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29.
Agreement for avoidance of double taxation
and prevention of fiscal evasion with
Mauritius Whereas
the annexed Convention between the
Government of the Republic of India and the
Government of Mauritius for the avoidance of
double taxation and the prevention of fiscal
evasion with respect to taxes on income and
capital gains and for the encouragement of
mutual trade and investment has come into
force on the notification by both the
Contracting States to each other on
completion of the procedures required by
their respective laws, as required by
Article 28 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 24A of
the Companies (Profits) Surtax Act, 1964 (7
of 1964), the Central Government hereby
directs that all the provisions of the said
Convention, shall be given effect to in the
Union of India. Notification
:
GSR No. 920(E), dated 6-12-1983. TEXT
OF ANNEXED CONVENTION, DATED 24-8-1982 The
Government of the Chapter
I - Scope of the convention ARTICLE
1 -
Personal scope - This Convention
shall apply to persons who are residents of
one or both of the Contracting States. ARTICLE
2 -
Taxes covered - 1. The
existing taxes to which this Convention
shall apply are :
(a)
in the case of
(i)
the income-tax including any
surcharge thereon imposed under the
Income-tax Act, 1961 (43 of 1961) ;
(ii)
the surtax imposed under the
Companies (Profits) Surtax Act, 1964 (7 of
1964) ;
(hereinafter
referred to as “Indian tax”) ;
(b)
in the case of 2.
This Convention shall also apply to any
identical or substantially similar taxes
which are imposed by either 3.
The competent authorities of the Contracting
States shall notify to each other any
significant changes which are made in their
respective taxation laws. Chapter
II - Definitions ARTICLE
3 -
General definitions - 1. For
the purposes of this Convention, unless the
context otherwise requires:
(a)
the term “India” means the
territory of India and includes the
territorial sea and air space above it as
well as any other maritime zone referred to
in the Territorial Waters, Continental
Shelf, Exclusive Economic Zone and other
Maritime Zones Act, 1976 (Act No. 80 of
1976), in which India has certain rights and
to the extent that these rights can be
exercised therein as if such maritime zone
is a part of the territory of India ;
(b)
the term “
(i)
the territorial
(ii)
any area outside the territorial sea
of Mauritius which in accordance with
international law has been or may hereafter
be designated, under the laws of Mauritius
concerning the Continential Shelf, as an
area within which the rights of Mauritius
with respect to the sea bed and sub-soil and
their natural resources may be exercised ;
(c)
the terms “a
(d)
the term “tax” means Indian tax
or Mauritius tax as the context requires,
but shall not include any amount which is
payable in respect of any default or
omission in relation to the taxes to which
this Convention applies or which represents
a penalty imposed relating to those taxes ;
(e)
the term “person” includes an
individual, a company and any other entity,
corporate or non-corporate, which is treated
as a taxable unit under the taxation laws in
force in the respective Contracting States ;
(f)
the term “company” means any body
corporate or any entity which is treated as
a company or a body corporate under the
taxation laws in force in the respective
Contracting States ;
(g)
the terms “enterprise of a
Contracting State” and “enterprise of
the other Contracting State” mean
respectively an industrial, mining,
commercial, plantation or agricultural
enterprise or similar undertaking carried on
by a resident of a Contracting State and an
industrial, mining, commercial, plantation
or agricultural enterprise or similar
undertaking carried on by a resident of the
other Contracting State ;
(h)
the term “competent authority”
means in the case of India, the Central
Government in the Ministry of Finance
(Department of Revenue) or their authorised
representative; and in the case of
Mauritius, the Commissioner of Income-tax or
his authorised representative ;
(i)
the term “national” means any
individual possessing the nationality of a
(j)
the term “international traffic”
means any transport by a ship or aircraft
operated by an enterprise which has its
place of effective management in a 2.
In the application of the provisions of this
Convention by a Contracting State, any term
not defined therein shall, unless the
context otherwise requires, have the meaning
which it has under the laws in force of that
Contracting State relating to the areas
which are the subject of this Convention. ARTICLE
4
- Residents - 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 taxation therein by
reason of his domicile, residence, place of
management or any other criterion of similar
nature. The terms “resident of 2.
Where by reason of the provisions of
paragraph (1), an individual is a
resident of both Contracting States, then
his residential status for the purposes of
the Convention shall be determined in
accordance with the following rules :
(a)
he shall be deemed to be a resident
of the Contracting State in which he has a
permanent home available to him; if he has a
permanent home available to him in both
Contracting States, he shall be deemed to be
a resident of the Contracting State with
which his personal and economic relations
are closer (hereinafter referred to as his
“centre of vital interests”) ;
(b)
if the Contracting State in which he
has his centre of vital interests cannot be
determined, or if he does not have a
permanent home available to him in either
Contracting State, he shall be deemed to be
a resident of the Contracting State in which
he has an habitual abode ;
(c)
if he has an habitual abode in both
Contracting States or in neither of them, he
shall be deemed to be a resident of the
(d)
if he is a national of both
Contracting States or of neither of them,
the competent authorities of the Contracting
States shall settle the question by mutual
agreement. 3.
Where by reason of the provisions of
paragraph (1), a person other than an
individual is a resident of both the
Contracting States, then it shall be deemed
to be a resident of the 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 the enterprise is wholly or
partly carried on. 2.
The term “permanent establishment” shall
include—
(a)
a place of management ;
(b)
a branch ;
(c)
an office ;
(d)
a factory ;
(e)
a workshop ;
(f)
a warehouse, in relation to a person
providing storage facilities for others ;
(g)
a mine, an oil or gas well, a quarry
or any other place of extraction of natural
resources ;
(h)
a firm, plantation or other place
where agricultural, forestry, plantation or
related activities are carried on ;
(i)
a building site or construction or
assembly project or supervisory activities
in connection therewith, where such site,
project or supervisory activity continues
for a period of more than nine months. 3.
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 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 for
collecting information for the enterprise ;
(e)
the maintenance of a fixed place of
business solely—
(i)
for the purpose of advertising,
(ii)
for the supply of information, (iii)
for scientific research, or (iv)
for similar activities, which
have a preparatory or auxiliary character
for the enterprise. 4.
Notwithstanding the provisions of paragraphs
(1) and (2) of this article, a
person acting in a Contracting State for or
on behalf of an enterprise of the other
Contracting State [other than an agent of an
independent status to whom the provisions of
paragraph (5) apply] shall be deemed
to be a permanent establishment of that
enterprise in the first-mentioned State if :
(i)
he has and habitually exercises in
that first-mentioned State, an authority to
conclude contracts in the name of the
enterprise, unless his activities are
limited to the purchase of goods or
merchandise for the enterprise ; or
(ii)
he habitually maintains in that
first-mentioned State a stock of goods or
merchandise belonging to the enterprise from
which he regularly fulfils orders on behalf
of the enterprise. 5.
An enterprise of a 6.
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
Contracting State (whether through a
permanent establishment or otherwise) shall
not, of itself, constitute either company a
permanent establishment of the other. Chapter
III - Taxation of income ARTICLE
6
- Income from immovable property - 1.
Income from immovable property may be taxed
in the 2.
The term “immovable property” shall be
defined in accordance with the law and usage
of the 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 2.
Subject to the provisions of paragraph (3)
of this article, 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. Where the correct amount of
profits attributable to a permanent
establishment cannot be readily determined
or the determination thereof presents
exceptional difficulties, the profits
attributable to the permanent establishment
may be estimated on a reasonable basis. 3.
In determining the profits of a permanent
establishment, there shall be allowed as
deductions expenses which are incurred for
the purposes of the business 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. 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 from the operation of ships or
aircraft in international traffic shall be
taxable only in the 2.
If the place of effective management of a
shipping enterprise is aboard a ship, then
it shall be deemed to be situated in the 3.
The provisions of paragraph (1) of
this article shall also apply to profits
from the participation in a pool, a joint
business or an international operating
agency. 4.
For the purposes of paragraph (1),
interest on funds connected with the
operation of ships or aircraft in
international traffic shall be regarded as
profits from the operation of such ships or
aircraft, and the provisions of Article 11
shall not apply in relation to such
interest. 5.
The term “operation of ships or
aircraft” shall mean business of
transportation of persons, mail, livestock
or goods, carried on by the owners or
lessees or charterers of the ships or
aircraft, including the sale of tickets for
such transportation on behalf of other
enterprises, the incidental lease of ships
or aircraft and any other activity directly
connected with such transportation. ARTICLE
9 -
Associated enterprises - Where
(a)
an enterprise of a Contracting State
participates, directly or indirectly, in the
management, control or capital of an
enterprise of the other Contracting State,
or
(b)
the same persons participate,
directly or indirectly, in the management,
control or capital of an enterprise of a
Contracting State and an enterprise of the
other Contracting State, and
in either case conditions are made or
imposed between the two enterprises in their
commercial or financial relations which
differ from those which would be made
between independent enterprises, then any
profits which would, but for those
conditions, have accrued to one of the
enterprises, but, by reason of those
conditions have not so accrued, may be
included in the profits of that enterprise
and taxed accordingly. ARTICLE
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—
(a)
five per cent of the gross amount of
the dividends if the beneficial owner is a
company which holds directly at least 10 per
cent of the capital of the company paying
the dividends ;
(b)
fifteen per cent of the gross amount
of the dividends in all other cases. This
paragraph shall not affect the taxation of
the company in respect of the profits out of
which the dividends are paid. 3.
Notwithstanding the provisions of paragraph
(2), dividends paid by a company
which is a resident of Mauritius to a
resident of India may be taxed in Mauritius
and according to the laws of Mauritius, as
long as dividends paid by companies which
are residents of Mauritius are allowed as
deductible expenses for determining their
taxable profits. However, the tax charged
shall not exceed the rate of the Mauritius
tax on profit of the company paying the
dividends. 4.
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 Contracting State
of which the company making the distribution
is a resident. 5.
The provisions of paragraphs (1), (2)
and (3) shall not apply if the
beneficial owner of the dividends, being a
resident of the 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 a case, the provisions of
article 7 or article 14, as the case may be,
shall apply. 6.
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
insofar as such dividends are paid to a
resident of that other State or insofar 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, subject to the provisions of
paragraphs (3) and (4) of this
article, such interest may also be taxed in
the Contracting State in which it arises and
according to the laws of that State. 3.
Interest arising in a Contracting State
shall be exempt from tax in that State
provided it is derived and beneficially
owned by :
(a)
the Government or a local authority
of the other Contracting State ;
(b)
any agency or entity created or
organised by the Government of the other
Contracting State ; or
(c)
any bank carrying on a bona fide
banking business which is a resident of the
other Contracting State. 4.
Interest arising in a Contracting State
shall be exempt from tax in that Contracting
State to the extent approved by the
Government of that State if it is derived
and beneficially owned by any person [other
than a person referred to in paragraph (3)]
who is a resident of the other Contracting
State provided that the transaction giving
rise to the debt-claim has been approved in
this regard by the Government of the
first-mentioned Contracting State. 5.
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. 6.
The provisions of paragraphs (1), (2),
(3) and (4) shall not apply if the
recipient 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. 7.
Interest shall be deemed to arise in a
Contracting State when the payer is that
Contracting 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 in connection with which the
indebtedness on which the interest is paid
was incurred, and such interest is borne by
that permanent establishment, then such
interest shall be deemed to arise in the
Contracting State in which the permanent
establishment is situated. 8.
Where, by reason of a special relationship
between the payer and the recipient or
between both of them and some other person,
the amount of the interest paid, 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
recipient in the absence of such
relationship, the provisions of this article
shall apply only to the last-mentioned
amount. In that case, the excess part of the
payments shall remain taxable according to
the law of each Contracting State, due
regard being had to the other provisions of
this Convention. ARTICLE
12 -
Royalties - 1. Royalties
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 may also be taxed in
the Contracting State in which they arise,
and according to the law of that State, but
the tax so charged shall not exceed 15 per
cent of the gross amount of the royalties. 3.
The term “royalties” as used in this
Article means payments of any kind received
as a consideration for the use of, or the
right to use, any copyright of literary,
artistic or scientific work (including
cinematograph films, and films or tapes for
radio or television broadcasting), 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. 4.
The provisions of paragraphs (1) and
(2) shall not apply if the recipient
of the royalties, being a resident of a
Contracting State carries on business in the
other Contracting State in which the
royalties arise, through a permanent
establishment situated therein, or performs
in that other State independent personal
services from a fixed base situated therein,
and the right or property in respect of
which the royalties are paid is effectively
connected with such permanent establishment
or fixed base. In such a case, the
provisions of article 7 or article 14, as
the case may be, shall apply. 5.
Royalties shall be deemed to arise in a
Contracting State when the payer is that
Contracting State itself, a political
sub-division, a local authority or a
resident of that State, where, however, the
person paying the royalties whether he is a
resident of a Contracting State, or not, has
in a Contracting State a permanent
establishment in connection with which the
liability to pay the royalties was incurred,
and such royalties are borne by such
permanent establishment, then such royalties
shall be deemed to arise in the Contracting
State in which the permanent establishment
is situated. 6.
Where, by reason of a special relationship
between the payer and the recipient or
between both of them and some other person,
the amount of royalties paid, 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 recipient in the absence of such
relationship, the provisions of this article
shall apply only to the last-mentioned
amount. In that 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 from
the alienation of immovable property, as
defined in paragraph (2) of article
6, may be taxed in the Contracting State in
which such property is situated. 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 together with the whole
enterprise) or of such a fixed base, may be
taxed in that other State. 3.
Notwithstanding the provisions of paragraph
(2) of this article, gains from the
alienation of ships and aircraft operated in
international traffic and movable property
pertaining to the operation of such ships
and aircraft, shall be taxable only in the
Contracting State in which the place of
effective management of the enterprise is
situated. 4.
Gains derived by a resident of a Contracting
State from the alienation of any property
other than those mentioned in paragraphs (1),
(2) and (3) of this article
shall be taxable only in that State. 5.
For the purposes of this article, the term
“alienation” means the sale, exchange,
transfer, or relinquishment of the property
or the extinguishment of any rights therein
or the compulsory acquisition thereof under
any law in force in the respective
Contracting States. ARTICLE
14 -
Independent personal services - 1.
Income derived by a resident of a
Contracting State in respect of professional
services or other independent activities of
a similar character shall be taxable only in
that State unless he has a fixed base
regularly available to him in the other
Contracting State for the purpose of
performing his activities. If he has such a
fixed base, the income may be taxed in the
other Contracting State but only so such of
it as is attributable to that fixed base. 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, dentists and
accountants. ARTICLE
15 -
Dependent personal services - 1.
Subject to the provisions of articles 16,
17, 18, 19, 20 and 21, 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 Contracting State. 2.
Notwithstanding the provisions of paragraph
(1) of this article, 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 the relevant
“previous year” or “year of income”,
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. 3.
Notwithstanding the preceding provisions of
this article, remuneration in respect of an
employment exercised aboard a ship or
aircraft in international traffic, may be
taxed only in the Contracting State in which
the place of effective management of the
enterprise is situated. 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 Contracting State. ARTICLE
17 -
Artistes and athletes - 1.
Notwithstanding the provisions of articles
14 and 15, income derived by public
entertainers such as theatre, motion
picture, radio or television artistes and
musicians, and by athletes, from their
personal activities as such may be taxed in
the Contracting State in which these
activities are exercised. 2.
Where income is derived from personal
activities exercised by an entertainer or an
athlete in his capacity as such, and accrues
not to the entertainer or athlete himself
but to another person, that income may,
notwithstanding the provisions of articles
7, 14 and 15, be taxed in the State in which
the activities of the entertainer or athlete
are exercised. 3.
Notwithstanding the provisions of paragraph
(1) of this article, income derived
by an entertainer or an athlete who is a
resident of a Contracting State from his
personal activities as such exercised in the
other Contracting State, shall be taxable
only in the first-mentioned Contracting
State, if those activities in the other
Contracting State, are supported wholly or
substantially from the public funds of the
first-mentioned Contracting State, including
any of its political sub-divisions or local
authorities. 4.
Notwithstanding the provisions of paragraph
(2) of this article and articles 7,
14 and 15, where income is derived from
personal activities exercised by an
entertainer or an athlete in his capacity as
such in a Contracting State and accrues not
to the entertainer or athlete himself but to
another person, that income shall be taxable
only in the Contracting State, if that other
person is supported wholly or substantially
from the public funds of that other
Contracting State, including any of its
political sub-divisions or local
authorities. ARTICLE
18 -
Governmental functions - 1.
Remuneration, other than pension, paid by
the Government of a Contracting State, to an
individual who is a national of that State
in respect of services rendered to that
State shall be taxable only in that State. 2.
Any pension paid by the Government of a
Contracting State to an individual who is a
national of that State, shall be taxable
only in that Contracting State. 3.
The provisions of paragraphs (1) and
(2) of this article shall not apply
to remuneration and pensions in respect of
services rendered in connection with any
business carried on by the Government of
either of the Contracting States for the
purpose of profit. 4.
The provisions of paragraph (1) of
this article shall likewise apply in respect
of remuneration paid under a development
assistance programme of a Contracting State,
out of funds supplied by that State, to a
specialist or volunteer seconded to the
other Contracting State with the consent of
that other State. 5.
For the purposes of this article, the term
“Government” shall include any State
Government or local or statutory authority
of either Contracting State and, in
particular, the Reserve Bank of India and
the Bank of Mauritius. ARTICLE
19 -
Non-Government pensions and annuities
- 1. Any pension, other than a
pension referred to in article 18, or any
annuity derived by a resident of a
Contracting State from sources within the
other Contracting State shall be taxed only
in the first-mentioned Contracting State. 2.
The term “pension” means a periodic
payment made in consideration of past
services or by way of compensation for
injuries received in the course of
performance of services. 3.
The term “annuity” means a stated sum
payable periodically at stated times during
life or during a specified or ascertainable
period of time, under an obligation to make
the payments in return for adequate and full
consideration in money or money’s worth. ARTICLE
20 -
Students and apprentices - 1.
A student or business apprentice who is or
was a resident of one of the Contracting
States 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 Contracting
State on—
(a)
payments made to him from sources
outside that other Contracting State for the
purposes of his maintenance, education or
training, and
(b)
remuneration from employment in that
other Contracting State, in an amount not
exceeding Rs. 15,000 in Indian currency or
its equivalent in Mauritius rupees at the
parity rate of exchange during any
“previous year” or “year of income”,
as the case may be, provided that such
employment is directly related to his
studies or is undertaken for the purpose of
his maintenance. 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,
teacher and research scholar who is or was a
resident of one of the Contracting States
immediately before visiting the other
Contracting State at the invitation of that
other Contracting State or of a university,
college, school or other approved
institution in that other Contracting State
for the purpose of teaching or engaging in
research, or both, at the university,
college, school or other approved
institution, shall be exempt from tax in
that other Contracting 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
Contracting State. 2.
This article shall not apply to income from
research if the 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
resident of a Contracting State if he is a
resident in that Contracting State in the
“previous year” or the “year of
income”, as the case may be, in which he
visits the other Contracting State or in the
immediately preceding “previous year” or
the “year of income”. 4.
For the purpose 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) of
this article, 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 Contracting 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. Chapter
IV - methods for elimination of double
taxation ARTICLE
23 -
Elimination of double taxation - 1.
The laws in force in either of the
Contracting States shall continue to govern
the taxation of income in the respective
Contracting States except where provisions
to the contrary are made in this Convention. 2.
(a) The amount of Mauritius tax
payable, under the laws of Mauritius and in
accordance with the provisions of this
Convention, whether directly or by
deduction, by a resident of India, in
respect of profits or income arising in
Mauritius, which has been subjected to tax
both in India and in Mauritius, shall be
allowed as a credit against the Indian tax
payable in respect of such profits or income
provided that such credit shall not exceed
the Indian tax (as computed before allowing
any such credit) which is appropriate to the
profits or income arising in Mauritius.
Further, where such resident is a company by
which surtax is payable in India, the credit
aforesaid shall be allowed in the first
instance against income-tax payable by the
company in India and as to the balance, if
any, against surtax payable by it in India. (b)
In the case of a dividend paid by a company
which is a resident of Mauritius to a
company which is a resident of India and
which owns at least 10 per cent of the
shares of the company paying the dividend,
the credit shall take into account [in
addition to any Mauritius tax for which
credit may be allowed under the provisions
of sub-paragraph (a) of this
paragraph] the Mauritius tax payable by the
company in respect of the profits out of
which such dividend is paid. 3.
For the purposes of the credit referred to
in paragraph (2) the term
“Mauritius tax payable” shall be deemed
to include any amount which would have been
payable as Mauritius tax for any year but
for an exemption or reduction of tax granted
for that year or any part thereof under :
(i)
sections 33, 34, 34A and 34B of the
Mauritius Income-tax Act, 1974 (41 of 1974)
;
(ii)
any other provision which may
subsequently be made granting an exemption
or reduction of tax which the competent
authorities of the Contracting States agree
to be for the purposes of economic
development. 4.
(a) The amount of Indian tax payable
under the laws of India and in accordance
with the provisions of this Convention,
whether directly or by deduction, by a
resident of Mauritius, in respect of profits
or income arising in India, which has been
subjected to tax both in India and Mauritius
shall be allowed as a credit against
Mauritius tax payable in respect of such
profits or income provided that such credit
shall not exceed the Mauritius tax (as
computed before allowing any such credit) is
appropriate to the profits or income arising
in India. (b)
In the case of a dividend paid by a company
which is a resident of India to a company
which is a resident of Mauritius and which
owns at least 10 per cent of the shares of
the company paying the dividend, the credit
shall take into account [in addition to any
Indian tax for which credit may be allowed
under the provisions of sub-paragraph (a)
of this paragraph] the Indian tax payable by
the company in respect of the profits out of
which such dividend is paid. 5.
For the purposes of the credit referred to
in paragraph (4), the term “Indian
tax payable” shall be deemed to include
any amount by which tax has been reduced by
the special incentive measures under—
(i)
section 10(4), 10(4A),
10(6)(viia), 10(15)(iv),
10(28), 10A, 32A, 33A, 35B, 54E,
80HH, 80HHA, 80-I or 80L of the Income-tax
Act, 1961 (43 of 1961);
(ii)
any other provision which may
subsequently be enacted granting a reduction
of tax which the competent authorities of
the Contracting States agree to be for the
purposes of economic development. 6.
Where under this Convention a resident of a
Contracting State is exempt from tax in that
Contracting State in respect of income
derived from the other Contracting State,
then the first-mentioned Contracting State
may, in calculating tax on the remaining
income of that person, apply the rate of tax
which would have been applicable if the
income exempted from tax in accordance with
this Convention had not been so exempted. Chapter
V - Special provisions ARTICLE
24
- Non-discrimination - 1. The
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 are or may be
subjected. 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 in the same
circumstances. 3.
Nothing contained in this Article shall be
construed as obliging a Contracting State to
grant persons not resident in that State any
personal allowances, reliefs, reductions and
deductions for taxation purposes which are
by law available only to persons who are so
resident. 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 Contracting 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 that
first-mentioned State are or may be
subjected in the same circumstances. 5.
In this article, the term “taxation”
means taxes which are the subject of this
Convention. ARTICLE
25 -
Mutual agreement procedure - 1.
Where a resident of a Contracting State
considers that the actions of one or both of
the Contracting States result or will result
for him in taxation not in accordance with
this Convention, he may, notwithstanding the
remedies provided by the national laws of
those States, present his case to the
competent authority of the Contracting State
of which he is a resident. This case must be
presented within three years of the date of
receipt of notice of the action which gives
rise to taxation not in accordance with 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 an
appropriate 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 not
in accordance with the Convention. Any
agreement reached shall be implemented
notwithstanding any time limits in the laws
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
26 -
Exchange of information or document -
1. The competent authorities of the
Contracting States shall exchange such
information or document as is necessary for
carrying out the provisions of this
Convention or for prevention of evasion of
taxes which are the subject of this
Convention. Any information or document so
exchanged shall be treated as secret but may
be disclosed to persons (including courts or
other authorities) concerned with the
assessment, collection, enforcement,
investigation or prosecution in respect of
the taxes which are the subject of this
Convention, or to persons with respect to
whom the information or document relates. 2.
The exchange of information or documents
shall be either on a routine basis or on
request with reference to particular cases
or both. The competent authorities of the
Contracting States shall agree from time to
time on the list of the information or
documents which shall be furnished on a
routine basis. 3.
The provisions of paragraph (1) shall
not be construed so as to impose on a
Contracting State the obligation—
(a)
to carry out administrative measures
at variance with the laws or 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 or documents
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
27 -
Diplomatic and consular activities -
Nothing in this Convention shall affect the
fiscal privileges of diplomatic or consular
officials under the general rules of
international law or under the provisions of
special agreements. Chapter
VI - Final provisions ARTICLE
28 -
Entry into force - Each of the
Contracting State shall notify to the other
completion of the procedures required by its
law for the bringing into force of this
Convention. The 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 and
capital gains assessable for any assessment
year commencing on or after 1st April, 1983
;
(b)
in Mauritius, in respect of income
and capital gains assessable for any
assessment year commencing on or after 1st
July, 1983. ARTICLE
29 -
Termination - This Convention shall
remain in force indefinitely but either of
the Contracting States may, on or before the
thirtieth day of June in any calendar year
beginning after the expiration of a period
of five years from the date of its entry
into force, give the other Contracting State
through diplomatic channels, written notice
of termination and, in such event, this
Convention shall cease to have effect—
(a)
in India, in respect of income and
capital gains assessable for the assessment
year commencing on 1st day of April in the
second calendar year next following the
calendar year in which the notice is given,
and subsequent years ;
(b)
in Mauritius, in respect of income
and capital gains assessable for the
assessment year commencing on 1st day of
July in the second calendar year next
following the calendar year in which the
notice is given, and subsequent years. In
witness whereof the undersigned, being duly
authorised thereto, have signed the present
Convention. Done
on this 24th day of August, 1982 at Port
Louis on two original copies each in Hindi
and English languages, both the texts being
equally authentic. In case of divergence
between the two texts, the English text
shall be the operative one.
Clarification
regarding agreement for avoidance of double
taxation with Mauritius 1.
A Convention for the avoidance of double
taxation and prevention of fiscal evasion
with respect to taxes of income and capital
gains was entered into between the
Government of India and the Government of
Mauritius and was notified on 6-12-1983. In
respect of India, the Convention applies
from the assessment year 1983-84 and
onwards. 2.
Article 13 of the Convention deals with
taxation of capital gains and it has five
paragraphs. The first paragraph gives the
right of taxation of capital gains on the
alienation of immovable property to the
country in which the property is situated.
The second and third paragraphs deal with
right of taxation of capital gains on the
alienation of movable property linked with
business or professional enterprises and
ships and aircrafts. 3.
Paragraph 4 deals with taxation of capital
gains arising from the alienation of any
property other than those mentioned in the
preceding paragraphs and gives the right of
taxation of capital gains only to that State
of which the person deriving the capital
gains is a resident. In terms of paragraph
4, capital gains derived by a resident of
Mauritius by alienation of shares of
companies shall be taxable only in Mauritius
according to Mauritius tax law. Therefore,
any resident of Mauritius deriving income
from alienation of shares of Indian
companies will be liable to capital gains
tax only in Mauritius as per Mauritius tax
law and will not have any capital gains tax
liability in India. 4.
Paragraph 5 defines ‘alienation’ to mean
the sale, exchange, transfer or
relinquishment of the property or the
extinguishment of any rights in it or its
compulsory acquisition under any law in
force in India or in Mauritius. Circular
:
No. 682, dated 30-3-1994. Judicial
Analysis See
Companies Incorporated in Mauritius, In re [1996]
89 Taxman 125 (AAR - New Delhi)/DLJMB
Mauritius Investment Company v. CIT [1997]
94 Taxman 218 (AAR - New Delhi)/Dr. Rajni
Kant R. Bhatt v. CIT [1996] 89
Taxman 82 (AAR - New Delhi).
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