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KOREA 25. Agreement
for avoidance of double taxation of income and the prevention of fiscal evasion
with Korea Whereas the annexed Convention between the Government of the Republic of
India and the Government of the Republic of Korea for the avoidance of double
taxation and the prevention of fiscal evasion with respect to taxes on income
has been ratified and the instruments of ratification exchanged, as required by
paragraph (1) of article 29 of the said Convention, on 1st August, 1986; 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 Union of
India. Notification :
No. GSR 111(E), dated 26-9-1986, as amended by GSR
986(E), dated 20-12-1990. TEXT OF
ANNEXED AGREEMENT DATED 19-7-1985 The Government of the Republic of India, and the Government of the
Republic of Korea, desiring to conclude a Convention for the avoidance of
double taxation and the prevention of fiscal evasion with respect to taxes on
income, 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. The Convention shall apply to taxes on income imposed on
behalf of each 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 and taxes on the total
amounts of wages or salaries paid by enterprises. 3. The existing taxes to which the Convention shall apply
are :
1(a) In the case of Korea (i) the
income-tax; (ii) the
corporation tax; and (iii) the
inhabitant tax; (hereinafter
referred to as Korean tax); (b) In
the case of India, (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). 4. The Convention shall apply also to any identical or
substantially similar taxes which are imposed after the date of signature of
this 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. In this Convention, unless the context
otherwise requires (a) the terms a Contracting State and the other
Contracting State mean Korea or India as the context requires; (b) the term tax means Korean tax or Indian tax,
as the context requires; (c) the term person includes an individual, a
company and any other body of persons which is treated as an entity for tax
purposes; (d) the term company means any body corporate or
any entity which is treated as a body corporate for tax purposes; (e) the terms enterprise of a Contracting State
and enterprise of the other Contracting State mean respectively an enterprise
carried on by a resident of a Contracting State and an enterprise carried on by
a resident of the other Contracting State; (f) the term competent authority means, in the
case of Korea the Minister of Finance or his authorised representative; and in
the case of India, the Central Government in the Ministry of Finance
(Department of Revenue) or its authorised representative; (g) the term national means any individual
possessing the nationality of a Contracting State and any legal person, partnership,
association or other entity deriving its status as such from the laws in force
in the Contracting State; (h) 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. 2. As
regards the application of this Convention by either Contracting State, any
term not otherwise defined shall, unless the context otherwise requires, have
the meaning which it has under the laws of that Contracting State relating to
the taxes which are the subject of this Convention. ARTICLE
4 - Fiscal domicile - 1. For the purposes of the 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 head or main office, place of management or any other criterion of a
similar nature. 2. Where
by reason of the provisions of paragraph (1), an individual is a resident of
both Contracting States, then his status shall be determined as follows : (a) he shall be deemed to be a resident of the
State in which he has a permanent home available to him, if he has a permanent
home available to him in both States, he shall be deemed to be a resident of
the State with which his personal and economic relations are closer (centre of
vital interests); (b) if the State in which he has his centre of
vital interests cannot be determined, or if he has not a permanent home
available to him in either State, he shall be deemed to be a resident of the
State in which he has an habitual abode; (c) if he has an habitual abode in both States or
in neither of them, he shall be deemed to be a resident of the State of which
he is a national; (d) if he is a national of both States or of
neither of them, the competent authorities of the Contracting States shall
settle the question by mutual agreement. 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.
In case of doubt 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 shall include especially (a) a place of
management; (b) a branch; (c) 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. The
term permanent establishment likewise encompasses 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 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 for collecting information, for the enterprise; (e) the maintenance of
a fixed place of business solely for the purpose of advertising, the supply of
information, scientific research or any other activity, if it has a preparatory
or auxiliary character in the trade or business of the enterprise; (f) the maintenance
of a fixed place if business solely for any combination of activities mentioned
in sub-paragraphs (a) to (e) of this paragraph, 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) if a person - other
than an agent of independent status to whom paragraph (6) applies - is acting
on behalf of an enterprise and has, and habitually exercises, in a Contracting
State an authority to conclude contracts in the name of the enterprise, that
enterprise shall be deemed to have a permanent establishment in that State in
respect of any activities which that person undertakes for 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 by virtue of that
paragraph. 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,
where such persons are acting in the ordinary course of their business. 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 from immovable
property may be taxed in the Contracting State in which such property is
situated. 2. The
term immovable property shall be defined in accordance with 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, 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,
boats and aircraft shall not be regarded as immovable property. 3. The
provisions of paragraph (1) shall apply to income derived from the direct use,
letting or use in any other form of immovable property. 4. The
provisions of paragraphs (1) and (5) 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 the
determination of 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, which are allowed under the provisions of the domestic law of the
Contracting State in which the permanent establishment is situated. 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
income or 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. 1ARTICLE
8 - Air transport - 1. Profits from the operation of aircraft in
international traffic carried on by an enterprise of a Contracting State shall
be taxable only in that State. 2. The
provisions of paragraph (1) shall also apply to profits derived from the
participation in a pool, a joint business or in an international operating
agency. 3. For
the purposes of this article, the term operation of aircraft shall include
transportation by air of persons, livestock, goods or mail carried on by the
owners or lessees or charterers of aircraft, including the sale of tickets for
such transportation on behalf of other enterprises, the incidental lease of
aircraft on a charter basis and any other activity directly connected with such
transportation. 1ARTICLE
9 - Shipping transport - 1. Profits derived by an enterprise of a
Contracting State from the operation of ships in international traffic shall be
taxable only in that State. 2.
Notwithstanding the provisions of paragraph (1) of this article, profits
derived from the operation of ships in international traffic may be taxed in
the Contracting State in which such operation
is carried on; but the tax so charged shall not exceed 50 per cent of
the tax otherwise imposed by the internal law of that State. 3. The
provisions of paragraphs (1) and (2) of this article shall also apply to
profits derived from the participation in a pool, a joint business or an
international operating agency. ARTICLE
10 - 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
11 - 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) 15 per cent of the gross amount of the
dividends if the beneficial owner is a company which owns directly at least 20
per cent of the capital of the company paying the dividends ; (b) 20 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. 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
cases the provisions of article 7 or article 15, 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 so which the
dividends are paid is effectively connected with a permanent establishment or a
fixed base situated in that other State, nor subject the companys
undistributed profits to a tax on the companys undistributed profits, even if
the dividends paid or the undistributed profits consist wholly or partly or
profits or income arising in such other State. ARTICLE
12 - 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 15 per
cent of the gross amount of the interest. 3.
Notwithstanding the provisions of paragraph (2) of this article : (a) where the interest is paid to a bank carrying
on a bona fide banking business which is a resident of the other
Contracting State and is the beneficial owner of the interest, the tax charged
in the Contracting State in which the interest arises shall not exceed 10 per
cent of the gross amount of the interest ; (b) where the interest is paid to the Government
of one of the Contracting States or a political sub-division or local authority
or the Central Bank or the Export-Import Bank of that State, it shall not be
subjected to tax by the State in which it arises. 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 debtors 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. 5. The
provisions of paragraphs (1), (2) and (3) 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-claims in
respect of which the interest is paid is effectively connected with such
permanent establishment or fixed base. In such cases the provisions of article
7 or article 15, as the case may be, shall apply. 6.
Interest shall be deemed to arise in a Contracting State when the payer is that
State itself, a political sub-division, a local authority or a resident of that
State. Where, however, the person paying the interest, whether he is a resident
of a Contracting State or not, has in a Contracting State a permanent establishment
or a fixed base in connection with which the indebtedness on which the interest
is paid was incurred, and such interest is borne by such permanent
establishment or fixed base, then such interest shall be deemed to arise in the
State in which the permanent establishment or the fixed base is situated. 7. Where,
owing to 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 cases, 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 - Royalties and fees for technical services - 1. Royalties and
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 and fees for technical services may also be taxed in
that 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 15 per cent of the
gross amount of the royalties or fees for technical services. 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
term fees for technical services as used in this article means payments of
any kind to any person, other than payments to an employee of the person making
the payments and to any individual for independent personal services mentioned
in article 15, in consideration for services of a managerial, technical or
consultative nature, including the provision of services of technical or other
personnel. 5. The
provisions of paragraphs (1) and (2) of this article 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 perform in that other State
independent personal services from a fixed base situated therein, and the
right, property or contract in respect of which the royalties or fees for
technical services and paid is effectively connected with such permanent
establishment or fixed base. In such cases the provisions of article 7 or
article 15, as the case may be, shall apply. 6.
Royalties and fees for technical services shall be deemed to arise in a
Contracting State when the payer is that State itself, a political
sub-division, a local authority or a resident of that State. Where, however,
the person paying the 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 of a fixed base in connection with which the obligation to make
the payments was incurred and the payments are borne by the permanent
establishment or fixed base, then the royalties or fees for technical services
shall be deemed to arise in the Contracting State in which the permanent
establishment or fixed base in situated. 7. Where,
owing to 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 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 such cases,
the excess part of the payments shall remain taxable according to the law of
each Contracting State due agreed being had to the other provisions of this
Convention. ARTICLE
14 - Capital gains - 1. Capital gains from the alienation of
immovable property, as defined in paragraph (2) of article 6 or from the
alienation of shares in a company the assets of which consist principally or
immovable property, may be taxed in the 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 purposes of performing professional 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 the other State. 3.
Notwithstanding the provisions of paragraph (2), gains by an enterprise of a
Contracting State from the alienation of ships and aircraft which it operates
in international traffic and movable property pertaining to the operation of
such ships and aircraft shall be taxable only in that State. 4. Gains
from the alienation of any property, other than those mentioned in preceding
paragraphs of this Article, shall be taxable only in the Contracting State of
which the alienator is a resident. 5. The
term alienation shall mean alienation in accordance with the law of the
Contracting State in which the property in question is situated. ARTICLE
15 - Independent personal services - 1. Income derived by an
individual who is a resident of a Contracting State from the performance 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 much 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, surgeons, lawyers, engineers, architects,
dentists and accountants. ARTICLE
16 - Dependent personal services - 1. Subject to the provisions of
articles 17, 19, 20, 21 and 22, salaries, wages and other similar remuneration
derived by a resident of a Contracting State in respect of an employment shall
be taxable only in that State unless the employment is exercised, in the other
Contracting State. If the employment is so exercised, such remuneration as is
derived therefrom may be taxed in that other State. 2.
Notwithstanding the provisions of paragraph (1), remuneration derived by a
resident of a Contracting State in respect of an employment exercised in the
other Contracting State shall be taxable only in the first-mentioned State if (a) the recipient is present in the other State
for a period or periods not exceeding in the aggregate 183 days in the
previous year or taxation year concerned, as the case may be; 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
by a resident of a Contracting State in respect of an employment exercised
aboard a ship or aircraft operated in international traffic shall be taxable
only in that State. ARTICLE
17 - Directors fees and remuneration of top-level managerial officials
- 1. 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. 2. Salaries,
wages and other similar remuneration derived by a resident of a Contracting
State in his capacity as an official in top-level managerial position of a
company which is a resident of the other Contracting State may be taxed in that
other State. ARTICLE
18 - Artistes and athletes - 1. Notwithstanding the provisions of
article 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 an athlete, 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 athlete
in his capacity as such accrues not to the entertainer or athlete himself but
to another person, that income may, not withstanding the provisions of articles
7 and 15, be taxed in the Contracting State in which the activities of the
entertainer or athlete are exercised. 3. The
provisions of paragraphs (1) and (2) shall not apply to remuneration or
profits, salaries, wages and similar income derived from activities performed
in a Contracting State by entertainers or athletes if their visit to that State
is substantially supported from the public funds of the other Contracting
State, a political sub-division or a local authority thereof. ARTICLE
19 - Pensions - Subject to the provisions of paragraphs (2) and (3)
of Article 20, 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
20 - Government functions - 1. (a) Remuneration, other than a
pension, paid by a Contracting State or a political sub-division or a local
authority thereof, to an individual in respect of service rendered to that
State or sub-division or, authority shall be taxable only in that State. (b)
However, such remuneration shall be taxable only in the other Contracting State
if the services are rendered in that State and the individual is a resident of
that State who: (i) is a national of that State ; or (ii) did not become a resident of that State solely
for the purpose of rendering the services. 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 pensions shall be taxable only in the other Contracting State if
the individual is a resident of, and a national of, that State. 3. The
provisions of articles 16, 17 and 19 shall apply to remuneration and pensions
in respect of services rendered in connection with a business carried on by a
Contracting State or a political sub-division or a local authority thereof. 4. The
provisions of paragraph (1) of this article shall likewise apply in respect of
remuneration or pensions paid, in the case of Korea, by the Bank of Korea, the
Export-Import Bank of Korea and the Korea Trade Promotion Corporation and in
the case of India, by the Reserve Bank of India and the EXIM Bank of India, and
by organizations recognized by and agreed between the competent authorities of
the Contracting States. ARTICLE
21 - Payments received by 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 State solely for the purpose of his education or training shall be
exempt from tax in that other State on : (a) payments made to him by persons residing
outside that other State for the purposes of his maintenance, education or
training, and (b) remuneration from employment in that other State,
in an amount not exceeding one million and seven hundred thousand Korean Won or
its equivalent in Indian currency during any previous year or the taxation
year, as the case may be, provided that such employment is directly related to
his studies or is undertaken for the purpose of his maintenance. 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
22 - Professors, teachers and research scholars - 1. An individual
who is or was a resident of a Contracting State immediately before making a
visit to the other Contracting State, and who, at the invitation of any
university, college, school or other similar educational institution, which is
recognised by the competent authority in that other State, visits that other
State solely for the purpose of teaching or research or both at such
educational institutions shall be exempt from tax in that other State on his
remuneration for such teaching or research, for a period not exceeding two
consecutive years from the date of his first arrival in that other State. 2. This
article shall not apply to income from research if such research is undertaken
primarily for the private benefit of a specific person or persons. ARTICLE
23 - Other income - 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. ARTICLE
24 - Elimination of double taxation - 1. In the case of a resident
of Korea, double taxation shall be avoided as follows: Subject
to the provisions of Korean tax law regarding the allowance as a credit
against Korean tax of tax payable in any country other than Korea (which shall
not affect the general principle hereof), the Indian tax payable (excluding in
the case of a dividend, tax payable in respect of the profits out of which the
dividend is paid) under the laws of India and in accordance with this
Convention, whether directly or by deduction, in respect of income from sources
within India shall be allowed as a credit against Korean tax payable in respect
of that income. The credit shall not, however, exceed that proportion of Korean
tax which the income from sources within India bears to the entire income
subject to Korean tax. 12. For
the purposes of paragraph (1), the term Indian tax payable shall be deemed to
include the amount of Indian tax which would have been payable in accordance
with Indian tax laws but for the exemption or reduction, of Indian tax in
accordance with the laws relating to incentives for the promotion of economic
development in India which were in force on the date of signature of this
Convention or any other provisions which may subsequently be introduced in
India in modification of, or in addition to, these laws so far as they are
agreed by the competent authorities of the Contracting States, provided that
the amount of the tax referred to in this paragraph shall not, however, exceed
: (a) in
the case of dividends referred to in paragraph (2) (a) of article 11 an
amount of 15 per cent of the gross amounts of such dividends and, in the case
of dividends referred to in paragraph (2)(b) of article 11 an amount of
20 per cent of the gross amount of such dividends ; (b) in
the case of interest referred to in paragraph (2) of Article 12 on amount of 15
per cent of the gross amount of such interest and in the case of interest
referred to in paragraph (3) (a) of Article 12 an amount of 10 per cent
of the gross amount of such interest; and (c) in
the case of royalties referred to in paragraph (2) of Article 12 an amount of
15 per cent of the gross amount of such royalties. 3. In the case of a resident of India, double taxation
shall be avoided as follows : Subject to the provisions of Indian tax law regarding the allowance as a
credit against Indian tax of tax payable in any country other than India (which
shall not affect the general principle hereof), the Korean tax payable
(excluding in the case of a dividend, tax payable in respect of the profits out
of which the dividend is paid) under the laws of Korea and in accordance with
this Convention, whether directly or by deduction, in respect of income from
sources within Korea shall be allowed as a credit against Indian tax payable in
respect of that income. The credit shall not, however, exceed that proportion
of Indian tax which the income from sources within Korea bears to the entire
income subject to Indian tax. 14. For the purposes of paragraph (3), the term
Korean tax payable shall be deemed to include the amount of Korean tax which
would have been payable in accordance with Korean tax laws but for the
exemption or reduction of Korean tax in accordance with the laws relating to
incentives for the promotion of economic development in Korea which were in
force on the date of signature of this Convention or any other provisions which
may subsequently, be introduced in Korea in modification of, or in addition to
those laws so far as they are agreed by the competent authorities of the
Contracting States, provided that the amount of the tax referred to in this
paragraph shall not, however, exceed : (a) in
the case of dividends referred to in paragraph (2)(a) of article 11 an
amount of 15 per cent of the gross amount of such dividends and in the case of
dividends referred to in paragraph (2)(b) of Article 11 an amount of 20
per cent of the gross amount of such dividends ; (b) in
the case of interest referred to in paragraph (2) of article 12 an amount of 15
per cent of the gross amount of such interest and in the case of interest
referred to in paragraph (3)(a) of Article 12 an amount of 10 per cent
of the gross amount of such interest; and (c) in
the case of royalties referred to in paragraph (2) of Article 13 an amount of
15 per cent of the gross amount of such royalties. ARTICLE
25 - 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. This
provision shall not be constituted 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 article 10, paragraph (7) of article 12, or paragraph
(7) of article 13 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 condition 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 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. 5. The
provisions of this article shall, notwithstanding the provisions of article 2,
apply to taxes of every kind and description. ARTICLE
26 - Mutual agreement procedure - 1. Where a 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 or, if his case comes under paragraph (1)
of Article 25, to that of the Contracting State of which he is a national. This
case must be presented within three years from the first notification of the
action giving 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 about 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 which is not
in accordance with the Convention. Any agreement reached shall be implemented
notwithstanding any time limits in the national 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 or double taxation in cases not provided for in the Convention. 4. The
competent authorities of the Contracting States may communicate with each
other directly for the purpose of reaching an agreement in the sense of the
preceding paragraphs. When it seems advisable in order to reach agreement to
have an oral exchange of opinions, such exchange may take place through a
Commission consisting of representatives of the competent authorities of the
Contracting States. ARTICLE
27 - Exchange of information - 1. The competent authorities of the
Contracting States shall exchange such information (including documents) as is
necessary for carrying out the provisions of this Convention or of the
domestic laws of the Contracting States concerning taxes covered by the
Convention, insofar as the taxation thereunder is not contrary to the
Convention in particular for the prevention of fraud or evasion of such taxes.
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. However,
if the information is originally regarded as secret in the transmitting State
it 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 which are the subject of the Convention. Such persons or
authorities shall use the information only for such purposes but may disclose
the information in public court, proceedings or in judicial decisions. The
competent authorities shall, through consultation, develop appropriate
conditions, methods and techniques concerning the matters in respect of which
such exchanges of information shall be made, including where appropriate,
exchanges of information regarding tax avoidance. 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 which is not obtainable under the laws or in the normal course of
the administration of that or of the other Contracting State ; (c) to supply
information which would disclose any trade, business industrial, commercial or
professional secret or trade process, or information, the disclosure of which
would be contrary to public policy. ARTICLE
28 - Diplomatic agents and consular officers - Nothing in this
Convention shall affect the fiscal privileges of diplomatic agents and consular
officers under the general rules or international law or under the provisions
of special agreements. ARTICLE
29 - Entry into force - 1. This Convention shall be ratified and the
instruments of ratification shall be exchanged at Seoul as soon as possible. The
Convention shall enter into force on the thirtieth day after the date of
exchange of the instruments of ratification. 2. This
Convention shall have effect (a) in Korea, (i) in respect of tax
withheld at the source on amounts paid or credited to non-residents on or after
the first day of January of the calendar year next following that in which the
Convention is initialled ; and (ii) in respect of
other taxes for taxation years beginning on or after the first day of January
of the calendar year next following that in which the Convention is initialled, (b) in India, (i) in respect of
tax withheld at the source on amounts paid or credited to non-residents on or
after the first day of April of the calendar year next following that in which
the Convention is initialled ; and (ii) in respect of
other taxes for previous years beginning on or after the first day of April of
the calendar year next following that in which the Convention is initialled. ARTICLE
30 - Termination - The 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 ten
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 Korea, (i) in respect of
tax withheld at the source on amounts paid or credited to non-residents on or
after the first day of January next following the calendar year in which the
notice of termination is given ; and (ii) in respect of
other taxes for taxation years beginning on or after the first day of January
next following the calendar year in which the notice of termination is given. (b) in India, (i) in respect of
tax withheld at the source on amounts paid or credited to non-residents on or
after the first day of April next following the calendar year in which the
notice of termination is given ; and (ii) in respect of
other taxes for previous years beginning on or after the first day of April
next following the calendar year in
which the notice of termination is given. In witness whereof the undersigned, being duly
authorised thereto, have signed the present Convention. Done in duplicate at New Delhi this 19th day of July,
1985 on three original copies each in the Hindi, Korean and English languages,
all the texts being equally authentic. In case of divergence between the three
texts, the English text shall be the operative one.
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