G.S.R.
197(E).— Whereas the annexed Convention between the Government of the
Republic of India and the Government of the Republic of Hungary for the
avoidance of double taxation and the prevention of fiscal evasion with respect
to taxes on income, has come into force on the 4th day of March, 2005, thirty
days after the receipt of the later of the notifications by both the
Contracting States to each other, under Article 28 of the said Convention, of
the completion of the procedures required under their respective laws for the
entry into force of this 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 India.
[F.No. 500/68/95-FTD]
ANNEXURE
CONVENTION
BETWEEN
THE REPUBLIC OF INDIA
AND
THE REPUBLIC OF HUNGARY
FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE
PREVENTION
OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME
The
Republic of Hungary and the Republic of India desiring to conclude a ,
Convention for the avoidance of double taxation and the prevention of fiscal
evasion with respect to taxes on income and with a view to promoting economic
cooperation between the two countries, have agreed as follows:
Article
1
PERSONAL SCOPE
This
Convention shall apply to persons who are residents of one or both of the
Contracting States.
Article 2
TAXES
COVERED
1. This
Convention shall apply to taxes on income imposed on behalf of a Contracting
State, irrespective of the manner in which they are levied.
2. There
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, taxes on the total amount of wages or salaries paid by
enterprises, as well as taxes on capital appreciation.
3. The
existing taxes to which the Convention shall apply are in particular:
(a) in Hungary:
(i) the income tax on individuals;
(ii) the corporation tax;
(iii) the dividend tax;
(hereinafter referred to as
"Hungarian tax");
(b) in India: the
income tax, including any surcharge thereon (hereinafter referred to as
"Indian tax").
4. The
Convention shall apply also to any identical or substantially similar
taxes which are imposed after the date of signature of the Convention in
addition to, or in place of, the existing taxes. The competent authorities of
the Contracting States shall notify each other of any substantial changes which
have been made in their respective taxation laws.
Article 3 GENERAL
DEFINITIONS
1. For
the purposes of this Convention, unless the context otherwise requires:
(a) term "Hungary" when used in a
geographical sense means the territory of the Republic of Hungary;
(b) 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 rights and
jurisdiction, according to the Indian law and in accordance with international
law, including the U.N. Convention on the Law of the Sea;
(c) the terms "Contracting, State", and
"the other
Contracting State" mean Hungary or India, as the
context requires;
(d) the term "person" includes an
individual, a company, a body of persons and any other entity which is treated
as a taxable unit under the taxation laws in force in the respective
Contracting States;
(e) the term "company" means any body
corporate or any entity which 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 Contracting
State, except when the ship, or aircraft is operated solely between places in
the other Contracting State;
(h) the term "competent authority"
means:
(i) in the case of Hungary, the Minister of
Finance or his authorized representative;
(ii) the case of India, the Central Government in the Ministry
of Finance (Department of Revenue) or their authorized representative;
(i) the term "national"
means:
(i) any individual possessing the
nationality of a Contracting State;
(ii) any legal person, partnership, association,
company or other entity deriving its status as such from the laws in force in a
Contracting State
(j) the term "fiscal year" means :
(i) in the case of India, the financial year
beginning on the first day of April;
(ii) the case of Hungary, the calendar year;
(k) the term "tax" means
Indian tax or Hungarian 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 or
fine imposed relating to those taxes.
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 the 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 Contracting
State" means any person who, under the laws of that State, is liable to
tax therein by reason of his domicile, residence, place of management, place of
incorporation or any other criterion of a similar nature, and also includes
that State and any local authority thereof. 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.
2. Where
by reason of the provisions of paragraph 1 an individual is a resident of both
Contracting States, then his status shall be determined as follows:
(a) he shall be deemed to be a resident only of
the State in which he has a permanent home available to him; if he has a
permanent home available to him in both States, he shall be deemed to be a
resident only of the State with which his personal and economic relations are
closer (centre of vital interests);
(b) if the State in which he has his centre of
vital interests cannot be determined, or if he has not a permanent home
available to him in either State, he shall be deemed to be a resident only of
the State in which he has an habitual abode;
(c) if he has an habitual abode in both States or
in neither of them, he shall be deemed to be a resident only of the State of
which he is a national;
(d) if he is a national of both States or of
neither of them, the competent authorities of the Contracting States shall
settle the question by mutual agreement.
3. Where
by reason of the provisions of paragraph 1 a person other than an
individual is a resident of both Contracting States, then it shall be deemed to
be a resident of the State in which its place of effective management is situated.
If the State in which its place of effective management is situated cannot be
determined, then the competent authorities of the Contracting States shall
settle the question by mutual agreement.
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;
(a) a branch;
(a) an office;
(d) a factory;
(e) a workshop; and
(f) a mine, an oil or gas well, a quarry or any
other place of extraction of natural resources.
3. A building site or construction, installation or assembly
project or supervisory activities in connection therewith constitute a
permanent establishment only if such site, project or activity lasts more than
nine months.
4. Notwithstanding the preceding provisions of this Article, the term
"permanent establishment" shall be deemed not to include:
(a) the use of facilities solely for the purpose of storage, display or
delivery 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, display or delivery;
(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 6 applies - is acting
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; or
(c) habitually secures orders in the first-mentioned State, wholly or
almost wholly for the enterprise itself or for the enterprise and other
enterprises controlling, controlled by, or subject to the same control, as that
enterprise.
6. An enterprise shall not be deemed to have a permanent establishment
in a Contracting State merely because it carries on business in that State through a broker, general commission agent or any
other agent of an independent status, provided that such persons are acting in
the ordinary course of their business. However, when the activities of such an
agent are devoted wholly or almost wholly on behalf of that enterprise, he will
not be considered an agent of an independent status within the meaning of this
paragraph.
7. The fact that a company which is a resident of a Contracting State
controls or is controlled by a company which is a resident of the other
Contracting State, or which carries on business in that other State (whether through a permanent
establishment or otherwise), shall not of itself constitute either company a
permanent establishment of the other.
Article 6
INCOME FROM IMMOVABLE
PROPERTY
1. Income derived by a resident of
a Contracting State from immovable property (including income from agriculture
or forestry) situated in the other Contracting State may be taxed in that other
State.
2. The term "immovable
property" shall have the meaning which it has under the law of the
Contracting State in which the property in question is situated. The term shall
in any case include property accessory to immovable property, livestock and
equipment used in agriculture and forestry, rights to which the provisions of
general law respecting landed property apply, usufruct of immovable property
and rights to variable or fixed payments as consideration for the working of,
or the right to work, mineral deposits, sources and other natural resources.
Ships and aircraft shall not be regarded as immovable property.
3. The provisions of paragraph I
shall apply to income derived from the direct use, letting or use in any other
form of immovable property.
4. The provisions of paragraphs 1
and 3 shall also apply to the income from immovable property of an enterprise
and to income from immovable property used for the performance of independent
personal services.
Article 7
BUSINESS PROFITS
1. The profits of an enterprise of
a Contracting State shall be taxable only in that State unless the enterprise
carries on business in the other Contracting State through a permanent
establishment situated therein. If the enterprise carries on business as
aforesaid, the profits of the enterprise may be taxed in the other State but
only so much of them as is attributable to that permanent establishment.
2. Subject to the provisions of
paragraph 3, where an enterprise of a Contracting State carries on business in
the other Contracting State through a permanent establishment situated therein,
there shall in each Contracting State be attributed to that permanent
establishment the profits which it might be expected to make if it were a
distinct and separate enterprise engaged in the same or similar activities
under the same or similar conditions and dealing wholly independently with the
enterprise of which it is a permanent establishment.
3. In determining the profits of a
permanent establishment, there shall be allowed as deductions expenses which are
incurred for the purposes of the permanent establishment, including executive
and general administrative expenses so incurred, whether in the State in which
the permanent establishment is situated or elsewhere.
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 profit 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
INTERNATIONAL
TRANSPORT
1. Profits derived by an
enterprise of a Contracting State from the operation of ships or aircraft in
international traffic shall be taxable only in that State.
The terms "profit" shall
include income derived by the enterprise from the use, maintenance or rental of
containers operated in international traffic (including trailers, barges and
related equipment for the transport of such containers) if such income is
incidental to the profits of such enterprise from the operation of ships and
aircraft in international traffic.
2. For the purposes of this
Article, interest on bank accounts excluding term deposits earned on funds
directly connected with the operation of ships or aircraft in international
traffic shall be regarded as profits derived from the operation of such ships
or aircraft, and the provisions of Article 11 shall not apply in relation to
such interest.
3. The provisions of
paragraph 1 shall also apply to profits from the participation in a pool, a
joint business or an international operating agency.
Article 9
ASSOCIATED ENTERPRISES
1. Where
(a) an enterprise of a Contracting State
participates directly or indirectly in the management, control or capital of an
enterprise of the other Contracting State, or
(b) the same persons participate directly or
indirectly in the management, control or capital of an enterprise of a
Contracting State and an enterprise of the other Contracting State,
and in either case conditions are
made or imposed between the two enterprises in their commercial or financial
relations which differ from those which would be made between independent
enterprises, then any profits which would, but for those conditions, have
accrued to one of the enterprises, but, by reason of those conditions have not
so accrued, may be included in the profits of that enterprise and taxed
accordingly.
2. Where a Contracting State
includes in the profits of an enterprise of that State - and taxes accordingly
- profits on which an enterprise of the other Contracting State has been
charged to tax in that other State and the profits so included are profits
which would have accrued to the enterprise of the first- mentioned State if the
conditions made between the two enterprises had been those which would have
been made between independent enterprises, then that other State shall make an
appropriate adjustment to the amount of the tax charged therein on those
profits. In determining such adjustment, due regard shall be had to the other
provisions of this Convention and the competent authorities of the Contracting
States shall if necessary consult each other.
Article 10
DIVIDENDS
1. Dividends paid by a company
which is a resident of a Contracting State to a resident of the other
Contracting State may be taxed in that other State.
2. However, such dividends may
also be taxed in the Contracting State of which the company paying the
dividends is a resident and according to the laws of that State, but if the
recipient is the beneficial owner of the dividends the tax so charged shall not
exceed 10 per cent of the gross amount of the dividends. This paragraph shall
not affect the taxation of the company in respect of the profits out of which
the dividends are paid.
3. The term "dividends"
as used in this Article means income from shares or other rights, not being
debt-claims, participating in profits, as well as income from other corporate
rights which is subjected to the same taxation treatment as income from shares
by the laws of the State of which the company making the distribution is a
resident.
4. The provisions of paragraphs 1
and 2 shall not apply if the beneficial owner of the dividends, being a
resident of a Contracting State, carries on business in the other Contracting
State of which the company paying the dividends is a resident, through a
permanent establishment situated therein, or performs in that other State
independent personal services from a fixed base situated therein, and the
holding in respect of which the dividends are paid is effectively connected
with such permanent establishment or fixed base. In such case the provisions of
Article 7 or Article 14, as the case may be, shall apply.
5. Where a company which is a
resident of a Contracting State derives profits or income from the other
Contracting State, that other State may not impose any tax on the dividends
paid by the company, except 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, such interest may also
be taxed in the Contracting State in which it arises and according to the laws
of that State, but if the recipient is the beneficial owner of the interest the
tax so charged shall not exceed 10 per cent of the gross amount of the
interest. The competent authorities of the Contracting States shall by mutual
agreement settle the mode of application of this limitation.
3. Notwithstanding the provisions
of paragraph 2, interest arising in a Contracting State shall be exempt from tax
in that State provided it is derived and beneficially owned by:
(i) the
Government, a political subdivision or a local authority of the other
Contracting State; or
(ii) the
Central Bank of the other Contracting State; or
(iii) (a) the Hungarian Exim Bank; or
(b) 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 Exim Bank; or
(iv) (a) the Export Import Bank of India (Exim
Bank); or
(b)a resident of India if the interest is
paid in respect of a loan made, guranteed or insured or a credit extended,
guaranteed or insured by the Export Import Bank of India (Exim Bank); or
(v) any
other bank or government financial institution that may be mutually agreed upon
between the two Contracting States.
4. The term "interest"
as used in this Article means income from debt-claims of every kind, whether or
not secured by mortgage, and whether or not carrying a right to participate in
the debtor's profits, and in particular, income from government securities and
income from bonds or debentures, including premiums and prizes attaching to
such securities, bonds or debentures. Penalty charges for late payment shall
not be regarded as interest for the purpose of this Article.
5. The provisions of paragraphs 1
and 2 shall not apply if the beneficial owner of the interest, being a resident
of a Contracting State, carries on business in the other Contracting State in
which the interest arises, through a permanent establishment situated therein,
or performs in that other State independent personal services from a fixed base
situated therein, and the debt-claim in respect of which the interest is paid
is effectively connected with such permanent establishment or fixed base. In
such case the provisions of Article 7 or Article 14, as the case may be shall
apply.
6. Interest shall be deemed to
arise in a Contracting State when the payer is that State itself, a political
subdivision, a local authority or a resident of that State. Where, however, the
person paying the interest, whether he is a resident of a Contracting State or
not, has in a Contracting State a permanent establishment or a fixed base in
connection with which the indebtedness on which the interest is paid was
incurred, and such interest is borne by such permanent establishment or fixed
base, then such interest shall be deemed to arise in the Contracting State in
which the permanent establishment or fixed base is situated.
7. Where, by reason of a special relationship
between the payer and the beneficial owner or between both of them and some
other person, the amount of the interest, having regard to the debt-claim for
which it is paid, exceeds the amount which would have been agreed upon by the
payer and the beneficial owner in the absence of such relationship, the
provisions of this Article shall apply only to the last-mentioned amount. In
such case, the excess part of the payments shall remain taxable according to
the laws of each Contracting. State, due regard being had to the other
provisions of this Convention.
Article 12
ROYALTIES AND FEES FOR
TECHNICAL SERVICES
1. Royalties or fees for technical
services arising in a Contracting State and paid to a resident of the other
Contracting State may be taxed in that other State.
2. However, such royalties or fees
for technical services may also be taxed in the Contracting State in which they
arise, and according to the laws of that State, but if the recipient is the
beneficial owner of the royalties or fees for technical services, the tax so
charged shall not exceed 10 per cent of the gross amount of the royalties or
fees for technical services.
3. (a) The term "royalties" as used in this Article means
payments of any kind received as a consideration for the use of, or the right
to use, any copyright of literary, artistic or scientific work including
cinematograph films and films or tapes for radio or television broadcasting ,
any patent, trade mark, design or model, plan, secret formula or process, or
transmission by satellite, cable, optic fibre or similar technology, or for the
use of, or the right to use, industrial, commercial, or scientific equipment,
or for information concerning industrial, commercial or scientific experience.
(b) the term "fees for technical services" means payment
of any kind in consideration for the rendering of any managerial, technical or
consultancy services including the provision of services by technical or other
personnel but does not include payments for services mentioned in Article 14
and 15 of this Convention.
4. The provisions of paragraphs 1
and 2 shall not apply if the beneficial owner of the royalties or fees for
technical services being a resident of a Contracting State. carries on business
in the other Contracting State in which the royalties or fees for technical
services arise, through a permanent establishment situated therein, or performs
in that other State independent personal services from a fixed base situated
therein, and the right or property in respect of which the royalties or fees
for technical services are paid is effectively connected with such permanent
establishment or fixed base. In such case the provisions of Article 7 or
Article 14, as the case may be, shall apply.
5. Royalties or fees for technical
services shall be deemed to arise in a Contracting State when the payer is that
State itself, a political subdivision, a local authority or a resident of that
State. Where, however, the person paying the royalties or fees for technical
services, whether he is a resident of a Contracting State or not, has in a
Contracting State a permanent establishment or a fixed base in connection with
which the liability to pay the royalties or fees for technical services was
incurred, and such royalties or fees for technical services are borne by such
permanent establishment or fixed base, then such royalties or fees for
technical services shall be deemed to arise in the State in which the permanent
establishment or fixed base is situated.
6. Where, by reason of a special
relationship between the payer and the beneficial owner or between both of them
and some other person, the amount of the royalties or fees for technical
services, having regard to the use, right or information for which they are
paid, exceeds the amount which would have been agreed upon by the payer and the
beneficial owner in the absence of such relationship, the provisions of this
Article shall apply only to the last-mentioned amount. In such case, the excess
part of the payments shall remain taxable according to the laws of each
Contracting State, due regard being had to the other provisions of this
Convention.
Article 13
CAPITAL GAINS
1. Gains derived by a resident of a Contracting State from
the alienation of immovable property referred to in Article 6 and situated in
the other Contracting State may be taxed in that other State.
2. Gains from the alienation of shares of the capital
stock of a company the property of which consists directly or indirectly
principally of immovable property situated in a Contracting State may be taxed
in that State.
3. Gains, other than those dealt with in paragraph 2 of
this Article, from the alienation of movable property forming part of the
business property of a permanent establishment which an enterprise of a
Contracting State has in the other Contracting State or of movable property
pertaining to a fixed base available to a resident of a Contracting State in
the other Contracting State for the purpose of performing independent personal
services, including such gains from the alienation of such a permanent
establishment (alone or with the whole enterprise) or of such fixed base, may
be taxed in that other State.
4. Gains derived by an enterprise of a Contracting State
from the alienation of ships or aircraft operated in international traffic or
movable property pertaining to the operation of such ships, aircraft shall be
taxable only in that State.
5. Gains from the alienation of shares other than those
mentioned in paragraph ?. 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 the preceding paragraphs of this Article shall be taxable
only in the Contracting State of which the alienator is a resident.
Article 14
INDEPENDENT PERSONAL
SERVICES
1. Income derived by a resident of
a Contracting State in respect of professional services or other activities of
an independent character shall be taxable only in that State except in the
following circumstances, when such income may also be taxed in the other
Contracting State:
(a) if
he has a fixed base regularly available to., him in the other Contracting State
for the purpose of performing his activities; in that case. only so much of the
income as is attributable to that fixed base may be taxed in that other State;
or
(b) if
his stay in the other State is for a period or periods aggregating 183 days or
more in any 12-month period commencing or ending in the fiscal year concerned;
in that case, only so much of the income as is derived from his activities
performed in that other State 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 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 there from may be taxed in that other State.
2. Notwithstanding the provisions
of paragraph 1, remuneration derived by a resident of a Contracting State in
respect of an employment exercised in the other Contracting State shall be
taxable only in the first-mentioned State if:
(a) the
recipient is present in the other State for a period or periods not exceeding
in the aggregate 183 days in any 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 Contracting State may be taxed in that State.
Article 16
DIRECTORS' FEES
Directors' fees and other similar
payments derived by a resident of a Contracting State in his capacity as a
member of the board of directors of a company which is a resident of the other
Contracting State may be taxed in that other State.
Article 17
ARTISTES AND
SPORTSPERSON
1. Notwithstanding the provisions
of Articles 7, 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. Notwithstanding the provisions
of paragraphs 1 and 2 of this Article, income mentioned in this Article shall
be exempt from tax in the Contracting State in which the activity of the
entertainer or sportsperson is exercised provided that this activity is supported
in a considerable part out of public funds of this State or of the other State
or the activity is exercised under a cultural agreement between the Contracting
States. In such a case, the income is taxable only in the Contracting State in
which the artiste or the sportsperson is a resident.
Article 18
PENSIONS
1. 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.
2. Notwithstanding the provisions
of paragraph 1, pensions and other similar remunerations paid under the
compulsory pension system of Hungary" to a resident of India in
consideration of past employment shall be taxable only in Hungary.
3. Notwithstanding the provisions of
paragraph 1 any pension paid by, or out of funds created by India or a
political sub-division, or a local authority thereof to a resident of Hungary
in consideration of past employment shall be taxable only in India.
Article 19
GOVERNMENT SERVICE
1. (a) Remuneration,
other than a pension, paid by a Contracting State or a political subdivision or
a local authority thereof to an individual in respect of services rendered to
that State or subdivision or authority shall be taxable only in that State.
(b) However,
such remuneration shall be taxable only in the other Contracting State if the
services are rendered in that State and the individual is a resident of that
State who:
(i) is a national of that State; or
(ii) did
not become a resident of that State solely for the purpose of rendering the
services.
2. The provisions of Articles
15, 16, 17 and 18 shall apply to remuneration and pensions in respect of
services rendered in connection with a business carried on by a Contracting
State or a political subdivision or a local authority thereof.
Article 20
STUDENTS
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 State solely for the purpose
of his education or training, shall be exempt from tax in that other State on:
(a) payments made to him by persons residing
outside that other State for the purposes of his maintenance, education or
training; and
(b) remuneration which he derives from an
employment which he exercises in the other Contracting State if the employment
is a requirement of his studies or apprenticeship.
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 seven consecutive years from the date
of his first arrival in that other State.
Article 21
PROFESSORS AND
TEACHERS
1. A professor or teacher who visits one of the Contracting
States for a period not exceeding two years for the sole purpose of teaching or
carrying out advanced study (including research) at a university, college or
other approved institution in that Contracting State and who was immediately
before that visit a resident of the other Contracting State shall be exempt
from tax in the first-mentioned Contracting State on any remuneration for such
teaching or research for a period not exceeding two years from the date he
first visits that Contracting State for such purpose.
2. The preceding provisions of this Article shall not
apply to remuneration which a professor or teacher receives for conducting
research if the research is undertaken primarily for the private benefit of a
specific person or persons.
3. For the purposes of paragraph 1 "approved
institution" means an institution which has been approved in this regard
by the competent authority of the concerned State. The Competent Authority of a
Contracting State approving the institution shall intimate the name of the
institution so approved to the Competent Authority of the other Contracting
State.
Article 22
OTHER INCOME
1. Items of income of a resident of a Contracting State
wherever arising, not dealt with in the foregoing Articles of this Convention
shall be taxable only in that State.
2. The provisions of paragraph 1 shall not apply to income,
other than income from immovable property as defined in paragraph 2 of Article
6, if the beneficial owner of such income, being a resident of a Contracting
State carries on business in the other Contracting State through a permanent
establishment situated therein, or performs in that other State independent
personal services from a fixed base situated therein, and the right or property
in respect of which the income is paid is effectively connected with such
permanent establishment or fixed base. In such case the provisions of Article 7
or Article 14, as the case may be, shall apply.
3. Notwithstanding the provisions of paragraph 1, if a
resident of a Contracting State derives income from sources within the other
Contracting State in the form of lotteries, crossword puzzles, races including
horse races, card games and other games of any sort or gambling or betting of
any form or nature whatsoever, such income may be taxed in the other
Contracting State.
Article 23
ELIMINATION OF DOUBLE TAXATION
1. In Hungary double taxation shall be eliminated as
follows:
(a) Where a resident of Hungary derives income
which, in accordance with the provisions of this Convention may be taxed in
India. Hungary shall, subject to the provisions of sub-paragraph (b)
exempt such income from tax.
(b) Where a resident of Hungary derives items of
income which, in accordance with the provisions of Article 10, 11 and 12 may be
taxed in India. Hungary shall allow as a deduction from the tax on the income
of that resident an amount equal to the tax paid in India. Such deduction shall
not, however, exceed that part of the tax, as computed before the deduction is
given which is attributable to such items of income which may be taxed in
India.
2. In the case of India double taxation shall be eliminated
as follows:
Where a resident of India derives income which, in
accordance with the provisions of this Convention, may be taxed in Hungary,
India shall allow as a deduction from the tax on the income of that resident an
amount equal to the income tax paid in Hungary whether directly or by deduction
at source. Such amount shall not however exceed that part of the income tax, as
computed before the deduction is given, which is attributable to the income
which may .be taxed in Hungary.
3. Where in accordance with any provisions of this
Convention income derived by a resident of a Contracting State is exempt from
tax in that State, such State may nevertheless, in calculating the amount of
tax on the remaining income of such resident, take into account the exempted
income.
Article 24
NON-DISCRIMINATION
1. Nationals of a Contracting State shall not be subjected
in the other Contracting State to any taxation or any requirement connected
therewith, which is other or more burdensome than the taxation and connected
requirements to which nationals of that other State in the same circumstances
are or may be subjected. This provision shall, notwithstanding the provisions
of Article 1, also apply to persons who are not residents of one or both of the
Contracting States.
2. The taxation on a permanent establishment which an
enterprise of a Contracting State has in the other Contracting State shall not
be less favourably levied in that other State than the taxation levied on
enterprises of that other State carrying on the same activities. This provision
shall not be construed as obliging a Contracting State to grant to residents of
the other Contracting State any personal allowances, reliefs and reductions for
taxation purposes on account of civil status or family responsibilities which
it grants to its own residents.
3. Except where the provisions of paragraph 1 of Article 9,
paragraph 4 of Article 11, or paragraph 4 of Article 12, apply, interest,
royalties and other disbursements paid by an enterprise of a Contracting State
to a resident of the other Contracting State shall, for the purpose of
determining the taxable profits of such enterprise, be deductible under the
same conditions as if they had been paid to a resident of the first-mentioned
State.
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 more burdensome than the taxation and connected requirements
to which other similar enterprises of the first-mentioned State are or may be
subjected.
5. The provisions of this Article shall, notwithstanding
the provisions of Article 2, apply to taxes of every kind and description.
Article 25
MUTUAL AGREEMENT
PROCEDURE
1. Where a person considers that the actions of one or both
of the Contracting States result or will result for him in taxation not in
accordance with the provisions of this Convention, he may, irrespective of the
remedies provided by the domestic law of those States, present his case to the
competent authority of the Contracting State of which he is a resident or, if
his case comes under paragraph 1 of Article 24, to that of the Contracting
State of which he is a national. The case must be presented within three years
from the first notification of the action resulting in taxation not in
accordance with the provisions of the Convention.
2. The competent authority shall endeavour, if the
objection appears to it to be justified and if it is not itself able to arrive
at a satisfactory solution, to resolve the case by mutual agreement with the
competent authority of the other Contracting State, with a view to the
avoidance of taxation which is not in accordance with the Convention. Any
agreement reached shall be implemented notwithstanding any time limits in the
domestic law of the Contracting States.
3. The competent authorities of the Contracting States
shall endeavour to resolve by mutual agreement any difficulties or doubts arising
as to the interpretation or application of the Convention. They may also
consult together for the elimination of double taxation in cases not provided
for in the Convention.
4. The competent authorities of the Contracting States may
communicate with each other directly for the purpose of reaching an agreement
in the sense of the preceding paragraphs.
Article 26
EXCHANGE OF
INFORMATION
1. The competent authorities of the Contracting States
shall exchange such information (including documents) as is necessary for
carrying out the provisions of this Convention, or of the domestic laws of the
Contracting States concerning taxes covered by the Convention insofar as the
taxation thereunder is not contrary to the Convention. The exchange of
information is not restricted by Article 1. Any information so received by a
Contracting State shall be treated as secret in the same manner as information
obtained under the domestic laws of that State and shall be disclosed only to
persons or authorities (including courts and administrative bodies) involved in
the assessment or collection of, the enforcement or prosecution in respect of,
or the determination of appeals in relation to, the taxes covered by the
Convention. Such persons or authorities shall use the information only for such
purposes. They may disclose the information in public court proceedings or in
judicial decisions.
2. In no case shall the provisions of paragraph 1 be
construed so as to impose on a Contracting State the obligation:
(a) to carry out administrative measures at
variance with the laws and administrative practice of that or of the other
Contracting State;
(b) to supply information (including documents)
which are not obtainable under the laws or in the normal course of the
administration of that or of the other Contracting State;
(c) to supply information which would disclose any
trade business industrial, commercial or professional secret or trade process
or information the disclosure or which would be contrary to public policy
(ordre public)
Article 27
DIPLOMATIC AGENTS
AND CONSULAR OFFICERS
Nothing in this Convention shall
affect the fiscal privileges of diplomatic agents or consular officers under
the general rules of international law or under the provisions of special
agreements.
Article 28
ENTRY INTO FORCE
1. The Contracting States shall
notify each other in writing, through diplomatic channels, the completion of
the procedure required by the respective laws for the entry into force of this
Convention.
2. This Convention shall enter
into force thirty days after the receipt of the later of the notifications
referred to in paragraph 1 of this Article.
3. The provisions of this Convention
shall have effect:
(a) in India: in respect of income arising in any
fiscal year beginning on or after the first day of April next following the
calendar year in which the Convention enters into force; and
(b) in Hungary: in respect of income arising in
any fiscal year beginning on or after the first day of January next following
the calendar year in which the Convention enters into force.
4. The Convention between the
Government of the People's Republic of Hungary and the Government of the
Republic of India for avoidance of double taxation with respect to taxes on
income signed at New Delhi on 30th October, 1986 and the Protocol thereto
signed on the same date shall cease to have effect when the provisions of this
Convention become effective in accordance with the provisions of paragraph 3.
Article 29
TERMINATION
This Convention shall remain in
force indefinitely until terminated by a Contracting State. Either Contracting
State may terminate the Convention, through diplomatic channels, by giving
notice of termination in writing at least six months before the end of any
calendar year beginning after the expiration of five years from the date of
entry into force of the Convention. In such event, the Convention shall cease
to have effect:
(a) in India, in respect of income arising in any
fiscal year beginning on or after the 1st April next following the calendar
year in which the notice of termination is given;
(b) in Hungary: in respect of income arising in
any fiscal year beginning on or after the first day of January next following
the calendar year in which the notice of termination is given.
IN WITNESS WHEREOF the undersigned, being duly authorised
thereto, have signed this Agreement.
DONE in two originals at New Delhi this 3rd day of
November, 2003 in Hindi, the Hungarian and English languages, all three texts
being equally authentic. In case of divergence between the texts the English
text shall prevail.
FOR THE REPUBLIC OF
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FOR THE REPUBLIC OF |
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INDIA |