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3. Agreement for avoidance of
double taxation and prevention of fiscal evasion with Bangladesh Whereas the
annexed Convention between the Government of the Republic of India and the Government
of the Peoples Republic of Bangladesh for the Avoidance of Double Taxation and
the Prevention of Fiscal Evasion with respect to taxes on income has come into
force on the 27th May, 1992 after the exchange of Instruments of Ratification
as required by paragraph 1 of Article 31 of the said Convention; Now,
therefore, in exercise of the powers conferred by section 90 of the Income-tax
Act, 1961 (43 of 1961), the Central Government hereby directs that all the
provisions of the said Convention shall be given effect to in the Union of Notification : No. GSR 758(E), dated 8- 9-1992. ANNEXURE CONVENTION
BETWEEN THE GOVERNMENT OF THE REPUBLIC OF INDIA AND THE GOVERNMENT OF THE
PEOPLES REPUBLIC OF BANGLADESH FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE
PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME The Government
of the Have agreed as
follows : CHAPTER I - SCOPE OF THE CONVENTION ARTICLE I - Personal scope - This Convention
shall apply to persons who are residents of one or both of the Contracting
States. ARTICLE II - Taxes covered - 1. The existing
taxes to which this convention shall apply are (a) in the case of the income-tax (hereinafter referred to as
Bangladesh tax); (b) in
the case of India : (i) the income-tax including any surcharge
thereon, (ii) the surtax, (hereinafter referred to as
Indian tax). (2) This
Convention shall also apply to any identical or substantially similar taxes
which are imposed by either Contracting State after the date of signature of
the present Convention in addition to, or in place of, the taxes referred to in
paragraph (1). The competent authorities of the Contracting States shall notify
each other of any substantive changes which are made in their respective
taxation laws. CHAPTER II - DEFINITIONS ARTICLE III - General definitions - 1. In this
Convention, unless the context otherwise requires : (a) the term (b) the
term India means the Republic of India; (c) the terms a Contracting State and the other Contracting State
mean Bangladesh or India as the context requires; (d) the
term tax means Bangladesh tax or Indian tax, as the context requires; (e) the
term person includes an individual, a company and any other entity which is
treated as a taxable unit under the tax laws in force in the respective
Contracting States; (f) the term company means any company, body corporate or any other
entity which is treated as a company under the tax laws of the respective
Contracting States; (g) the
terms resident of a Contracting State and resident of the other Contracting
State mean a person who is a resident of Bangladesh or a person who is a
resident of India, as the context requires; (h) 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; (i) the term
nationals means all individuals possessing the nationality of the respective
Contracting States and also all legal persons, partnerships and associations
deriving their status as such from the law in force in the respective
Contracting States ; (j) the term competent authority means in the case of Bangladesh,
the National Board of Revenue or their authorised
representative and in the case of India, the Central Government in the Ministry
of Finance (Department of Revenue) or their authorised
representative; (k) 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 a 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 IV -
Resident - 1. For the purposes of this Convention, the term resident of a
Contracting State means any person who, under the law of that State, is liable
to taxation therein by reason of his domicile, residence, 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 case shall be determined in accordance with the
following rules : (a) he
shall be deemed to be a resident of the Contracting State in which he has a
permanent home available to him. If he has a permanent home available to him in
both Contracting States, he shall be deemed to be a resident of the Contracting
State with which his personal and economic relations are the closest (centre of
vital interests); (b) if the
Contracting 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
Contracting State, he shall be deemed to be a resident of the Contracting State
in which he has an habitual abode; (c) if he
has an habitual abode in both Contracting States or in neither of them he shall
be deemed to be a resident of the Contracting State of which he is a national; (d) if he
is a national of both Contracting States or of neither of them, the competent
authorities of the Contracting States shall settle the question by mutual
agreement. 3. Where by reason of the provisions of paragraph
(1) a person other than an individual is a resident of both Contracting States,
then it shall be deemed to be a resident of the Contracting State in which its
place of effective management is situated. ARTICLE V - Permanent
establishment - 1. For the purposes of this Convention, the term
permanent establishment means a fixed place of business in which the business
of the 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; (f) a
warehouse; (g) a mine,
quarry or other place of extraction of natural resources; (h) a
building site or construction or assembly project or the like which exists for
more than 183 days. 3. The term permanent establishment shall not
be deemed to include: (a) the use
of facilities solely for the purposes of storage or display of goods or
merchandise belonging to the enterprise; (b) the
maintenance of a stock of goods or merchandise belonging to the enterprise
solely for the purpose of storage or display; (c) the
maintenance of a stock of goods or merchandise belonging to the enterprise
solely for the purpose of processing by another enterprise; (d) the maintenance
of a fixed place of business solely for the purpose of purchasing goods or
merchandise, or for collecting information, for the enterprise; (e) the
maintenance of a fixed place of business solely for the purpose of advertising,
for the supply of information for scientific research or for similar activities
which have a preparatory or auxiliary character for the enterprise. 4. Notwithstanding the provisions of paragraphs
(1) & (2), where a person - other than an agent of an independent status,
to whom paragraph (5) applies - is acting in a Contracting State on behalf of
an enterprise of the other Contracting State, that enterprise shall be deemed
to have a permanent establishment in the first-mentioned State, if (a) he has,
and habitually exercises, in the first-mentioned State a general authority to
conclude contracts for or on behalf of the enterprise, unless his activities
are limited to the purchase of goods or merchandise for the enterprise, or (b) he
habitually maintains in the first-mentioned State a stock of goods or
merchandise belonging to the enterprise from which that person regularly
delivers goods or merchandise for or on behalf of the enterprise, or (c) he habitually secures orders in the first-mentioned State, wholly
or almost wholly, for the enterprise itself, or for the enterprise or other
enterprises which are controlled by it or have controlling interest in it. 5. An enterprise of a Contracting State shall not
be deemed to have a permanent establishment in the other Contracting State
merely because it carries on business in that other 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 and their
activities do not fall within the scope of paragraph (4)(c) above. 6. The fact that a company which is a resident of
a Contracting State controls or is controlled by a company which is a resident
of the other Contracting State, or which carries on business in that other
State (whether through a permanent establishment or otherwise) shall not of
itself make either company a permanent establishment of the other. 7. An enterprise of a Contracting State shall be
deemed to have a permanent establishment in the other Contracting State if it
carries on a business which consists of providing the services of public
entertainers (such as stage, motion picture, radio or television artists and
musicians) or athletes in that other Contracting State unless such services are
provided within the scope of a cultural or sports exchange programme
agreed to by both the Contracting States. CHAPTER III - TAXATION OF INCOME ARTICLE VI - Income from immovable property - 1.
Income from immovable property shall be taxable only in the Contracting State
in which such property is situated. 2. The term immovable property shall be defined
in accordance with the law and usage (having the force of 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, forestry and fishery, lights to which the
provisions of general law respecting landed property apply, usufruct of
immovable property and rights to variable or fixed payments in cash or kind 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 (1) shall apply to
income derived from the direct use, letting, or use in any other form of
immovable property. 4. The provisions of paragraphs (1) and (3)
shall also apply to the income from immovable property of an enterprise and to
income from immovable property used for the performance of independent personal
services. ARTICLE II - 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, then so much of the profits of the enterprise as is attributable
to that permanent establishment shall be taxable only in that other Contracting
State. 2. 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. In any case, where the correct amount of profits attributable to
a permanent establishment is incapable of determination or the ascertainment
thereof presents exceptional difficulties, the profits attributable to the
permanent establishment may be computed on a reasonable basis. 3. In the determination of the profits of a
permanent establishment, there shall be allowed as deductions expenses which
are incurred for the purpose 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, but this does not include
any expenses which, under the law of that State, would not be allowed to be
deducted by an enterprise of that State. 4. Insofar as it has been customary in a Contracting
State to determine the profits to be attributed to a permanent establishment on
the basis of an apportionment of the total profits of the enterprise to its
various parts, nothing in paragraph (2) shall preclude that Contracting State
from determining the profits to be taxed by such an apportionment as may be
customary; the method of apportionment adopted shall, however, be such that the
result shall be in accordance with the principles laid down in this Article. 5. 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. 6. For the purpose 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. 7. 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 VIII - Air transport - 1. Profits derived
by an enterprise of a Contracting State from the operation of aircraft in
international traffic shall be taxable only in that Contracting State. 2. The provisions of paragraph (1) shall likewise
apply in respect of income derived from participation in pools of any kind by
enterprises engaged in air transport. ARTICLE IX - Shipping - 1. Profits of an
enterprise of a Contracting State derived from the other Contracting State from
the operation of ships in international traffic may be taxed in that other
Contracting State, but the tax chargeable in that other Contracting State on
such income shall be reduced by an amount equal to fifty per cent of such tax. 2. The provisions of paragraph (1) shall also
apply to profits derived from the participation in a pool, a joint business or
an international operating agency. ARTICLE X - 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. ARTICLE XI - 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 Contracting 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 Contracting State, but if the recipient is
the beneficial owner of the dividends, the tax so charged shall not exceed : (a) 10 per cent of
the gross amount of the dividends if the beneficial owner is a company which
holds directly at least 10 per cent of the capital of the company paying the
dividends; (b) 15 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, mining shares, founders shares or other rights, not
being debt-claims, participating in profits, as well as income from other
corporate rights which is subjected to the same taxation treatment as income
from shares by the laws of the State of which the company making the
distribution is a resident. 4. The provisions of paragraphs (1) and (2)
shall not apply if the beneficial owner of the dividends, being a resident of a
Contracting State, carries on business in the other Contracting State of which
the company paying the dividends is a resident, through a permanent
establishment situated therein, or performs in that other State independent personal
services from a fixed base situated therein and the holding in respect of which
the dividends are paid is effectively connected with such permanent
establishment or fixed base. In such case the provisions of Article 7 or
Article 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 Contracting 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 Contracting 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 Contracting 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 Contracting State. ARTICLE II - Interest - 1. Interest arising in a
Contracting State and paid to a resident of the other Contracting State may be
taxed in that other Contracting 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. 3. Notwithstanding the provisions of paragraph
(2) : (a) interest arising in India and paid to the Government of Bangladesh
or to the Bangladesh Bank shall be exempt from Indian tax; (b) interest arising in Bangladesh and paid to the Government of India
or to the Reserve Bank of India shall be exempt from Bangladesh tax. The competent
authorities of the Contracting States may determine by mutual agreement any
other institution to which this paragraph shall apply. 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 premium 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) to (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 Contracting 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 15, as the case may
be, shall apply. 6. Interest shall be deemed to arise in
Contracting State when the payer is that Contracting State itself, a political
sub-division, a local authority or a resident of that State. Where, however,
the person paying the interest, whether he is a resident of a Contracting State
or not, has in a Contracting State a permanent establishment 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 payment shall remain taxable according to the laws of each
Contracting State, due regard being had to the other provisions of this
Convention. ARTICLE XII - Royalties - 1. Royalties arising in
a Contracting State and paid to a resident of the other Contracting State may
be taxed in that other Contracting State. 2. However, such royalties may also be taxed in
the Contracting State in which they arise, and according to the laws of that
Contracting State, but if the recipient is the beneficial owner of the
royalties, the tax so charged shall not exceed 10 per cent of the gross amount
of the royalties. 3. The term royalties as used in this Article
means payments of any kind received as a consideration for the use of, or the
right to use, any copyright of literary, artistic or scientific work, including
cinematograph films, 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 but does not include any payments in respect of the
operation of mineral deposits, sources and other natural resources. 4. The provisions of paragraphs (1) and (2)
shall not apply if the beneficial owner of the royalties, being a resident of a
Contracting State, carries on business in the other Contracting State in which
the royalties arise, through a permanent establishment situated therein, or
performs in that other State independent personal services from a fixed base
situated therein, and the right or property in respect of which the royalties
are paid is effectively connected with such permanent establishment or fixed
base. In such case the provisions of Article 7 or Article 15, as the case may
be, shall apply. 5. Royalties shall be deemed to arise in a
Contracting State when the payer is that Contracting State itself, a political
sub-division, a local authority or a resident of that Contracting State. Where,
however, the person paying the royalties, whether he is a resident of a
Contracting State or not, has in a Contracting State a permanent establishment
or a fixed base in connection with which the liability to pay the royalties was
incurred, and such royalties are borne by such permanent establishment or fixed
base then such royalties shall be deemed to arise in the Contracting 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 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 XIV - Capital gains - 1. Subject to the
provisions of paragraph (3), capital gains arising from the sale, exchange or
transfer of a capital asset as defined under the respective tax laws of the
Contracting States shall be taxable only in the Contracting State in which the
capital asset is situated at the time of such sale, exchange or transfer. 2. For the purpose of this Article, the situs of
the shares of a company shall be deemed to be in the Contracting State in which
the company is incorporated. 3. Capital gains derived from the sale, exchange or transfer of a capital
asset being a ship or aircraft operated in international traffic by an
enterprise of a Contracting State shall be taxable only in that Contracting
State. ARTICLE XV -
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 Contracting State. However,
such income may be taxed in the other Contracting State, if (a) he has a fixed base regularly available to him
in the other Contracting State for the purposes of performing his activities;
in that case, only so much of the income as is attributable to that fixed base
may be taxed in that other Contracting State; or (b) he is present in the other Contracting State
for a period or periods exceeding in the aggregate 120 days in the previous
year or income year concerned of that Contracting State. 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 XVI - Dependent
personal services - 1. Subject to the provisions of Articles 17, 19
and 20, 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
Contracting State unless the employment is exercised in the other Contracting
State. If the employment is so exercised such remuneration as is derived therefrom shall be taxable only in that other Contracting
State. 2. Notwithstanding the provisions of paragraph (1), remuneration
derived by a resident of a Contracting State in respect of and employment
exercised in the other Contracting State shall be taxable only in the
first-mentioned Contracting State, if (a) he is present in that other Contracting State
for a period or periods not exceeding in the aggregate 183 days during the
previous year or income yearconcerned or he is
present in that other Contracting State for any period which forms part of a
continuous period exceeding 183 days throughout which he is present in that
other Contracting State, and (b) the remuneration is paid by, or on behalf of,
an employer who is not a resident of that other Contracting State, and (c) the remuneration is not deducted from the
profits of a permanent establishment chargeable to tax in that other
Contracting State. 3. Notwithstanding the provisions of paragraphs (1) and (2)
of this Article, remuneration for personal services performed aboard a ship or
aircraft operated by an enterprise of a Contracting State, in international
traffic shall be taxable only in that Contracting State. ARTICLE XVII -
Directors fees - Directors fees and 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 shall
be taxable only in that other Contracting State. ARTICLE XVIII - Entertainers and athletes - 1. Notwithstanding the provisions of Articles 15
and 16, income derived by a resident of a Contracting State as an entertainer,
such as theatre, motion picture, radio or television artist, 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 Contracting State. 2. Where income in respect of personal activities exercised by an
entertainer or an athlete in his capacity as such accrues not to the
entertainer or athlete himself but to another person, that income may,
notwithstanding the provisions of Articles 7, 15 and 16, 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, including those of any political sub-division, a local
authority or statutory body thereof, nor to income derived by a non-profit
making organization in respect of such activities provided no part of its
income is payable to, or is otherwise available for the personal benefit of its
proprietors, members or shareholders. ARTICLE XIX -
Non-governmental pensions - 1. Any pension other than pension to which
paragraph (1) of Article 20 applies and any annuity derived from sources within
a Contracting State by an individual, who is a resident of the other
Contracting State, shall be taxable only in the first-mentioned Contracting
State. 2. The term pension as used in Article 20 and this Article means periodic
payments made in consideration for services rendered or by way of compensation
for injuries received. 3. The term annuity as used in paragraph (1), means a stated sum payable
periodically at stated times, during life or during a specified or
ascertainable period of time, under an obligation to make the payment in return
for adequate and full consideration in money or moneys worth. ARTICLE XX -
Governmental remuneration and pension - 1. Remuneration including pensions paid by or out of funds by a Contracting
State or a political sub-division or a local authority thereof, to any
individual who is a citizen of that Contracting State in respect of services
rendered to that Contracting State or political sub-division or local authority
thereof in the discharge of functions of a governmental nature shall be taxable
only in that State. 2. The provisions of paragraph (1) shall not apply to remuneration and
pensions in respect of services rendered in connection with any business
carried on by the Government of either of the Contracting States or a political
sub-division or a local authority thereof for the purpose of profit. 3. The provisions of paragraph (1) of this Article shall also apply to
remuneration including pensions paid by the Reserve Bank of India and the
Bangladesh Bank. ARTICLE XXI - Students,
trainees and apprentices - 1. An individual who is a resident of a
Contracting State and who is temporarily present in the other Contracting
State, solely (a) as a student at a recognised
university, college, school or other educational institution in the other
Contracting State, or (b) as a business or technical apprentice in an organisation other than a permanent establishment of an
enterprise of the first-mentioned Contracting State, or (c) as the recipient of a grant, allowance or
award for the primary purpose of study or research, from a religious,
charitable, scientific or educational organisation, shall be exempt from tax in that other Contracting State in respect of (i) the remittances from abroad for
the purpose of his maintenance, education, study, research or training the
maximum period of exemption being five years; (ii) the grant, allowance or award; and (iii) any amount not exceeding the sum of Rs. 15,000 per annum or its equivalent sum in Bangladesh
currency during the previous year or income year, as the case may be,
representing remuneration for an employment in that other Contracting State if
the employment is related with his studies or his training or if it is
necessary for his maintenance. 2. An individual who is a resident of a Contracting State and who is
temporarily present in the other Contracting State for a period not exceeding
one year, as an employee of, or under contract with, an enterprise of the
first-mentioned Contracting State or an organisation
referred to in sub-paragraph (c) of paragraph (1), solely to acquire technical,
professional or business experience from a person other than such enterprise or
organisation, shall be exempt from tax in that other
Contracting State in respect of remuneration for such period for his services
directly related to the acquisition of such experience, to the extent such
remuneration does not exceed the sum of Rs. 12,000
per annum or its equivalent sum in Bangladesh currency, during the previous
year or the income year, as the case may be. 3. An individual who
is a resident of a Contracting State and who is temporarily present in the
other Contracting State under arrangements with the Government of that other
Contracting State or any agency thereof solely for the purpose of training,
study or orientation shall be exempt from tax in that other Contracting State
in respect of remuneration received by him on account of such training, study
or orientation. ARTICLE XXII - Professors, teachers and researchers -
1. A professor or a teacher who visits a Contracting State for the purposes
of teaching or engaging in research, or both, at a University, college, school
or other approved institution in that Contracting State and who is, or was
immediately before such 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 of his arrival in that Contracting 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. 3. For the purposes of this Article and Article
21, an individual shall be deemed to be a resident of a Contracting State if he
is resident in that Contracting State in the previous year or income year
in which he visits the other Contracting State, or in the immediately preceding
previous year or income year, as the case may be. 4. For purposes of paragraph (1), approved
institution means an institution which has been approved in this regard by the
competent authority of the concerned Contracting State. ARTICLE XXIII - Income of Government and institutions -
1. The Government of one of the Contracting States shall be exempt from tax
in the other Contracting State in respect of any income derived by such
Government from that other Contracting State. 2. For the purposes of paragraph (1) of this
Article, the term Government (a) in the case of India means the Government of India and shall
include (i) the Governments of the States and the Union
Territories of India; (ii) the
Reserve Bank of India; (iii) any such
institution or body as may be agreed from time to time between the two
Contracting States, (b) in the case of
Bangladesh means the Government of the Peoples Republic of Bangladesh and
shall include (i) the Bangladesh Bank; (ii) any such institution or body as may be agreed
from time to time between the two Contracting States. ARTICLE XXIV - Income not expressly mentioned - The
laws in force in each Contracting State shall continue to govern the taxation
of incomes in the respective Contracting States, except where express provision
to the contrary has been made in this Convention. ARTICLE XXV - Methods for elimination of double
taxation - 1. In the case of a resident of India, double taxation shall be
avoided as follows : Subject to the
provisions of Indian tax laws 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 Bangladesh 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 Bangladesh and in accordance with this
Convention, whether directly or by deduction in respect of income from sources
within Bangladesh which has been subjected to tax both in Bangladesh and India
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 Bangladesh bears to the entire income
subject to Indian tax : Provided that such credit shall not exceed Indian tax
(as computed before allowing any such credit), which is appropriate to the
income derived from sources within Bangladesh, so however, that where such
resident is a company by which surtax is payable in India the credit aforesaid
shall be allowed in the first instance, against income-tax payable by the
company in India and as to the balance, if any, against surtax payable by it in
India. (2) For
the purposes of paragraph (1), the term Bangladesh tax payable shall be
deemed to include the amount of Bangladesh tax which would have been payable if
the Bangladesh tax had not been exempted or reduced in accordance with the
following provisions of Bangladesh law : (a) clause
(x) of section 29(1), section 45 and section 46 of the Income-tax
Ordinance, 1984; (b) paragraph
7 of the Third Schedule to the Income-tax Ordinance, 1984; (c) paragraphs
10, 11, 12, 13, 15 and 22 of Part B of the Sixth Schedule to the Income-tax
Ordinance, 1984; (d) paragraphs
(c), (e), (f), (g) and (h) of Notification number S.R.O.
417A-L/76, dated 29 November, 1976, and paragraphs (a), (b) and (d)
of the said Notification so far as the exemption or belief relates to loans
made with a view to promoting economic development in Bangladesh; So far as they were in
force on, and have not been modified since, the date of signature of this
Convention, or have been modified only in minor respects so as not to affect
their general character; or (e) under
any other provision which may subsequently be made granting an exemption or reduction
of tax which is agreed by the competent authorities of the Contracting States
to be of a substantially similar character, if it has not been modified
thereafter or has been modified only in minor respects so as not to affect its
general character : Provided that the amount of the tax referred to in this
paragraph shall not, however, exceed : (a) in the
case of dividends an amount equal to 10 per cent of the gross amount of such
dividends in the case of dividends referred to in paragraph 2(a) of Article
11 and 15 per cent of the gross amount of dividends in the case of dividends
referred to in paragraph 2(b) of Article 11; (b) in the
case of interest an amount equal to 10 per cent of the gross amount of such
interest; and (c) in the
case of royalties an amount equal to 10 per cent of the gross amount of such
royalties. 3. In the case of a resident of Bangladesh,
double taxation shall be avoided as follows : Subject to the
provisions of the law of Bangladesh regarding the allowance as a credit against
Bangladesh tax of tax payable in any country other than Bangladesh (which shall
not affect the general principle hereof), the Indian tax payable (excluding in
the case of dividends, tax payable in respect of profits out of which the
dividend is paid) under the law of India and in accordance with this
Convention, whether directly or by deduction, by a resident of Bangladesh in
respect of income from sources within India which has been subjected to tax
both India and Bangladesh shall be allowed as a credit against Bangladesh tax
payable in respect of such income, but in an amount not exceeding that
proportion of Bangladesh tax which such income bears to the entire income
chargeable to Bangladesh tax. 4. For the purpose of paragraph (3) of this
Article the term Indian tax payable shall be deemed to include any amount
which would have been payable as Indian tax for any year but for an exemption
or reduction of tax granted for that year or any part thereof under: (a) any of the following provisions, that is to say, sections 10(4),
10(4A), 10(6)(viia), 10(15)(iv),
10A, 32A, 33A, 35C, 35CC, 54E, 80CC, 80HH, 80HHA, 80-I, 80J, 80K, 80L of the
Income-tax Act, 1961; or (b) any other provisions which may subsequently be made granting an
exemption or reduction of tax which is agreed by the competent authorities of
the Contracting States to be of a substantially similar character if it has not
been modified thereafter or has been modified only in minor respects so as not
to affect its general character : Provided that the amount of the tax referred to in this
paragraph shall not, however, exceed: (a) in the
case of dividends an amount equal to 10 per cent of the gross amount of such
dividends in the case of dividends referred to in paragraph 2(a) of
Article 11 and 15 per cent of the gross amount of dividends in the case of
dividends referred to in paragraph 2(b) of Article 11; (b) in the
case of interest an amount equal to 10 per cent of the gross amount of such
interest; and (c) in the
case of royalties an amount equal to 10 per cent of the gross amount of such
royalties. CHAPTER V - SPECIAL PROVISIONS ARTICLE XXVI - 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 and under the
same conditions 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
Contracting State than the taxation levied on enterprises of that other
Contracting State carrying on the same activities in the same circumstances and
under the same conditions. 3. 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 in which other similar enterprises of that
first-mentioned Contracting State are or may be subjected in the same
circumstances and under the same conditions. 4. Nothing contained in paragraphs (1), (2) and
(3) of this Article shall be construed as (a) obliging
a Contracting State to grant to residents of the other Contracting State any
personal allowances, reliefs and reductions which it
grants to its own residents; (b) affecting
any provisions of the tax laws of the respective Contracting States regarding
the imposition of tax on non-resident persons as such; (c) affecting
any provisions of the tax laws of the respective Contracting States regarding
any tax concessions granted to persons fulfilling specified conditions. 5. In this Article the term taxation means
taxes which are the subject of this Convention. ARTICLE XXVII - 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 Contracting States present the case to the
competent authority of the Contracting State of which he is a resident. The
case must be presented within three years from the date of the assessment or of
the withholding of tax at the source, whichever is later. 2. The competent authority shall endeavour, if the objection appears to it to be justified
and if it is not itself able to arrive at an appropriate solution, to resolve
the case by mutual agreement with the competent authority of the other
Contracting State with a view to the avoidance of taxation not in accordance
with this 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
this Convention. They may also consult together for the elimination of double
taxation in cases not provided for in this Convention. 4. The competent authorities of the Contracting
States may communicate with each other directly for the purposes of applying
the provisions of this Convention. 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 XXVIII - Exchange of information - 1. The
competent authorities of the Contracting States shall exchange such information
as is necessary for carrying out the provisions of this Convention or for the
prevention or detection of evasion or avoidance of the taxes which are the
subject of this Convention. Any information so exchanged shall be treated as
secret but may be disclosed only to persons (including a court or
administrative body) concerned with the assessment, collection, enforcement or
prosecution in respect of the taxes which are the subject of this Convention, or
to persons with respect to whom the information relates. 2. The exchange of information shall be either
on a routine basis or on request with reference to particular cases, or both.
The competent authorities of the Contracting States shall agree from time to
time on the list of information which shall be furnished on a routine basis. 3. 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 or administrative
practice of that or of the other Contracting State; (b) to
supply information 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 of which would be contrary to public policy. ARTICLE XXIX - Assistance in collection - 1. The
two Contracting States undertake to lend assistance and support to each other,
in the collection of the taxes to which this Convention relates, in the cases
where the taxes are definitely due according to the laws of the Contracting
State making the request. 2. In the case of a request for enforcement of
collection, tax claims of either of the Contracting States which have been
finally determined will be accepted for enforcement by the other Contracting
State to which the request is made and collected in that Contracting State in
accordance with the laws applicable to the enforcement and collection of its
own taxes. 3. In the case of Indian tax, the request will be
sent by the Central Board of Direct Taxes, Ministry of Finance (Department of
Revenue) to the National Board of Revenue of the Government of the Peoples
Republic of Bangladesh and will be accompanied by such certificate as is
required by the laws of India to establish that the taxes have been finally
determined and are due from the taxpayer. 4. In the case of Bangladesh tax, the request
will be sent by the National Board of Revenue of the Government of the Peoples
Republic of Bangladesh to the Central Board of Direct Taxes, Ministry of
Finance (Department of Revenue) in India and will be accompanied by such
certificate as is required by the laws of Bangladesh to establish that the
taxes have been finally determined and are due from the taxpayer. 5. Where the tax claim has not become final by
reason of its being subject to appeal or any other proceeding, a Contracting
State may, in order to protect its revenues, request the other Contracting
State to take such interim measures in this behalf as are lawful under the laws
of that other Contracting State. 6. A request for assistance in collection of
taxes due from a taxpayer shall be made only if adequate assets of that
taxpayer are not available for recovering the taxes from him in the Contracting
State making the request. 7. The Contracting State in which tax is
recovered in pursuance of paragraphs (1), (2) and (5) of this Article shall
immediately thereafter remit the amount so recovered to the Contracting State
which made the request but it shall be entitled to reimbursement of costs, if
any, incurred in the course of rendering assistance in the recovery of such
tax. ARTICLE XXX - Diplomatic
and consular officials - Nothing in this Convention shall affect the fiscal
privileges of diplomatic or consular officials under the general rules of
international law or under the provisions of special Convention. CHAPTER VI - FINAL PROVISIONS ARTICLE XXXI - Entry into force - 1. This
Convention shall be ratified and the instruments of ratification shall be
exchanged as soon as possible. 2. This Convention shall enter into force upon
the exchange of the instruments of ratification and its provisions shall have
effect : (a) in
Bangladesh, for any year of assessment beginning on or after the first day of
July in the calendar year next following that in which the exchange of
instruments of ratification takes place; and (b) in
India, for any year of assessment beginning on or after the first day of April
in the calendar year next following that in which the exchange of instruments
of ratification takes place. ARTICLE XXXII - Termination - This Convention shall
remain in force indefinitely but either Contracting State may, on or before
June 30 in any calendar year beginning after the expiration of a period of five
years from the date of its entry into force, give to the other Contracting State,
through diplomatic channels, written notice of termination. In such event, the
Convention shall cease to have effect : (a) in
Bangladesh : In respect of income
assessable for any year of assessment commencing on 1 st
day of July in the calendar year next following that in which such notice is
given, and subsequent years; (b) in India : In respect of income
assessable for any year of assessment commencing on 1st day of April in the
calendar year next following that in which such notice is given, and subsequent
years. In witness
whereof the undersigned, duly authorised thereto, by
their respective Governments, have signed this Convention. Done in
duplicate at New Delhi on 27th August, 1992 in Hindi, Bengali and English
languages, all texts being equally authentic. In the case of divergence of
interpretation the English text shall prevail.
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