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A-

II-SEC. ,

MINISTRY OF FINANCE

(Department of Revenue)

(FOREIGN TAX DIVISION)

NOTIFICATION

New Delhi, the 7th February, 2001

INCOME-TAX

G.S.R. 75 (E).— Whereas the annexed Agreement between the Government of the

Republic of India and the Government of the Kyrgyz Republic for the avoidance of

double taxation and for the prevention of fiscal evasion with respect to taxes on income

has come into force on the 10^th January, 2001, thirty days after the date of receipt of the

latter of the notifications by the Contracting States to each other of the completion of the

procedure required by the respective laws for the entry into force of this Agreement in

accordance with Article 29 of the said Agreement;

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 Agreement shall be given effect to in the Union of India.

[Notification No. 34/F. No. 503/7/95-FTD]

VIIAY MATHUR, Jt. Secy.

ANNEXURE

AGREEMENT

BETWEEN

THE GOVERNMENT OF THE REPUBLIC OF INDIA

AND

THE GOVERNMENT OF THE KYRGYZ REPUBLIC

FOR THE AVOIDANCE OF DOUBLE TAXATION AND FOR THE

PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON

INCOME.

The Government of the Republic of India and the Government of the

Kyrgyz Republic desiring to conclude an Agreement for the avoidance of double

taxation and the prevention of fiscal evasion with respect to tax *s on income and

with a view to promoting economic co-operation between the two countries have

agreed as follows :

THE GAZETTE OF INDIA EXTRAORDINARY

[P\KI II—Src l(i)|

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

This Agreement shall apply to taxes on income imposed on behalf of a

Contracting State irrespective of the manner in which they are levied.

There shall be regarded as taxes on income all taxes imposed on total

income, or on elements of income, including taxes on gains from the alienation of

movable or immovable property and taxes on the total amounts of wages or salaries

paid by enterprises.

The existing taxes to which the Agreement shall apply are in particular:

(a) in India :

the income-tax, including any surcharge thereon;

(hereinafter referred to as "Indian tax")

(b) in Kyrgyzstan

(i) tax on profits and income of legal persons;

(ii) income tax on physical persons;

(hereinafter referred to as "Kyrgyz tax"),

The Agreement shall apply also to any identical or substantially similar taxes

which are imposed after the date of signature of the Agreement in addition to, or in

place ofHhe existing taxes referred to in paragraph 3 The competent authorities of

the Contracting States shall notify each other of any significant chanf? ;s which have

been made in their respective taxation laws

Article 3

GENERAL DEFINITIONS

For the purposes of this Agreement, unless the context otherwise requires .

(a)

the term "Indit:" 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 "Kyrgyzstan" means the Kyrgyz Republic, When used in the

geographical terms the term "Kyrgyzstan" means the territory on which the

Kyrgyz Republic exercises sovereign rights and jurisdiction in accordance

with Kyrgyz law and in accordance with International Law.

(c)

the term "person" includes an individual, a company, a body of

persons and any other entity which is treated as a taxable unit under the

taxation laws in force in the respective Contracting States;

(d)

the term "company" means any corporate entity which is treated as a

body corporate for tax purposes and includes in particular jqint stock

companies, limited companies or any other enterprise treated as company

under Kyrgyz law;

(e)

the terms "enterprise of a Contracting State" and "enterprise of the

other Contracting State" mean respectively an enterprise carried on by a

resident of a Contracting State and an enterprise carried on by a resident of

the other Contracting State,

(f)

the term "international traffic" means any transport fey an aircraft

operated by an enterprise which is a resident of a Contracting State, except

when the aircraft is operated solely between places in the other Contracting

State;

(g)

the term "competent authority" means:

(i) in India, the Central Government in the Ministry of Finance

(Department of Revenue) or their authorized representative;

(ii) in Kyrgyz Republic, the Ministry of Finance or their authorized

representative;

381 Gl/2001—5

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THE GAZETTE Or INDIA EXTRAORDINARY

|PART II—Sir 1(1)1

(li)

the term "national" means •

(i) any individual possessing the nationality of a Contracting State,

(ii) any legal person, partnership or association deriving its status as such

from the laws in force in a Contract-ng State

(i)

the term "fiscal year" means ;

(i) in the case of India, the financial year beginning on the first day of

April;

(ii) in the case of Kyrgyzstan, the calendar year;

(j) the term "tax" means Indian tax or Kyrgyz 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 pen ilty or fine imposed relating to those taxes.

(k) the terms "a Contracting State" and "the other Contracting State" mean

the Republic of India or the Kyrgyz Republic as the context requires.

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 law of that State concerning the taxes to which the

Agreement applies.

Article 4

RESIDENT

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. But this term does not include any person who is liable to tax in that

State in respect only of income from sources in that State.

Where by reason of the provisions of paragraph 1 an individual is f(tResident

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 ?hall be deemed to be a resident of the State with which his personal

and economic relation? 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;

be deemed to be a resident of the State of which he is_a national;

(d) if he is a natic.ial of both States or of neither of them, the competent

authorities of the Contracting States shall settle the question by mutual agreement.

Where by reason of the provisions of paragraph 1 a person other than an

individual is a resident of both Contracting States, then it shail be deemed to be a

resident of the State in which its place of effective management is situated. If the

State in which its place of effective management is situated cannot be determined,

then the competent authorities of the Contracting States shall settle the question by

mutual agreement.

Article 5

PERMANENT ESTABLISHMENT

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.

The term "permanent establishment" includes especially :

(a) a place of management,

(b)a branch;

(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,

THE GAZETTE OF INDIA : EXTRAORDINARY

[PART II—SEC. 3(i)]

(g) a sales outlet;

(h) a warehouse in relt tion to a person providing storage facilities for others

and;

(i) a farm, plantation or other place where agricultural, forestry, plantation

or related activities are carried on.

A building site, a construction, assembly or installation project, or

supervisory activities connected therewith, only if such site, or project or activity

lasts for more than six months.

An enterprise shall be deemed to have a permanent establishment in a

Contracting State and to carry on business through that permanent establishment if

it provides services or facilities in connection with, or supplies plant and machinery

on hire used for or to be used in the prospecting for, or extraction or exploitation of

mineral oils in that State.

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;

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; or

(f) the maintenance of a fixed place of business solely for any combination

of activities mentioned in sub-paragraphs (a) to (e), provided that the overall activity

of the fixed place of business resulting from this combination is of a preparatory or

auxiliary character.

Notwithstanding the provisions of paragraphs 1 and 2, where a person -other

than an agent of an independent status to whom paragraph 8 applies - is acting in a

Contracting State on behalf of an enterprise of the other Contracting State that

enterprise shall be deemed to have a permanent establishment in the first-mentioned

Contracting State in respect of any activities which that person undertakes for the

enterprise, if such a person:

(a)

has and habitually exercises in that State an authority to conclude

contracts in the name of the enterprise, unless the activities of such person

are limited to those mentioned in paragraph 5 which, if exercised through a

fixed place of business, would not make this fixed place of business a

permanent establishment under the provisions of that paragraphs; or

(b)

has no such authority, but habitually maintains in the first-mentioned

State a stock of goods or merchandise from which he regularly delivers

goods or merchandise on behalf of the enterprise; or

(c)

habitually secures orders in the first-mentioned State, wholly or

almost wholly for the enterprise itself or for the enterprise and other

enterprises controlling, controlled by, or subject to the same control, as that

enterprise.

Notwithstanding the preceding provisions of this Article, an insurance

enterprise of a Contracting State shall, except in regard to re-insi ranee, be deemed

to have a permanent establishment in the other Contracting State if it collects

premiums in the territory of that other State or it insures risks situ ited therein

through a person other than an agent of an independent status to whom paragraph 8

applies

An enterprise shall not be deemed to have a permanent establishment in a

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.

The fact that a company which is a resident of a Contracting State controls

or is controlled by a company which is a resident of the other Contracting State, or

which carries on business in that other State (whether through a permanent

establishment or otherwise), shall not of itself constitute either company a

permanent establishment of the other.

OF INDIA :

IAORDINARY

[PAKrll—SE^, 3(i)]

Article 6

INCOME EROM IMMOVABLE PROPERTY

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.

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 or road and railway vehicles shall not be regarded as immovable property.

The piovisions of paragraph 1 shall apply to income derived from the direct

use, letting, or use in any other form of immovable property.

4. '

The provisions of paragraphs 1 and 3 shall also apply to the income from

immovable property of an enterprise and to income from immovable property used

for the performance of independent personal services.

Where the ownership of shares or other corporate rights in a company

entitles the owner of such shares or corporate rights to the enjoyment of immovable

property held by the company, the income from direct use, letting, or use in any

other form of such right to enjoyment may be taxed in the Contracting State, in

which the immovable property is situated.

Article 7

BUSINESS PROFITS

The profits of an enterprise of a Contracting State shall be taxable only in

that State unless the enterprise carries on business i» the oiher Contracting State

through a permanent establishment situated therein. If the enterprise carries on

business as aforesaid, the profits of the enterprise may also be taxed in the other

State but only so much of them as is attributable to that permanent establishment.

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.

In determining the piofits of a permanent establishment, there ohall 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, in accordance with the provisions of and subject to the

limitations of the tax laws of that State.

No profits shall be attributed to a permanent establishment by reason of the

mere purchase by that permanent establishment of goods or merchandise for the

enterprise.

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.

Where profits include items of income which are dealt with separately in

other Articles of this Agreement, then the provisions of those Articles sjrvall not be

affected by the provisions of this Article,

Article 8

INTERNATIONAL TRAFFIC

Profits derived by an enterprise of a Contracting State f om the operation of

aircraft in international traffic shall be taxable only in that contracting State.

Profits derived by a transportation enterprise which is a resident of a

Contracting State from the use, maintenance, or rental of containers (including

trailers and other equipment for the transport of containers) used for the transport of

goods or merchandise in international traffic shall be taxable only in that Contracting

State unless the containers are used solely within the other Contracting State.

For the purposes of this Article, interest on funds connected with the

operation of aircraft in international traffic shall be regarded as profits derived from

40_

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THE GAZETTE OF INDIA EXTRAORDINARY

[PART II—She 3(i)1

the operation of such aircraft, and the provisions of Article 11 shall not apply in

relation to such interest.

The provisions of paragraph 1 shall also 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,

(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 not so accrued, may be included in the profits of that

enterprise and taxed accordingly.

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

Con-racting 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 t'lat 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 10

DIVIDENDS

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.

4J_

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 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 the dividends are paid.

The term "dividends" as used in this Article means income frgm 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.

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 case the provisions of Article 7 or Article 14, as

the case may be, shall apply.

Where a company which is a resident of a Contracting State r erives 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

Interest arising in a Contracting State and paid to a resident of the other

Contracting State may be taxed in that other State.

However, such interest may also be taxed in the Contracting State in which

it arises and according to the laws of that State, but if the recipient is the beneficial

THE GAZETTE OF INDIA EXTRAORDINARY

[PART II—SEC. 3(i)l

owner of the interest, the tax so charged shall not exceed 10 per cent, of the gross

amount of the interest.

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 of the other Contracting State; or

(ii) the Central Bank of the other Contracting State or Governmental

financial institutions that may be mutually agreed upon between the two Contracting

States.

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 debentur.es, including premiuius 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.

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.

Interest shall be deemed to arise in a Contracting State when the payer is

that State itself 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 State in which the permanent establishment or fixed base is situated.

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 a 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 AND FEES FOR TECHNICAL SERVICES

Royalties or fees for technical services arising in a Contracting State and

paid to a resident of the other Contracting State may be taxed in that other State.

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 recipient is the beneficial owner of the royalties or fees for technical

services, the tax so charged shall not exceed 15 per cent, of the gross amount of the

royalties or fees for technical services.

3.(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 software, cinematograph and video films or

records or tapes for television or radio;

ii) any patent, design or model, plan, secret formula or process, trade

mark or for information (know-how) concerning industrial,

commercial, or scientific experience; or

iii) the use of, or right to use, any industrial commercial or scientific

equipment.

(b)

the term "fees for technical services" as used in this Article, means payment

of any kind in consideration for the rendering of any managerial, technical or

consultancy services including the provision of services by technical or other

personnel but does not include payments for services mentioned in Articles 14 and

15 of this Agreement.

The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner

of the royalties or fees for technical services being a resident of a Contract^ State,

carries on business in the other Contracting State in which the royalties or fees for

technical services 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 or fees for

technical services are paid is effectively connected with such permanent

THE GAZETTE OF INDIA . EXTRAORDINARY

[PART II—Sfcc, J(i)l

establishment or fixed base. In such a case the provisions of Article 7 or Article 14,

as the case may be, shall apply.

Royalties or fees for technical services shall be deemed to arise in a

Contracting State when the payer is that State itself or a resident of that State.

Where, however, the person paying the royalties or foes for technical services,

whether he is a resident of a Contracting State ornot, has in a Contracting State a

permanent establishment or a fixed base in connection with which the liability to pay

the royalties or fees for icchnical services was incuired, and such royalties or fees

for technical services are borne by such permanent establishment or fixed base, then

such royalties or fees for technical services shall be deemed to arise in the State in

which the permanent establishment or fixed base is situated.

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 or fees for technical services, 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 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 13

CAPITAL GAINS

Gains derived by a resident of a Contracting State from the alienation of

immovable property referred to in Article 6 and situated in the other Contracting

State may also be taxed in that other State.

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 with the whole enterprise) or

of such fixed base, may be taxed in that other State.

Gains derived by a resident of Contracting State from the alienation of

aircraft operated in international traffic or movable property pertaining to the

operation of such aircraft, shall be taxable only in the Contracting State in which the

enterprise is a resident.

Gains from the aliens lion of shares of the capital stock of a company the

property of which consists diiectly or indirectly principally of immovable property

situated in a Contracting State may be taxed in that State.

Gains from the alienation of shares other than those mentioned in paragraph

4 of a company which is a resident of a Contracting State may be taxed in that State.

Gains from the alienation of any property other than that referred to in

paragraphs 1,2,3,4, and 5 shall be taxable only in the Contracting State of which the

alienator is a resident.

Article 14

INDEPENDENT PERSONAL SERVICES

Income derived by a resident of a Contracting State in respect of

professional services or other activities of an independent character shall be taxable

only in that State 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 State is for a period or periods aggregating 183

days or more in any 12-month period commencing or ending in the fiscal year

concerned; 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,

The term "professional services" includes especially, independent scientific,

literary, artistic, educational or teaching activities as well as the independent

activities of physicians, lawyers, engineers, architects, dentists and accountants.

Article 15

DEPENDENT PERSONAL SERVICES

Subject to the provisions of Articles 16, 18 and 19, salaries, wages and other

similar remuneration derived by an individual who is 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 deriveo therefrom may be taxed in that other

Stat-

THE GAZETTE OF INDIA EXTRAORDINARY

[PART II—She t(i)J

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 lecipient is piesent in the other Stale for a peiiod or periods not

exceeding in the aggregate 183 days in any 12-month period commencing or ending

in the fiscal year concerned; and

(b) the remuneration is paid by, or on behalf of, an employer who is not a

resident of the other State, and

base which the employer has in the other State.

Notwithstanding the preceding provisions of this Article, remuneration

derived in respect of an employment exercised aboaid an airciaft operated in

international traffic by an enterprise which is a resident of a Contracting State may

be taxed in that State

Article 16

DIRECTORS' FEES

Directors' fees and other similar payments derived by a resident of a

Contracting State in his capacity as a member of the board of directors of a

company which is a resident of the other Contracting State may be taxed in that

other State.

Article 17

ARTISTES AND SPORTSPERSONS

Notwithstanding the provisions of Articles 14 and 15, the 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 a sportsperson, from his personal

activities as such exercised in the other Contt acting State, may be taxed in that other

State

Where income in respect of personal activities exercised by an entertainer or

a sportsperson in his capacity as such accrues not to the entertainer or sportsperson

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 spoitspcrson are exercised.

The provisions of paragraphs 1 and 2, shall not apply to income from

activities performed in a Contracting State by entertainers or sportspersons if the

visit to that State is substantially supported by public funds of one or both of the

Contracting States or the activity is exercised within the framework of cultural or

sports co-operation agreement between the Contracting States. In such a case, the

income is taxable only in the Contracting State of which the entertainer or

sportsperson is a resident.

Article 18

PENSIONS AND OTHER PAYMENTS

Subject to the provisions of paragraph 2 of Article 19, pensions and other

similar remuneration and annuities paid to a resident of a Contracting State shall be

taxable only in that State.

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 19

GOVERNMENT SERVICE

l.(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 other 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.

THE GAZETTE OF INDIA : EXTRAORDINARY

[PART II—SEC. 3(i)1

2.(a) Any pension paid by, or out of flinds 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 State.

The provisions of Articles 15, 16 and 18 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 20

STUDENTS

A student or business apprentice who is or was a resident of a Contracting

State immediately before visiting the other Contracting State and who is present in

that other Contracting State solely for the purpose of his education o training shall

be exempt from tax in that other State on :

(a) payments made to him by persons residing outside that other State for

the purposes of his maintenance, education or training; and

(b) remuneration from employment in that other State for an amount not

exceeding the amount which is exempt from tax under the laws of that other

Contracting State for any fiscal year, as the case may be, provided that such

employment is directly related to his studies or is undertaken for the purpose of his

maintenance.

The benefit of this Article shall extend only for such period of time as may be

reasonably or customarily required to complete the education or training

undertaken, but in no event shall any individual have the benefits of this Article for

more than five consecutive years from the date of his first arrival in that other

Contracting State.

Article 21

PROFESSORS, TEACHERS AND RESEARCH SCHOLARS

A professor or teacher who is or was a resident of a Contracting State

immediately before visiting the other Contracting State for the purpose of teaching

or engaging in research, or both, at a university, college, school or other approved

institution in that other Contracting State shall be exempt from tax in that other

State on any remuneration for such teaching or research for a period not exceeding

two years from the date of his arrival in that other State.

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.

For the purposes of this Article and Article 20, an individual shall be

deemed to be a resident of a Contracting State if he is resident in that State in the

fiscal year in which he visits the other Contracting State or in the immediately

preceding fiscal year.

For the purposes of paragraph 1:

the teaching or research assignment should be approved by the

Governments of the Contracting States,

"approved institution" means an institution which has been approved

in this regard by the Government of the concerned State.

Article 22

OTHER INCOME

Items of income of a resident of a Contracting State, wherever arising, not

dealt with in the foregoing Articles of this Agreement shall be taxable only in that

State.

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 reffpient 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.

Notwithstanding the provisions of paragraph 1, if a resident of a Contracting

State derives income from sources within the other Contracting State in the form of

lotteries, crossword puzzles, races including horse races, card games and other

games or any sort of gambling or betting of any form or nature whatsoever, such

income may be taxed in the other Contracting State.

381 GI/2001—7

~ - — - . ^ r

—

THE GAZFTE OF INDIA hXTRAORDINARY

[PART II—SE< HQ|

Article 23

METHOD FOR ELIMINATION OF DOUBLE TAXATION

Where a resident of a Contracting State derives income which, in

accordance with the provisions of this Agreement, may be taxed in the other

Contracting State, the first-mentioned State shall allow as a deduction from the lax

on the income of that resident, an amount equal to the income tax paid in that other

State Such deduction shall not, however, exceed that part of the income tax as

computed before the deduction is given, whu h is attributable to the income which

may be taxed in that other State

In the case of India, the tax payable in the Contracting Stale mentioned in

paragraph 1 of this Article shall be deemed to include the tax which would have

been payable but for the tax incentives granted under the laws of the Contracting

Slate and which are designed to promote economic development

Where in accordance with any provision of the Agreement income derived

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 icniaining income of such

resident, take into account the e .empted income.

Article 24

NON-DISCRIMINATION

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 c f that other State in the same circumstances in particular with respect to

residence, are or may be subjected This provision shall, notwithstanding the

provisions of Article 1, also apply to persons who are not residents of one or both

the Contracting States.

The taxation on a permanent establishment which an enterprise of a

Contracting State has in the other Contracting Stale shall not be less favourably

levied in that other State than the taxation levied on enterprises of that other State

carrying on the same activities. This provision shall not be construed as preventing a

Contracting State from charging the profits of a permanent establishment which a

company of the other Contracting State has in the first-mentioned State at a rate of

tax which is higher than that imposed on the profits of a similar company of the first-

mentioned Contracting State, nor as being in conflict with the provisions of

paragraph 3 of Article 7 of this Agreement. This provision shall not be construed as

obliging a Contracting State to grant to residents of the othet Contracting State any

personal allowances, reliefs and reductions for taxation purpose^ on account of civil

status or family responsibilities which it grants to its own residents,

Enterprises of a Contracting State, the capital of which is wholly or partly

owned or controlled, directly or indirectly, by one or more residents of the other

Contracting State, shall not be subjected in the first-mentioned State to any taxation

or any requirement connected therewith which is other or more burdensome than the

taxation and connected requirements to which other similar enterprises of the first-

mentioned State are or may be subjected

Except where the provisions of paiagraph 1 of Article 9, paragraph 7 of

Article 11, or paragraph 6 of Article 12 apply, interest, royalties and other

disbursements paid by an enterprise of a Contracting State to a resident of the other

Contracting State shall, for the purpose of determining the taxable profits of such

enterprise, be deductible under the same conditions as if they had been paid to a

resident of the first-mentioned State.

Article 25

MUTUAL AGREEMENT PROCEDURE

Where a person considers that the actions of one or both of the Contracting

States result or will result for him in taxation not in accordance with the provisions

of this Agreement, he may, irrespective of the remedies provided by the domestic

law of those States, present his case to the competent authority of the Contracting

State of which he is a resident or, if he comes under paragraph 1 of Article 24, to

that of the Contracting State of which he is a national. The case must be presented

within three years from the first notification of the action resulting in taxation not in

accordance with the provisions of the Agreement.

The competent authority shall endeavour, if the objection appears to it to be

justified and if it is not itself able to arrive at a satisfactory solution, to resolve the

case by mutual agreement with the competent authority of the other Contracting

State, with a view to the avoidance of taxation which is not in accordance with this

Agreement. Any agreement reached shall be implemented notwithstanding any time

limits in the domestic law of the Contracting State

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. They shall also consult each other

for the elimination of double taxation in cases not provided for in the Agreement.

THE GAZETTE OF INDIA EXTRAORDINARY

[PART II—SEC 3(I)1

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 | 'urpose of reaching an agreement in the sense of the

preceding paragraphs.

Article 26

EXCHANGE OF INFORMATION

The competent authorities of the Contracting States shall exchange such

information (including certified copies of documents) as is necessary for carrying out

the provisions of this Agreement or of the domestic laws of the Contracting State

concerning taxes covered by the Agreement, in so far as the taxation thereunder is

not contrary to the Agreement. The exchange of information is not restricted by

Article 1. Any information received by the competent authority of a Contracting

State 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 courts and administrative bodies) involved in the assessment or collection

of, the enforcement or prosecution in respect of, or the determination of appeals in

relation to, the taxes to which the Agreement applies and shall be used only for such

purposes. They may disclose the information in public court proceedings or in

judicial decisions.

In no case shall the provisions of paragraph 1 be construed so as to impose

on the competent authority of 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 (including certified copies of documents) which is

not obtainable under the laws or in the normal course of the administration of that or

of the other Contracting State;

industrial, commercial or professional secret or trade process, or information, the

disclosure of which would be contrary to public policy.

Article 27

COLLECTION ASSISTANCE

The Contracting States undertake to lend assistance to each other in the

collection of taxes to which this Agreement relates together with interest, costs, and

civil penalties relating to such taxes, referred to in this article as a "revenue claim".

Request for assistance by the competent authority of a Contracting State in

the collection of a revenue claim shall include a certification by such authority that,

under the laws of that State, the revenue claim has been finally determined. For the

purposes of this article,, a revenue claim is finally determined when a Contracting

State has the right under its internal law to collect the revenue claim and the

taxpayer has no further rights to restrain collection.

Amounts collected by the competent authority of a Contracting State

pursuant to this article shall be forwarded to the competent authority of the other

Contracting State. However, the first-mentioned Contracting State shall be entitled

to reimbursement of costs, if any, incurred in the course of rendering such assistance

to the extent mutually agreed between the competent authorities of the two States.

Nothing in this article shall be construed as imposing on either Contracting

State the obligation to carry out administrative measures of a different nature from

those used in the collection of its own taxes or those which would be contrary to its

public policy.

Article 28

DIPLOMATIC AND CONSULAR OFFICIALS

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 29

ENTRY INTO FORCE

The Contracting States shall notify each other in writing through diplomatic

channels, the completion of the procedure required by the respective laws for the

entry into force of this Agreement. It shall enter into force thirty days after the date

of receipt of the latter of the notifications.

•

[

—

(

)

The provisions of this Agreement shall have effect :--

(a) in India, in respect of income arising in any fiscal year beginning on

or after the first day of April next following the calendar year in which

the Agreement enters into force; and

(b) in Kyrgyzstan;

(i) in respect of taxes withheld at source, in relation to taxable amount

paid on or after the first day January following the calendar year in which

the Agreement enters into force;

(ii) in respect of other Kyrgyz taxes' in relation to profits and income

arising in the calendar year following the calendar year in which the

Agreement enters into force and in subsequent calendar years.

Article 30

TERMINATION

This Agreement shall remai-n in force until terminated by one of the

Contracting States. Either Contracting State may terminate the Agreement, through

diplomatic channels, by giving written notice of termination at least six months

before the end of any calendar year after the expiration of five years from the date of

entry into force of the Agreement In such event, the Agreement shall cease to have

effect:

(a) in India, in respect of income arising in any previous year on or after the

first day of April next following the calendar year in which the notice of termination

is given; and

(b) in Kyrgyzstan ;

i) in respect of taxes withheld at source, in relation to taxable amount paid

on or after the first day January following the calendar year in which the

notice of termination is given;

ii) in respect of other Kyrgyz iaxes in relation to profits and income arising

in the calendar year following the calendar year in which the notice of

termination is given and in subsequent calendar years.

IN WITNESS WHEREOP, the undersigned, being duly authorized thereto,

have signed this Agi cement,

Done in duplicate nt Mew Delhi, this thiilccnth day of April, 1999,

Hindi, Kyigyz, Russian and English languages, all four texts being equally authentic.

In case of divergence between 'he texts, the English text shall prevail.

Sd/-

For the Government of

F°^r the Government of

the Republic of India

the Kyrgyz Republic

UASWANT SINGH)

(OMURAUEV ESENGUL KASYMOVICH)

PROTOCOL

At the signing of the Agreement between the Government o( the Republic

or India and ihe Government of the Kyrgyz Republic fbi the avoidance of double

taxation and ihe prevention of fiscal evasion with respect to taxes on income and on

capital, the undeisigned have ngrecd that the following shall form an integral part of

the Agreement.

With reference to Article 6 it is understood that income from immovable

piopcily mny be inxccl in both the Contrncling States

With reference to Atticle II paragtaph 3

(i) it is understood that

Government in the case of India shall include a political subdivision.

With icleicncc to Atticle II paragtaph 6 and Ailiclc 12 paragraph 5 it is

understood that in the case oflndii interest, royalties m Tees for technical services

shall be deemed to aiisc in a Conlincling State if the pnycr is a political subdivision

of that State

IN WITNESS WHEREOF, the undersigned, being duly authorized thereto,

have signed this Piolocol.

Done in duplicate at

New Delhi, this thirteenth day of April, 1999, in

Hindi, Kyigyz, Russian and English langungcs, all four texts being equally authentic.

In case or divergence between the texts, the English text shall prcvVll

Sd/-

Sd7-

For the Government of

the Republic of India

the Kyrgyz Republic

(JASWANT SINGH)

(OMURAUEV ESENGUL KASYMOVICH)

Printed by the Manager, Govt of India Press, Ring Road, Mayapun, New Delhi-110064

and Published by the Controller of Publications, Delhi-110034.