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40A.
Agreement for avoidance of Double Taxation
and Prevention of Fiscal Evasion with Whereas
the annexed Convention between the
Government of the Republic of India and the
Government of the Kingdom of Saudi Arabia
for the avoidance of double taxation and the
prevention of tax evasion with respect to
taxes on income shall come into force on the
1st day of November, 2006, being the first
day of the second month following the month
in which the later of the notifications
after completion of the procedures as
required by the respective laws for the
entry into force of this Convention was
received, in accordance with 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), the Central
Government hereby directs that all the
provisions of the said Convention shall be
given effect to in the Union of Notification
:
No.
287/2006-FTD [F.No.
501/7/91-FTD], dated 17-10-2006. CONVENTION
BETWEEN THE GOVERNMENT OF THE REPUBLIC OF
INDIA AND THE GOVERNMENT OF THE KINGDOM OF
SAUDI ARABIA FOR THE AVOIDANCE OF DOUBLE
TAXATION AND THE PREVENTION OF TAX EVASION
WITH RESPECT TO TAXES ON INCOME The
Government of the Article
1
:
Persons covered
- This Convention shall apply to persons who
are residents of one or both of the
Contracting States. Article
2
:
Taxes Covered - 1. This Convention
shall apply to taxes on income imposed on
behalf of a 2.
They shall be regarded as taxes on income
all taxes imposed on total income, or on
elements of income, including taxes on gains
from the alienation of movable or immovable
property, and taxes on the total amounts of
wages or salaries paid by enterprises. 3.
The
existing taxes to which the Convention shall
apply are in particular:
(a)
in the
case of
-
The income-tax, including any
surcharge thereon;
(hereinafter
referred to as “Indian tax”);
(b)
in the
case of the
-
The Zakat
-
The income-tax including the natural
gas investment tax;
(hereinafter
referred to as “ Saudi tax”). 4.
The provisions of this Convention shall also
apply to any identical or substantially
similar taxes which are imposed by either
contracting state after the date of
signature of this Convention in addition to,
or in place of, the existing taxes. The
competent authorities in both Contracting
States shall notify each other of any
significant changes that have been made in
their respective taxation laws. Article
3
:
General Definitions - 1. For the
purposes of this Convention, unless the
context otherwise requires
:
(a)
the term “India” means the
territory of India and includes the
territorial sea and airspace above it, as
well as any other maritime zone in which
India has sovereign rights, other
jurisdiction, according to the Indian law
and in accordance with international law,
including the U.N. Agreement on the Law of
the Sea;
(b)
the term
“
(c)
the terms
“a
(d)
the term
“person” includes an individual, a
company, any other body of persons.
(e)
the term
“company” means any body corporate or
any entity that is treated as a body
corporate for tax purposes;
(f)
the terms “enterprise of a
Contracting State” and “enterprise of
the other Contracting State” mean
respectively an enterprise carried on by a
resident of a Contracting State and an
enterprise carried on by a resident of the
other Contracting State;
(g)
the term
“international traffic” means any
transport by a ship or aircraft operated by
an enterprise of a
(h)
the term
“competent authority” means :
(i)
In the case of
(ii)
In the case of the Kingdom of Saudi
Arabia, the Ministry of Finance represented
by the Minister of Finance or his authorized
representative;
(i)
the term
“national” means:
(i)
any
individual possessing the nationality of a
(ii)
any legal
person, partnership or association deriving
its status as such from the laws in force in
a 2.
As regards the application of the Convention
at any time by a Contracting State, any term
not defined therein shall, unless the
context otherwise requires, have the meaning
that it has at that time under the law of
that State for the purposes of the taxes to
which this Convention applies, any meaning
under the applicable tax laws of that State
prevailing over a meaning given to the term
under other laws of that State. Article
4
:
Resident - 1. For the purposes
of this Convention, the term “resident of
a
(a)
Any person who, under the laws of
that State, is liable to taxes in that State
by reason of his domicile, residence, place
of management or any other criterion of a
similar nature. This term, however, does not
include any person who is liable to tax in
that State in respect only of income from
sources in that State.
(b)
The Government of any of the two
Contracting States or any of its political
sub-division or local authorities. 2.
Where by reason of the provisions of
paragraph 1 of this Article an individual is
a resident of both Contracting States, then
his status shall be determined as follows
:
(a)
he shall be deemed to be a resident
only 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 the Contracting States, he shall be
deemed to be a resident only of the
Contracting State with which his personal
and economic relations are closer (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 only of the Contracting State in
which he has a habitual abode;
(c)
if he has
a habitual abode in both Contracting States
or in neither of them, he shall be deemed to
be a resident only 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 of this Article a person other
than an individual is a resident of both
Contracting States, then it shall be deemed
to be a resident only of the State in which
its place of effective management is
situated. Article
5
:
Permanent Establishment - 1. For the
purposes of this Convention, the term
“Permanent Establishment” means a fixed
place of business through which the business
of an enterprise is wholly or partly carried
on. 2.
The term “permanent establishment”
includes especially :
(a)
a place of
management;
(b)
a branch;
(c)
an office;
(d)
a factory;
(e)
a
workshop;
(f)
a mine, a
gas well, a quarry or any other place of
extraction of natural resources. 3.
The
term “permanent establishment” also includes
:
(a)
A building site, a construction,
assembly or installation project, or
supervisory activities, in connection
therewith, but only where such site, project
or activities continue for a period of more
than 182 days;
(b)
The furnishing of services, including
consultancy services, by an enterprise
through employees or other personnel engaged
by the enterprise for such purpose, but only
where activities of that nature continue
(for the same on a connected project) within
the country for a period or periods
aggregating more than 182 days within any
12-month period. 4.
Notwithstanding the preceding provisions of
this Article the term “permanent
establishment” shall be deemed not to include
:
(a)
the use of
facilities solely for the purpose of storage
or display of goods or merchandise belonging
to the enterprise;
(b)
the
maintenance of a stock of goods or
merchandise belonging to the enterprise
solely for the purpose of storage or
display;
(c)
the
maintenance of a stock of goods or
merchandise belonging to the enterprise
solely for the purpose of processing by
another enterprise;
(d)
the
maintenance of a fixed place of business
solely for the purpose of purchasing goods
or merchandise or of collecting information,
for the enterprise;
(e)
the
maintenance of a fixed place of business
solely for the purpose of carrying on, for
the enterprise, any other activity of a
preparatory or auxiliary character;
(f)
the
maintenance of a fixed place of business
solely for any combination of activities
mentioned in sub-paragraphs (a) to (e),
provided that the overall activity of the
fixed place of business resulting from this
combination is of a preparatory or auxiliary
character. 5.
Notwithstanding
the provisions of paragraphs 1 and 2, where
a person - other than an agent of an
independent status to whom paragraph 7
applies - is acting in a Contracting State
on behalf of an enterprise of the other
Contracting State, that enterprise shall be
deemed to have a permanent establishment in
the first-mentioned Contracting State in
respect of any activities which that person
undertakes for the enterprise, if such a
person:
(a)
has and habitually exercises in that
State an authority to conclude contracts in
the name of the enterprise, unless the
activities of such person are limited to
those mentioned in paragraph 4 which, if
exercised through a fixed place of business,
would not make this fixed place of business
a permanent establishment under the
provisions of that paragraph, or
(b)
has no such authority, but habitually
maintains in the first-mentioned State a
stock of goods or merchandise from which he
regularly delivers goods or merchandise on
behalf of the enterprise;
(c)
habitually
obtains orders in the first-mentioned State,
wholly or almost wholly for the enterprise
itself. 6.
Notwithstanding the preceding provisions of
this Article, an insurance enterprise of a 7.
An
enterprise of a 8.
The
fact that a company which is a resident of a
Contracting State controls or is controlled
by a company which is a resident of the
other Contracting State or which carries on
business in that other State (whether
through a permanent establishment or
otherwise), shall not of itself constitute
either company a permanent establishment of
the other. Article
6
:
Income from Immovable Property - 1.
Income derived by a resident of a 2.
The term “immovable property” shall have
the meaning ‘provided for in the laws of
the 3.
The provisions of paragraph 1 of this
Article 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 of this
Article 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, where an
enterprise of a Contracting State carries on
business in the other Contracting State
through a permanent establishment situated
therein, there shall in each Contracting
State be attributed to that permanent
establishment the profits which it might be
expected to make if it were a distinct and
separate enterprise engaged in the same or
similar activities under the same or similar
conditions and dealing wholly independently
with the enterprise of which it is a
permanent establishment. 3.
In
the determination of the profits of a
permanent establishment, there shall be
allowed as deductions expenses which are
incurred for the purposes of the 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. However, no such
deduction shall be allowed in respect of
amounts, if any, paid (otherwise than
towards reimbursement of actual expenses) by
the permanent establishment to the head
office of the enterprise or any of its other
offices, by way of royalties, fees or other
similar payments in return for the use of
patents or other rights, or by way of
commission, for specific services performed
or for management, or, except in the case of
a banking enterprise, by way of income from
debt-claim with regard to moneys lent to the
permanent establishment. Likewise, no
account shall be taken, in the determination
of the profits of a permanent establishment,
for amounts charged (otherwise than towards
reimbursement of actual expenses), by the
permanent establishment to the head office
of the enterprise or any of its other
offices, by way of royalties, fees or other
similar payments in return for the use of
patents or other rights, or by way of
commission for specific services performed
or for management, or, except in the case of
a banking enterprise, by way of income from
debt-claim with regard to moneys lent to the
head office of the enterprise or any of its
other offices. 4.
No
profits shall be attributed to a permanent
establishment by reason of the mere purchase
by that permanent establishment of goods or
merchandise for the enterprise. 5.
For the purposes of the preceding
paragraphs, the profits to be attributed to
the permanent establishment shall be
determined by the same method year by year
unless there is good and sufficient reason
to the contrary. 6.
Where profits include items of income which
are dealt with separately in other Articles
of this Convention, then the provisions of
those Articles shall not be affected by the
provisions of this Article. Article
8
:
Shipping and Air Transport -
1. Profits derived by an
enterprise of a 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
Contracting State in which the home harbour
of the ship is situated, or, if there is no
such home harbour,
in the Contracting State of which the
operator of the ship is a resident. 3.
The term “profits derived from the
operation of ships or aircraft in
international traffic” includes profits
derived from the use or rental of containers
and related equipment used in international
transport that is incidental to income from
the operation of ships or aircraft in
international traffic. 4.
The
provisions of paragraph 1 shall also apply
to profits from the participation in a pool;
a joint business or an international
operating agency. 5.
Nothing contained in the foregoing
provisions of this Article shall affect the
existing Agreement between the Article
9 :
Associated Enterprises - 1. Where:—
(a)
an
enterprise of a
(a)
the same
persons participate directly or indirectly
in the management, control or capital of an
enterprise of a 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. 2.
Where a Contracting State includes in the
profits of an enterprise of that State - and
taxes accordingly - profits on which an
enterprise of the other Contracting State
has been charged to tax in that other State
and the profits so included are profits
which would have accrued to the enterprise
of the first-mentioned State if the
conditions made between the two enterprises
had been those which would have been made
between independent enterprises, then that
other State shall make an appropriate
adjustment to the amount of the tax charged
therein on those profits. In determining
such adjustment, due regard shall be had to
the other provisions of this Convention and
the competent authorities of the Contracting
States shall if necessary consult each
other. Article
10 :
Dividends - 1.
Dividends paid by a company which is a
resident of a 2.
However, such dividends may also be taxed in
the 3.
The
term “dividends” as used in this Article
means income from shares “jouissance”
shares or “jouissance”
rights, mining shares, founders’ shares or
other rights, not being debt-claims,
participating in profits, as well as income
from other corporate rights which is
subjected to the same taxation treatment as
income from shares by the laws of the State
of which the company making the distribution
is a resident. 4.
The provisions of paragraphs 1 and 2 shall
not apply if the beneficial owner of the
dividends, being a resident of a Contracting
State, carries on business in the other
Contracting State of which the company
paying the dividends is a resident, through
a permanent establishment situated therein,
or performs in that other State independent
personal services from a fixed base situated
therein, and the holding in respect of which
the dividends are paid is effectively
connected with such permanent establishment
or fixed base. In such case the provisions
of Article 7 or Article 14, as the case may
be, shall apply. 5.
Where a company which is a resident of a
Contracting State derives profits or income
from the other Contracting State, that other
State may not impose any tax on the
dividends paid by the company, except
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
:
Income from debt-claims - 1. Income
from debt-claims arising in a 2.
However,
such income from debt-claims may also be
taxed in the Contracting State in which it
arises and according to the laws of that
Contracting State, but if the beneficial
owner of the income from debt-claims is a
resident of the other Contracting State, the
tax so charged shall not exceed 10 per cent
of the gross amount of the income from
debt-claims. 3.
Notwithstanding the provisions of paragraph
2, income from debt-claims arising in a
(a)
the
Government, a political sub-division or a
local authority of the other
(b)
(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 the
(c)
any other
financial institution wholly owned,
directly, and controlled by the Government
of the other 4.
The term “Income from Debt-Claims” as
used in this Article means income from
Government securities and bonds or
debentures, including premiums and prizes
attaching to such securities, bonds or
debentures, whether or not secured by
mortgage and whether or not carrying a right
to participate in the debtor’s profits;
and debt-claims of every kind as well as all
other income included as income from moneys
lent under the taxation laws of the State in
which the income arises. Penalty charges for
late payment shall not be regarded as income
from debt-claims for the purpose of this
Article. 5.
The provisions of paragraphs 1 and 2 shall
not apply if the beneficial owner of income
from Debt-Claims, being a resident of a
Contracting State, carries on business in
the other Contracting State in which the
income from debt claims 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 such 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. 6.
Income from debt-claims shall be deemed to
arise in a 7.
Where, by reason of a special relationship
between the payer and the beneficial owner
or between both of them and some other
person, the amount of the income from
debt-claims, having regard to the debt-claim
for which it is paid, exceeds the amount
which would have been agreed upon by the
payer and the beneficial owner in the
absence of such relationship, the provisions
of this Article shall apply only to the
last-mentioned amount. In such case, the
excess part of the payments shall remain
taxable according to the laws of each Article
12
:
Royalties -
1. Royalties arising in a 2.
However, such royalties may also be taxed in
the 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 or films or tapes used
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 beneficial owner 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 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 6.
Where, by reason of a special relationship
between the payer and the beneficial owner
or between both of them and some other
person, the amount of the royalties, having
regard to the use, right or information for
which they are paid, exceeds the amount
which would have been agreed upon by the
payer and the beneficial owner in the
absence of such relationship, the provisions
of this Article shall apply only to the
last-mentioned amount. In such case, the
excess part of the payments shall remain
taxable according to the laws of each Article
13
:
Capital Gains -
1. Gains derived by a
resident of a 2.
Gains
from the alienation of movable property
forming part of the business property of a
permanent establishment which an enterprise
of a Contracting State has in the other
Contracting State or of movable property
pertaining to a fixed base available to a
resident of a Contracting State in the other
Contracting State for the purpose of
performing independent personal services,
including such gains from the alienation of
such a permanent establishment (alone or
with the whole enterprise) or of such fixed
base, may be taxed in that other Contracting
State. 3.
Gains
from the alienation of ships or aircraft
operated in international traffic, or
movable property pertaining to the operation
of such ships or aircraft shall be taxable
only in the 4.
Gains from the alienation of shares of the
capital stock of a company the property of
which consists directly or indirectly
principally of immovable property situated
in a 5.
Gains from the alienation of shares other
then those mentioned in paragraph 4 in a
company which is a resident of a Contracting
State may be taxed in that State. 6.
Gains from the alienation of any property
other than that referred to in paragraphs 1,
2, 3, 4 and 5, shall be taxable only in the Article
14 :
Independent Personal Services - 1.
Income derived by an individual who is a
resident of a Contracting State in respect
of professional services or other activities
of a independent character shall be taxable
only in that State except in the following
circumstances when such income may also be
taxed in the other Contracting State:
(a)
if he has a fixed base regularly
available to him in the other Contracting
State for the purpose of performing his
activities; in that case, only so much of
the income as is attributable to that fixed
base may be taxed in that other Contracting
State; or
(b)
if his stay in the other Contracting
State is for a period or periods amounting
to or exceeding in the aggregate 183 days in
any 12-month period commencing or ending in
the fiscal year concerned; in that case,
only so much of the income as is derived
from his activities performed in that other
State may be taxed in that other State. 2.
The term “professional services”
includes especially independent scientific,
literary, artistic, educational or teaching
activities as well as the independent
activities of physicians, lawyers,
engineers, architects, surgeons, dentists
and accountants. Article
15
:
Dependent Personal Services - 1.
Subject to the provisions of Articles 16,
18, 19, 20 and 21, salaries, wages and other
similar remuneration derived by a resident
of a 2.
Notwithstanding the provisions of paragraph
1, remuneration derived by a resident of a
(a)
the recipient is present in the other
State for a period or periods not exceeding
in the aggregate 183 days in any twelve
month period commencing or ending in the
fiscal year concerned, and
(b)
the
remuneration is paid by, or on behalf of, an
employer who is not a resident of the other
State, and
(c)
the
remuneration is not borne by a permanent
establishment or a fixed base which
the employer has in the other State. 3.
Notwithstanding the preceding provisions of
this Article, remuneration derived in
respect of an employment exercised aboard a
ship or aircraft operated in international
traffic, by an enterprise of a Article
16 :
Directors’ Fees -
Directors’ fees and other
similar payments derived by a resident of a Article
17
:
Artistes and Sportspersons - 1. Notwithstanding
the provisions of Articles 14 and 15, income
derived by a resident of a Contracting State
as an entertainer, such as a theatre, motion
picture, radio or television artiste, or a
musician, or as a sportsperson, from his
personal activities as such exercised in the
other Contracting State, may be taxed in
that other State. 2.
Where income in respect of personal
activities exercised by an entertainer or a
sportsperson in his capacity as such accrues
not to the entertainer or sportsperson
himself but to another person, that income
may, notwithstanding the provisions of
Articles 7, 14 and 15, be taxed in the
Contracting State in which the activities of
the entertainer or sportsperson are
exercised. 3.
The
provisions of paragraphs 1 and 2, shall not
apply to income from activities performed in
a Contracting State by entertainers or
sportspersons if the activities are
substantially supported by public funds of
one or both of the Contracting States or of
political sub-divisions or local authorities
thereof or takes place under a cultural
agreement or arrangement between the
Governments of the Contracting States. In
such a case, the income shall be taxable
only in the Article
18
:
Pensions -
Subject to the provisions of
paragraph 2 of Article 19, pensions and
other similar remuneration paid to a
resident of a Contracting. State in
consideration of past employment shall be
taxable only in that State. Article
19
:
Government Service -
1. (a)
Salaries, wages and other similar
remuneration, other than a pension, paid by
a Contracting State or a political
sub-division or a local authority thereof to
an individual in respect of services
rendered to that State or sub-division or
authority shall be taxable only in that
State. (b)
However, such salaries, wages and other
similar remuneration shall be taxable only
in the other Contracting State if the
services are rendered in that other State
and the individual is a resident of that
State who:
(i)
is a
national of that State; or
(ii)
did not
become a resident of that State solely for
the purpose of rendering the services. 2.
(a)
Any pension paid by, or out of funds
created by, a Contracting State or a
political sub-division or a local authority
thereof to an individual in respect of
services rendered to that State or
sub-division or authority shall be taxable
only in that State.
(b)
However, such pension shall be
taxable only in the other 3.
The provisions of Articles 15, 16, 17 and 18
shall apply to salaries, wages and other
similar remuneration and to pensions in
respect of services rendered in connection
with a business carried on by a Article
20
:
Students -
1. Payments, besides
grants, loans and scholarships, which a
student, trainee or apprentice who is or was
immediately before visiting a Contracting
State a resident of the other Contracting
State and who is present in the
first-mentioned State solely for the purpose
of his education or training receives for
the purpose of his maintenance, education or
training shall not be taxed in that State,
provided that such payments arise from
sources outside that State. 2.
Payments
received by a student, trainee or apprentice
who is or was immediately before visiting a
Contracting State a resident of the other
Contracting State and who is present in the
first-mentioned Contracting State solely for
the purpose of his education or training and
which constitute remuneration in respect of
services performed in that other Contracting
State are not taxable in that other State,
provided the services are connected with
education or training and are necessary for
maintenance purposes. 3.
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 six consecutive years
from the date of his first arrival in that
other State. Article
21
:
Teachers and Researchers - 1. A
teacher or researcher who is or was a
resident of the Contracting State
immediately before being invited to or
visiting the other Contracting State for the
purpose of teaching or engaging in research,
or both, at a university, college or other
similar institution in that other
Contracting State shall be exempt from tax
in that other State on any remuneration for
such teaching or research for a period not
exceeding two years from the date of his
arrival in that other State. 2.
This Article shall apply to income from
research only if such research is undertaken
by the individual in the public interest. Article
22
:
Other Income - 1. Items of income of
a resident of a 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. Article
23
:
Methods for Elimination of Double
Taxation - Double taxation shall be
eliminated as follows - 1. Where a
resident of a Such
deduction shall not, however, exceed that
portion of the tax as computed before the
deduction is given, which is attributable,
as the case may be, to the income which may
be taxed in the other 2.
Where in accordance with any provision of
the Convention income derived by a resident
of a Article
24
:
Mutual Agreement Procedure - 1. Where
a person considers that the actions of one
or both of the Contracting States result or
will result for him in taxation not in
accordance with the provisions of this
Convention, he may, irrespective of the
remedies provided by the domestic law of
those States, present his case to the
competent authority of the Contracting State
of which he is a resident. The case must be
presented within three years from the first
notification of the action resulting in
taxation not in accordance with the
provisions of this Convention. 2.
The
competent authority shall endeavour,
if the objection appears to it to be
justified and if it is not itself able to
arrive at a satisfactory solution, to
resolve the case by mutual agreement with
the competent authority of the other 3.
The competent authorities of both
Contracting States shall endeavour
to resolve by mutual agreement any
difficulties or doubts arising as to the
interpretation or application of this
Convention. They may also consult together
for the elimination of double taxation in
cases not provided for in this 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
25
:
Exchange of Information - 1. The
competent authorities of the Contracting
States shall exchange such information as is
necessary for carrying out the provisions of
this Convention or of the domestic laws of
the Contracting States concerning taxes
covered by this Convention insofar as the
taxation thereunder
is not contrary to the Convention. The
exchange of information is not restricted by
Article 1. Any information received by a
Contracting State shall be treated as secret
in the same manner as information obtained
under the domestic laws of that State and
shall be disclosed only to persons or
authorities (including courts and
administrative bodies) concerned with the
assessment or collection of, the enforcement
or prosecution in respect of, or the
determination of appeals in relation to the
taxes covered by this Convention. Such
persons or authorities shall use the
information only for such purposes. They may
disclose the information in public court
proceedings or in judicial decisions. 2.
In no case shall the provisions of paragraph
1 be construed so as to impose on a
(a)
to carry
out administrative measures at variance with
the laws and administrative practice of that
or of the other
(b)
to supply
information which is not obtainable under
the laws or in the normal course of the
administration of that or of the other
(c)
to supply information which would
disclose any trade, business, industrial,
commercial or professional secret or trade
process, or information, the disclosure of
which would be contrary to public policy
(order public). Article
26
:
Other Provisions - 1. Nothing in this
Convention shall affect the application of
the domestic provisions to prevent tax
evasion. 2.
An enterprise of a 3.
The case of legal entities not having bona
fide business activities shall be
covered by the provisions of this Article. Article
27
:
Members of Diplomatic Missions and
Consular Posts - Nothing in this
Convention shall affect the fiscal
privileges of members of diplomatic missions
or consular posts under the general rules of
international law or under the provisions of
special agreements. Article
28
:
Entry Into Force -
1. The Contracting States
shall notify each other in writing, through
diplomatic channels, of the completion of
the procedures required by the respective
laws for the entry into force of this
Convention. 2.
This Convention shall enter into force on
the first day of the second month following
the month in which the later of these
notifications were received. 3.
The provisions of this Convention shall have
effect:
(a)
In India, in respect of income
derived in any fiscal year beginning on or
after the first day of April next following
the calendar year in which the Convention
enters into force; and
(b)
In
(i)
with regard to taxes withheld at
source, in respect of amounts paid or
credited on or after the first day of
January next following the calendar year in
which the Convention enters into force; and
(ii)
with regard to other taxes, in
respect of taxable years beginning on or
after the first day of January next
following the calendar year in which the
Convention enters into force. Article
29
:
Termination - This Convention shall
remain in force indefinitely until
terminated by a
(a)
In
(b)
In
(i)
with regard to taxes withheld at
source, in respect of amounts paid or
credited after the end of the calendar year
in which such notice is given; and
(ii)
with
regard to other taxes, in respect of taxable
years beginning after the end of the
calendar year in which such notice is given. In
witness whereof the undersigned, duly
authorized thereto, have signed this
Convention. Done
in duplicate at
Protocol The
1.
With regard to para
2(d) of Article 3 the term
‘person’ shall include the state, its
political sub-division or local authorities
and any other entity which is treated as a
taxable unit under the taxation laws in
force in the respective Contracting States. 2.
It is understood that for the purposes of
Article 2, the term “tax” means Indian
or Saudi tax, as the context requires, but
shall not include any penalty or fine
imposed relating to those taxes. 3.
For the purposes of Article 3, the term
“fiscal year” means:
(i)
in the
case of
(ii)
in the
case of 4.
It is understood that for the purposes of para
1(b) Article 4, the term
‘resident’ shall include:
(a)
The legal institutions and agencies
of the Government, wholly owned directly,
and controlled by the Government.
(b)
In the case of the Kingdom of Saudi
Arabia, an individual who is an Indian
national and is present in the Kingdom of
Saudi Arabia for a period or periods totalling
in the aggregate at least 183 days in the
fiscal year concerned.
(c)
A legal person organized under the
laws of a
(i)
Exclusively for a religious,
charitable, educational, scientific, or
other similar purpose; or
(ii)
To provide pensions to employees
pursuant to a plan. 5.
For the purposes of para
2 of Article 5, Permanent Establishment
shall include the following:
(a)
a sales
outlet;
(b)
a farm,
plantation or other place where
agricultural, forestry, plantation or
related activities are carried on. 6.
For the purposes of paragraph 6 of Article
5, the person, who is not an agent of
independent status and whose activities may
create a Permanent Establishment for the
insurance enterprise, may be either
individual or company and need not be
resident of, nor have a place of business
in, the state in which it acts for the
enterprise. 7.
With regard to Article 7, the term
‘business profits’ in the case of a
Contracting State means the profits from
business as defined under the laws of that
Contracting State. 8.
In respect of Article 7, it is understood
that: -
(i)
The business profits derived by an
enterprise of a
(ii)
In the case of contracts for survey,
constructions or installations, the profits
of a permanent establishment shall not be
determined on the total amount of the
contract, but shall be determined only on
the basis of that part of the contract,
which is effectively carried out by the
permanent establishment in the state where
the permanent establishment is situated and
any portion of the contract executed outside
the other Contracting State shall not be
taken into consideration in determining the
profits of the permanent establishment. 9.
For the purposes of Para 3 of Article 7, the
deductions of expenses to be allowed by a 10.
For the purposes of Article 21, an
individual shall be deemed to be a resident
of a 11.
For
the purposes of this Convention, the Zakat
shall be treated as a tax on income. 12.
In the case of the 13.
It
is understood that information referred to
in Article 25, will include evidence
available with a 14.
When Saudi Arabia introduces a provision in
its domestic law regarding assistance in
collection of taxes to other treaty partners
or agrees to extend such assistance to any
other treaty partner, then the competent
authorities of the two Contracting States
shall by mutual agreement settle the mode of
application for extending assistance in the
collection of tax to each other. 15.
It is understood that the two Contracting
States will review the provisions of this
Convention after a period of 5 years from
the date on which this Convention enters
into force in order to consider the
inclusion of an Article on ‘Fees for
Technical Services’ within the scope of
this Convention. In
witness whereof the undersigned, duly
authorized thereto, have signed this
Protocol. Done
in duplicate at
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