Notification No. 54E-

A tax treaty given effect under section 24A of the Income-tax Act, 1961

What this is

Notification No. 54E- was published on 19 January 2001. Its subject is A tax treaty given effect under section 24A of the Income-tax Act, 1961.

This one is about a tax treaty. India’s treaties enter Indian law by notification under section 90; where the instrument below is that notification, its date decides from when the treaty may be applied, and where it is a circular, it is the Board telling its officers how it reads the treaty — which is not the same thing.

What it does

In exercise of the powers under section 90 of the Income-tax Act, 1961, the Central Government directs that modifications shall be made in the Agreement between India and the Kingdom of Belgium for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income, which came into force on 1 October 1997 and was notified by G.S.R. 632(E) dated 31 October 1997. With effect from 1 April 1998 in India and 1 January 1998 in Belgium, paragraph (2) of Article 12 on royalties and fees for technical services is substituted so that such royalties and fees may also be taxed in the Contracting State in which they arise and according to the laws of that State, but where the beneficial owner is a resident of the other Contracting State the tax so charged shall not exceed 10 per cent of the gross amount. With effect from the same dates, sub-paragraph (a) of paragraph 3 of Article 12 is substituted to define "royalties" as payments of any kind received as 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, plan, secret formula or process, or for information concerning industrial, commercial or scientific experience.

Why it was issued

Paragraph 1 of the Protocol dated 26 April 1993 to the Agreement provides that if, after 1 January 1990, India limits its taxation on royalties or fees for technical services under a Convention or Agreement with a third State that is a member of the Organisation for Economic Co-operation and Development to a lower rate or a more restricted scope, the same rate or scope shall apply under the India-Belgium Agreement from the later of the two effective dates; in the Convention between India and Sweden, effective 1 April 1998 in India and 1 January 1998 in Sweden, India so limited taxation at source on royalties and fees for technical services.

Who it reaches

Belgian residents receiving royalties or fees for technical services from India
Indian residents receiving such payments from Belgium
Indian payers withholding tax on royalties and fees for technical services remitted to Belgium
assessing officers applying Article 12 of the India-Belgium Agreement

The provisions it speaks to

Left, the provision of the Income-tax Act, 1961 as the instrument itself names it. Right, the section of the Income-tax Act, 2025 that the department’s own concordance maps it to — which is where the same ground is now covered.

Under the 1961 Act	Now
s.24A	no counterpart recorded
s.44A	s.50
s.90	s.159

The instrument, as the Board published it

The words below are the department’s own, reproduced from its published text. Where the department’s copy carried a publisher’s notes after the instrument, those are not reproduced.

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, plan, secret formula or process, or for information concerning industrial, commercial or scientific experience.".

[Notification No. 20/F. No. 505/2/89-FTD]

From when

1 April 1998 in India and 1 January 1998 in Belgium, retrospectively.

What to watch

The modifications take effect from 1 April 1998 in India and 1 January 1998 in Belgium, and so operate for years already past when notified on 19 January 2001.
The source State rate is capped at 10 per cent of the gross amount, and only where the recipient is the beneficial owner and a resident of the other State.
The definition of royalties is narrowed to the categories listed in the substituted sub-paragraph (a) of paragraph 3.
The modification is made under the most favoured nation clause in paragraph 1 of the Protocol of 26 April 1993, triggered by the India-Sweden Convention.

Where you meet it

In withholding on royalties and fees for technical services paid to Belgium and in a certificate under section 195 or a refund claim for such payments.

On the same provision

Other instruments in this library that name the same provision of the 1961 Act. They are not necessarily still operative, and a later one may have replaced an earlier one without saying so.

Notification No. 368 — A tax treaty given effect under section 24A of the Income-tax Act, 1961 15 December 2006
Notification No. 650(E) — A tax treaty given effect under section 24A of the Income-tax Act, 1961 10 July 2000
Notification No. G.S.R. 38(E) — 38 e convention between the government of the republic of INDIA and the government of the kingdom of sweden for the avoi 27 March 1989
Notification No. 78 — Section 90 of the Income-tax Act, 1961 - Double taxation agreement - Agreement for Avoidance of Double Taxation and Prev 12 October 2009
Notification No. 5 — Section 90 of the Income-tax Act, 1961 - Double taxation agreement - Agreement for Avoidance of Double Taxation and Prev 7 January 2009
Notification No. 4 — Section 90 of the Income-tax Act, 1961 - Double taxation agreement - Agreement for Avoidance of Double Taxation and Prev 7 January 2009

← Notification No. 21- · Notification No. 20- →

What a notification is. A notification is made under a power the Act itself gives, and within that power it is law — unlike a circular, which only binds the department. Its reach is the reach of the enabling provision and no wider, and the date it carries decides from when it works.

Source: the Income Tax Department’s own published text — its page for this instrument.