Section(s) Referred: s. 90 ,s. 24A ,s. 44A
Statute: INCOME TAX
Date of Issue: 19/1/2001
Notification No. S. O. 54(E), dated, 19th January, 2001.
Whereas the Agreement between the Government of the Republic of India and the Kingdom of Belgium for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income came into force on the 1st day of October, 1997, after the notification by both the Contracting States to each other of the completion of the procedures required under their laws for bringing into force the said agreement ;
And whereas the Central Government 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), had directed that all the provisions of the said Agreement annexed to the notification of the Government of India in the Ministry of Finance. (Department of Revenue) (Foreign Tax Division) No. G. S. R. 632(E), dated the 31st October, 1997, shall be given effect to in the Union of India;
And whereas paragraph 1 of the Protocol dated the 26th April, 1993, to the aforesaid agreement, provides that if after the 1st day of January, 1990, under any Convention or Agreement between India and a third State being a member of the Organisation for Economic Co-operation and Development, India should limit its taxation on royalties or fees for technical services to a rate lower or a scope more restricted than the rate or scope provided for in the present agreement on the said items of income, then, as from the date on which the Agreement between India and Belgium or the relevant Indian Convention or Agreement becomes effective ; whichever date is later, the same rate or scope as provided for in that Convention or Agreement on the said items of income shall also apply under this agreement ;
And whereas in the Convention between India and Sweden which became effective on the 1st April, 1998, in the case of India, and on the 1st January, 1998, in the case of Sweden, which state is a member of the Organisation for Economic Co-operation and Development, the Government of India has limited the taxation at source on royalties and fees for technical services to a rate lower and a scope more restricted than that provided in the Agreement between India and Belgium on the said items of income ;
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 the following modifications shall be made in the Agreement notified by the said notification which are necessary for implementing the aforesaid Agreement between India and Belgium, namely :—
I. With effect from the 1st April, 1998, in India and, with effect from the 1st January, 1998, in Belgium for the existing paragraph (2) of article 12 relating to “royalties and fees for technical services”, the following paragraph shall be substituted, namely :
“2. However, such royalties and 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 10 per cent. of the gross amount of the royalties or fees for technical services.”
II. With effect from the 1st April, 1998, in India and with effect from the 1st January, 1998, in Belgium for the existing sub-paragraph (a) of paragraph 3 of article 12 relating to “royalties and fees for technical services”, the following sub-paragraph shall be substituted, namely :
“(a) The term “royalties” as used in this article means payments of any kind received as a consideration for the use of, or the right to use, any copyright of literary, artistic or scientific work including cinematograph films, any patent, trade mark, design or model, plant, secret formula or process, or for information concerning industrial, commercial or scientific experience.”.
[Notification No. 20/F. No. 505/2/89-FTD]