notification no. 24/2023 f. no.500/62/2017 ft tr v pt iii / so 2059 e

MINISTRY OF FINANCE (Department of Revenue) NOTIFICATION (Income-Tax) New Delhi, the 3rd May, 2023 S.O. 2059(E).—Whereas, an Agreement and Protocol between the Government of the Republic of India and the Government of the Republic of Chile for the elimination of double taxation and the prevention of fiscal evasion and avoidance with respect to taxes on income, was signed at Chile on the 9th day of March, 2020, as set out in the Annexure to this notification (hereinafter referred to as the Agreement and Protocol); And whereas, the said Agreement and Protocol entered into force on the 19th day of October, 2022, being the date of the later of the notifications of the completion of the procedures required by the respective laws of the Contracting States for entry into force of the said Agreement and Protocol, in accordance with paragraph 1 of Article 30 of the said Agreement; [भाग II—खण् ड 3(ii)] भारत का राजपत्र : ऄसाधारण 23 And whereas, sub-paragraph (a) of paragraph 2 of Article 30 of the said Agreement provides that the provisions of the 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 date on which the 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 and Protocol, as annexed hereto, shall be given effect to in the Union of India. ANNEXURE AGREEMENT BETWEEN THE REPUBLIC OF INDIA AND THE REPUBLIC OF CHILE FOR THE ELIMINATION OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION AND AVOIDANCE WITH RESPECT TO TAXES ON INCOME The Government of the Republic of India and the Government of the Republic of Chile, Desiring to further develop their economic relationship and to enhance their cooperation in tax matters, Intending to conclude an Agreement for the elimination of double taxation with respect to taxes on income without creating opportunities for non-taxation or reduced taxation through tax evasion or avoidance (including through treaty-shopping arrangements aimed at obtaining reliefs provided in this Agreement for the indirect benefit of residents of third States), Have agreed as follows: Article 1 PERSONS COVERED 1. This Agreement shall apply to persons who are residents of one or both of the Contracting States. 2. For the purposes of this Agreement, income derived by or through an entity or arrangement that is established in either Contracting State and that is treated as wholly or partly fiscally transparent under the tax law of either Contracting State shall be considered to be income of a resident of a Contracting State, but only to the extent that the income is treated, for the purposes of taxation by that Contracting State, as the income of a resident of that Contracting State. 3. This Agreement shall not affect the taxation, by a Contracting State, of its residents, except with respect to the benefits granted under paragraph 2 of Article 9 and Articles 19, 20, 22, 23, 24 and 27. 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, taxes on the total amount of wages or salaries paid by enterprises, as well as on capital appreciation. 3. 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 Chile, the taxes imposed under the Income Tax Act, ―Ley sobre Impuesto a la Renta‖ (hereinafter referred to as ―Chilean tax‖); 5. The Agreement shall apply also 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. 24 THE GAZETTE OF INDIA : EXTRAORDINARY [PART II—SEC. 3(ii)] 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; (b) the term ―Chile‖ means the Republic of Chile and includes any area outside the territorial sea designated under the laws of the Republic of Chile and in accordance with international law as an area within which the Republic of Chile may exercise sovereign rights with regard to the seabed and subsoil and their natural resources; (c) the terms a ―Contracting State‖ and ―the other Contracting State‖ mean India or Chile, as the context requires; (d) the term "person" includes an individual, a company and any other body of persons; (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 except when the ship or aircraft is operated solely between places in a Contracting State and the enterprise that operates the ship or aircraft is not an enterprise of that State; (i) the term "competent authority" means: (i) in India, the Finance Minister, Government of India, or his authorized representative; and (ii) in Chile, the Minister of Finance, the Commissioner of the Revenue Service or their authorised representative; (j) 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 Contracting State; (k) the term ―tax‖ means Indian or Chilean tax, as the context requires. (l) the term ―fiscal year‖ means: (i) in the case of India: the financial year beginning on the 1 day of April; (ii) in the case of Chile: as defined in domestic law. 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. 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 or capital situated therein. 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: [भाग II—खण् ड 3(ii)] भारत का राजपत्र : ऄसाधारण 25 (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 States, 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 he is a national of both States or of neither of them, the competent authorities of the Contracting States shall 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 of which it is a national. If the person is a national of both Contracting States or of neither of them the Contracting States shall by mutual agreement procedure endeavour to settle the question. In the absence of a mutual agreement by the competent authorities of the Contracting States, the person shall not be entitled to any relief or exemption from tax provided by the 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: