DTC Agreement Between India and Nepal

1/6/2017
IncomeTaxDepartment
NEPAL
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Section90oftheIncometaxAct,1961DoubleTaxationAgreement AgreementforAvoidanceofDoubleTaxation
andPreventionofFiscalEvasionwithForeignCountriesNepal
WHEREAS the annexed Agreement between the Government of the Republic of India and the Government of Nepal for the
avoidanceofdoubletaxationandthepreventionoffiscalevasionwithrespecttotaxesonincome(hereinafterreferredtoasthe
"Agreement")wassignedinKathmandu,Nepalonthe27thdayofNovember,2011.
WHEREASthesaidAgreemententeredintoforceonthe16thdayofMarch,2012,beingthedateofthelaterofthenotifications
aftercompletionoftheproceduresasrequiredbythelawsoftherespectivecountriesfortheentryintoforceoftheAgreement,
inaccordancewiththeprovisionsofparagraph2ofarticle30oftheAgreement.
WHEREAS the provisions of the said Agreement shall have effect in India, in respect of income derived in any fiscal year
beginning on or after the 1st day of April, 2013 in accordance with the provisions of paragraph 3 of article 30 of the
Agreement.
NOW,THEREFORE,inexerciseofthepowersconferredbysubsection(1)ofsection90oftheIncometaxAct,1961(43of
1961),theCentralGovernmentherebynotifiesthatalltheprovisionsofthesaidAgreementannexedheretoshallbegiveneffect
tointheUnionofIndiawitheffectfromthe1stdayofApril,2013.
NotificationNo.20/2012[F.No.503/03/2005FTDII],dated1262012*
AGREEMENTBETWEENTHEGOVERNMENTOFTHEREPUBLICOFINDIAANDTHEGOVERNMENTOF
NEPALFORTHEAVOIDANCEOFDOUBLETAXATIONANDTHEPREVENTIONOFFISCALEVASIONWITH
RESPECTTOTAXESONINCOME
TheGovernmentoftheRepublicofIndiaandtheGovernmentofNepal,desiringtoconcludeanAgreementfortheavoidance
ofdoubletaxationandthepreventionoffiscalevasionwithrespecttotaxesonincomeandwithaviewtopromotingeconomic
cooperationbetweenthetwocountries,haveagreedasfollows:
*SeealsooldAgreementvideNotificationNo.GSR1146(E),dated5121988.
ARTICLE1
PERSONSCOVERED
ThisAgreementshallapplytopersonswhoareresidentsofoneorbothoftheContractingStates.
ARTICLE2
TAXESCOVERED
1.ThisAgreementshallapply totaxesonincomeimposedonbehalfofaContractingStateorofitspoliticalsubdivisionsor
localauthorities,irrespectiveofthemannerinwhichtheyarelevied.
2.Thereshallberegardedastaxesonincomealltaxesimposedontotalincome,oronelementsofincome,includingtaxeson
gains from the alienation of movable or immovable property and taxes on the total amounts of wages or salaries paid by
enterprises.
3.TheexistingtaxestowhichtheAgreementshallapplyareinparticular:
(a)

(b)
inIndia,theincometax,includinganysurchargethereon
(hereinafterreferredtoas"Indiantax")
inNepal,incometaximposedundertheIncome.TaxAct,2058B.S.
(2002A.D.)
(hereinafterreferredtoas"Nepalesetax").
4.TheAgreementshallapply alsotoanyidenticalorsubstantiallysimilartaxesthatareimposedafterthedateofsignatureof
http://www.incometaxindia.gov.in/_layouts/15/dit/Pages/viewer.aspx?path=http://www.incometaxindia.gov.in/dtaa/comprehensive%20agreements/10869000000
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theAgreementinadditionto,orinplaceof,theexistingtaxes.Thecompetent authoritiesoftheContractingStatesshallnotify
eachotherofanysignificantchangesthathavebeenmadeintheirtaxlaws.
ARTICLE3
GENERALDEFINITIONS
1.ForthepurposesofthisAgreement,unlessthecontextotherwiserequires:
(a)
theterm"India"meanstheterritoryofIndiaandincludestheterritorialseaandairspaceaboveit,
as well as any other maritime zone in which India has sovereign rights, other rights and
jurisdiction,accordingtotheIndianlawandinaccordancewithinternationallaw,includingthe
U.N.ConventionontheLawoftheSea
(b)
theterm"Nepal"meanstheTerritoryofNepal.
(c)
the term "person" includes an individual, a company, a body of persons and any other entity
whichistreatedasataxableunitunderthetaxlawsinforceintherespectiveContractingStates
(d)
theterm"company"meansanybodycorporateoranyentitythatistreatedasabodycorporatefor
taxpurposes
(e)
theterms"enterpriseofaContractingState"and"enterpriseoftheotherContractingState"mean
respectivelyanenterprisecarriedonbyaresidentofaContractingStateandanenterprisecarried
onbyaresidentoftheotherContractingState
(f)
theterm"internationaltraffic"meansanytransportbyashiporaircraftoperatedbyanenterprise
ofaContractingState,exceptwhentheshiporaircraftisoperatedsolelybetweenplacesinthe
otherContractingState
(g)
theterm"competentauthority"means:
(i)
in India: the Finance Minister, Government of India, or his authorized

representative
(ii)
inNepal:theMinisterofFinanceorhisauthorizedrepresentative
(h)
theterm"national"means:
(i) anyindividualpossessingthenationalityofaContractingStateand
(ii) any legal person, partnership or association deriving its status as such from the laws in
forceinaContractingState
(i)
theterms"ContractingState"and"theotherContractingState"meantheRepublic
ofIndiaorNepalasthecontextrequires:
(j)
theterm"tax"means"IndiantaxorNepalesetax,asthecontextrequires,butshall
not include any amount which is payable in respect of any default or omission in
relationtothetaxestowhichthisAgreementappliesorwhichrepresentsapenalty
orfineimposedrelatingtothosetaxes
(k)
Theterm"fiscalyear"means:
(i) inthecaseofIndia:thefinancialyearbeginningonthe1stdayofApril
(ii) inthecaseofNepal:financialyearbeginninginmidJuly(correspondingto1stdayofShrawanmonthoftheNepalese
B.S.).
2.AsregardstheapplicationoftheAgreementatanytimebyaContractingState,anytermnotdefinedthereinshall,unlessthe
contextotherwiserequires,havethemeaningthatithasatthattimeunderthelawofthatStateforthepurposesofthetaxesto
whichtheAgreementappliesandanymeaningunder theapplicabletaxlawsofthatStateprevailingoverameaninggivento
thetermunderotherlawsofthatState.
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ARTICLE4
RESIDENT
1.ForthepurposesofthisAgreement,theterm"residentofaContractingState"meansanypersonwho,underthelawsofthat
State, is liable to tax therein by reason of his domicile, residence, place of management or any other criterion of a similar
nature, and also includes that State and any political subdivision or local authority thereof. This term, however, does not
includeanypersonwhoisliabletotaxinthatStateinrespectonlyofincomefromsourcesinthatState.
2.Wherebyreasonoftheprovisionsofparagraph1anindividualisaresidentofbothContractingStates,thenhisstatusshall
bedeterminedasfollows:
(a)
heshallbedeemedtobearesidentonlyoftheStateinwhichhehasapermanenthomeavailabletohim
ifhehasapermanenthomeavailabletohiminbothStates,heshallbedeemedtobearesidentonlyofthe
Statewithwhichhispersonalandeconomicrelationsarecloser(centreofvitalinterests)
(b)
iftheStateinwhichhehashiscentreofvitalinterestscannotbedetermined,orifhehasnotapermanent
homeavailabletohimineitherState,heshallbedeemedtobearesidentonlyoftheStateinwhichhehas
anhabitualabode
(c)
ifhehasanhabitualabodeinbothStatesorinneitherofthem,heshallbedeemedtobearesidentonlyof
theStateofwhichheisanational
(d)
ifheisanationalofbothStatesorofneitherofthem,thecompetentauthoritiesoftheContractingStates
shallsettlethequestionbymutualagreement.
3.Wherebyreasonoftheprovisionsofparagraph1apersonotherthananindividualisaresidentofbothContractingStates,
thenitshallbedeemedtobearesidentonlyoftheStateinwhichitsplaceofeffectivemanagementissituated.IftheStatein
which its place of effective management is situated cannot be determined, then the competent authorities of the Contracting
Statesshallsettlethequestionbymutualagreement.
ARTICLE5
PERMANENTESTABLISHMENT
1.ForthepurposesofthisAgreement,theterm"permanentestablishment"meansafixedplaceofbusinessthroughwhichthe
businessofanenterpriseiswhollyorpartlycarriedon.
2.Theterm"permanentestablishment"includesespecially:
(a)
aplaceofmanagement
(b)
abranch
(c)
anoffice
(d)
afactory
(e)
aworkshop
(f)
asalesoutlet
(g)
awarehouseinrelationtoapersonprovidingstoragefacilitiesforothers
(h)
afarm,plantationorotherplacewhereagricultural,forestry,plantationorrelatedactivitiesarecarriedon
and
(i)
amine.,anoilorgaswell,aquarryoranyotherplaceofextractionofnaturalresources.
3.Thetermpermanentestablishmentalsoencompasses:
(a)
A building site or construction, installation or assembly project or supervisory activities in connection

therewithbutonlyifsuchsite,projectoractivitieslastmorethan183days.
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(b)
Thefurnishingofservices,includingconsultancyservices,byanenterprisethroughemployeesorother
personnelengagedbytheenterpriseforsuchpurpose,butonlyifactivitiesofthatnaturecontinue(forthe
same or connected project) within "the country for a period or periods aggregating more than 90 days
withinany12monthperiod.
4. Notwithstanding the preceding provisions of this Article the term "permanent establishment" shall be deemed not to
include:
(a)
theuseoffacilitiessolelyforthepurposeofstorage,ordisplayofgoodsormerchandisebelongingtothe
enterprise
(b)
themaintenanceofastockofgoodsormerchandisebelongingtotheenterprisesolelyforthepurposeof
storage,ordisplay
(c)
themaintenanceofastockofgoodsormerchandisebelongingtotheenterprisesolelyforthepurposeof
processingbyanotherenterprise:
(d)
themaintenanceofafixedplaceofbusinesssolelyforthepurposeofpurchasinggoodsormerchandiseor
ofcollectinginformationfortheenterprise
(e)
themaintenanceofafixedplaceofbusinesssolelyforthepurposeofcarryingon,fortheenterprise,any
otheractivityofapreparatoryorauxiliarycharacter
(f)
themaintenanceof a fixed place of business solely for any combination of activities mentionedinsub
paragraphs(a)to(e),providedthattheoverallactivityofthefixedplace,ofbusinessresultingfromthis
combinationisofapreparatoryorauxiliarycharacter.
5.Notwithstandingtheprovisionsofparagraphs1and2,whereapersonotherthananagentofanindependentstatustowhom
paragraph7appliesisactinginaContractingStateonbehalfofanenterpriseoftheotherContractingState,thatenterprise
shallbedeemedtohaveapermanentestablishmentinthefirstmentionedContractingStateinrespectofanyactivitieswhich
thatpersonundertakesfortheenterprise,ifsuchaperson:
(a)
hasandhabituallyexercisesinthatStateanauthoritytoconcludecontractsinthenameoftheenterprise,
unless the activities of such person are limited to those mentioned in paragraph 4 which, if exercised
throughafixedplaceofbusiness,wouldnotmakethisfixedplaceofbusinessapermanentestablishment
undertheprovisionsofthatparagraphor
(b)
has no such authority, but habitually maintains' in the firstmentioned State a stock of goods or
merchandisefromwhichheregularlydeliversgoodsormerchandiseonbehalfoftheenterpriseor
(c)
habituallysecuresordersinthefirstmentionedState,whollyoralmostwhollyfortheenterpriseitself.
6. Notwithstanding the preceding provisions of this Article, an insurance enterprise of a Contracting State shall, except in
regardtoreinsurance,bedeemedtohaveapermanentestablishmentintheotherContractingStateifitcollectspremiumsin
theterritoryofthatotherStateorinsuresriskssituatedthereinthroughapersonotherthananagentofanindependentstatusto
whomparagraph7applies.
7.Anenterpriseofacontracting StateshallnotbedeemedtohaveapermanentestablishmentintheotherContractingState
merelybecauseitcarriesonbusinessinthatotherStatethroughabroker,generalcommissionagentoranyotheragentofan
independentstatus,providedthatsuchpersonsareactingintheordinarycourseoftheirbusiness.However,whentheactivities
ofsuchanagentaredevotedwhollyoralmostwhollyonbehalfofthatenterprise,,hewillnotbeconsideredanagentofan
independentstatuswithinthemeaningofthisparagraph.
8.ThefactthatacompanywhichisaresidentofaContractingStatecontrolsoriscontrolledbyacompanywhichisaresident
oftheotherContractingStateorwhichcarriesonbusinessinthatotherState(whetherthroughapermanentestablishmentor
otherwise),shallnotofitselfconstituteeithercompanyapermanentestablishmentoftheother.
ARTICLE6
INCOMEFROMIMMOVABLEPROPERTY
1.IncomederivedbyaresidentofaContractingStatefromimmovableproperty(includingincomefromagricultureorforestry)
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situatedintheotherContractingStatemaybetaxedinthatotherState.
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 apply to income derived from the direct use, letting or use in any other form of
immovableproperty.
4.Theprovisionsofparagraphs1and3shallalsoapplytotheincomefromimmovablepropertyofanenterpriseandtoincome
fromimmovablepropertyusedfortheperformanceofindependentpersonalservices.
ARTICLE7
BUSINESSPROFITS
1.TheprofitsofanenterpriseofaContractingStateshallbetaxableonlyinthatStateunlesstheenterprisecarriesonbusiness
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
permanentestablishment.
2. Subject to the provisions of paragraph 3, where an enterprise of a Contracting State carries on business in the other
ContractingStatethroughapermanentestablishmentsituatedtherein,thereshallineachContractingStatebeattributedtothat
permanentestablishmenttheprofitswhichitmightbeexpectedtomakeifitwereadistinctandseparateenterpriseengagedin
the same or similar activities under the same or similar conditions and dealing wholly independently with the enterprise of
whichitisapermanentestablishment.
3.Indeterminingtheprofitsofapermanentestablishment,thereshallbeallowedasdeductionsexpenseswhichareincurredfor
thepurposesofthepermanentestablishment,includingexecutiveandgeneraladministrativeexpensessoincurred,whetherin
theStateinwhichthepermanentestablishmentissituatedorelsewhere,inaccordancewiththeprovisionsofandsubjecttothe
limitations of the tax laws of that State. However, no such deduction shall be allowed in respect of amounts, if any, paid
(otherwisethantowardsreimbursementofactualexpenses)bythepermanentestablishmenttotheheadofficeoftheenterprise
oranyofitsotheroffices,bywayofroyalties,feesorothersimilarpaymentsinreturnfortheuseofpatents,knowhoworother
rights,orbywayofcommissionorotherchargesforspecificservicesperformedorformanagement,or,exceptinthecaseof
bankingenterprises,bywayofinterestonmoneyslenttothepermanentestablishment.Likewise,noaccountshallbetaken,in
thedeterminationoftheprofitsofapermanentestablishment,foramountscharged(otherwisethantowardreimbursementof
actual expenses), by the permanent establishment to the head office of the enterprise or any of its other offices, by way of
royalties,feesorothersimilarpaymentsinreturnfortheuseofpatents,knowhoworotherrights,orbywayofcommissionor
other charges for specific services performed or for management, or, except in the case of a banking enterprise, by way of
interestonmoneyslenttotheheadofficeoftheenterpriseoranyofitsotheroffices.
4.InsofarasithasbeencustomaryinaContractingStatetodeterminetheprofitstobeattributedtoapermanentestablishment
onthebasisofanapportionmentofthetotalprofitsoftheenterprisetoitsvariousparts,nothinginparagraph2shallpreclude
thatContractingStatefromdeterminingtheprofitstobetaxedbysuchanapportionmentasmaybecustomarythemethodof
apportionmentadoptedshall,howeverbesuchthattheresultshallbeinaccordancewiththeprinciplescontainedinthisArticle.
5.Noprofitsshallbeattributedtoapermanentestablishmentbyreasonofthemerepurchasebythatpermanentestablishment
ofgoodsormerchandisefortheenterprise.
6.Forthepurposesoftheprecedingparagraphs,theprofitstobeattributedtothepermanentestablishmentshallbedetermined
bythesamemethodyearbyyearunlessthereisgoodandsufficientreasontothecontrary.
7. Where profits include items of income which are dealt with separately in other Articles of this Agreement, then the
provisionsofthoseArticlesshallnotbeaffectedbytheprovisionsofthisArticle.
ARTICLE8
SHIPPINGANDAIRTRANSPORT
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1.ProfitsderivedbyanenterpriseofaContractingStatefromtheoperationofshipsoraircraftininternationaltrafficshallbe
taxableonlyinthatContractingState.
2.ProfitsderivedbyatransportationenterprisewhichisaresidentofaContractingStatefromtheuse/maintenance,orrentalof
containers(includingtrailersandotherequipmentforthetransportofcontainers)usedforthetransportofgoodsormerchandise
ininternationaltrafficwhichissupplementary,orincidentaltooperationofitsshipsoraircraftininternationaltrafficshallbe
taxableonlyinthatContractingStateunlessthecontainersareusedsolelywithintheotherContractingState.
3. For the purposes of this Article interest on investments directly connected with the operation of ships or aircraft in
internationaltrafficshallberegardedasprofitsderivedfromtheoperationofsuchshipsoraircraftiftheyareintegraltothe
carryingonofsuchbusiness,andtheprovisionsofArticle11shallnotapplyinrelationtosuchinterest.
4.Theprovisionsofparagraph1shallalsoapplytoprofitsfromtheparticipationinapool,ajointbusinessoraninternational
operatingagency.
ARTICLE9
ASSOCIATEDENTERPRISES
1.Where:
(a)
anenterpriseofaContractingStateparticipatesdirectlyorindirectlyinthemanagement,controlorcapital
ofanenterpriseoftheotherContractingState,or
(b)
thesamepersonsparticipatedirectlyorindirectlyinthemanagementcontrolorcapitalofanenterpriseof
aContractingStateandanenterpriseoftheotherContractingState,andineithercaseconditionsaremade
orimposedbetweenthetwoenterprisesintheircommercialorfinancialrelationswhichdifferfromthose
which would be made between independent enterprises, then any profits which would, but for those
conditions,haveaccruedtooneoftheenterprises,but,byreasonofthoseconditions,havenotsoaccrued,
maybeincludedintheprofitsofthatenterpriseandtaxedaccordingly.
2.Where,aContractingStateincludesintheprofitsofanenterpriseofthatStateandtaxesaccordinglyprofitsonwhichan
enterpriseoftheotherContractingStatehasbeenchargedtotaxinthatotherStateandtheprofitssoincludedareprofitswhich
wouldhaveaccruedtotheenterpriseofthefirstmentionedStateiftheconditionsmadebetweenthetwoenterpriseshadbeen
thosewhichwouldhavebeenmadebetweenindependententerprises,thenthatotherStateshallmakeanappropriateadjustment
totheamountofthetaxchargedthereinonthoseprofits.Indeterminingsuchadjustment,dueregard'shallbehadtotheother
provisionsoftheAgreementandthecompetentauthoritiesoftheContractingStatesshall,ifnecessary,consulteachother.
ARTICLE10
DIVIDENDS
1.DividendspaidbyacompanywhichisaresidentofaContractingStatetoaresidentoftheotherContractingStatemaybe
taxedinthatotherState.
2.However,suchdividendsmayalsobetaxedintheContractingStateofwhichthecompanypayingthedividendsisaresident
andaccordingtothelawsofthatState,butifthebeneficialownerofthedividendsisaresidentoftheotherContractingState,
thetaxsochargedshallnotexceed:
(a)
5percentofthegrossamountofdividendsifthebeneficialownerisacompanywhichownsatleast10
percentofthesharesofthecompanypayingthedividends
(b)
10percentofthegrossamountofdividendsinallothercases.Thisparagraphshallnotaffectthetaxation
ofthecompanyinrespectoftheprofitsoutofwhichthedividendsarepaid.
3.Theterm"dividends"asusedinthisarticlemeansincomefromshares,orotherrights,notbeingdebtclaims,participatingin
profits,aswellasincomefromothercorporaterightswhichissubjectedtothesametaxationtreatmentasincomefromshares
bythelawsoftheStateofwhichthecompanymakingthedistributionisaresident.
4. The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the dividends, being a resident of a
ContractingState,carriesonbusinessintheotherContractingStateofwhichthecompanypayingthedividendsisaresident,
throughapermanentestablishmentsituatedtherein,orperformsinthatotherStateindependentpersonalservicesfromafixed
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basesituatedtherein,andtheholdinginrespectofwhichthedividendsarepaidiseffectivelyconnectedwithsuchpermanent
establishmentorfixedbase.Insuchcasetheprovisionsofarticle7orarticle14,asthecasemaybe,shallapply.
5.WhereacompanywhichisaresidentofaContractingStatederivesprofitsorincomefromtheotherContractingState,that
other State may not impose any tax on the dividends paid by the company, except insofar as such dividends are paid to a
residentofthatotherStateorinsofarastheholdinginrespectofwhichthedividendsarepaidiseffectivelyconnectedwitha
permanentestablishmentorafixedbasesituatedinthatotherState,norsubjectthecompany'sundistributedprofitstoataxon
thecompany'sundistributedprofits,evenifthedividendspaidortheundistributedprofitsconsistwhollyorpartlyofprofitsor
incomearisinginsuchotherState.
ARTICLE11
INTEREST
1.InterestarisinginaContractingStateandpaidtoaresidentoftheotherContractingStatemaybetaxedinthatotherState.
2.However,suchinterestmayalsobetaxedintheContractingStateinwhichitarisesandaccordingtothelawsofthatState,
butifthebeneficialowneroftheinterestisaresidentoftheotherContractingState,thetaxsochargedshallnotexceed10per
centofthegrossamountoftheinterest.
3.Notwithstandingtheprovisionsofparagraph2,interestarisinginaContractingStateshallbeexemptfromtaxinthatState,
providedthatitisderivedandbeneficiallyownedby:
(a)(i)inthecaseofIndia,theReserveBankofIndia,and
(ii)inthecaseofNepal,theNepalRashtraBankor
(b)theGovernment,apoliticalsubdivisionoralocalauthorityoftheotherContractingStateor
(c)anyotherinstitutionasmaybeagreeduponfromtimetotimebetweentheCompetentauthoritiesoftheContractingStates
throughexchangeofletters.
4.Theterm"interest"asusedinthisArticlemeansincomefromdebtclaimsofeverykind,whetherornotsecuredbymortgage
andwhetherornotcarryingarighttoparticipateinthedebtor'sprofits,andinparticular,incomefromgovernmentsecurities
andincomefrombondsordebentures,includingpremiumsandprizesattachingtosuchsecurities,bondsordebentures.Penalty
chargesforlatepaymentshallnotberegardedasinterestforthepurposeofthisArticle.
5.Theprovisionsofparagraphs1and2shallnotapplyifthebeneficialowneroftheinterest,beingaresidentofaContracting
State,carriesonbusinessintheotherContractingStateinwhichtheinterestarises,throughapermanentestablishmentsituated
therein,orperformsinthatotherStateindependentpersonalservicesfromafixedbasesituatedtherein,andthedebtclaimin
respectofwhichtheinterestispaidiseffectivelyconnectedwithsuchpermanentestablishmentorfixedbase.Insuchcasesthe
provisionsofarticle7orarticle14,asthecasemaybe,shallapply.
6.InterestshallbedeemedtoariseinaContractingStatewhenthepayerisaresidentofthatState.Where,however,theperson
payingtheinterest,whetherheisaresidentofaContractingStateornot,hasinaContractingStateapermanentestablishment
orafixedbaseinconnectionwithwhichtheindebtednessonwhichtheinterestispaidwasincurred,andsuchinterestisborne
bysuchpermanentestablishmentorfixedbase,thensuchinterestshallbedeemedtoariseintheStateinwhichthepermanent
establishmentorfixedbaseissituated.
7.Where,byreasonofaspecialrelationshipbetweenthepayerandthebeneficialownerorbetweenbothofthemandsome
otherperson,theamountoftheinterest,havingregardtothedebtclaimforwhichitispaid,exceedstheamountwhichwould
havebeenagreeduponbythepayerandthebeneficialownerintheabsenceofsuchrelationship,theprovisionsofthisArticle
shallapplyonlytothelastmentionedamount.Insuchcase,theexcesspartofthepaymentsshallremaintaxableaccordingto
thelawsofeachContractingState,dueregardbeinghadtotheotherprovisionsofthis'Agreement.
ARTICLE12
ROYALTIES
1.RoyaltiesarisinginaContractingStateandpaidtoaresidentoftheotherContractingStatemaybetaxedinthatotherState.
2.However,suchroyaltiesmayalsobetaxedintheContractingStateinwhichtheyarise,andaccordingtothe laws ofthat
State,butifthebeneficialowneroftheroyaltiesisaresidentoftheotherContractingState,thetaxsochargedshallnotexceed
15percentofthegrossamountoftheroyalties.
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3.Theterm"royalties"asusedinthisarticlemeanspaymentsofanykindreceivedasaconsiderationfortheuseof,ortheright
touse,anycopyrightofliterary,artisticorscientificworkincludingcinematographfilms,orfilmsortapesusedfortelevisionor
radiobroadcasting,anypatent,trademark,designormodel,plan,secretformulaorprocess,orfortheuseof,ortherighttouse,
industrial,commercialorscientificequipmentorforinformationconcerningindustrial,commercialorscientificexperience.
4.Theprovisionsofparagraph1and2shallnotapplyifthebeneficialowneroftheroyaltiesbeingaresidentofaContracting
State,carriesonbusinessintheotherContractingStateinwhichtheroyaltiesarise,throughapermanentestablishmentsituated
therein, or performs in that other State independent personal services from a fixed base situated therein, and the right or
propertyinrespectofwhichtheroyaltiesarepaidiseffectivelyconnectedwithsuchpermanentestablishmentorfixedbase.In
suchcasestheprovisionsofarticle7orarticle14,asthecasemaybe,shallapply.
5.(a)RoyaltiesshallbedeemedtoariseinaContractingStatewhenthepayerisaresidentofthatState[itself,apoliticalsub
division,alocalauthority,oraresidentofthatState].Where,however,thepersonpayingtheroyalties,whetherheisaresident
ofaContractingStateornot,hasinaContractingStateapermanentestablishmentorafixedbaseinconnectionwithwhichthe
liabilitytopaytheroyalties was incurred, and such royalties are borne by such permanent establishment or fixed base, then
suchroyaltiesshallbedeemedtoariseintheContractingStateinwhichthepermanentestablishmentorfixedbaseissituated.
(b)Whereundersubparagraph(a)royaltiesdonotariseinoneoftheContractingStates,andtheroyaltiesrelatetotheuseof,
or the right to use, the right or property, in one of the Contracting States, the royalties shall be deemed to arise in that
ContractingState.
6.Where,byreasonofaspecialrelationshipbetweenthepayerandthebeneficialownerorbetweenbothofthemandsome
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
provisionsof thisArticle shall apply only to the lastmentioned amount. In such case, the excess part of the payments shall
remaintaxableaccordingtothelawsofeachContractingState,dueregardbeinghadtotheotherprovisionsofthisAgreement.
ARTICLE13
CAPITALGAINS
1.GainsderivedbyaresidentofaContractingState from the alienation of immovablepropertyreferred to inArticle 6 and
situatedintheotherContractingStatemaybetaxedinthatotherState.
2.Gainsfromthealienationofmovablepropertyformingpartofthebusinesspropertyofapermanentestablishmentwhichan
enterpriseofaContractingStatehasintheotherContractingStateorofmovablepropertypertainingtoafixedbaseavailableto
aresidentofaContractingStateintheotherContracting State for the purpose of performing independent personal services,
includingsuchgainsfromthealienationofsuchapermanentestablishment(aloneorwiththewholeenterprise)orofsuchfixed
basemaybetaxedinthatotherState.
3.Gainsfromthealienationofshipsoraircraftoperatedininternationaltraffic,ormovablepropertypertainingtotheoperation
ofsuchshipsoraircraft,shallbetaxableonlyintheContractingStateofwhichthealienatorisaresident.
4.Gainsfromthealienationofsharesofthecapitalstockofacompanythepropertyofwhichconsistsdirectlyorindirectly
principallyofimmovablepropertysituatedinaContractingStatemaybetaxedinthatState.
5. Gains from the alienation of shares other than those mentioned in paragraph 4 in a company which is a resident of a
ContractingStatemaybetaxedinthatState.
6.Gainsfromthealienationofanypropertyotherthanthatreferredtoinparagraphs1,2,3,4and5shallbetaxableonlyinthe
ContractingStateofwhichthealienatorisaresident.
ARTICLE14
INDEPENDENTPERSONALSERVICES
1. Income derived by an individual who is a resident of a Contracting State in respect of professional services or other
independentactivitiesofasimilarcharactershallbetaxableonlyinthatStateexceptinthefollowingcircumstanceswhensuch
incomemayalsobetaxedintheotherContractingState:
(a)
if he has a fixed base regularly available to him in the other Contracting State for the purpose of
performinghisactivitiesinthatcase,onlysomuchoftheincomeasisattributabletothatfixedbasemay
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betaxedinthatotherStateor
(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 any period of 12months in that case only so much of the income as is derived
fromhisactivitiesperformedinthatotherStatemaybetaxedinthatotherState.
2.Theterm"professionalservices"includesespeciallyindependentscientific,literary,artistic,educationalorteachingactivities
aswellastheindependentactivitiesofphysicians,lawyers,engineers,architects,surgeons,dentistsandaccountants.
ARTICLE15
DEPENDENTPERSONALSERVICES
1. Subject to the provisions ofArticles 16, 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
exercisedintheotherContractingState.Iftheemploymentissoexercised,suchremunerationasisderivedtherefrommaybe
taxedinthatotherState.
2.Notwithstandingtheprovisionsofparagraph1,remunerationderivedbyaresidentofaContractingState in respect of an
employmentexercisedin.theotherContractingStateshallbetaxableonlyinthefirstmentionedStateif:
(a)
therecipientispresentintheotherStateforaperiodorperiodsnotexceedingintheaggregate183daysin
anytwelvemonthperiodcommencingorendinginthefiscalyearconcerned.
(b)
theremunerationispaidby,oronbehalfof,anemployerwhoisnotaresidentoftheotherState,and
(c)
theremunerationisnotbornebyapermanentestablishmentorafixedbasewhichtheemployerhasinthe
otherState.
3.NotwithstandingtheprecedingprovisionsofthisArticle,remunerationderivedinrespectofanemploymentexercisedaboard
ashiporaircraftoperatedininternationaltraffic,byanenterpriseofaContractingStatemaybetaxedinthatState.
ARTICLE16
DIRECTORS'FEES
Directors'feesandothersimilarpaymentsderivedbyaresidentofaContractingStateinhiscapacityasamemberoftheBoard
ofDirectorsofacompanywhichisaresidentoftheotherContractingStatemaybetaxedinthatotherState.
ARTICLE17
ARTISTESANDSPORTSPERSONS
1.NotwithstandingtheprovisionsofArticles14and15,incomederivedbyaresidentofaContracting Stateasanentertainer,
suchasatheatre,motionpicture,radioortelevisionartiste,oramusician,orasasportsperson,fromhispersonalactivitiesas
suchexercisedintheotherContractingState,maybetaxedinthatotherState.
2.Whereincomeinrespectofpersonalactivitiesexercisedbyanentertainerorasportspersoninhiscapacityassuchaccrues
nottotheentertainerorsportspersonhimselfbuttoanotherperson,thatincomemaynotwithstandingtheprovisionsofArticles
7,14and15,betaxedintheContractingStateinwhichtheactivitiesoftheentertainerorsportspersonareexercised.
3. The provisions of paragraphs 1 and 2, shall not apply to income from activities performed in a Contracting State by
entertainersorsportspersonsiftheactivitiesaresubstantiallysupportedbypublicfundsofoneorbothoftheContractingStates
orofpoliticalsubdivisionsorlocalauthoritiesthereof.Insuchacase,theincomeshallbetaxableonlyintheContractingState
ofwhichtheentertainerorsportspersonisaresident.
ARTICLE18
PENSIONS
Subject to the provisions of paragraph 2 of article 19, pensions and other similar remuneration paid to a resident of a
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ContractingStateinconsiderationofpastemploymentshallbetaxableonlyinthatState.
ARTICLE19
GOVERNMENTSERVICE
1.7(a)Salaries, wages and other similar 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 renderedtothatStateorsubdivisionorauthority
shallbetaxableonlyinthatState.
(b)However, such salaries, wages and other similar remuneration shall be taxable only in the other Contracting State if the
servicesarerenderedinthatotherStateandtheindividualisaresidentofthatStatewho:
(i)
isanationalofthatStateor
(ii)
didnotbecomearesidentofthatStatesolelyforthepurposeofrenderingtheservices.
2.(a)Anypensionpaidby,oroutoffundscreatedby,aContractingStateorapoliticalsubdivisionoralocalauthoritythereof
toanindividualinrespectofservicesrenderedtothatStateorsubdivisionorauthorityshallbetaxableonlyinthatState.
(b)However,suchpensionshallbetaxableonlyintheotherContractingStateiftheindividualisaresidentof,andanational
of,thatotherState.
3.Theprovisionsofarticles15,16,17and18shallapplytosalaries,wagesandothersimilarremunerationandtopensionsin
respectofservicesrenderedinconnectionwithabusinesscarriedonbyaContractingStateorapoliticalsubdivisionoralocal
authoritythereof.
ARTICLE20
PROFESSORS,TEACHERSANDRESAERCHSCHOLARS
1.Aprofessor,teacherorresearch scholar who is or was a resident of the Contracting State immediately before visiting the
other Contracting State for the purpose of teaching or engaging in research, or both, at a university, college or other similar
approvedinstitutioninthatotherContractingStateshallbeexemptfromtaxinthatotherStateonanyremunerationforsuch
teachingorresearchforaperiodnotexceedingtwoyearsfromthedateofhisfirstarrivalinthatotherState.
2.ThisArticleshallapply toincomefromresearchonlyifsuchresearchisundertakenbytheindividualinthepublicinterest
andnotprimarilyforthebenefitofsomeprivatepersonorpersons.
3.ForthepurposesofthisArticle,anindividualshallbedeemedtobearesidentofaContractingStateifheisresidentinthat
StateinthefiscalyearinwhichhevisitstheotherContractingStateorintheimmediatelyprecedingfiscalyear.
4.Forthepurposeofparagraph1"approvedinstitution"meansaninstitutionwhichhasbeenapprovedin this regard by the
competentauthorityoftheconcernedContractingState.
ARTICLE21
STUDENTS
1.Astudentwhoisorwasa residentofoneoftheContractingStatesimmediatelybeforevisitingtheotherContractingState
andwhoispresentinthatotherContractingStatesolelyforthepurposeofhiseducationortrainingshall,besidesgrants,loans
andscholarships,beexemptfromtaxinthatothercontractingStateon:
(a)
paymentsmadetohimbypersonsresidingoutsidethatotherStateforthepurposesofhismaintenance,
educationortrainingand
(b)
remunerationwhichhederivesfromanemploymentwhichheexercisesintheotherContractingStateif
theemploymentisdirectlyrelatedtohisstudies.
2. The benefits of this Article shall extend only for such period of time as may be reasonable or customarily required to
completetheeducationortrainingundertaken,butinnoeventshallanyindividualhavethebenefitsofthisArticle,formore
thansixconsecutiveyearsfromthedateofhisfirstarrivalforthepurposesofhiseducationortraininginthatotherState.
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ARTICLE22
OTHERINCOME
1. Items of income of a resident of a Contracting State, wherever arising, not dealt within the foregoing Articles of this
AgreementshallbetaxableonlyinthatState.
2.Theprovisionsofparagraph1shallnotapplytoincome,otherthanincomefromimmovablepropertyasdefinedinparagraph
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
connectedwithsuchpermanentestablishmentorfixedbase.InsuchcasetheprovisionsofArticle7 orArticle14,asthecase
maybe,shallapply.
3.Notwithstandingtheprovisionsofparagraph1,ifaresidentofaContractingStatederivesincomefromsourceswithinthe
otherContractingSateinformoflotteries,crosswordpuzzles,racesincludinghorseraces,cardgamesandothergamesofany
sortorgamblingorbettingofanynaturewhatsoever,suchincomemaybetaxedintheotherContractingState.
ARTICLE23
METHODSFORELIMINATIONOFDOUBLETAXATION
1. The laws in force in either of the Contracting States shall continue to govern the taxation of income in the respective
ContractingStatesexceptwhereprovisionstothecontraryaremadeinthisAgreement.Whereincomeissubjecttotaxinboth
ContractingStates,relieffromdoubletaxationshallbegiveninaccordancewiththefollowingparagraphsofthisArticle.
2.DoubleTaxationshallbeeliminatedasfollows:
(i)
InIndia:
(a) WherearesidentofIndiaderivesincomewhich,inaccordancewiththeprovisionsofthisAgreement,maybetaxed
inNepal,Indiashallallowasadeductionfromthetaxontheincomeofthatresident,anamountequaltothetaxpaid
inNepal.
Suchdeductionshallnot,however,exceedthatportionofthetaxascomputedbeforethedeductionisgiven,whichis
attributable,asthecasemaybe,totheincomewhichmaybetaxedinNepal.
(b) WhereinaccordancewithanyprovisionoftheAgreementincomederivedbyaresidentofIndiaisexemptfromtaxin
Indiamaynevertheless,incalculatingtheamountoftaxontheremainingincomeofsuchresident,takeintoaccount
theexemptedincome.
(ii)
inNepal:
(a) WherearesidentofNepalderivesincomewhich,inaccordancewiththeprovisionsofthisAgreement,maybetaxed
inIndia,Nepalshallallowasadeductionfromthetaxontheincomeofthatresident,anamountequaltothetaxpaid
inIndia.
Suchdeductionshallnot,however,exceedthatportionofthetaxascomputedbeforethedeductionisgiven,whichis
attributable,asthecasemaybe,totheincomewhichmaybetaxedinIndia.
(b) WhereinaccordancewithanyprovisionoftheAgreementincomederivedbyaresidentofNepalisexemptfromtax
inNepal,Nepalmaynevertheless,incalculatingtheamountoftaxontheremainingincomeofsuchresident,takeinto
accounttheexemptedincome.
ARTICLE24
NONDISCRIMINATION
1. Nationals of a Contracting State shall not be subjected in the other Contracting State to any taxation or any requirement
connectedtherewith,whichisotherormoreburdensomethanthetaxationandconnectedrequirementstowhichnationalsof
thatotherStateinthesamecircumstances,inparticularwithrespecttoresidence,areormaybesubjected.Thisprovisionshall,
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notwithstandingtheprovisionsofarticle1,alsoapplytopersonswhoarenotresidentsofoneorbothoftheContractingStates.
2.ThetaxationonapermanentestablishmentwhichanenterpriseofaContractingStatehasintheotherContractingStateshall
notbelessfavourablyleviedinthatotherStatethanthetaxationleviedonenterprisesofthatotherStatecarryingonthesame
activities.Thisprovisionshallnotbeconstrued asobliging a Contracting State to grant to residents of the other Contracting
Stateanypersonalallowances,reliefsandreductionsfortaxationpurposesonaccountofcivilstatusorfamilyresponsibilities
whichitgrantstoitsownresidents.ThisprovisionshallnotbeconstruedaspreventingaContractingStatefromchargingthe
profitsofapermanentestablishmentwhichacompanyoftheotherContractingStatehasinthefirstmentionedStateatarateof
taxwhichishigherthanthatimposedontheprofitsofasimilarcompanyofthefirstmentionedContractingState,norasbeing
inconflictwiththeprovisionsofparagraph3ofArticle7.
3. Except where the provisions of paragraph 1 ofArticle 9. paragraph 7 ofArticle 11, or paragraph 6 of Article 12, apply,
interest,royaltiesandotherdisbursementspaidbyanenterpriseofaContractingStatetoaresidentoftheotherContracting
Stateshall,forthepurposeofdeterminingthetaxableprofitsofsuchenterprise,bedeductibleunderthesameconditionsasif
theyhadbeenpaidtoaresidentofthefirstmentionedState.
4.EnterprisesofaContractingState,thecapitalofwhichiswhollyorpartyownedorcontrolled,directlyorindirectly,byone
or more residents of the other Contracting State, shall not be subjected in the firstmentioned State to an taxation or any
requirement connected therewith which is other or more burdensome than the taxation and connected requirements to which
othersimilarenterprisesofthefirstmentionedStateareormaybesubjected.
5.TheprovisionsofthisArticleshallapplytotaxescoveredbythisAgreement.
ARTICLE25
MUTUALAGREEMENTPROCEDURE
1.WhereapersonconsidersthattheactionsofoneorbothoftheContractingStatesresultorwillresultforhimintaxationnot
in accordance with the provisions of thisAgreement, he may, irrespective of the remedies provided by the domestic law of
thoseStates,presenthiscasetothecompetentauthorityoftheContractingStateofwhichheisaresidentor,ifhiscasecomes
underparagraph1ofarticle24,tothatoftheContractingStateofwhichheisanational.Thecasemustbepresentedwithin
threeyearsfromthefirstnotificationoftheactionresultingintaxationnotinaccordancewiththeprovisionsoftheAgreement.
2.Thecompetentauthorityshallendeavour,iftheobjectionappearstoittobejustifiedandifitisnotitselfabletoarriveata
satisfactorysolution,toresolvethecasebymutualagreementwiththecompetentauthorityoftheotherContractingState,with
a view to the avoidance of taxation which is not in accordance with the Agreement. Any agreement reached shall be
implementednotwithstandinganytimelimitsinthedomesticlawoftheContractingStates.
3.ThecompetentauthoritiesoftheContractingStatesshallendeavourtoresolvebymutualagreementanydifficultiesordoubts
arisingastotheinterpretationorapplicationoftheAgreement.Theymay alsoconsulttogetherfortheeliminationofdouble
taxationincasesnotprovidedforintheAgreement.
4.The competent authorities of the Contracting States may communicate with each other directly, including through a joint
commission consisting of themselves or their representatives, for the purpose of reaching an agreement in the sense of the
preceding paragraphs. The competent authorities, through consultations, shall develop appropriate bilateral procedures,
conditions,methods,andtechniquesfortheimplementationofthemutualagreementprocedureprovidedforinthisArticle.
ARTICLE26
EXCHANGEOFINFORMATION
1.ThecompetentauthoritiesoftheContractingStatesshallexchangesuchinformation,includingdocumentsorcertifiedcopies
thereof,asisforeseeablyrelevantforcarryingouttheprovisionsofthisAgreementortotheadministrationorenforcementof
domestic laws concerning taxes of every kind and description imposed on behalf or of their political subdivisions or local
authorities,insofarasthetaxationthereunderisnotcontrarytotheAgreement.Theexchangeofinformationisnotrestrictedby
Articles1and2.
2. Any information received under paragraph 1 by a Contracting State shall be treated as secret in the same manner as
information obtained under the domestic laws of that Contracting State and shall be treated as secret in the same manner as
information obtained under the domestic laws of that State and shall be disclosed only to persons or authorities (including
courtsandadministrativebodies)concernedwiththeassessmentorcollectionoftheenforcementorprosecutioninrespectof,
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thedeterminationofappealsinrelationtothetaxesreferredtoinparagraph1,ortheoversightoftheabove.Suchpersonsor
authoritiesshallusetheinformationonlyforsuchpurposes.Theymaydisclosetheinformationinpubliccourtproceedingsor
in judicial decisions. Notwithstanding the foregoing, information received by a Contracting State may be used for other
purposeswhensuchinformationmaybeusedforsuchotherpurposesunderthelawsofbothStatesandthecompetentauthority
ofthesupplyingStateauthorizessuchuse.
3.Innocaseshalltheprovisionsofparagraphs1and2beconstruedsoastoimposeonaContractingStatetheobligation:'
(a)
Tocarryoutadministrativemeasuresatvariancewiththelawsandadministrativepracticeofthatorofthe
(b)
Tosupplyinformationincludingdocumentsandcertifiedcopiesthereofwhichisnotobtainableunderthe
lawsorinthenormalcourseoftheadministrationofthatoroftheotherContractingState
(c)
To supply information which would disclose any trade, business, industrial, commercial or professional
secretortradeprocess,orinformation,thedisclosureofwhichwouldbecontrarytopublicpolicy(order
public).
4.IfinformationisrequestedbyaContractingStateinaccordancewiththisArticle,theother ContractingStateshalluseits
information gathering measures to obtain the requested information, even though that other State may not need such
information for its own tax purposes. The obligation contained in the preceding sentence is subject to the limitations of
paragraph3butinnocaseshallsuchlimitationsbeconstruedtopermitaContractingStatetodeclinetosupplyinformation
solelybecauseithasnodomesticinterestinsuchinformation.
5.Innocaseshalltheprovisionsofparagraph3beconstruedtopermitaContractingStatetodeclinetosupplyinformation
solely because the information is held by a bank, other financial institution, nominee or person acting in an agency or a
fiduciarycapacityorbecauseitrelatestoownershipinterestsinaperson.
ARTICLE27
ASSISTANCEINTHECOLLECTIONOFTAXES
1.TheContractingStatesshalllendassistancetoeachotherinthecollectionofrevenueclaims.Thisassistanceisnotrestricted
by Articles 1 and 2. The competent authorities of the Contracting States may by mutual agreement settle the mode of
applicationofthisArticle.
2.Theterm"revenueclaim" asusedinthisArticlemeansanamountowedinrespectoftaxesofevery kindanddescription
imposed on behalf of the Contracting States, or of their political subdivisions or local authorities, insofar as the taxation
thereunder is not contrary to thisAgreement or any other Instrument to which the Contracting States are parties, as well as
interestsadministrativepenaltiesandcostsofcollectionorconservancyrelatedtosuchamount.
3.WhenarevenueclaimofaContractingStateisenforceableunderthelawsofthatStateandisowedbyapersonwho,atthat
time, cannot, under the laws of that State, prevent its collection, that revenue claim shall, at the request of the competent
authorityofthatState,beacceptedforpurposesofcollectionbythecompetentauthorityoftheotherContractingState.That
revenueclaimshallbecollectedbythatotherStateinaccordancewiththeprovisionsofitslawsapplicabletotheenforcement
andcollectionofitsowntaxesasiftherevenueclaimwerearevenueclaimofthatotherState.
4.WhenarevenueclaimofaContractingStateisaclaiminrespectofwhichthatStatemay,underitslaw,takemeasuresof
conservancywithaviewtoensureitscollection,thatrevenueclaimshall,attherequestofthecompetentauthorityofthatState,
be accepted for purposes of taking measures of conservancy by the competent authority of the other Contracting State.That
otherStateshalltakemeasuresofconservancyinrespectofthatrevenueclaiminaccordancewiththeprovisionsofitslawsas
iftherevenueclaimwerearevenueclaimofthatotherStateevenif,atthetimewhensuchmeasuresareapplied,therevenue
claimisnotenforceableinthefirstmentionedStateorisowedbyapersonwhohasarighttopreventitscollection.
5. Notwithstanding the provisions of paragraphs 3 and 4, a revenue claim accepted by a Contracting State for purposes of
paragraph 3 or 4 shall not, in that State, be subject to the timelimits or accorded any priority applicable to a revenue claim
underthelawsofthatStatebyreasonofitsnatureassuch.Inaddition,arevenueclaimacceptedbyaContractingStateforthe
purposesofparagraph3or4shallnot,inthatState,haveanypriorityapplicabletothatrevenueclaimunderthelawsofthe
otherContractingState.
6. Proceedings with respect to the existence, validity or the amount of a revenue claim of a Contracting State shall only be
brought before the courts or administrative bodies of that State. Nothing in this Article shall be construed as creating or
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providinganyrighttosuchproceedingsbeforeanycourtoradministrativebodyoftheotherContractingState.
7. Where, at any time after a request has been made by a Contracting State under paragraph 3 or 4 and before the other
ContractingStatehascollectedandremittedtherelevantrevenueclaimtothefirstmentionedState,therelevantrevenueclaim
ceasestobe
(a)
inthecaseofarequestunderparagraph3,arevenueclaimofthefirstmentionedStatethatisenforceable
underthelawsofthatStateandisowedbyapersonwho,atthattime,cannot,underthelawsofthatState,
preventitscollection,or
(b)
inthecaseofarequestunderparagraph4,arevenueclaimofthefirstmentionedStateinrespectofwhich
thatStatemay,underitslaws,takemeasuresofconservancywithaviewtoensureitscollection.
thecompetentauthorityofthefirstmentionedStateshallpromptlynotifythecompetentauthorityoftheotherStateofthatfact
and,attheoptionoftheotherState,thefirstmentionedStateshalleithersuspendorwithdrawitsrequest.
8.InnocaseshalltheprovisionsofthisArticlebeconstruedsoastoimposeonaContractingStatetheobligation:
(a)
tocarryoutadministrativemeasuresatvariancewiththelawsandadministrativepracticeofthatorofthe
(b)
tocarryoutmeasureswhichwouldbecontrarytopublicpolicy(orderpublic)
(c)
toprovideassistanceiftheotherContractingStatehasnotpursuedallreasonablemeasuresofcollection
orconservancy,asthecasemaybe,availableunderitslawsoradministrativepractice
(d)
to provide assistance in those cases where the administrative burden for that State is clearly
disproportionatetothebenefittobederivedbytheotherContractingState.
ARTICLE28
LIMITATIONOFBENEFITS
AresidentofaContractingStateshallnotbeentitledtothebenefits ofthisAgreementifitsaffairs werearrangedinsucha
manner as if it was the main purpose or one of the main purposes to take the benefits of thisAgreement.The case of legal
entitiesnothavingbonafidebusinessactivitiesshallbecoveredbytheprovisionsofthisArticle.
ARTICLE29
MEMBERSOFDIPLOMATICMISSIONSANDCONSULARPOSTS
Nothing in thisAgreement shall affect the fiscal privileges of members of diplomatic missions or consular posts under the
generalrulesofinternationallaworundertheprovisionsofspecialagreements.
ARTICLE30
ENTRYINTOFORCE
1.TheContractingStatesshallnotifyeachotherinwriting,throughdiplomaticchannels,ofthecompletionoftheprocedures
requiredbytherespectivelawsfortheentryintoforceofthisAgreement
2.ThisAgreementshallenterintoforceonthedateofthenotificationsreferredtoinparagraph1ofthisArticle.
3..TheprovisionsofthisAgreementshallhaveeffect:
(a)
InIndia,inrespectofincomederivedinanyfiscalyearbeginningonorafterthefirstdayofAprilnext
followingthecalendaryearinwhichtheAgreemententersintoforceand
(b)
InNepalinrespectofincomederivedinanyfiscalyearbeginningonorafterthemidJuly(corresponding
to 1st day of Shrawan month of the Nepalese B.S.) next following the calendar year in which the
Agreemententersintoforce.
4.TheAgreementbetweentheGovernmentoftheRepublicofIndiaandHisMajesty'sGovernmentofNepalfortheAvoidance
ofDoubleTaxationandPreventionofFiscalEvasionwithrespecttoTaxesonIncomesignedatKathmanduonthe8thdayof
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January, 1987 shall cease to have effect when the provisions of this Agreement become effective in accordance with the
provisions of paragraph 3, provided that any action or proceeding already initiated prior to the coming into force of this
Agreement shall be dealt with in accordance with theAgreement for theAvoidance of Double Taxation and Prevention of
FiscalEvasionwithrespecttotaxesonincomesignedatKathmanduonJanuary8,1987.
ARTICLE31
TERMINATION
This Agreement shall remain in force until terminated by a Contracting State. Either Contracting State may terminate the
Agreement,throughdiplomaticchannels,bygivingnoticeofterminationatleastsixmonthsbeforetheendofanycalendaryear
beginningaftertheexpirationoffiveyearsfromthedateofentryintoforceoftheAgreement.InsucheventtheAgreement
shallceasetohaveeffect:
(a)
InIndiainrespectofincomederivedinanyfiscalyearonorafterthefirstdayofAprilnextfollowingthe
calendaryearinwhichthenoticeisgiven
(b)
InNepal,inrespectofincomederivedinanyfiscalyearonorafterthemidJuly(correspondingto1stday
ofShrawanmonthoftheNepaleseB.S.)nextfollowingthecalendaryearinwhichthenoticeisgiven.
INWITNESSWHEREOFtheundersigned,dulyauthorizedtheretohavesignedthisAgreement.
DONEinduplicateatKathmanduonthis27thdayofNovember,2011,eachintheHindi,NepaliandEnglish languages, all
textsbeingequallyauthentic.Incaseofdivergenceofinterpretation,theEnglishtextshallprevail.
PROTOCOL
At the moment of signing of theAgreement this day concluded between the Government of the Republic of India and the
Government of Nepal for theAvoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on
Income,theundersignedhave.agreeduponthefollowingprovisionswhichshallbeanintegralpartoftheAgreement:
1.ItisunderstoodthatifthedomesticlawofaContractingStatesismorebeneficialtoresidentoftheotherContractingState
than the provision of thisAgreement, then the provisions of the domestic law of the first mentioned State shall apply to the
extenttheyaremorebeneficialtosucharesident.
2.WithreferencetoArticle12:
InrespecttoArticle.12(Royalties)ifunderanyAgreementConvention orProtocolbetweenNepaland a third State, Nepal
limitsitstaxationatsourceonroyaltiestoaratelowerorascopemorerestrictedthantherateorscopeprovidedforinthis
AgreementonRoyalties,thenasfromthedateonwhichtherelevantNepalAgreementorConventionorprotocolentersinto
force,thesamerateofscopeasprovidedforinthatAgreementorConventionorProtocolonRoyaltiesshallalsoapplyunder
thisAgreement.
INWITNESSWHEREOFtheundersigned,dulyauthorizedtheretohavesignedthisAgreement.
DONEinduplicateatKathmanduonthis27thdayofNovember,2011,eachintheHindi,NepaliandEnglishlanguages,all
textsbeingequallyauthentic.Incaseofdivergenceofinterpretation,theEnglishtextshallprevail.
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