tax in other country
54	Nepal 345 ITR 128	01.04.2013 A.Y 2014-15	*5 @ 10 @	**10 @	15 @	No separate provision	*5% tax on dividends if at least 10% of the capital is owned by Company; in other cases 10%. **Interest derived and beneficially owned by following entities is exempt The Government, a political sub-division or a local authority (i) in case of India, the Reserve Bank of India and (ii) in case of Nepal, the Nepal Rashtra Bank any other institution as may be agreed upon from time to time between the competent authorities of the Contracting states. For LOB Clause – Refer Note 6
55	Netherlands 177 ITR 72 239 ITR 56 350 ITR 39	01.04.1997 [01.04.87 for Air transport] A.Y. 1998-99	10 @	10 @	10 @	10 @	Reduced rates for dividend and interest from 1.4.1997. Interest earned by the Government, certain institutions like the Central Banks, local authorities or institutions the capital of which is held by the Government of the respective countries etc. is exempt. Protocol replaces Article 26 - Exchange of Information to make it more comprehensive.
56	New Zealand 166 ITR 90 225 ITR 15 242 ITR 147	01.04.1987 A.Y. 1988-89	15 @	10 @	10 @	10 @	Protocol restricting treaty benefits to Indian or New Zealand residents. Reduced rates come into force from 1.4.2000 and apply to A.Y. 2001-02.
57	Norway 345 ITR 157	01.04.2012 A.Y 2013-14	10 @	10 @	10 @	10 @	Interest derived and beneficially owned by the following entities is taxable only in the contracting state of which the recipient is resident: in case of Norway.(i) the Government, political sub- division, local authority, (ii) Central Bank of Norway, (iii) the Government Pension Fund, (iv) the Norwegian Guarantee Institute for Export Credits, (v) Norfund to the extent they are wholly owned and controlled by the Government of Norway (in case of India, (i) the Government, political sub- division, local authority, (ii) the Reserve Bank of India, (iii) the Export Import Bank of India and the National Housing Bank to the extent they are wholly owned and controlled by the Government of India or Reserve Bank of India any other institution as may be agreed upon from time to time between the competent authorities of the Contracting states. For LOB Clause – Refer Note 6.
58	Oman (Sultanate of) 228 ITR 21	01.04.1998 A.Y. 1999-00	10 @ 12.5 @	10 @	15 @	15 @	10% tax on dividends if beneficial owner is company owning at least 10% of capital in payer company. 12.5% in all other cases.
59	Philippines 219 ITR 60	01.04.1995 A.Y. 1996-97	15 @ 20 @	10 @ 15 @	15 @	No separate provision	15% tax on dividends if at least 10% of the capital is owned by Company; in other cases 20%. Interest at 10% in hands of financial institutions, Insurance Company and also on public issues of bond, debentures, etc., and at 15% in all other cases.
60	Poland 182 ITR 147 Modified via Protocol Notification No. 47/2014 F.No. 501/08/1979-FTD-I dated 24 September 2014	01.04.1990 A.Y. 1991-92 01.04.2015 A.Y 2016-17	10 @	10 @	15 @	15 @	Interest derived and beneficially owned by following entities is exempt (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. Interest derived in connection with a loan or credit extended or endorsed and beneficially owned by following entities is exempt (i) in the case of Poland, Bank Gospodarstwa Krajowego (BGK), to the extent such interest is attributable to financing of exports and imports only (ii) in the case of India, the Export-Import Bank of India (Exim Bank) to the extent such interest is attributable to financing of exports and imports only (iii) any institution of a Contracting State in charge of public financing of external trade (iv) any other person provided that the loan or credit is approved by the Government of the first-mentioned Contracting State. For LOB clause – Refer Note 5.
61	Portuguese Republic 244 ITR 57	1.4.2001 A.Y. 2002-03	10 @ 15 @	10 @	10 @	10 @	10% tax on dividend if at least 25% of the capital is owned by a Company for an uninterrupted period of 2 years prior to payment of the dividend, otherwise 15% limitation of tax on interest to be settled under Mutual Agreement Procedure by competent Authorities. See protocol to the Treaty for details on other Articles.
62	Qatar 242 ITR 165	01.04.2001 A.Y. 2002-03	5 @ 10 @	10 @	10 @	10 @	5% tax on dividend if beneficial owner is company owning, at least 10% of capital in payer company. 10% in all other cases.
63	Romania Notification No 13/2014 F.No.501/10/1995-FTD-I	01.04.14 A.Y 2015-16	10 @	10 @	10 @	10@	Interest derived and beneficially owned by following entities is exempt (a) the Government, an administrative – territorial unit political sub-division or a local authority of the other Contracting state; or (b) (i) in case of Romania, the National Bank of Romania, Export-Import Bank of Romania, and (ii) in case of India, the Reserve Bank of India,Export-Import Bank of India, the National Housing Bank, or (c) any other institutions as may be agreed upon from time to time between the competent authorities of the Contracting states through exchange of letters. For LOB Clause – Refer Note 6
64	Russian Federation 233 ITR 90	01.04.99 A.Y. 2000-01	10 @	10 @	10 @	10 @	—
65	Saudi Arabia 286 ITR 87	01.04.2007 AY 2008-09	5 @	10 @	10 @	No Separate provision	Interest derived and beneficially owned by following entities is exempt (a) the Government, a political sub-division or a local authority; or (b) RBI, Export-Import Bank of India, the National Housing Bank, the Saudi Arabian Monetary Agency (c) any other financial institutions wholly owned directly and controlled by the Government. ”Resident” includes (in case of Saudi Arabia), an Indian national who is present in Saudi Arabia for a period of at least 183 days in a fiscal year. “Zakat” is treated as a tax on income. DTA to be reviewed after 5 years for inclusion of FTS clause
66	Serbia 308 ITR 18	01.04.2009 A.Y. 2010-11	5 @ 15 @	10 @	10 @	10 @	5% tax on dividends if at least 25% of the capital is owned by Company; in other cases 15%. Interest derived and beneficially owned by following entities is exempt the Government, a political sub-division or a local authority; or RBI and Central Bank or National Bank.
67	Singapore 209 ITR 1 Modified via Protocol signed pursuant to CECA 276 ITR 142 Further Modified via Protocol 337 ITR 93	01.04.1994 A.Y. 1995-96	10 @ 15 @	10 @ 15 @	10 @	10 @	10% tax on dividend if at least 25% of the capital is owned by co. In other cases 15%. Interest at 10% if recipient is bank, insurance co. or similar financial institution. In other cases 15%. Article on Capital Gains similar to India - Mauritius DTAA subject to satisfaction of additional conditions in the LOB clause via Protocol dated 29th June 2005 (effective A. Y. 2006-2007). Protocol replaces Article 28- Exchange of Information to make it more comprehensive.
68	Slovak Republic Notification No. 25/2015 F.No. 501/12/1995-FTD-I dated 23 March 2015	01.04.2000 A.Y. 2001-02	10@	10@	10@	10@	The Agreement signed between India and Czechoslovak Socialist Republic for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income continues to be applicable in respect of the Slovak Republic, being one of the independent States to have succeeded the Czechoslovak Socialist Republic.
69	Slovenia 275 ITR 144	01.04.2006 A.Y. 2007-08	5 @ 15 @	10 @	10 @	10 @	5% tax on dividend if beneficial owner is company owning at least 10% of capital in payer company, 15% in all other cases.
70	South Africa 231 ITR 23 Modified via protocol notification No. 10/2015-FT & TR-II dated 2 February 2015	01.04.1998 A.Y. 1999-2000	10 @	10 @	10 @	10 @	Protocol effective from 26 November 2014 replaces Article 28- Exchange of Information to make it more comprehensive.
71	Spain 214 ITR 197	01.04.1996 A.Y. 1997-98	15 @	15 @	10 @	10 @	Royalty payment for use of or right to use equipment was taxable at 10%, in other cases taxable rate was 20%. However, Royalties and Fees for Technical Services taxable at 10% as per lower rate specified in Indo-German DTAA w.e.f. 26-10-1996.
72	Sri Lanka 363 ITR 39	01.04.2014 A.Y. 2015-16	7.5 @	10 @	10 @	10 @	Interest derived and beneficially owned by the following shall be exempt a) the Government, a political sub-division or a local authority; (b)(i) in the case of India, the RBI, Exim Bank, the National Housing Bank and (ii) in case of Srilanka, the Central Bank of Srilanka or (c) any other institution the capital of which is wholly owned by the Government of that
							state, as may be agreed upon from time to time between the competent authorities of the Contracting States through exchange of letters. For LOB Clause – Refer Note 6.
73	Sudan 271 ITR 3	01.04.2005 A. Y. 2006-07	10 @	10 @	10 @	10 @	Interest or gains derived and beneficially owned by following entities is exempt (a) the Government, a political sub-division or a local authority; (b) in case of India, the RBI, IFCI, IDBI, NHB, SIBBI and ICICI; (c) in case of Sudan, the Bank of Sudan and the Sudanese Development Corporation; or (d) any other institution as may be agreed upon from time to time between the competent authorities of the Contracting States through exchange of letters
74	Sweden 229 ITR 11	01.04.1998 A.Y. 1999-2000	10 @	10 @	10 @	10 @	—
75	Swiss Confederation 214 ITR 223 248 ITR 209	01.04.1995 A.Y. 1996-97	10 @	10 @	10 @	10 @	Extensive Modifications to many articles including P.E. come into effect from 1.4.2001.
76	Syria 312 ITR 9	01.04.2009 A.Y. 2010-2011	5 @ 10 @	10 @	10 @	No separate provision	5% tax on dividend at least 10% of capital is held by company, 10% in all other cases Interest derived and beneficially owned by following entities is exempt the Government, a political sub-division or a local authority; or RBI and the Central Bank of Syria For LOB Clause – Refer Note 6.
77	Tajikistan 315 ITR 1	01.04.2010 A.Y. 2011-12	5 @ 10 +	10 @	10 @	No separate provision	Dividend is taxable at 5% where the beneficial owner is a company holding at least 25% of the share capital. Interest derived and beneficially owned by following entities is exempt the Government, a political sub-division or a local authority; or the RBI, Export-Import Bank of India, the National Housing Bank (India) and the National Bank, Tajikistan. Any other institution agreed upon between the Contracting States. For LOB Clause – Refer Note 6.
78	Tanzania 343 ITR 5	01.04.2012 A.Y. 2013-14	*5 @ 10 @	**10 @	10 @	No separate provision	*5% tax on dividends if at least 25% of the capital is owned by Company; in other cases 10% 10% Interest derived and beneficially owned by following entities is exempt: the Government, a political sub-division or a local authority; (i) in case of India, RBI, Export-Import Bank of India, the National Housing Bank and (ii) in case of Tanzania, the Bank of Tanzania any other institution as agreed upon from time to time between the competent authorities of the Contracting states. For LOB Clause – Refer Note 6.
79	Thailand 161 ITR 82	01.01.1987 A.Y. 1988-89	15 @ 20 @	10 + 25 +	15 +	No separate provision	Dividend taxable at 15% if payer is industrial company and payee company is holding at least 10% of voting shares in it. Taxable at 20% if payee is industrial company or recipient company is beneficial owner holding at least 25% of voting shares. In other cases as per domestic law. Interest taxable at 10% if recipient is financial institution including insurance company, otherwise at 25%.
80	Trinidad and Tobago 240 ITR 184	01.04.2000 A.Y. 2001-02	10 @	10 @	10 @	10 @	—
81	Turkey 224 ITR 145	01.04.1994 (notified on 03.02.97) A.Y. 1995-96	15 @	10 @	15 @	15 @	Interest is taxable at 10% if recipient is a bank or a financial institution, in other cases 15%.
82	Turkmenistan 228 ITR 44	01.04.1998 A.Y. 1999-2000	10 @	10 @	10 @	10 @	—
83	Uganda 270 ITR 83	01.04.2005 A. Y. 2006-07	10 @	10 @	10 @	10 @	Interest derived and beneficially owned by following entities is exempt (a) Government, political sub-division or a local authority of the other Contracting State; or (b) the Central Bank or the other Contracting State; or any other bank, or Government financial institutions/agencies that may be mutually agreed upon between the two Contracting States.
84	Ukraine 253 ITR 54	01.04.2002 A.Y. 2003-04	10 @ 15 @	10 @	10 @	10 @	Dividend taxable @ 10% if at least 25% of the capital beneficially owned, otherwise @ 15%
85	United Arab Emirates 205 ITR 49 Notification no. 282 dated 28.11.07 295 ITR 40 352 ITR 43	01.04.1994 A.Y. 1995-96	10 @	5 @ 12.5 @	10 @	No separate provision	Tax on interest at 5% in cases of banks, etc. and at 12.5% in all other cases. Interest exempt in case of Government, political sub-division or a local authority and Central Banks of the two states Protocol replaces Article 28- Exchange of Information to make it more comprehensive. For LOB Clause – Refer Note 6
86	United Arab Republic (Egypt) 74 ITR 11	01.01.1970 A.Y. 1971-72 (01.01.1961 operation of aircraft)	*	*	Taxable only in source country	No separate provision	* For rate of tax and basis of taxation refer to the DTAA provisions.
87	United Kingdom 206 ITR 235 Modified via Protocol Notification No. 10/2014 F.No. 505/3/1986-FTD-I dated 10 February 2014	01.04.1994 A.Y. 1995-96	15 @* 10 @	15 @** 10 @	[See Note 2]	[See Note 2]	* Dividend taxable @15% where those dividends are paid out of income derived directly or indirectly from immovable property within the meaning of Article 6 by an investment vehicle which distributes most of this income annually and whose income from such immovable property is exempted from tax, in all other cases 10% **Interest taxable at 10% if beneficial owner is bank which is resident, in other cases at 15%. Interest paid to following entities is exempt: Government, political sub-division or a local authority; RBI, United Kingdom Export Credits Guarantee Department, Exim bank, Export Credits and Guarantee Corporation of India. Protocol replaces Article 28- Exchange of Information to make it more comprehensive For LOB Clause – Refer Note 6
88	United States of America 187 ITR 102	01.04.1991 A.Y. 1992-93	15 @ 25 @	10 @ 15 @	[See Note 2]	[See Note 2]	15% tax on dividends if at least 10% of the capital is owned by Company, in other cases 25%. Interest taxable at 10% if recipient is bona fide bank or financial institution, in other cases 15%. Technical Services termed as included services. Treaty has LOB clause and P.E. Tax Articles. Protocol is very important. For LOB Clause – Refer Note 6
89	Uruguay CBDT Circular No. F.No.500/138/2002-FTD-II	01.04.2014 A.Y. 2015-16	5 @	10 @	10 @	10 @	Interest arising in a Contracting State shall be exempt from tax in that State, provided that it is derived and beneficially owned by: The Government, a political sub-division or a local authority of the other Contracting state; or (i) in the case of India, the Reserve Bank of India, the Export-Import bank of India; the National Housing bank and (ii) in the case of Uruguay, Banco Central del Uruguay, Banco de la Republica Oriental del Uruguay, Banco Hipotecario del Uruguay or c) Any other institution as may be agreed upon from time to time between the Competent authorities of the Contracting States through exchange of letters. For LOB Clause – Refer Note 6.
90	Uzbekistan 223 ITR 60 349 ITR 171	01.04.1993 A.Y. 1994-95 01.04.2013 A.Y 2014-15	15 @ 10 @	15 @ 10 @	15 @ 10 @	15 @ 10 @	* Interest received from transaction approved by source country’s Government will be exempt. In other cases normal provision of domestic tax law will apply. Protocol replaces Article 28- Exchange of Information to make it more comprehensive. For LOB Clause – Refer Note 6.
91	Vietnam (Socialist Republic of Vietnam) 214 ITR 137	01.04.1996 A.Y. 1997-98	10 @	10 @	10 @	10 @	—
92	Zambia 146 ITR 233	A.Y. 1979-80	5 + 15 +	10 +	10 +	10+	Dividend taxable at 5% if the recipient is a company which holds at least 25% of the shares during at least 6 months before the date of payment and at 15% in all other cases. Article 14 is titled ‘Management and Consultancy Fees’

Notes:

1. In most cases the aforesaid rates of tax are on gross income but in some cases, tax is levied on the net income and, hence, each article of the respective agreement/s must be carefully analyzed and applied.
2. In the Country of Source, Royalties and Fees for Technical Services are taxed at following rates :
   1. 10% for Equipment Rental and for Services ancillary or subsidiary thereto.
   2. for other cases.
      1. during 1st 5 years of Agreement 15% if Government or Specified Organization is payer, 20% for other payers
      2. subsequent years, 15% in all cases Income of Government/Government Organizations exempt from Taxation in Country of Source.
3. Pages referred to in citation are statute page Nos.
   @ - Beneficial Ownership required
   + - Beneficial Ownership may not be required
4. The rate of tax under the Income-tax Act, 1961 (‘the Act’) on royalty or fees for technical services receivable by a foreign company is as below:
   For agreements made on or after 1 April 1976 –10% (*With effect from 1 April 2016 i.e. A.Y. 2016-17)
   As per Section 90(2) of the Act, this rate may be adopted if it is lower than rate under DTAA.
5. Separate Limitation of Benefits Article to combat treaty shopping. Anti-avoidance provisions under domestic law will override treaty
6. Separate Limitation of Benefits Article to combat treaty shopping.
7. List of important Circulars on DTAA and Income of Non Residents in India

Circular / Notification No. & Date	Reference	Matter
No. 5 DT. 28-09-2004:	270 ITR (St.) 0031	Taxation of business process outsourcing units of Non-Residents in India. (Revised, withdrawing Circular No. 1 dated 02-01-2004 [265 ITR (St.) 0023])
No. 1 of 2004 DT. 02-01-2004:	265 ITR (St.) 0023	Taxation of business process outsourcing units of Non-Residents in India.
No. 1 of 2003 DT. 10-02-2003:	260 ITR (St.) 0245	Residential status under Indo Mauritian Tax Treaty.
No. 10 DT. 09-10-2002	258 ITR (St.) 9	Submission of No Objection Certificate in case of remittance to a non-resident
No 787 DT. 10-02-2000	243 ITR (St.) 1	Taxation of income of artists, entertainers, sportsmen etc. from international/local events.
No. 742 DT. 02-05-1996: No. 765 DT. 15-04-1998: No. 6/2001, dated 5-3-2001	219 ITR (St.) 0049 231 ITR (St.) 0010 248 ITR (St.) 247	Taxation of foreign telecasting companies.
No. 740 DT. 17-04-1996:	219 ITR (St.) 0008	Taxability of remittance of interest by Branch of a foreign bank to its head office.
No. 734 DT. 24-01-1996:	217 ITR (St.) 0074	Rates of TDS under DTAA between India & U.A.E.
No. 728 DT. 30-10-1995:	216 ITR (St.) 0141A	Clarification regarding rate of TDS u/s. 195 for remittance, clarified that such rates shall be as provided in relevant Finance Act or in DTAA whichever is more beneficial to the assessee.
No. 588 DT. 02-01-1991:	187 ITR (St.) 0063	Taxability of import of system software from Non Residents.
No. 333 DT. 02-04-1982:	137 ITR (St.) 0001B	A conflict in application of DTAA and provisions of Income-tax Act, 1961, clarified that beneficial provision shall apply.
No. 108 DT. 20-03-1973:		In relation to exchange of information between the countries for preventing evasion or avoidance of taxes and recovery thereof.
Nos. 90 and 91/ 2008 DT 28-08-2008	304 ITR 63	Where treaty provides that any income of an Indian Resident “may be taxed” in the other country, such income shall be included in the total Income of such resident and relief shall be available as per DTAA.
CBDT Instruction No. 3 /2004 dated 19-03-2004		Suspension of collection of taxes during operation of Mutual Agreement Procedure in respect of India-UK DTAA
Circular No.7/2009 [F.No. 500/135/2007-FTD-I] dated 22 October 2009	318 ITR 1	Circular No 23 dated 23rd July 1969 and Circular No 163 dated 29th May, 1975 (both relating to taxability and accrual of Income of Non-resident in India) are withdrawn. Further, Circular No. 786 dated 7th February 2000 (relating to clarification of taxability of export commission in the hands of non-resident in India) is also withdrawn
Circular No.7 dated 23 October 2007 amended on 27 September 2011	338 ITR 1	The CBDT has laid down the procedure for refund of tax deducted at source under Section 195 of the Income-tax Act, 1961 to the person deducting tax at source from the payment to a non-resident. Refund will now be available to residents who have deducted tax at a higher rate, relying on a Tax Treaty, while a lower rate of tax deduction has been prescribed under domestic law.
Notification No.57/2013/F.No.142/16/2013-TPL	356 ITR 21	The CBDT has amended Rule 21AB of Income Tax Rules, 1962. As per the amendment, subject to provisions of Section 90 and 90A of the Act, if the TRC doesn’t contain specified details viz. status of the taxpayer, country of registration, PAN, tax identification number etc.; non-resident taxpayer to furnish the same through Form 10F.
Notification No. 93/2009 dated 9 December 2009	320 ITR 14	“The territory in which the taxation law administered by the Ministry of Finance in Taipei is applied” has been notified as ‘Specified Territory’ and “India-Taipei Association in Taipei” and “Taipei Economic and Cultural Centre in New Delhi” have been notified as ‘Specified Association’ under Section 90A of the Income-tax Act, 1961.
Notification No. 22/2010/F.No. 142/5/2010-SO(TPL) dated 8 April 2010	323 ITR 52	The following areas outside India have been notified as ‘Specified territory’ under Section 90 of the Income-tax Act, 1961: Bermuda; British Virgin Islands; Cayman Islands; Gibraltar; Guernsey; Isle of Man; Jersey; Netherlands Antilles; Macau
Notification No. 25/2010 [F.No. 500/124/97-FTD-II], dated 20 April 2010	323 ITR 52	Hong Kong Special Administrative Region of the People’s Republic of China has been notified as ‘Specified territory’ under Section 90 of the Income-tax Act, 1961
Notification No. 54/2012 [F.No. 503/14/2012-FTD-I(PT), dated 17 December 2012	350 ITR 4	Sint Maarten, a part of Kingdom of Netherlands, has been notified as ‘Specified territory’ under Section 90 of the Income-tax Act, 1961
Notification No F.No.504/05/2003-FTD-I	359 ITR 8	Cyprus has been notified as ‘notified jurisdictional area’ under Section 94A of the Income-tax Act, 1961
Notification No.03/2011-FTD-II [F.No. 500/96/97-FTD_II] dated 10 January 2011	330 ITR 6	Agreement among Governments of SAARC Member States for avoidance of double taxation and mutual administrative matters is effective from 1 April 2011
Notification No.05/2011/F.No.503/2/2009-FTD-I	330 ITR 83	Tax Information Exchange Agreement between India and Bermuda signed on 7 October 2010
Notification No.25/2011/F.No.503/6/2009-FTD-I	334 ITR 296	Tax Information Exchange Agreement between India and Bahamas signed on 11 February 2011
Notification No.26/2011/F.No.503/01/2008-FTD-I	334 ITR 313	Tax Information Exchange Agreement between India and Isle of Man was signed on 4 February 2011
Notification No.54/2011/F.No.503/10/2009-FTD-I	338 ITR 25 332 ITR 4	Tax Information Exchange Agreement between India and British Virgin Islands signed on 9 February 2011 Press Note / Release No. 402/92/2006-MC (43 of 2011)
Notification No.61/2011/F.No.503/03/2009-FTD-I	340 ITR 1	Tax Information Exchange Agreement between India and Cayman Islands was signed on 21 March 2011
Notification No.26/2012/F.No.503/6/2008-FTD-I	346 ITR 1	Tax Information Exchange Agreement between India and Jersey was signed on 03 November 2011
Notification No.30/2012/F.No.503/01/2009-FTD-I	346 ITR 169	Tax Information Exchange Agreement between India and Guernsey was signed on 20 December 2011
Notification No.32/2012-FT-TR-II/F.No.503/02/2010-FT&TR-II	348 ITR 132	Tax Information Exchange Agreement between India and Liberia was signed on 03 October 2011
Notification No.43/2012-FT&TR-II/F.No.503/04/2009-FT&TR-II	349 ITR 3	Tax Information Exchange Agreement between India and Macao Special Administrative Region of the People’s Republic of China was signed on 03 January 2012
Notification No. 22/2013/504/3/2010 FTD-II	352 ITR 46	Tax Information Exchange Agreement between India and Argentina was signed on 21 November 2011.
Notification No. 28/2013[F.No.503/11/2009-FTD-I	352 ITR 58	Tax Information Exchange Agreement between India and Gibraltar was signed on 01 February 2013.
Notification No. 43/2013/F. No. 503/4/2009 – FTD-I.	355 ITR 197	Tax Information Exchange Agreement between India and Monaco was signed on 31 July 2012.
Notification No. 3/2014/F.No. 503/4/2012-FTD-I	360 ITR 44	Tax Information Exchange Agreement between India and Belize was signed on 18 September 2013.
Notification No. 44/2013/F.No.501/03/1994-FT&TR-II dated 19 June 2013		Tax Information Exchange Agreement between India and Bahrain was signed on 31 May 2012.
Notification No. 30/2014/F.No. 503/4/2009-FTD-I dated 6 June 2014		Tax Information Exchange Agreement between India and the Principality of Liechtenstein was signed on 28 March 2013.
Notification No. 48/2011/F.No. 500/02/2001/FTD-II	337 ITR 96	Agreement between India – Taipei Association In Taipei and Taipei Economic and Cultural Center in New Delhi for Avoidance of Double Taxation and the prevention of Fiscal Evasion with respect to Taxes on Income shall be effective from 1 April 2012. The Agreement notifies the following rates for taxes on income:- Dividend – 12.5%@ Interest – 10%@ Interest will be exempt if derived and beneficially owned by The authority administering a territory, a sub-division or a local authority of other territory; or Central Banks and Export-Import Banks of the territories referred above; or Any other institution as may be identified and accepted from time to time by competent authorities of both the territories. Royalty and Fees for Technical Services – 10%@