United
Arab Emirates

Double Taxation
Avoidance Agreement

Income-tax Act, 1961:
Notification under section 90 Agreement between the Government of the Republic
of India and the Government of the United Arab Emirates for avoidance of double
taxation and the prevention of fiscal evasion with respect to taxes on income
and on capital

Notification
G.S.R. No. 710(E), dtd. 18th November, 1993.

Whereas
the annexed agreement between the Government of the United Arab Emirates and
the Government of the Republic of India for the avoidance of double taxation
and prevention of fiscal evasion with respect to taxes on income and on capital
has entered into force on the 22nd September, 1993, after the notification by
both the Contracting States to each other of the completion of the proceedings
required by laws for bringing into force of the said agreement in accordance
with paragraph 1 of Article 30 of the said Agreement:

Now,
therefore, in exercise of the powers conferred by section 90 of the Income-tax
Act, 1961 (43 of 1961), section 24A of the Companies (Profits) Surtax Act, 1964
(7 of 1964), and section 44A of the Wealth-tax Act, 1957 (27 of 1957), the
Central Government hereby directs that all the provisions of the said agreement
shall be given effect to in the Union of India.

ANNEXURE

AN
AGREEMENT BETWEEN THE GOVERNMENT OF THE REPUBLIC OF INDIA AND THE GOVERNMENT OF
THE UNITED ARAB EMIRATES FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE
PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME AND ON CAPITAL.

The
Government of the Republic of India and the Government of the United Arab
Emirates

Desiring
to promote mutual economic relations by concluding an Agreement for the
avoidance of double taxation and the prevention of fiscal evasion with respect
to taxes on income and on capital,

Have
agreed as follows:

Article
1

PERSONAL
SCOPE

This
Agreement shall apply to persons who are residents of one or both of the
Contracting States.

Article
2

TAXES
COVERED

1.     There shall be
regarded as taxes on income and on capital all taxes imposed on total income,
on total capital, or on elements of income or of capital including taxes on
gains from alienation of movable or immovable property as well as on capital
appreciation.

2.     The existing taxes to
which the Agreement shall apply are:

a.     In United Arab
Emirates;

                     
i.       
income-tax;

                    
ii.       
corporation
tax;

                   
iii.       
wealth-tax;

(hereinafter
referred to as “U.A.E. tax”);

a.     In India:

                     
i.       
the
income-tax including any surcharge thereon;

                    
ii.       
the
surtax; and

                   
iii.       
the
wealth-tax;

(hereinafter
referred to as “Indian tax”).

1.      

2.      

3.     This Agreement shall
also apply to any identical or substantially similar taxes on income or capital
which are imposed at Federal or State level by either Contracting State in
addition to, or in place of, the taxes referred to in paragraph 2 of this
Article. The competent authorities of the Contracting States shall notify each
other of any substantial changes which are made in their respective taxation
laws.

Article
3

GENERAL
DEFINITIONS

1.     In this Agreement,
unless the context otherwise requires

a.     the term
“India” means the Territory of India and includes the territorial sea
and air space above it, as well as any other maritime zone in which India has
sovereign rights, other rights and jurisdictions, according to the Indian law
and in accordance with international law;

b.    the term
“U.A.E.” means the United Arab Emirates and when used in a
geographical sense, means all the territory of the United Arab Emirates
including its territorial sea in which the U.A.E. laws relating to taxation
apply and any area beyond its territorial sea within which the United Arab
Emirates has sovereign rights of exploration for an exploitation of resources
of the seabed and its sub-soil and superjacent water resources in accordance
with international law;

c.     the terms “a
Contracting State” and “the other Contracting State” mean U.A.E.
or India as the context requires;

d.    the term
“tax” means “Indian tax” or “U.A.E. tax” as the
context requires, but shall not include any amount which is payable in respect
of any default or omission in relation to the taxes to which this Agreement
applies or which represents a penalty imposed relating to those taxes;

e.     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;

f.     the term
“company” means any body corporate or any entity which is treated as
a company or body corporate under the taxation laws in force in the respective
Contracting States;

g.    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;

h.     the term
“national” means:

                     
i.       
in
the case of U.A.E. all individuals possessing the nationality of U.A.E. in
accordance with U.A.E. laws and any legal person, partnership and other body
corporate deriving its status as such from the U.A.E. laws;

                    
ii.       

in
the case of India, any individual possessing the nationality of India and any
legal person, partnership, or association deriving its status as such from the
laws in force in India;

a.       

b.       

c.       

d.       

e.       

f.       

g.       

h.       

i.      the term
“international traffic” means any transport by a ship 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;

j.      the term
“competent authority” means:

                     

i.       
in
the case of U.A.E., the Minister of Finance and Industry or his authorised
representative; and

                    
ii.       
in
the case of India, the Central Government in the Ministry of Finance
(Department of Revenue) or their authorised representative.

1.      

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

Article
4

RESIDENT

1.     For the purposes of
this Agreement, the term “resident of a Contracting State” means any
person who, under the laws of that State, is liable to tax therein by reason of
his domicile, residence, place of management, place of incorporation or any
other criterion of a similar nature.

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 either 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 Agreement, 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 any other place of extraction of natural resources;

g.    a farm or plantation;

h.     a building site or
construction or assembly project or supervisory activities in connection
therewith, but only where such site, project or activity continues for a period
of more than 9 months;

i.      the furnishing of
services including consultancy services by an enterprise of a Contracting State
through employees or other personnel in the other Contracting State, provided
that such activities continue for the same project or connected project for a
period or periods aggregating to more than 9 months within any twelve-month
period.

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, display or delivery of goods or merchandise
belonging to the enterprise;

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

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

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

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

1.      

2.      

3.      

4.     Notwithstanding the
provisions of paragraphs 1 and 2, where a person–other than an agent of
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 on behalf 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 persons are limited to the purchase of goods or merchandise
for the enterprise.

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, provided that such persons are acting in the ordinary
course of their business. However, when the activities of such an agent are
devoted wholly or almost wholly on behalf of that enterprise, he will not be
considered an agent of an independent status within the meaning of this
paragraph.

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, boats and aircraft shall not be regarded as immovable
property.

3.     The provisions of
paragraph 1 shall also 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 business of the permanent
establishment, including executive and general administrative expenses so
incurred, whether in the State in which the permanent establishment is situated
or elsewhere.

4.     In so far 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 methods of apportionment adopted shall,
however, be such that, the result shall be in accordance with the principles
contained in this Article.

5.     No profits shall be
attributed to a permanent establishment by reason of the mere purchase by the
permanent establishment of goods or merchandise for the enterprise.

6.     For the purposes of
the preceding paragraphs, the profits to be attributed to the permanent
establishment shall be determined by the same method year by year unless there
is good and sufficient reason to the contrary.

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

Article
8

SHIPPING

1.     Profits derived by an
enterprise of a Contracting State from the operation by that enterprise of
ships in international traffic shall be taxable only in that State.

2.     For the purposes of
this Article, profits from the operation of ships in international traffic
shall mean profits derived by an enterprise described in paragraph 1 from the
transportation by sea of passengers, mail, livestock or goods and shall
include:

a.     the charter or rental
of ships incidental to such transportation;

b.    the rental of
containers and related equipments used in connection with the operation of
ships in international traffic;

c.     the gains derived
from the alienation of ships, containers and related equipments owned and
operated by the enterprise in international traffic.

1.      

2.      

3.     For the purposes of
this Article, interest on funds connected with the operation of ships in
international traffic shall be regarded as profits derived from the operation
of such ships and the provisions of Article 11 shall not apply in relation to
such interest.

4.     The provisions of
paragraphs 1, 2 and 3 shall apply to profits from the participation in a pool,
a joint business or an international operating agency.

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 the beneficial owner of the dividends, the tax so charged
shall not exceed:

a.     5 per cent. of the
gross amount of the dividends if the beneficial owner is a company which owns
at least ten per cent. of the shares of the company paying the dividend;

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

1.      

2.      

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

4.     The provisions of
paragraphs 1 and 2 shall not apply if the beneficial owner of the dividends,
being a resident of a Contracting State, carries on business in the other
Contracting State of which the company paying the dividends is a resident,
through a permanent establishment situated therein or performs in that other
State independent personal services from a fixed base situated therein, and the
holding in respect of which the dividends are paid is effectively connected
with such permanent establishment or fixed base. In such a case, the provisions
of Article 7 or Article 14, as the case may be, shall apply.

5.     Where a company which
is a resident of a Contracting State derives profits or income from the other
Contracting State, that other State may not impose any tax on the dividends
paid by the company except 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 or a
fixed base situated in that other State, nor subject the company’s
undistributed profits to a tax on the company’s undistributed profits, even if
the dividends paid or the undistributed profits consist wholly or partly of
profits or income arising in such other State.

Article
11

INTEREST

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

2.     However, such
interest may 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:

a.     5 per cent. of the
gross amount of the interest if such interest is paid on a loan granted by a
bank carrying on a bona fide banking business or by a similar financial
institution; and

b.    12.5 per cent. of the
gross amount of the interest in all other cases.

1.      

2.      

3.     Notwithstanding the
provisions of paragraph 2 interest arising in a Contracting State shall be
exempt from tax in that State provided it is derived and beneficially owned by:

                     
i.       
the
Government, a political sub-division or a local authority of the other
Contracting State; or

                    

ii.       
the
Central Bank of the other Contracting State.

1.      

2.      

3.      

4.     The term
“interest” as used in this Article means income from debt-claims of
every kind, whether or not secured by mortgage and whether or not carrying a
right to participate in the debtor’s profits, and in particular, income from
Government securities and income from bonds or debentures including premiums
and prizes attaching to such securities, bonds or debentures. Penalty charges
for late payment shall not be regarded as interest for the purpose of this
Article.

5.     The provisions of
paragraphs 1 and 2 shall not apply if the beneficial owner of the interest,
being a resident of a Contracting State, carries on business in the other
Contracting State in which the interest arises, through a permanent
establishment situated therein or performs in that other State independent
personal services from a fixed base situated therein, and the debt-claim in
respect of which the interest is paid is effectively connected with such
permanent establishment or fixed base. In such case, the provisions of Article
7 or Article 14, as the case may be, shall apply.

6.     Interest shall be
deemed to arise in a Contracting State when the payer is that 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 payments shall
remain taxable according to the laws of each Contracting State, due regard
being had to the other provisions of this Agreement.

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 10 per cent. of the
gross amount of such royalties.

3.     The term
“royalties” as used in this Article means payment 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, 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 do
not include royalties or other payments in respect of the operation of mines or
quarries or exploitation of petroleum or other natural resources.

4.     The provisions of
paragraphs I 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 a case, the provisions of
Article 7 or Article 14, as the case may be, shall apply.

5.     Royalties shall be
deemed to arise in a 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
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 lastmentioned 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 Agreement.

Article
13

CAPITAL
GAINS

1.     Gains derived by a
resident of a Contracting State from the alienation of immovable property
referred to in paragraph 2 of Article 6 and 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 or of movable property pertaining to a fixed base available
to a resident of a Contracting State in the other Contracting State for the
purpose of performing independent personal services, including such gains from
the alienation of such a permanent establishment (alone or together with the
whole enterprise) or of such fixed base may be taxed in that other State.

3.     Gains from the
alienation of any property other than that mentioned in paragraphs 1 and 2
shall be taxable only in the Contracting State of which the alienator is a
resident.

Article
14

INDEPENDENT
PERSONAL SERVICES

1.     Income derived by a
resident of a Contracting State in respect of professional services or other
independent activities of a similar character shall be taxable only in that
State, except in the following circumstances when such income may also be taxed
in the other Contracting State:

a.     if he has a fixed
base regularly available to him in the other Contracting State for the purpose
of performing his activities; in that case, only so much of the income as is
attributable to that fixed base may be taxed in that other Contracting State;
or

b.    if his stay in the
other Contracting State is for a period or periods amounting to or exceeding in
the aggregate 183 days in the relevant “previous year” or “year
of income”, as the case may be; in that case only so much of the income as
is derived from his activities performed in that other State may be taxed in
that other State.

1.      

2.     The term
“professional services” includes independent scientific, literary,
artistic, educational or teaching activities as well as the independent
activities of physicians, surgeons, lawyers, engineers, architects, dentists
and accountants.

Article
15

DEPENDENT
PERSONAL SERVICES

1.     Subject to the
provisions of Articles 16, 17, 18, 19, 20 and 21, salaries, wages and other
similar remuneration derived by a resident of a Contracting State in respect of
an employment shall be taxable only in that State unless the employment is
exercised in the other Contracting State. If the employment is so exercised,
such remuneration as is derived therefrom may be taxed in that other State.

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

a.     the recipient is
present in the other State for a period or periods not exceeding in the
aggregate 183 days in the relevant “previous year” or “year of
income”, as the case may be; and

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

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

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 by an enterprise of a Contracting State shall be taxable only in that
State.

Article
16

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 may be taxed in that other State.

Article
17

INCOME
EARNED BY ENTERTAINERS 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 a theatre, motion picture, radio or television
artiste or a musician or as an athlete, from his personal activities as such
exercised in the other Contracting State may be taxed in that other State.

2.     Where income in
respect of personal activities exercised by an entertainer or an athlete in his
capacity as such accrues not to the entertainer or an 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.     Notwithstanding the
provisions of paragraph 1, income derived by an entertainer or an athlete who
is a resident of a Contracting State from his personal activities as such
exercised in the other Contracting State, shall be taxable only in the
first-mentioned Contracting State, if the activities in the other Contracting
State are supported wholly or substantially from the public funds of the
first-mentioned Contracting State, including any of its political sub-divisions
or local authorities.

4.     Notwithstanding the
provisions of paragraph 2 and Articles 7, 14 and 15, where income in respect of
personal activities exercised by an entertainer or an athlete in his capacity
as such in a Contracting State accrues not to the entertainer or athlete
himself but to another person, that income shall be taxable only in the other
Contracting State, if that other person is supported wholly or substantially
from the public funds of that other State, including any of its political
sub-divisions or local authorities.

Article
18

REMUNERATION
AND PENSIONS IN RESPECT OF GOVERNMENT SERVICE

1.      

a.     Remuneration, other
than a pension, paid by a Contracting State or a political sub-division or a
local authority thereof to an individual in respect of services rendered to
that State or sub-division or authority shall be taxable only in that State.

b.    However, such
remuneration shall be taxable only in the other Contracting State if the
services are rendered in that other State and the individual is a, resident of
that State who:

                     
i.       
is
a national of that State; or

                    
ii.       
did
not become a resident of that State solely for the purpose of rendering the
services.

1.      

2.      

a.     Any pension paid by,
or out of funds created by a Contracting State or a political sub-division or a
local authority thereof to an individual in respect of services rendered to
that State or sub-division or authority shall be taxable only in that State.

b.    However, such pension
shall be taxable only in the other Contracting State, if the individual is a
resident of, and a national of that other State.

1.      

2.      

3.     The provisions of
Articles 15, 16 and 17 shall apply to remuneration and pensions in respect of
services rendered in connection with a business carried on by a Contracting
State or a political sub-division or a local authority thereof.

Article
19

NON-GOVERNMENT
PENSIONS AND ANNUITIES

1.     Any pension, other
than a pension referred to in Article 18, or any annuity derived by a resident
of a Contracting State from sources within the other Contracting State may be
taxed only in the first-mentioned Contracting State.

2.     The term
“pension” means a periodic payment made in consideration of past
services or by way of compensation for injuries received in the course of
performance of services.

3.     The term

“annuity” 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 payments in return for adequate and full consideration
in money or money’s worth.

Article
20

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 as a student at a recognised university, college,
school or other educational institution in that other Contracting State or as a
business or technical apprentice therein, for a period not exceeding six years
from the date of his first arrival in that other Contracting State in
connection with that visit, shall be exempt from tax in that other Contracting
State on–

a.     all remittances from
the first-mentioned Contracting State for the purposes of his maintenance,
education or training; and

b.    any remuneration (not
exceeding 20,000 Indian rupees or its equivalent sum in U.A.E. currency per
annum) for personal services rendered in that other Contracting State with a
view to supplementing the resources available to him for such purposes.

1.      

2.     An individual who is
a resident of a Contracting State and who is temporarily present in the other
Contracting State for the purpose of study, research or training solely as a
recipient of a grant, allowance or award from the Government of either of the
Contracting States or from a scientific, educational, religious or charitable
organisation or under a technical assistance programme entered into by the
Government of either of the Contracting States for a period not exceeding three
years from the date of his first arrival in that other Contracting State in
connection with that visit shall be exempt from tax in that other Contracting
State on–

a.     the amount of such
grant, allowance or award;

b.    all remittances from
the first-mentioned Contracting State for the purposes of his maintenance,
education or training; and

c.     any remuneration (not
exceeding 20,000 Indian rupees or its equivalent sum in U.A.E. currency per
annum) in respect of services in that other Contracting State if the services
are performed in connection with his study, research, training or are
incidental thereto.

1.      

2.      

3.     An individual who is
a resident of a Contracting State and who is temporarily present in the other
Contracting State solely as an employee of, or under contract with, an
enterprise of the first-mentioned Contracting State solely for the purpose of
acquiring technical, professional or business experience from a person other
than such enterprise, for a period not exceeding twelve months from the date of
his first arrival in that other Contracting State in connection with that visit
shall be exempt from tax in that other Contracting State on-

a.     all remittances from
the first-mentioned Contracting State for the purposes of his maintenance,
education or training; and

b.    any remuneration, so
far as it is not in excess of 20,000 Indian rupees or its equivalent sum in
U.A.E. currency per annum, for personal services rendered in that other
Contracting State, provided such services are in connection with the
acquisition of such experience.

1.      

2.      

3.      

4.     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 solely for the purpose of training or study shall be exempt
from tax in that other Contracting State in respect of remuneration received by
him on account of such training or study.

5.     For the purposes of
this Article and Article 21,

a.      

                     
i.       
an
individual shall be deemed to be a resident of India if he is resident in India
in the “previous year” in which he visits U.A.E. or in the
immediately preceding “previous year”;

                    

ii.       
an
individual shall be deemed to be a resident of U.A.E. if, immediately before
visiting India, he is a resident of U.A.E.;

a.     

b.    the term
“recognised” in relation to a university, college, school or other
educational institution in a Contracting State shall, in the case of doubt, be
determined by the competent authority of that State.

Article
21

PROFESSORS,
TEACHERS AND RESEARCHERS

1.     An individual who is
a resident of a Contracting State immediately before making a visit to the
other Contracting State, and who, at the invitation of any university, college,
school or other similar educational institution, which is recognised by the Government
a political sub-division or a local or statutory authority of that State,
visits that other Contracting State for a period not exceeding two years solely
for the purpose of teaching or research or both at such educational
institution, shall be exempt from tax in that other Contracting State on his
remuneration for such teaching or research

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
22

OTHER
INCOME

1.     Subject to the
provisions of paragraph 2, items of income of a resident of a Contracting
State, wherever arising, which are not expressly dealt with in the foregoing
articles of this Agreement, shall be taxable only in that Contracting State.

2.     The provisions of
paragraph 1 shall not apply to income, other than income from immovable
property as defined in paragraph 2 of Article 6, if the recipient of such
income, being a resident of a Contracting State, carries on business in the
other Contracting State through a permanent establishment situated therein, or
performs in that other State independent personal services from a fixed base
situated therein, and the right or property in respect of which the income is
paid is effectively connected with such permanent establishment or fixed base.
In such case, the provisions of Article 7 or Article 14, as the case may be,
shall apply.

Article
23

CAPITAL

1.     Capital represented
by immovable property referred to in Article 6, owned by a resident of a
Contracting State and situated in the other Contracting State, may be taxed in
that State.

2.     Capital represented
by movable property forming part of the business property of a permanent
establishment which an enterprise of a Contracting State has in the other
Contracting State, or by movable property pertaining to a fixed base available
to a resident of a Contracting State in the other Contracting State for the
purpose of performing independent personal services, may be taxed in that other
State.

3.     Capital represented
by ships operated in international traffic and by movable property pertaining
to the operation of such ships, shall be taxable only in the Contracting State
in which the place of effective management of the enterprise is situated.

Article
24

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
political sub-divisions, the local authorities, the local administrations,and
the local Governments;

                    
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;

a.     

b.    In the case of
U.A.E., means the Government of the United Arab Emirates, and shall include;

                     

i.       
the
political sub-divisions, the local authorities, the local administrations and
the local Governments;

                    
ii.       
the
Central Bank of the United Arab Emirates, Abu Dhabi Investment Authority and
Abu Dhabi Fund for Economic Development;

                   
iii.       
any
such institution or body as may be agreed from time to time between the two
Contracting States.

Article
25

ELIMINATION
OF DOUBLE TAXATION

1.     The laws in force in
either of the Contracting States shall continue to govern the taxation of
income and capital in the respective Contracting States except where express
provisions to the contrary are made in this Agreement.

2.     Where a resident of
India derives income or owns capital which, in accordance with the provisions
of this Agreement, may be taxed in U.A.E., India shall allow as a deduction
from the tax on the income of that resident an amount equal to the income-tax
paid in U.A.E. whether directly or by deduction; and as a deduction from the
tax on the capital of that resident an amount equal to the capital tax paid in
U.A.E. Such deduction in either case shall not, however, exceed that part of
the income-tax or capital tax (as computed before the deduction is given) which
is attributable, as the case may be, to the income or the capital which may be
taxed in U.A.E. Further, when such resident is a company by which surtax is
payable in India, the deduction in respect of income-tax paid in U.A.E. shall
be allowed in the first instance from income-tax payable by the company in
India and as to the balance, if any, from the surtax payable by it in India.

3.     Subject to the laws
of the U.A.E. where a resident of the U.A.E. derives income which in accordance
with the provisions of this Agreement may be taxed in India, the U.A.E. shall
allow as a deduction from the tax on income of that person an amount equal to
the tax on income paid in India. Such deduction shall not, however, exceed that
part of income-tax as computed before the deduction is given, which is
attributable to the income which may be taxed in the U.A.E.

4.     For the purpose of
paragraph 3, the term “tax paid in India” shall be deemed to include
the amount of Indian tax which would have been paid if the Indian tax had not
been exempted or reduced in accordance with the special incentive measures
under the provisions of the Income-tax Act, 1961, which are designed to promote
economic development in India, effective on the date of signature of this
Agreement, or which may be introduced in the future in modification of, or in
addition to, the existing provisions for promoting economic development in
India, and such other incentive measures which may be agreed upon from time to
time by the Contracting States.

5.     Where, in accordance
with any provision of the Agreement, income derived or capital owned by a
resident of a Contracting State is exempt from tax in that State, such State
may, nevertheless, in calculating the amount of tax on the remaining income or
capital of such resident, take into account the exempted income or capital.

Article
26

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 Contracting
State carrying on the same activities in the same circumstances or under the
same conditions.

3.     The provisions of
this Article 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.

4.     Enterprises of a
Contracting State, the capital of which is wholly or partly owned or controlled
directly or indirectly, by one or more residents of the other Contracting
State, shall not be subjected in the first-mentioned Contracting State to any
taxation or any requirement connected therewith which is other or more
burdensome than the taxation and connected requirements to which other similar
enterprises of that first-mentioned State are or may be subjected in the same
circumstances and under the same conditions.

5.     In this Article, the
term “taxation” means taxes which are the subject of this Agreement.

Article
27

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
Agreement, 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 two years
of the date of receipt of notice of the action which gives rise to taxation not
in accordance with the Agreement.

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
Agreement. 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 Agreement. When it seems advisable in order to reach
agreement to have an oral exchange of opinion, such exchange may take place
through a commission consisting of representatives of the competent authorities
of the Contracting States. They may also consult together for the elimination
of double taxation in cases not provided for in the Agreement.

4.     The competent
authorities of the Contracting States may communicate with each other directly
for the purpose of applying this Agreement.

Article
28

EXCHANGE
OF INFORMATION

1.     The competent
authorities of the Contracting States shall exchange such information as is
necessary for carrying out the provisions of the Agreement or for the
prevention or detection of evasion of taxes which are the subject of this
Agreement. 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, investigation or prosecution in
respect of the taxes which are the subject of this Agreement, or to persons
with respect to whom the information relates.

2.     The exchange of
information may also be on request with reference to particular cases.

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
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
of 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 (ordre public).

Article
29

DIPLOMATIC
AND CONSULAR ACTIVITIES

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

Article
30

ENTRY
INTO FORCE

1.     Each of the
Contracting States shall notify to the other the completion of the proceedings
required by its law for the bringing into force of this Agreement. The
Agreement shall enter into force on the date of the later of these
notifications and shall thereupon have effect-

a.     In the United Arab
Emirates:

In
respect of income derived on or after the 1st January next following the
calendar year in which the Agreement enters into force and in respect of
capital which is held at the expiry of the calendar year next following that in
which the Agreement enters into force or subsequent years;

a.     

b.    In India:

In
respect of income arising in any “previous year” beginning on or
after 1st April next following the calendar year in which the Agreement enters
into force and in respect of capital which is held at the expiry of any
“previous year” beginning on or after 1st April next following the
calendar year in which the Agreement enters into force.

Article
31

TERMINATION

This
Agreement shall remain in force indefinitely, but either of the Contracting
States may, on or before 30th June 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 Agreement shall cease to have
effect–

a.    
In
the United Arab Emirates:

in
respect of income derived on or after 1st January next following the calendar
year in which the notice of termination is given and in respect of capital
which is held at the expiry of the calendar year next following that in which
the notice of termination is given or subsequent years;

a.     

b.    In India:

in
respect of income arising in any “previous year” beginning on or
after 1st April next following the calendar year in which the notice of
termination is given and in respect of capital which is held at the expiry of
any “previous year” beginning on or after 1st April next following
the calendar year in which the notice of termination is given.

IN
WITNESS WHEREOF
,
the undersigned, being duly authorised thereto, have signed this Agreement.

Done
in two originals at New Delhi on this Wednesday, 29th day of April, One
Thousand Nine Hundred and Ninety-Two corresponding to the 27th day of Shawwal
1412H in the Hindi, Arabic and English languages, all texts being equally
authentic. In case of divergence amongst the texts, the English text shall be
the operative one.

For
the Government of the Republic of India

For
the Government of the United Arab Emirates

(Sd.)
Dr. Manmohan Singh, (Sd.) Hamdan Bin Rashid Al Maktoum,

Minister
of Finance. Minister of Finance and Industry.

PROTOCOL

At
the signing today of the Agreement between the Government of the Republic of
India and the Government of the United Arab Emirates for the Avoidance of
Double Taxation and the Prevention of Fiscal Evasion with respect to taxes on
income and on capital, the undersigned have agreed upon the following
provisions which shall form an integral part of this Agreement

      i.       
Subject
to the provisions of Article 5, nothing in this Agreement shall affect the
right of the Government of the United Arab Emirates, its political
sub-divisions, local authorities or local Governments to apply its own laws
related to the taxation of income derived from the petroleum and natural
resources; such activities will be taxed according to the laws of the United
Arab Emirates;

     ii.       

Notwithstanding
the provisions of Article 6 and Article 23, the residential property owned by a
national of a Contracting

 

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