22
THE GAZETTE OF INDIA : EXTRAORDINARY
[PART II—SEC. 3(ii)]
MINISTRY OF FINANCE
(Department of Revenue)
NOTIFICATION
New Delhi, the 16th March, 2016
(INCOME-TAX)
S.O. 1144(E).—Whereas, an Agreement between the Government of the Republic of India and the Government
of the Republic of Indonesia for the avoidance of double taxation and prevention of fiscal evasion with respect to taxes
on income was signed at New Delhi on the 27th day of July, 2012 (hereinafter referred to as the said Agreement);
And whereas, the said Agreement entered into force on the 5th day of February, 2016, being the date of the later
of the notifications of the completion of the procedures required by the respective laws for entry into force of the said
Agreement, in accordance with paragraph 2 of Article 30 of the said Agreement;
And whereas, sub-paragraph (a) of paragraph 3 of Article 30 of the said Agreement provides that 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
first day of April next following the calendar year in which the said Agreement enters into force;
Now, therefore, in exercise of the powers conferred by sub-section (1) of section 90 of the Income-tax Act, 1961
(43 of 1961), the Central Government hereby notifies that all the provisions of said Agreement, as annexed hereto, shall
be given effect to in the Union of India.
[Notification No. 17/2016 F.No.503/4/2005-FTD-II]
RAJAT BANSAL, Jt. Secy.
AGREEMENT
BETWEEN
THE GOVERNMENT OF THE REPUBLIC OF INDIA
AND
THE GOVERNMENT OF THE REPUBLIC OF INDONESIA
FOR THE AVOIDANCE OF DOUBLE TAXATION
AND THE PREVENTION OF FISCAL EVASION
WITH RESPECT TO TAXES ON INCOME
The Government of the Republic of India and the Government of the Republic of Indonesia, desiring to conclude an
Agreement for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and
with a view to promoting economic cooperation between the two countries, have agreed as follows:
CHAPTER I
SCOPE OF THE AGREEMENT
Article 1
PERSONS COVERED
This Agreement shall apply to persons who are residents of one or both of the Contracting States.
Article 2
TAXES COVERED
1. This Agreement shall apply to taxes on income imposed on behalf of a Contracting State or of its political
subdivisions or local authorities, irrespective of the manner in which they are levied.
2. 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.
3. The existing taxes to which the Agreement shall apply are in particular:
(a) in the case of the Republic of India:
the income tax, including any surcharge thereon;
(hereinafter referred to as "Indian tax");
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23
(b) in the case of the Republic of Indonesia:
the income tax;
(hereinafter referred to as "Indonesian tax").
4. The Agreement shall also apply to any identical or substantially similar taxes that are imposed after the date of
signature of the Agreement in addition to, or in place of, the existing taxes. The competent authorities of the
Contracting States shall notify each other of any significant changes that have been made in their respective taxation
laws.
CHAPTER II
DEFINITIONS
Article 3
GENERAL DEFINITIONS
1. For the purposes of this Agreement, unless the context otherwise requires:
(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 United Nations Convention on the Law of the Sea
1982;
(b) the term "Republic of Indonesia" means the territory of the Republic of Indonesia as defined in its laws, and
parts of the continental shelf, exclusive economic zone and adjacent seas over which the Republic of Indonesia
has sovereignty, sovereign rights or jurisdiction in accordance with the United Nations Convention on the Law
of the Sea 1982;
(c) the terms "a Contracting State" and "the other Contracting State" mean the Republic of India or the Republic of
Indonesia as the context requires;
(d) 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;
(e) the term "company" means any body corporate or any entity that is treated as a body corporate for tax purposes;
(f) the term “enterprise” applies to the carrying on of any business;
(g) the terms "enterprise of a Contracting State" and "enterprise of the other Contracting State" mean respectively
an enterprise carried on by a resident of a Contracting State and an enterprise carried on by a resident of the
other Contracting State;
(h) the term "international traffic" means any transport by a ship or aircraft operated by an enterprise of a
Contracting State, except when the ship or aircraft is operated solely between places in the other Contracting
State;
(i) the term "national" means:
(1) any individual possessing the nationality of a Contracting State; and
(2) any legal person, partnership or association deriving its status as such from the laws in force in a
Contracting State;
(j) the term "competent authority" means:
(1) in the case of the Republic of India, the Finance Minister or his authorised representative;
(2) in the case of the Republic of Indonesia, the Minister of Finance or his authorised representative;
(k) the term “tax” means Indian or Indonesian tax, as the context requires, but shall not include any amount which is
payable in respect of any default or omission in relation to the taxes to which this Agreement applies or which
represents a penalty or fine imposed relating to those taxes;
2. As regards the application of the Agreement at any time by a Contracting State, any term not defined therein shall,
unless the context otherwise requires, have the meaning that it has at that time under the law of that State for the
purposes of the taxes to which the Agreement applies, any meaning under the applicable tax laws of that State
prevailing over a meaning given to the term under other laws of that State.
24
THE GAZETTE OF INDIA : EXTRAORDINARY
[PART II—SEC. 3(ii)]
Article 4
RESIDENT
1. For the purposes of this Agreement, the term "resident of a Contracting State" means any person who, under the laws
of that State, is liable to tax therein by reason of his domicile, residence, place of management, place of
incorporation, or any other criterion of a similar nature, and also includes that State and any political subdivision 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.
2. Where by reason of the provisions of paragraph 1 an individual is a resident of both Contracting States, then his
status shall be determined as follows:
(a) he shall be deemed to be a resident only of the State in which he has a permanent home available to him; if he
has a permanent home available to him in both Sates, he shall be deemed to be a resident only of the State
with which his personal and economic relations are closer (centre of vital interests);
(b) if the State in which he has his centre of vital interests cannot be determined, or if he has not a permanent
home available to him in either State, he shall be deemed to be a resident only of the State in which he has an
habitual abode;
(c) if he has an habitual abode in both States or in neither of them, he shall be deemed to be a resident only of the
State of which he is a national;
(d) if his residential status cannot be determined by reason of subparagraphs (a) to (c) in that sequence, the
competent authorities of the Contracting States shall endeavour to settle the question by mutual agreement.
3. Where by reason of the provisions of paragraph 1 a person other than an individual is a resident of both Contracting
States, then it shall be deemed to be a resident only 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 endeavour to settle the question by mutual agreement.
Article 5
PERMANENT ESTABLISHMENT
1. For the purposes of this Agreement, the term "permanent establishment" means a fixed place of business through
which the business of an enterprise is wholly or partly carried on.
2. The term "permanent establishment" includes especially:
(a) a place of management;
(b) a branch;
(c) an office;
(d) a factory;
(e) a workshop;
(f) a warehouse in relation to a person providing storage facilities for others;
(g) premises as sales outlet;
(h) farm or other place where agricultural, forestry, plantation or related activities are carried on; and
(i) a mine, an oil or gas well, a quarry or any other place of extraction of natural resources.
3. The term "permanent establishment" also encompasses:
(a) a building site or a construction or assembly or installation project or supervisory activities in connection
therewith, but only if such site, project or activities last for a period of more than 183 days;
(b) a drilling rig or working ship used for exploration or exploitation of natural resources, but only if so used for a
period more than 183 days;
(c) the furnishing of services, including consultancy services, by an enterprise through employees or other
personnel engaged by the enterprise for such purpose, but only if activities of that nature continue (for the same
or a connected project) within a Contracting State for a period or periods aggregating more than 91 days within
any twelve month period.
4. Notwithstanding the preceding provisions of this Article, the term "permanent establishment" shall be deemed not to
include:
