Brazil

Double Taxation
Avoidance Agreement

Convention Between
the Government of the Republic of India and the Government of the Federative
Republic of Brazil for the avoidance of double taxation and the prevention of
fiscal evasion with respect to taxes on income.

Notification
No. G. S. R. 381(E), dtd. 31.03.1992.

Whereas
the annexed Convention between the Government of the Republic of India and the
Government of the Federative Republic of Brazil for avoidance of double
taxation and prevention of fiscal evasion with respect to taxes on income has
been ratified and the Instruments of Ratification exchanged at Brasilia on 11th
March, 1992, as required by Article 28 of the said Convention:

Now,
therefore, in exercise of the powers conferred by section 90 of the Income-tax
Act, 1961 (43 of 1961) and section 24A of the Companies (Profits) Surtax Act,
1964 (7 of 1964), the Central Government hereby directs that all the provisions
of the said Convention shall be given effect to in the Union of India.

The
Government of the Republic of India and the Government of the Federative
Republic of Brazil.

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 taxes to which
the Convention shall apply are:

a.     in the case of
Brazil:


the federal income-tax, excluding the supplementary income-tax and the tax on
activities of minor importance; (hereinafter referred to as “Brazilian
tax”);

a.     

b.    in the case of India:

                     
i.       
the
income-tax including any surcharge thereon;

                    

ii.       
the
surtax; (hereinafter referred to as “Indian tax”).

1.      

2.     The Convention shall
also apply to any identical or substantially similar taxes which are imposed
after the date of signature of the Convention in addition to, or in place of,
the above-mentioned taxes. The competent authorities of the Contracting States
shall notify each other of any substantial changes which have been made in
their respective taxation laws.

Article
3

GENERAL
DEFINITIONS

1.     For the purposes of
this Convention, unless the context otherwise requires:

a.     the term
“nationals” means:

                                     
i.       
all
individuals possessing the nationality of a Contracting State;

                                    
ii.       
all
legal persons, partnerships and associations deriving their status as such from
the law in force in a Contracting State;

a.     

b.    the terms “a
Contracting State” and “the other Contracting State” mean Brazil
or India, as the context requires;

c.     the term
“person” includes an individual, a company and any other entity which
is treated as a taxable unit under the taxation laws in force in the respective
Contracting States;

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
“international traffic” means any transport by a skip or aircraft
operated by an enterprise which has its place of effective management in a
Contracting State, except when the ship or aircraft is operated solely between
places in the other Contracting State;

g.    the term
“tax” means Brazilian tax or Indian tax, as the context requires;

h.     the term
“competent authority” means:

                                             
i.       
in
Brazil: the Minister of Finance, the Secretary of Federal Revenue or their
authorized representative;

                                            
ii.       
in
India: the Central Government in the Ministry of Finance (Department of
Revenue) or their authorized representative.

1.      

2.     As regards the
application of the Convention by a Contracting State, any term not defined
therein shall, unless the context otherwise requires, have the meaning which it
has under the law of that State concerning the taxes to which the Convention
applies.

Article
4

FISCAL
DOMICILE

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 tax 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 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.

1.      

2.      

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.

Article
5

PERMANENT
ESTABLISHMENT

1.     For the purposes of
this Convention the term “permanent establishment” means a fixed
place of business through which the business of an enterprise is wholly or
partly carried on.

2.     The term
“permanent establishment” includes especially:

a. a place of management;

b.a branch;

c. an office;

d.a factory;

e. a workshop;

f. a mine, an oil or gas well, a quarry
or other place of extraction of natural resources;

g.a building site or
construction or assembly project which exists for more than six months;

h. an installation, drilling rig or ship
used for the exploration or exploitation of natural resources, but only if so
used for a period of more than six months.

a.      

1.      

2.      

3.     Notwithstanding the
preceding provisions of this Article, the term “permanent
establishment” shall be deemed not to include:

a. the use of facilities solely for the
purpose of storage or display of goods or merchandise belonging to the
enterprise;

b.the maintenance of a
stock of goods or merchandise belonging to the enterprise solely for the
purpose of storage or display;

c. the maintenance of a stock of goods or
merchandise belonging to the enterprise solely for the purpose of processing by
another enterprise;

d.the maintenance of a
fixed place of business solely for the purpose of purchasing goods or
merchandise or of collecting information, for the enterprise;

e. the maintenance of a fixed place of
business solely for the purpose of carrying on, for the enterprise, any other
activity of a preparatory or auxiliary character.

1.      

2.      

3.      

1.      

2.      

3.      

4.     Notwithstanding the
provisions of paragraphs 1 and 2, where a person–other than an agent of an
independent status to whom paragraph (5) 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 (3)
which, if exercised through a fixed place of business, would not make this
fixed place of business a permanent establishment under the provisions of that
paragraph.

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, provided that such persons are acting in
the ordinary course of their, business. However, when the activities of such an
agent are devoted wholly or almost wholly on behalf of that enterprise itself
or on behalf of that enterprise and other enterprises controlling, controlled
by, or subject to the same common control, as that enterprise, he will not be
considered an agent of an independent status within the meaning of this
paragraph.

5.    
The
fact that a company which is a resident of a Contracting State controls or is
controlled by a company which is a resident of the other Contracting State, or
which carries on business in that other State (whether through a permanent
establishment or otherwise), shall not of itself constitute either company a
permanent establishment of the other.

Article
6

INCOME
FROM IMMOVABLE PROPERTY

1.     Income derived by a
resident of a Contracting State from immovable property (including income from
agriculture or forestry) situated in the other Contracting State may be taxed
in that other State.

2.     The term
“immovable property” shall have the meaning which it has under the
law of the Contracting State in which the property in question is situated. The
term shall in any case include property accessory to immovable property,
livestock and equipment used in agriculture and forestry, rights to which the
provisions of general law respecting landed property apply, usufruct of
immovable property and rights to variable or fixed payments as consideration
for the working of, or the right to work, mineral deposits, sources and other
natural resources; ships and aircraft shall not be regarded as immovable
property.

3.     The provisions of
paragraph (1) shall apply to income derived from the direct use, letting, or
use in any other form of immovable property.

4.     The provisions of
paragraphs (1) and (3) shall also apply to the income from immovable property
of an enterprise and to income from immovable property used for the performance
of independent personal services.

Article
7

BUSINESS
PROFITS

1.     The profits of an
enterprise of a Contracting State shall be taxable only in that State unless
the enterprise carries on business in the other Contracting State through a
permanent establishment situated therein. If the enterprise carries on business
as aforesaid, the profits of the enterprise may be taxed in the other State but
only so much of them as is attributable to that permanent establishment.

2.     Subject to the
provisions of paragraph (3), where an enterprise of a Contracting State carries
on business in the other Contracting State through a permanent establishment
situated therein, there shall in each Contracting State be attributed to that
permanent establishment the profits which it might be expected to make if it were
a distinct and separate enterprise engaged in the same or similar activities
under the same or similar conditions and dealing wholly independently with the
enterprise of which it is a permanent establishment.

3.     In determining the
profits of a permanent establishment, there shall be allowed as deductions
expenses which are incurred for the purposes of the permanent establishment,
including executive and general administrative expenses so incurred, in
accordance with the provisions of and subject to the limitations of the
taxation laws of the Contracting State concerned.

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.     Where profits include
items of income which are dealt with separately in other Articles of this
Convention, then the provisions of those Articles shall not be affected by the
provisions of this Article.

Article
8

SHIPPING
AND AIR TRANSPORT

1.     Profits from the
operation of ships or aircraft in international traffic shall be taxable only
in the Contract State in which the place of effective management of the
enterprise is situated.

2.     If the place of
effective management of a shipping enterprise is aboard a ship, then it shall
be deemed to be situated in the Contracting State in which the home harbour of
the ship is situated, or, if there is no such home harbour, in the Contracting
State of which the operator of the ship is a resident.

3.     The provisions of
paragraph 1 shall also apply to profits from the participation in a pool, a
joint business, or an international operating agency.

4.     The term
“operation of ships or aircraft” shall mean business of
transportation of persons, mail, livestock or goods carried on by the owners or
lessees or charterers of the ships or aircraft, including the sale of tickets
for such transportation on behalf of other enterprises.

Article
9

ASSOCIATED
ENTERPRISES

Where

a.     an enterprise of a
Contracting State participates directly or indirectly in the management,
control or capital of an enterprise of the other Contracting State, or

b.    the same persons
participate directly or indirectly in the management, control or capital of an
enterprise of a Contracting State and an enterprise of the other Contracting
State,

and
in either case conditions are made or imposed between the two enterprises in
their commercial or financial relations which differ from those which would be
made between independent enterprises, then any profits which would, but for
those conditions, have accrued to one of the enterprises, but, by reason of
those conditions, have not so accrued, may be included in the profits of that
enterprise and taxed accordingly.

Article
10

DIVIDENDS

1.     Dividends paid by a
company which is a resident of a Contracting State to a resident of the other
Contracting State may be taxed in that other State.

2.     However, such
dividends may also be taxed in the Contracting State of which the company
paying the dividends is a resident and according to the laws of that State, but
if the recipient is a company which is the beneficial owner of the dividends
the tax so charged shall not exceed 15 per cent. of the gross amount of the
dividends.

This
paragraph shall not affect the taxation of the company in respect of the
profits out of which the dividends are paid.

1.      

2.      

3.     The term
“dividends” as used in this Article means income from shares,
“jouissance” shares or “jouissance” rights, mining shares,
founders’ shares or other rights, not being debt-claims, participating in
profits, as well as income from other corporate rights which is subjected to
the same taxation treatment as income from shares by the laws of the State of
which the company making the distribution is a resident.

4.     The provisions of
paragraphs (1) and (2) shall not apply if the beneficial owner of the
dividends, being a resident of a Contracting State, carries on business in the
other Contracting State of which the company paying the dividends is a
resident, through a permanent establishment situated therein, and the holding
by virtue of which the dividends are paid is effectively connected with such
permanent establishment. In such case the provisions of Article 7 shall apply.

5.     Where a resident of
India has a permanent establishment in Brazil, this permanent establishment may
be subject to a tax withheld at source in accordance with Brazilian law.
However, such a tax cannot exceed 15 per cent. of the gross amount of the
profits of that permanent establishment determined after the payment of the
corporate tax related to such profits.

6.     Where a company which
is a resident of a Contracting State derives profits or income from the other
Contracting State, that other State may not impose any tax on the dividends
paid by the company, except in so far as such dividends are paid to a resident
of that other State or in so far as the holding in respect of which the
dividends are paid is effectively connected with a permanent establishment
situated in that other State, nor subject the company’s undistributed profits
to a tax on the company’s undistributed profits, even if the dividends paid or
the undistributed profits consist wholly or partly of profits or income arising
in such other State.

Article
11

INTEREST

1.     Interest arising in a
Contracting State and paid to a resident of the other Contracting State may be
taxed in that other State.

2.     However, such
interest may also be taxed in the Contracting State in which it arises and
according to the laws of that State, but if the recipient is the beneficial
owner of the interest the tax so charged shall not exceed 15 per cent. of the
gross amount of the interest.

3.     Notwithstanding the
provisions of paragraphs (1) and (2):

a. interest arising in a Contracting
State and paid to the Government of the other Contracting State, a political
sub-division thereof or any agency (including a financial institution) wholly
owned by that Government, or political sub-division shall be exempt from tax in
the first-mentioned State, unless sub-paragraph (b) applies;

b.interest from
securities, bonds or debentures issued by the Government of a Contracting
State, a political sub-division thereof or any agency (including a financial
institution) wholly owned by that Government or political sub-division shall be
taxable only in that State.

1.      

2.      

3.      

4.     The term
“interest” as used in this Article means income from Government
securities, bonds or debentures, whether or not secured by mortgage and whether
or not carrying a right to participate in profits, and debt-claims of every
kind as well as other income assimilated to income from money lent by the
taxation law of the Contracting State in which the income arises.

5.     The provisions of
paragraphs (1) and (2) shall not apply if the beneficial owner of the interest,
being a resident of a Contracting State carries on business in the other
Contracting State in which the interest arises, through a permanent
establishment situated therein and the debtclaim in respect of which the
interest is paid is effectively connected with such permanent establishment. In
such case the provisions of Article 7 shall apply.

6.     The tax rate
limitation provided for in paragraph (2) shall not apply to interest arising in
a Contracting State and paid to a permanent establishment of an enterprise of
the other Contracting State which is situated in a third State.

7.     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
in connection with which the indebtedness on which the interest is paid was
incurred, and such interest is borne by such permanent establishment, then such
interest shall be deemed to arise in the State in which the permanent
establishment is situated.

8.     Where, by a reason of
a special relationship between the payer and the beneficial owner or between
both of them and some other person, the amount of the interest, having regard
to the debt-claim for which it is paid, exceeds the amount which would have
been agreed upon by the payer and the beneficial owner in the absence of such
relationship, the provisions of this Article shall apply only to the last-mentioned
amount. In such case, the excess part of the payments shall remain taxable
according to the laws of each Contracting State, due regard being had to the
other provisions of this Convention.

Article
12

ROYALTIES

1.     Royalties arising in
a Contracting State and paid to a resident of the other Contracting State may
be taxed in that other State.

2.     However, such
royalties may also be taxed in the Contracting State in which they arise and
according to the laws of that State, but if the recipient is the beneficial
owner of the royalties, the tax so charged shall not exceed:

a. 25 per cent. of the gross amount of
the royalties arising from the use or the right to use trade marks;

b.15 per cent. of the
gross amount of the royalties in all other cases.

1.      

2.      

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 cinematography films, films or tapes for television
or radio broadcasting), any patent, trade mark, design or model, plan, secret
formula or process, or for the use of, or the right to use, industrial,
commercial, or scientific equipment, or for information concerning industrial,
commercial or scientific experience.

4.     The provisions of
paragraphs (1) and (2) shall not apply if the beneficial owner of the
royalties, being a resident of a Contracting State, carries on business in the
other Contracting State in which the royalties arise, through a permanent
establishment situated therein, and the right or property in respect of which
the royalties are paid is effectively connected with such permanent
establishment. In such cases, the provisions of Article 7 shall apply.

5.     Royalties 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, whether he is a resident of a
Contracting State or not, has in a Contracting State a permanent establishment
in connection with which the obligation to pay the royalties was incurred, and
such royalties are borne by such permanent establishment, then such royalties
shall be deemed to arise in the State in which the permanent establishment 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 lastmentioned 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

CAPITAL
GAINS

1.     Gains derived by a
resident of a Contracting State from the alienation of immovable property
referred to in Article 6, which is situated in the other Contracting State, may
be taxed in that other State.

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, including such gains from the alienation of such a
permanent establishment (alone or with the whole enterprise), may be taxed in
the other State. However, gains from the alienation of ships or aircraft
operated in international traffic or movable property pertaining to the
operation of such ships or aircraft, shall be taxable only in the Contracting
State in which the place of effective management of the enterprise is situated.

3.     Gains from the
alienation of any property other than that referred to in paragraphs (1) and
(2), may be taxed in both Contracting States

Article
14

INDEPENDENT
PERSONAL SERVICES

1.     Income derived by a
resident of a Contracting State in respect of professional services or other
activities of an independent character shall be taxable only in that State,
unless the remuneration for such services or activities is paid by a resident
of the other Contracting State or is borne by a permanent establishment
situated therein. In such case, the income may be taxed in that other State.

2.     The term

“professional services” includes especially independent scientific,
technical, literary, artistic, educational or teaching activities of
physicians, lawyers, engineers, architects, dentists and accountants.

Article
15

DEPENDENT
PERSONAL SERVICES

1.     Subject to the
provisions of Articles 16, 18, 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 State unless the employment is
exercised in the other Contracting State. If the employment is so exercised,
such remuneration as is derived there from may be taxed in that other State.

2.     Notwithstanding the
provisions of paragraph 1, remuneration derived by a resident of a Contracting
State in respect of an employment exercised in the other Contracting State
shall be taxable only in the first mentioned State if:

a. the recipient is present in the other
State for a period or periods not exceeding in the aggregate 183 days in the
fiscal year concerned, and

b.the remuneration is
paid by, or on behalf an employer who is not a resident of the other State, and

c. the remuneration is not borne by a
permanent establishment which the employer has in the other State.

1.      

2.      

3.     Notwithstanding the
preceding provisions of this Article, remuneration derived in respect of an
employment exercised aboard a ship or aircraft operated in international
traffic may be taxed in the Contracting State in which the place of effective
management of the enterprise is situated.

Article
16

DIRECTORS’
FEES

Directors’
fees and other similar payments derived by a resident of a Contracting State in
his capacity as a member of the board of directors or of any council of a
company which is a resident of the other Contracting State may be taxed in that
other State.

Article
17

ARTISTES
AND ATHLETES

1.     Notwithstanding the
provisions of Articles 14 and 15, income derived by a resident of a Contracting
State as an entertainer, such as 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 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,
14 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 of this Article shall not apply to income derived from activities
performed in a Contracting State by an entertainer or an athlete if the visit
to that Contracting State is substantially supported by public funds of, or
sponsored by, the other Contracting State, including those of any political
sub-division or local authority.

Article
18

PENSIONS
AND SOCIAL SECURITY PAYMENTS

1.     Subject to the
provisions of paragraph 2 of Article 19, pensions and other similar
remuneration, alimony and annuities paid to a resident of a Contracting State
may be taxed in that State.

2.     However, such
pensions and other similar remuneration, alimony and annuities may also be
taxed in the other Contracting State if the payment is made by a resident of
that other State or a permanent establishment situated therein.1

3.     Notwithstanding the
provisions of paragraphs 1 and 2, pensions paid and other payments made under a
public scheme which is part of the social security system of a Contracting
State or a political sub-division or a local authority thereof shall be taxable
only in that State.

4.     As used in this
Article:

a. the term “pensions and other
similar remuneration” means periodic payments made in consideration of
past employment or by way of compensation for injuries in connection with past
employment;

b.the term
“annuities” means stated sums payable periodically at stated times
during life, or during a specified or ascertainable period of time, under an
obligation to make the payments in return for adequate and full consideration
in money or money’s worth.

Article
19

GOVERNMENTAL
PAYMENTS

1.    
Remuneration
not including pensions, paid by a Contracting State, a political sub-division
or a local authority thereof to an individual in respect of services rendered
to that State, to a political sub-division or local authority shall be taxable
only in that State.

However,
such remuneration shall be taxable only in the Contracting State of which the
recipient is a resident if the services are rendered in that State and the
recipient of the remuneration is a resident of that State who–

a. is a national of that State, or

b.did not become a
resident of that State solely for the purpose of performing the services.

1.      

1.      

1.      

2.     Pensions paid by, or
out of funds created by, a Contracting State, a political sub-division or a
local authority thereof to an individual in respect of services rendered to
that State, to a political sub-division or a local authority thereof may be
taxed in that State.

3.     The provisions of
Articles 15, 16 and 18 shall apply to remuneration and pensions paid in respect
of services rendered in connection with any business carried on by a
Contracting State, a political sub-division or a local authority thereof.

Article
20

TEACHERS
AND RESEARCHERS

1.     An individual who is
or was immediately before visiting a Contracting State a resident of the other
Contracting State and who, at the invitation of the Government of the
first-mentioned State or of a university, college, school, museum or other
cultural institution of that first-mentioned State or under an official
programme of cultural exchange, is present in that State for a period not
exceeding two consecutive years solely for the purpose of teaching, giving
lectures or carrying out research at such institution shall be exempt from tax
in that State on his remuneration for such activity, provided that the payment
of such remuneration is derived by him from outside that 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
21

STUDENTS
AND APPRENTICES

1.     Payments which a
student or business apprentice who is or was immediately before visiting a
Contracting State a resident of the other Contracting State and who is present
in the first-mentioned State solely for the purpose of his education or
training receives for the purpose of his maintenance, education or training
shall not be taxed in that State, provided that such payments arise from
sources outside that State.

2.     In respect of grants,
scholarships and remuneration from employment not covered by paragraph 1, a
student or business apprentice described in paragraph 1 shall, in addition, be
entitled during such education or training to the same exemptions, reliefs or
reductions in respect of taxes available to residents of the State which he is
visiting.

3.     The benefits of this
Article shall extend only for such period of time as may be reasonable or
customarily required to complete the education or training undertaken, but in
no event shall any individual have the benefits of this Article, for more than
five consecutive years from the date of his first arrival in that State.

Article
22

OTHER
INCOME

Items
of income of a resident of a Contracting State, arising in the other
Contracting State and not dealt with in the foregoing Articles of this
Convention, may be taxed in that other State.

Article
23

METHODS
FOR THE ELIMINATION OF DOUBLE TAXATION

1.    

Subject
to the provisions of paragraphs 3 and 4, where a resident of a Contracting
State derives income which, in accordance with the provisions of this
Convention, may be taxed in the other Contracting State, the first-mentioned
State shall allow as a deduction from the tax on the income of that resident an
amount equal to the tax paid in that other State.

Such
deduction shall not, however, exceed that part of the tax, as computed before
the deduction is given, which is attributable to the income which may be taxed
in that other State.

1.      

2.     For the deduction
mentioned in paragraph 1, the tax paid in that other State shall always be
deemed to have been paid at the rate of 25 per cent. of the gross amount of
interest referred to in paragraph 2 of Article 11 and of royalties referred to
in paragraph 2b of Article 12, provided, however, that the tax so deemed to
have been paid shall not exceed the tax livable on that income in the
first-mentioned State.

3.     Where a company which
is a resident of a Contracting State derives dividends which, in accordance
with the provisions of paragraph 2 of Article 10, may be taxed in the other
Contracting State, the first-mentioned State shall exempt such dividends from
tax.

4.     Where a resident of
India derives profits which, in accordance with the provisions of paragraph 5
of Article 10 may be taxed in Brazil, India, shall exempt such profits from
tax.

Article
24

NON-DISCRIMINATION

1.     Nationals of a
Contracting State shall not be subjected in the other Contracting State to any
taxation or any requirement connected therewith, which is other or more
burdensome than the taxation and connected requirements to which nationals of
that other State in the same circumstances are or may be subjected.

2.     The taxation on a
permanent establishment which an enterprise of a Contracting State has in the
other Contracting State shall not be less favourably levied in that other State
than the taxation levied on enterprises of that other State carrying on the
same activities. This provision shall not be construed as obliging a
Contracting State to grant to residents of the other Contracting State any
personal allowances, reliefs and reductions for taxation purposes on account of
civil status or family responsibilities which it grants to its own residents.

3.     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 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 the first-mentioned State, the capital of which is wholly or
partly owned or controlled, directly or indirectly, by one or more residents of
a third State, are or may be subjected.

4.     In this Article, the
term “taxation” means taxes to which this Convention applies.

Article
25

MUTUAL
AGREEMENT PROCEDURE

1.     Where a resident of a
Contracting State considers that the actions of one or both of the Contracting
States result or will result for him in taxation not in accordance with this
Convention, he may, notwithstanding the remedies provided by the national laws
of those States, present his case to the competent authority of the Contracting
State of which he is a resident. This case must be presented within five years
of the date of receipt of notice of the action which gives rise to taxation not
in accordance with this Convention.

2.     The competent
authority shall endeavour, if the objection appears to it to be justified and
if it is not itself able to arrive at an appropriate solution, to resolve the
case by mutual agreement with the competent authority of the other Contracting
State, with a view to avoidance of taxation 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 of double taxation in cases not provided for in the Convention.

4.     The competent
authorities of the Contracting States may communicate with each other directly
for the purpose of reaching an agreement in the sense of the preceding
paragraphs. When it seems advisable in order to reach agreement to have an oral
exchange of opinions, such exchange may take place through a commission
consisting of representatives of the competent authorities of the Contracting
States.

Article
26

EXCHANGE
OF INFORMATION

1.     The competent
authorities of the Contracting States shall exchange such information
(including documents) as is necessary for carrying out the provisions of the
Convention or of the domestic laws of the Contracting States concerning taxes
covered by the Convention, in so far as the taxation thereunder is not contrary
to the Convention, in particular for the prevention of fraud or evasion of such
taxes. 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 exchange of information shall be made, including,
where appropriate, exchange 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 or administrative practice of that or of the other
Contracting State;

b.to supply information
or documents which are not obtainable under the laws or in the normal course of
the administration of that or of the other Contracting State;

c. to supply information or documents
which would disclose any trade, business, industrial, commercial or
professional secret or trade process or information the disclosure of which
would be contrary to public policy.

Article
27

DIPLOMATIC
AGENTS AND CONSULAR OFFICERS

Nothing
in this Convention shall affect the fiscal privileges of diplomatic agents or
consular officers under the general rules of international law or under the
provisions of special agreements.

Article
28

ENTRY
INTO FORCE

1.     This Convention shall
be ratified and the instruments of ratification shall be exchanged at Brasilia
as soon as possible.

2.     This Convention shall
enter into force upon the exchange of instruments of ratification and its
provisions shall have effect for the first time: 1

a. In Brazil:

                                                     
i.       
in
respect of taxes withheld at source, to amounts paid or credited on or after
the first day of January of the calendar year immediately following that in which
the Convention enters into force;

                                                    
ii.       
in
respect of other taxes covered by the Convention, for the taxable year
beginning on or after the first day of January of the calendar year immediately
following that in which the Convention enters into force.

a.     

b.    In India:


In respect of income arising in any previous year beginning on or after the
first day of April immediately following the calendar year in which the
Convention enters into force.

Article
29

TERMINATION

Either
Contracting State may terminate this Convention after a period of five years
from the date on which the Convention enters into force by giving to the other
Contracting State, through diplomatic channels, a written notice of
termination, provided that any such notice shall be given only on or before the
thirtieth day of June in any calendar year.

In
such case, the Convention shall cease to have effect:

a.     In Brazil:

I.      in respect of taxes
withheld at source, to amounts paid or credited on or after the first day of
January of the calendar year immediately following that in which the notice of
termination is given;

II.     in respect of other
taxes, for taxable years beginning on or after the first day of January of the
calendar year immediately following that in which the notice of termination is
given.

a.     

b.    In India:


In respect of income arising in any previous year beginning on or after first
day of April immediately following the calendar year in which the notice is
given.

In
witness whereof the undersigned being duly authorised thereto have signed this
Convention.

Done
at New Delhi this 26th day of April, 1988, in duplicate in Hindi, Portuguese
and English languages, all three texts being equally authentic. In case of any
divergence of interpretation the English text shall prevail.

For
the Government of the For the Government of the Republic of India Federative
Republic of Brazil

P.
K. Appachoo

PROTOCOL

At
the moment of the signature of the Convention between the Republic of India and
the Federative Republic of Brazil for the avoidance of double taxation and the
prevention of fiscal evasion with respect to taxes on income the undersigned,
being duly autliorised thereto, have agreed upon the following provisions which
constitute an integral part of the Convention.

1.    
With
reference to Article 3, paragraph 1, item (q):

It
is understood that the term “tax” shall not include any amount which
is payable in respect of any default or omission in relation to the taxes to
which this Convention applies or which represents a penalty imposed relating to
those taxes.

2.    

With
reference to Article 12, paragraph 3:

It
is understood that the provisions of paragraph 3 of Article 12 shall apply to
payments of any kind to any person, other than payments to an employee of a
person making such payments, in consideration for the rendering of assistance
or services of a managerial, administrative, scientific, technical or
consultancy nature.

3.    
With
reference to Article 20:

It
is understood that the terms “museum or other cultural institution”
shall refer only to such organisations which have been approved in this regard
by the competent authority of the Contracting State concerned.

4.    
With
reference to Article 24, paragraph 2:

It
is understood that the provisions of paragraph 5 of Article 10 are not in
conflict with the provisions of paragraph 2 of Article 24.

5.    
It
is understood that either Contracting State may, at any time not earlier than
ten years from the date on which the Convention enters into force, seek to
review any or all of its provisions, by notice in writing through competent authority
thereof to the competent authority of the other Contracting State. The
competent authorities shall, within a period of six months thereafter, initiate
appropriate proceedings for such review.

In
witness whereof the undersigned being duly authorised thereto have signed this
Protocol.

Done
at New Delhi this, 26th day of April, 1988, in duplicate in Hindi, Portuguese
and English languages, all three texts being equally authentic. In case of any
divergence of interpretation, the English text shall prevail.

For
the Government of the For the Government of the

Republic
of India Federative Republic of Brazil

P.
K. Appachoo

(Sd.)
N. C. Jain,

Joint
Secretary to the Government of India

[Notification
No. 9020/F. No. 501/4/84-FTD]

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