Ministry of Finance
Notification No. 33/2024 [F.No. 503/2/1986-FTD-I] / SO 1484(E) was published on 19 March 2024. Its subject is Ministry of Finance.
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.
Acting under section 90 of the Income-tax Act, 1961, the Central Government modifies the India-Spain Convention for the avoidance of double taxation, as notified by G.S.R. 356(E) dated 21 April 1995. In Article 13, relating to royalties and fees for technical services, paragraph 2 is substituted so that where such income arises in a Contracting State and the recipient is the beneficial owner, the tax charged in the State of source shall not exceed ten per cent of the gross amount of the royalties or fees for technical services. The modification is given effect through the most-favoured-nation clause in paragraph 7 of the Protocol dated 8 February 1993 to that Convention.
Paragraph 7 of the Protocol to the India-Spain Convention provides that where India limits its source taxation on royalties or fees for technical services to a lower rate under a convention with a third State that is an OECD member entering into force after 1 January 1990, that lower rate applies under the Spain Convention too, and the India-Germany Convention, in force from 26 October 1996, did so limit the rate.
| Under the 1961 Act | Now |
|---|---|
| s.90 | s.159 |
MINISTRY OF FINANCE
(Department of Revenue)
NOTIFICATION
New Delhi, the 19th March, 2024.
(Income- Tax)
S.O. 1484(E).—Whereas, the Convention between the Government of the Republic of India and the Kingdom of Spain for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and on capital came into force on the 12th January, 1995, 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 Convention;And whereas, the Central Government in exercise of the powers conferred by section 90 of the Income-tax Act, 1961 (43 of 1961), had directed that all the provisions of the said Convention annexed to the notification of the Government of India in the Ministry of Finance (Department of Revenue) number G.S.R. 356 (E), dated the 21st April, 1995, shall be given effect to in the Union of India;
And whereas, paragraph 7 of the Protocol dated the 8th February,1993, to the aforesaid Convention provides that if under any Convention or Agreement between India and a third State which is a Member of the Organisation for Economic Cooperation and Development, which enters into force after the 1st January, 1990, India limits its taxation at source on royalties or fees for technical services to a rate lower than the rate provided for in this Convention on the said items of income, the same rate as provided for in that Convention or Agreement on the said items of income shall also apply under this Convention;
And whereas, in the Convention between India and Germany, which entered into force on the 26th October, 1996, and Germany was a member of the Organisation for Economic Co-operation and Development at the time of entering into the Convention with India, the Government of India has limited the taxation at source on royalties and fees for technical services to a rate lower than that provided in the Convention between India and Spain 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 modification shall be made in the Convention notified vide said notification number G.S.R. 356 (E), dated the 21st April, 1995, which are necessary for implementing the said Convention between India and Spain, namely:---
[भाग II—खण् ड 3(ii)] भारत का रािपत्र : असाधारण 3
In the said notification, in the Convention annexed therewith between the Republic of India and Kingdom of Spain, in Article 13 relating to Royalties and Fees for Technical Services, for paragraph 2, 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 law 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 ten per cent of the gross amount of royalties or fees for technical services.".
2. The paragraph 2 of Article 13 of the said Convention, as amended by this notification, shall be applicable with effect from the assessment year 2024-25.
[Notification No. 33/2024 F.No. 503/2/1986-FTD-I]
SUKHAD CHATURVEDI, Under Secy.
Uploaded by Dte. of Printing at Government of India Press, Ring Road, Mayapuri, New Delhi-110064
and Published by the Controller of Publications, Delhi-110054.
assessment year 2024-25.
In withholding on royalty and technical service fee payments to Spain, and in the treaty relief claimed in the return of income and tested in assessment.
An Indian company pays a fee for technical services to a Spanish beneficial owner in the previous year relevant to assessment year 2024-25. Source taxation in India on the gross fee is capped at ten per cent under the substituted paragraph 2 of Article 13.
← Notification No. 35/2024 [F. No. 225/196/2023/ITA-II] / SO 1538(E) · Notification No. 34/2024 [F. No. 370142/3/2024-TPL]/ GSR 223(E) →
Source: the Income Tax Department’s own published text — its page for this instrument.