notification no. 47/2014 f. no. 501/08/1979 ftd i / so 2488 e section 90 of the income tax act 1961 double taxation agreement agreement for avoidance of double taxation and prevention of fiscal evasion with foreign countries poland

MINISTRY OF FINANCE (Departemnt of Revenue) NOTIFICATION New Delhi, the 24th September, 2014 S.O. 2488(E).—Whereas, a Protocol (hereinafter referred to as the said Protocol) as set out in the Annexure, was entered into between the Government of the Republic of India and the Government of the Polish People’s Republic amending the Agreement between the Government of the Republic of India and the Government of the Polish People’s Republic for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income that was signed at Warsaw on the 21st day of June, 1989; And whereas, the date of entry into force of the said Protocol is the 1st day of June, 2014, being the thirtieth day after the date of receipt of latter of the notifications of completion of the procedures as required by the respective laws for entry into force of the said Protocol, in accordance with paragraph 1 of article 17 of the said Protocol; And whereas, sub-paragraph (a) of paragraph 1 of article 17 of the said Protocol provides that the provisions of the said Agreement shall have effect in India in respect of taxes withheld at source to amounts of income derived on or after the first day of the fiscal year next following the year in which the Protocol enters into force and in respect of other taxes on income to amounts of income derived in any fiscal year beginning on or after the first day of the fiscal year next following the year in which the Protocol enters into force; Now, therefore, in exercise of the powers conferred by section 90 of the Income-tax Act, 1961 (43 of 1961), the Central Government hereby directs that all the provisions of the said Protocol amending the agreements between the Government of the Republic of India and the Government of Polish People’s Republic for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income, as set out in the Annexure hereto, shall be given effect to in the Union of India with effect from the first day of April, 2015, being the first day of the fiscal year next following the year in which the Protocol enters into force. [Notification No. 47/2014 F. No. 501/08/1979-FTD-I] AKHILESH RANJAN, Jt. Secy. PROTOCOL BETWEEN THE GOVERNMENT OF THE REPUBLIC OF INDIA AND THE GOVERNMENT OF THE REPUBLIC OF POLAND AMENDING THE AGREEMENT BETWEEN THE GOVERNMENT OF THE REPUBLIC OF INDIA AND THE GOVERNMENT OF THE POLISH PEOPLE’S REPUBLIC FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME, SIGNED AT WARSAW ON THE 21ST DAY OF JUNE, 1989 The Government of the Republic of India and the Government of the Republic of Poland desiring to conclude a Protocol amending the Agreement between the Government of the Republic of India and the Government of the Polish People’s Republic for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income, signed at Warsaw on the 21st day of June, 1989 (hereinafter referred to as “the Agreement”), Have agreed as follows: 12 THE GAZETTE OF INDIA : EXTRAORDINARY [PART II—SEC. 3(ii)] ARTICLE 1 Paragraph 1 of Article 2 (TAXES COVERED) of the Agreement shall be deleted and replaced by the following paragraph: “1. The taxes to which this Agreement shall apply are: a) in India, the income-tax including any surcharge and cess thereon imposed under the Income-tax Act, 1961; (hereinafter referred to as “Indian tax”) b) in Poland: (i) the personal income tax, and (ii) the corporate income tax, (hereinafter referred to as “Polish taxes”).”. ARTICLE 2 In Article 3 (GENERAL DEFINITIONS) of the Agreement: 1. Clauses (a) and (b) of paragraph 1 shall be deleted and replaced by the following clauses: “a) the term “India” means the territory of India and includes the territorial sea and airspace above it, as well as any other maritime zone in which India has sovereign rights, other rights and jurisdiction, according to the Indian law and in accordance with international law, including the U.N. Convention on the Law of the Sea; b) the term "Poland" means the Republic of Poland and, when used in a geographical sense, means the territory of the Republic of Poland, and any area adjacent to the territorial waters of the Republic of Poland within which, under the laws of Poland and in accordance with international law, the rights of Poland with respect to the exploration and exploitation of the natural resources of the seabed and its sub-soil may be exercised;”. 2. After clause (j) of paragraph 1 the following clause shall be inserted: “(k) The term “fiscal year”, in the case of India, means the financial year beginning on the first day of April.”. ARTICLE 3 In Article 4 (FISCAL RESIDENCE) of the Agreement, paragraph 1 shall be deleted and replaced by the following paragraph: “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 or any other criterion of a similar nature, and also includes that State and any political sub-division or local authority thereof. This term, however, does not include any person who is liable to tax in that State in respect only of income from sources in that State.”. ARTICLE 4 In Article 5 (PERMANENT ESTABLISHMENT), the following paragraph shall be inserted after Paragraph 2: “2A. The term “permanent establishment” shall also include the furnishing of services, including consultancy services, by an enterprise of a Contracting State through its employees or other personnel engaged by the enterprise for such purpose, but only where such activities continue(for the same or a connected project) in the other Contracting State for a period or periods exceeding in the aggregate six months within any 12-month period.”. ARTICLE 5 Article 10 (ASSOCIATED ENTERPRISES) of the Agreement shall be deleted and replaced by the following Article: “Article 10 ASSOCIATED ENTERPRISES 1. Where: ¹Hkkx IIµ[k.M 3 (ii)º Hkkjr dk jkti=k % vlk/kj.k 13 (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. 2. Where a Contracting State includes in the profits of an enterprise of that State - and taxes accordingly - profits on which an enterprise of the other Contracting State has been charged to tax in that other State and the profits so included are profits which would have accrued to the enterprise of the first-mentioned State if the conditions made between the two enterprises had been those which would have been made between independent enterprises, then that other State shall make an appropriate adjustment to the amount of the tax charged therein on those profits. In determining such adjustment, due regard shall be had to the other provisions of this Agreement and the competent authorities of the Contracting States shall if necessary consult each other.”. ARTICLE 6 In Article 11 (DIVIDENDS) of the Agreement, paragraph 2 shall be deleted and replaced by the following paragraph: “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 beneficial owner of the dividends is a resident of the other Contracting State, the tax so charged shall not exceed 10 per cent of the gross amount of the dividends. This paragraph shall not affect the taxation of the company in respect of the profits out of which dividends are paid.”. ARTICLE 7 In Article 12 (INTEREST) of the Agreement: 1. Paragraph 2 shall be deleted and replaced by the following paragraph: “2. However, such interest may also be taxed in the Contracting State in which it arises and according to the laws of that State, but if the recipient is beneficial owner of the interest the tax so charged shall not exceed 10 per cent of the gross amount of the interest.”. 2. Clause (i) of sub paragraph (b) of paragraph 3 shall be deleted and replaced by the following clause: “(i) in the case of Poland, Bank Gospodarstwa Krajowego (BGK), to the extent such interest is attributable to financing of exports and imports only;”. ARTICLE 8 In Article 13 (ROYALTIES AND FEES FOR TECHNICAL SERVICES) of the Agreement, paragraphs 2, 3 and 4 shall be deleted and replaced by the following paragraphs: “2. However, such royalties or fees for technical services may also be taxed in the Contracting State in which they arise, and according to the laws of that State, but if the beneficial owner of the royalties, or fees for technical services, is a resident of the other Contracting State, the tax so charged shall not exceed 15per cent of the gross amount of the royalties or fees for technical services. 3. The term “royalties” as used in this Article means payments of any kind received as a consideration for the use of, or the right to use, any copyright including copyright of literary, artistic or scientific work including cinematograph 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 any industrial, commercial, or scientific equipment or for information concerning industrial, commercial or scientific experience. 4. The term “fees for technical services” as used in this Article means payments of any kind, other than those mentioned in Articles 15 and 16, as consideration for managerial or technical or consultancy services, including the provision of services of technical or other personnel.”.