India–Georgia tax treaty — rates, PE and MLI

Income	Rate	The condition attached to it	Article
Dividends	10 per cent of the gross amount of the dividends — Art. 10(2). A single flat ceiling.	There is none: no qualifying-holding tier, no minimum percentage of capital, no holding period and no second residual rate, so a controlling parent and a portfolio investor are capped identically. Art. 10(2)…	Article 10, paragraph 2
Interest	10 per cent of the gross amount of the interest — Art. 11(2), conditional on the beneficial owner being a resident of the other Contracting State. A single flat ceiling.	Art. 11(3) is drafted country by country rather than as a single list with lettered limbs, which is unusual and which means the two sides are not symmetrical. The chapeau imposes the double requirement —…	Article 11, paragraph 2 and 3
Royalties	10 per cent of the gross amount — Art. 12(2), the same ceiling as for fees for technical services, both conditional on the beneficial owner being a resident of the other Contracting State.	Royalties and fees for technical services share one article, one rate paragraph, one PE carve-out, one source rule and one excess-payment rule, so the characterisation contest between the two limbs does not…	Article 12, paragraph 2 and 3(a)
Fees for technical services	10 per cent of the gross amount — Art. 12(2), inside the combined Royalties and Fees for Technical Services article and at the same rate as royalties.	There is no make-available condition. Art. 12(3)(b): "The term 'fees for technical services' as used in this Article means payments of any kind, other than those mentioned in Articles 14 and 15 as…	Article 12, paragraph 2 and 3(b)

Status

In force	The Agreement was signed at New Delhi on 24 August 2011 ("Done at New Delhi on the 24th day of August 2011, in duplicate in the Hindi, Georgian and English Languages, all the texts being equally authentic. In case of divergence of interpretation, the English text shall prevail."). Entry into force is fixed by Article 31: each State notifies the other through diplomatic channels of completion of its domestic procedures, and "This Agreement shall enter into force on the date of the later notification indicating the completion of legal procedures necessary for the entry into force of this Agreement." The notification records that "the date of entry into force of the said Agreement is the 8th day of December, 2011, being the date of later of the notifications", in accordance with paragraph 2 of Article 31. Article 31(3)(a) gives effect in India in respect of taxes withheld at source to income paid or credited on or after 1 April of the calendar year next following the year of entry into force, and in respect of other taxes on income and taxes on capital to taxes chargeable for any fiscal year beginning on or after that same 1 April. The Central Government accordingly directed that the provisions "shall be given effect to in the Union of India with effect from 1st day of April, 2012" — so the fiscal year 2012-13 (assessment year 2013-14) is the first Indian year covered. In Georgia the corresponding date is 1 January 2012. The Agreement has since been modified by the Multilateral Instrument. India and Georgia both signed the MLI on 7 June 2017; India deposited its instrument of ratification on 25 June 2019 and Georgia on 29 March 2019; the MLI entered into force on 1 October 2019 for India and 1 July 2019 for Georgia. The MLI provisions have effect with respect to this Agreement, in India, for taxes withheld at source on amounts paid or credited to non-residents where the event giving rise to the tax occurs on or after 1 April 2020, and for all other Indian taxes for taxable periods beginning on or after 1 April 2020; in Georgia, for taxes withheld at source from 1 January 2020 and for all other Georgian taxes for taxable periods beginning on or after 1 January 2021. Note that the Indian and Georgian dates differ, and that the Georgian non-withholding date is a year later than the Georgian withholding date. So there are two periods to distinguish: Indian fiscal years 2012-13 to 2019-20, governed by the Agreement as notified, and Indian fiscal years from 2020-21, governed by the Agreement as modified by the MLI. See synthesised_text for what changed.
Given effect by	S.O. 34(E), Notification No. 04/2012, F. No. 503/05/2006-ftd.I, dated New Delhi, 6 January 2012, published in the Gazette of India Extraordinary, Part II, Section 3, Sub-section (ii), No. 31. Made by the Central Government in exercise of the powers conferred by section 90 of the Income-tax Act, 1961 (43 of 1961), directing that all the provisions of the Agreement as set out in the Annexure shall be given effect to in the Union of India with effect from 1 April 2012. Signed by Sanjay Kumar Mishra, Jt. Secy.
Modified by the MLI	Yes — a synthesised text exists. Prepared jointly by the competent authorities of India and Georgia and published by the Income Tax Department under the heading "Georgia : Synthesised Text", carrying the date of signature 2020. It is built on the MLI position of India submitted to the Depositary on ratification on 25 June 2019 and the MLI position of Georgia submitted on 29 March 2019, both States having signed the MLI on 7 June 2017. The MLI entered into force on 1 October 2019 for India and 1 July 2019 for Georgia.
Principal purpose test	Yes, and from Indian fiscal year 2020-21 it is the operative anti-abuse rule. The synthesised text records that "The following paragraph 1 of Article 7 of the MLI applies and supersedes the provisions of this Agreement to the extent of incompatibility", and then sets out the principal purposes test: "Notwithstanding any provisions of [the Agreement], a benefit under [the Agreement] shall not be granted in respect of an item of income or capital if it is reasonable to conclude, having regard to all relevant facts and circumstances, that obtaining that benefit was one of the principal purposes of any arrangement or transaction that resulted directly or indirectly in that benefit, unless it is established that granting that benefit in these circumstances would be in accordance with the object and purpose of the relevant provisions of [the Agreement]." It has effect in India for taxes withheld at source where the event giving rise to the tax occurs on or after 1 April 2020, and for all other Indian taxes for taxable periods beginning on or after 1 April 2020; in Georgia from 1 January 2020 for withholding and 1 January 2021 for other taxes. The comparison with the bilateral test in Art. 30(2) is where the practical difference lies, and it runs in both directions. Three respects in which the PPT is wider. (i) It is transaction- and income-focused: it denies a benefit "in respect of an item of income or capital" arising from "any arrangement or transaction that resulted directly or indirectly in that benefit". Art. 30(2) is directed at the creation or existence of the resident, or a transaction undertaken by him — so it reaches transactions but only those undertaken by the resident claiming the benefit, whereas the PPT reaches any arrangement anywhere in the chain that indirectly produced the benefit. (ii) The PPT's standard is whether "it is reasonable to conclude, having regard to all relevant facts and circumstances" that obtaining the benefit was one of the principal purposes — an objective reasonableness standard, easier for the revenue to satisfy than proof of actual purpose. (iii) The PPT operates "Notwithstanding any provisions" of the Agreement, so it overrides every distributive rule without exception. One respect in which the PPT is narrower, and it is a real protection: it carries an object-and-purpose escape — the benefit is still granted if "it is established that granting that benefit in these circumstances would be in accordance with the object and purpose of the relevant provisions". Art. 30(2) has no such proviso. And this is where the other MLI change earns its place: Article 6(1) of the MLI inserted into the preamble the recital about not 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 jurisdictions". That recital is the object and purpose against which the escape clause is measured, so the two MLI provisions work as a pair and neither should be read alone. For Indian fiscal years 2012-13 to 2019-20 the applicable test is Art. 30(2) alone, on its own narrower terms and against the original preamble.

Dividends

Rate	10 per cent of the gross amount of the dividends — Art. 10(2). A single flat ceiling.
The holding that unlocks it	There is none: no qualifying-holding tier, no minimum percentage of capital, no holding period and no second residual rate, so a controlling parent and a portfolio investor are capped identically. Art. 10(2): "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 beneficial owner of the dividends is a resident of the other Contracting State, the tax so charged shall not exceed 10 per cent of the gross amount of the dividends." Two conditions and no more: beneficial ownership, and residence of the beneficial owner in the other Contracting State — the modern formulation requiring both, unlike the older "if the recipient is the beneficial owner" used in the Uganda, Mongolia and Namibia treaties. Importantly, the MLI has not added a holding-period condition here. Article 8 of the MLI would have imposed a 365-day requirement on reduced dividend rates, and the synthesised text carries no Article 8 box against Article 10 — so no minimum holding period applies, and the 10 per cent is available on a dividend paid the day after the shares are acquired. That is worth confirming rather than assuming, because for many of India's MLI-covered treaties the position is the opposite.
Where this comes from	Article 10, paragraph 2

Art. 10(3) is the ordinary definition — income from shares, or other rights, not being debt-claims, participating in profits, and income from other corporate rights subjected to the same taxation treatment as income from shares by the laws of the distributing company's State. Art. 10(4) switches the cap off where the holding is effectively connected with a permanent establishment or a fixed base, referring the income to Art. 7 or Art. 14; Art. 14 in this Agreement is Independent Personal Services, because royalties and technical fees share Art. 12 and do not displace the numbering. Art. 10(5) is the full extra-territoriality bar: the other State may not tax dividends paid by the company except to its own residents or where the holding is effectively connected with a PE or fixed base there, nor tax the company's undistributed profits. The closing sentence of Art. 10(2) preserves taxation of the company on the profits out of which the dividends are paid. Note that the dividend cap, like every other benefit of the Agreement, is now subject to the MLI principal purposes test for Indian fiscal years from 2020-21 — the PPT operates "Notwithstanding any provisions of [the Agreement]" and denies a benefit "in respect of an item of income or capital", so it reaches a dividend as readily as a capital gain.

Interest

Rate	10 per cent of the gross amount of the interest — Art. 11(2), conditional on the beneficial owner being a resident of the other Contracting State. A single flat ceiling.
Exemptions	Art. 11(3) is drafted country by country rather than as a single list with lettered limbs, which is unusual and which means the two sides are not symmetrical. The chapeau imposes the double requirement — "interest arising in a Contracting State shall be exempt from tax in that State, provided that it is derived and beneficially owned" — and then splits. On the Indian side: "(i) the Government, a political sub-division or a local authority; or (ii) the Reserve Bank of India, the Export-Import Bank of India, the National Housing Bank; or (iii) any other institution as may be agreed upon from time to time between the Competent authorities of the Contracting States through exchange of letters". On the Georgian side: "(i) the Government, or a local authority; or (ii) the National Bank of Georgia; or (iii) any other governmental agencies, political-administrative sub-divisions, or institutions of Georgia as may be specified and agreed to in an exchange of letters between the Competent authorities of the Contracting States". Three asymmetries repay attention. First, the Indian government limb covers "the Government, a political sub-division or a local authority"; the Georgian limb covers "the Government, or a local authority" and omits political sub-divisions, which are instead picked up in the Georgian extension limb at (iii) — so a Georgian political-administrative sub-division is exempt only if specified in an exchange of letters, whereas an Indian political sub-division is exempt by force of the text. Second, the Indian institutional list is generous by the standards of this group: three institutions are named — the Reserve Bank of India, the Export-Import Bank of India and the National Housing Bank — where Syria names only the Reserve Bank, Colombia names the Reserve Bank and exim Bank, Mongolia names idbi, and Namibia and Uganda name none. Nabard, sidbi, ifci and idbi remain outside. Third, the extension limbs differ in width. The Indian limb reaches "any other institution" without restriction, so a private institution is capable of being added; the Georgian limb is confined to "governmental agencies, political-administrative sub-divisions, or institutions of Georgia". Both require an exchange of letters between the competent authorities and neither is self-executing; the notified text reproduces no such exchange, so as the record stands only the named bodies operate. Penalty charges for late payment are excluded from the definition of interest by the closing sentence of Art. 11(4).
Where this comes from	Article 11, paragraph 2 and 3

Art. 11(6) is the source rule in the narrow form: "Interest shall be deemed to arise in a Contracting State when the payer is a resident of that State" — the government-payer limb ("that State itself, a political sub-division, a local authority") that appears in the Uganda, Mongolia and Namibia source rules is absent, and there is no protocol repairing it, unlike the Kyrgyz Agreement where Protocol paragraph 3 adds Indian political sub-divisions. Note the asymmetry within this Agreement: the royalty and technical-fee source rule at Art. 12(5)(a) is drafted in the widest form of any in this group — "when the payer is that State itself, a political sub-division, a political-administrative sub-division, a local authority, or a resident of that State" — so interest and royalties do not arise on the same test, and interest paid by an Indian government body to a Georgian resident is arguably outside Art. 11(6) as drafted while a royalty paid by the same body is squarely within Art. 12(5)(a). The second sentence of Art. 11(6) is the usual PE/fixed-base override. Art. 11(4) defines interest as 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, expressly including government securities and bonds or debentures with their premiums and prizes; it does not sweep in amounts treated as interest under the source State's domestic law, unlike the Colombia equivalent. Art. 11(5) refers effectively-connected debt-claims to Art. 7 or Art. 14, and Art. 11(7) limits the article to the arm's-length amount.

Royalties

Rate	10 per cent of the gross amount — Art. 12(2), the same ceiling as for fees for technical services, both conditional on the beneficial owner being a resident of the other Contracting State.
Where this comes from	Article 12, paragraph 2 and 3(a)

Royalties and fees for technical services share one article, one rate paragraph, one PE carve-out, one source rule and one excess-payment rule, so the characterisation contest between the two limbs does not change the rate. Art. 12(3)(a) is the standard wide Indian royalty definition: "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 cinematography films, or films or tapes used for television or radio broadcasting, any patent, trade mark, design or model, plan, secret formula or process or for the use of, or the right to use, Industrial, commercial or scientific equipment or for information concerning industrial, commercial or scientific experience." Films are inside on the copyright limb. The equipment limb repeats "for the use of, or the right to use", so bare equipment rental is a royalty at 10 per cent gross, with no know-how condition of the Namibian kind. There is no express reference to software or computer programmes — contrast Kyrgyzstan, which names "software", and Namibia, which names "computer programme" — and no satellite, cable or optic-fibre transmission limb. Art. 12(5) is the source rule and it has two limbs, the second of which is easy to miss. Sub-paragraph (a) is the ordinary rule in the widest form found in this group, covering "that State itself, a political sub-division, a political-administrative sub-division, a local authority, or a resident of that State" — the reference to a "political-administrative sub-division" is specific to the Georgian administrative structure and appears also in Art. 2(1). Sub-paragraph (b) is a residual source rule: "Where under the sub-paragraph (a) royalties or fees for technical services do not arise in one of the Contracting States, and the royalties relate to the use of, or the right to use, the right or property, or the fees for technical services relate to services performed, in one of the Contracting States, the royalties or fees for technical services shall be deemed to arise in that Contracting State." So where the payer is resident in a third State and has no PE in either Contracting State — the case in which sub-paragraph (a) produces no source at all — the royalty is deemed to arise where the right or property is used, and the technical fee where the services are performed. That extends the Indian charge to payments made by third-State payers for rights used or services performed in India. Very few Indian treaties carry this limb; Syria and Albania do. Art. 12(4) refers effectively-connected royalties to Art. 7 or Art. 14, and Art. 12(6) limits the article to the arm's-length amount.

Fees for technical services

Rate	10 per cent of the gross amount — Art. 12(2), inside the combined Royalties and Fees for Technical Services article and at the same rate as royalties.
Make-available requirement	No
Where this comes from	Article 12, paragraph 2 and 3(b)

There is no make-available condition. Art. 12(3)(b): "The term 'fees for technical services' as used in this Article means payments of any kind, other than those mentioned in Articles 14 and 15 as consideration for managerial or technical or consultancy services, including the provision of services of technical or other personnel." The words "make available", "enable", "technical plan" and "technical design" appear nowhere in the Agreement, and there is no protocol in which they could appear. A Georgian service provider cannot argue that nothing was transmitted to the Indian payer: the charge attaches to the consideration for the service. Three features matter. (i) Three categories — managerial, technical or consultancy; "professional" services are not named, so an individual professional's fee is not swept in by the words of the definition itself. (ii) The inclusive limb, "including the provision of services of technical or other personnel", carries secondment and manpower supply into the article — the limb that the Colombia article omits and supplies only by protocol. (iii) The carve-out is by cross-reference to Articles 14 and 15 — independent and dependent personal services — which is what keeps Art. 12 from colliding with Art. 14. The operative line is the individual/entity divide: Art. 14(1) is expressly confined to "an individual who is a resident of a Contracting State" and is tested by fixed base or by a stay "amounting to or exceeding in the aggregate 183 days in any period of 12-months", so a company's technical-service fee cannot fall within Art. 14 and falls squarely within Art. 12 at 10 per cent gross. There is no negative list — nothing carved out for services ancillary to a sale of property, for construction, for natural-resources services or for teaching. The interaction with the permanent establishment article is where Georgia bites hardest, and it is the sharpest combination in this group: Art. 5(3)(b) creates a service PE after more than 90 days in any 12-month period, one of the shortest service thresholds in India's network, and it carries no exclusion for services taxed under Art. 12 of the kind the Namibia Convention has. So Indian-source service income is exposed on two fronts at once — 10 per cent gross under Art. 12 from the first rupee, or net-basis PE taxation under Arts. 5 and 7 once 90 days is crossed, in which case Art. 12(4) refers the income to Art. 7. And because the MLI made no change to Article 5, there is no anti-fragmentation or contract-splitting overlay to worry about on that count. There is no MFN clause in the Agreement, so no make-available limb can be imported from a later Indian treaty. Note finally that the technical-fee source rule includes the residual limb at Art. 12(5)(b), under which fees "relate to services performed" in a Contracting State are deemed to arise there where sub-paragraph (a) produces no source — so a fee paid by a third-State payer for services performed in India is Indian-source.

Capital gains on shares

Treatment	Full source-State taxing right over share gains, split across two paragraphs, and unmodified by the MLI. Art. 13(4) is the land-rich limb: "Gains from the alienation of shares of the capital stock of a company the property of which consists directly or indirectly principally of immovable property situated in a Contracting State may be taxed in that State." It is the narrow bilateral form — shares of the capital stock of a company only, with no extension to interests in a partnership, trust or estate of the kind in the Kenya and Namibia texts, and with no percentage test to give "principally" content. Art. 13(5) is the general limb and is unrestricted: "Gains from the alienation of shares other than those mentioned in paragraph 4 in a company which is a resident of a Contracting State may be taxed in that State." No percentage threshold, no minimum holding, no listing carve-out, no de minimis — India may tax a Georgian resident's gain on shares of an Indian company whatever the company's asset mix and whatever the size of the stake. Art. 13(6) is the residual: gains from any property other than that in paragraphs 1 to 5 "shall be taxable only in the Contracting State of which the alienator is a resident". Art. 13(1) allows source taxation of gains on immovable property referred to in Art. 6; Art. 13(2) covers movable property of a permanent establishment or fixed base, including gains on alienating the PE itself; and Art. 13(3) allocates gains on ships or aircraft operated in international traffic, and movable property pertaining to their operation, exclusively to the alienator's State of residence — the residence test, not the place-of-effective-management test used in the Kenya and Namibia treaties. The MLI point is worth stating expressly because it is the kind of thing a reader will assume went the other way: Article 9 of the MLI, which imposes a 365-day look-back on the immovable-property asset test and extends the rule to interests in partnerships and trusts, does not apply to this Agreement. The synthesised text carries no Article 9 box against Article 13, and Article 13 stands exactly as notified in 2012.
Grandfathering	None. The Agreement fixes no grandfathering date, carries no acquisition-date cut-off for shares and has no transitional paragraph in Article 13 or Article 31. It has had effect in India from FY 2012-13 and has never been amended bilaterally. The MLI made no change to Article 13, so no 365-day look-back has been added to Art. 13(4) and no holding-period condition to Art. 13(5). A disposal is tested under the same rules whenever the shares were acquired. There is one temporal distinction to keep in view, and it is not a grandfathering rule but an anti-abuse one: for Indian fiscal years 2012-13 to 2019-20 a claim to residence-only treatment under Art. 13(6) was tested against the bilateral main-purpose rule in Art. 30(2), and for Indian fiscal years from 2020-21 it is tested against the MLI principal purposes test, which is drafted differently and reaches further. See anti_abuse.
Conditions	Art. 13(5) is unconditional: the only requirement is that the company whose shares are alienated is a resident of the taxing State. Nothing turns on the seller's holding percentage, the period of holding, whether the shares are listed, or whether the seller has any other connection with India. Art. 13(4) turns on the undefined word "principally" — the Agreement supplies no percentage, no valuation date and no averaging rule, there is no protocol, and the MLI has not supplied the 365-day look-back that would at least have fixed a measurement period; contrast Colombia, where the equivalent paragraph writes the test into the text as more than 50 per cent of aggregate asset value. In an Indian case the distinction between paragraphs 4 and 5 rarely decides anything, because paragraph 5 confers the taxing right anyway wherever the company is resident in India; paragraph 4 matters mainly where the company whose shares are sold is resident in neither State but holds Indian immovable property, since it is drafted by reference to where the property is situated rather than where the company is resident. Beneficial ownership is not required for capital gains; that condition appears only in Articles 10, 11 and 12. What does apply to Article 13, and applies to every paragraph of it including the residence-only rule in Art. 13(6), is the anti-abuse machinery in Article 30 as superseded by the MLI principal purposes test. The PPT operates "Notwithstanding any provisions of [the Agreement]" and denies a benefit "in respect of an item of income or capital", so it is capable of denying the Art. 13(6) protection on a gain where obtaining that protection was one of the principal purposes of the arrangement — and unlike Art. 30(2), which was directed at the creation or existence of the resident or the transaction undertaken by him, the PPT reaches "any arrangement or transaction that resulted directly or indirectly in that benefit".
Where this comes from	Article 13, paragraph 4, 5 and 6

Permanent establishment

Construction or installation PE	More than 90 days — Art. 5(3)(a): "A building site or construction, installation or assembly project or supervisory activities in connection therewith constitutes a permanent establishment only if such site, project or activities last more than 90 days." Two things stand out. The unit is days, not months, which is rare — most Indian construction thresholds are expressed in months, and Syria's, the only other day-based one in this group, is 270 days. And 90 days is extraordinarily short: it is the shortest construction threshold of any treaty in this group and among the shortest in India's network, against six months in Colombia, Kyrgyzstan, Namibia and Albania, nine months in Mongolia and 270 days in Syria. A contract of four months creates an Indian permanent establishment under this Agreement where it would create none under any of the others. The covered works are wide — building site, construction, installation and assembly projects with their connected supervisory activities are all named — so there is no gap for a pure installation contract of the kind the Uganda and Mongolia texts leave open. The threshold is "more than" 90 days, so exactly 90 days does not create a permanent establishment. The clock runs on the duration of the site, project or activities; the Agreement says nothing about when it starts, so there is no equivalent of the Kenya protocol's exclusion of purely preparatory mobilisation time, and there is no protocol here at all. Critically, there is no anti-splitting rule either: Article 14 of the MLI, which aggregates connected activities carried on at the same site by closely related enterprises, was not applied to this Agreement — the synthesised text carries no Article 14 box against Article 5 — and there is no bilateral aggregation clause of the kind in the Colombia Protocol. So a 90-day threshold sits alongside no aggregation rule at all, which is the single most important planning point in this Article and cuts in the taxpayer's favour.
Service PE	Yes — more than 90 days within any 12-month period. Art. 5(3)(b): "The furnishing of services, including consultancy services, by an enterprise through employees or other personnel engaged by the enterprise for such purpose constitutes a permanent establishment, but only where activities of that nature continue (for the same or connected project) within the country for a period or periods aggregating more than 90 days within any 12-month period." Every element is load-bearing. The personnel must be "engaged by the enterprise for such purpose". Aggregation is limited to "the same or connected project", so unconnected engagements are not added together. The window is "any 12-month period", a rolling test rather than the fiscal year. And the threshold is "more than" 90 days, so exactly 90 days does not create a permanent establishment. At 90 days this is among the shortest service thresholds in India's network — matching Kenya and well below Colombia's six months and Syria's 183 days — and, unlike the Namibia Convention, it carries no exclusion for services taxed under the technical-fee article. The two therefore bite at once: a Georgian service provider faces 10 per cent gross under Art. 12 from the first rupee and net-basis PE taxation once 90 days is crossed. As with the construction limb, MLI Article 14 does not apply, so time spent by related enterprises on the same project is not aggregated, and the only aggregation is the treaty's own "same or connected project" rule applied to the enterprise itself.
Agency PE	Yes — Art. 5(5), in the three-limb form but without the group extension. A person other than an independent agent within Art. 5(7), acting in a Contracting State on behalf of an enterprise of the other State, creates a PE 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 are limited to those in paragraph 4 which, if exercised through a fixed place of business, would not make it a PE; (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". Limb (c) is confined to the enterprise itself — there is no extension to orders secured for enterprises controlling, controlled by or under common control with it, which the Uganda and Kyrgyz agency limbs both carry. Limb (a) uses the pre-beps "in the name of the enterprise" formulation, and it has not been replaced: Article 12 of the MLI, the commissionnaire and similar-strategies rule, was not applied to this Agreement, so an agent who habitually plays the principal role leading to the routine conclusion of contracts without formally concluding them in the enterprise's name remains outside limb (a). That is worth confirming rather than assuming, because for treaties where MLI Article 12 does apply the answer is the opposite. Art. 5(6) is a separate insurance PE: an insurance enterprise, except in regard to re-insurance, is deemed to have a PE in the other State if it collects premiums in that territory or insures risks situated therein through a person other than an independent agent. Art. 5(7) is the independent-agent exclusion with the single-limb anti-exclusivity rider, so exclusivity alone defeats independence, without the cumulative non-arm's-length requirement found in the Kenya text.
Where this comes from	Article 5, paragraph 3(a), 3(b), 5, 6 and 7

Art. 5(2) is the inclusive list and is the familiar Indian nine-limb form: place of management, branch, office, factory, workshop, "(f) a mine, an oil or gas well, a quarry or any other place of extraction of natural resources", "(g) a sales outlet", "(h) a warehouse in relation 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", none with a duration test. There is no natural-resources exploration installation limb of the Colombia or Namibia kind and no mineral-oils services deeming rule of the Kyrgyz kind. Art. 5(3) is a separate paragraph carrying both the construction and service thresholds, which is a cleaner structure than burying either in the inclusive list. Art. 5(4) is the specific-activity exclusion list and the omission in it is consequential: sub-paragraph (a) excludes facilities used solely for "storage, display of goods or merchandise belonging to the enterprise" and sub-paragraph (b) a stock held solely for "storage display" — the word "delivery" appears in neither. A fixed place of business used for delivery is therefore not within the Art. 5(4) exclusions and is capable of constituting a permanent establishment, as under the Colombia and Kenya treaties and unlike Uganda, Kyrgyzstan and Mongolia, where delivery is expressly excluded. Since Article 13 of the MLI (anti-fragmentation) was not applied to this Agreement, there is no overlay aggregating preparatory or auxiliary activities across closely related enterprises — but the delivery omission achieves bilaterally much of what MLI Article 13 Option A was designed to achieve. Sub-paragraphs (c) to (f) are standard, including the combination clause at (f). Taken together, this is a demanding PE article for a taxpayer: two 90-day thresholds, delivery outside the exclusions, a three-limb agency rule and an insurance PE. What softens it is the complete absence of any aggregation rule — no MLI Article 14, no MLI Article 13, no bilateral protocol clause — so the thresholds apply to each enterprise separately.

Anti-abuse: limitation of benefits, and the MLI

LOB	Article 30 is headed "Limitation of Benefits" and has four paragraphs. It is a short main-purpose article rather than an objective qualified-person test, and since Indian fiscal year 2020-21 it is superseded, to the extent of incompatibility, by the MLI principal purposes test. The synthesised text prints all four paragraphs under the marker "[modified by paragraph 1 of Article 7 of the MLI]" and none of them is struck out, so the right analysis is that Article 30 survives except so far as it is incompatible with the PPT. In full: "1. Nothing in this Agreement shall affect the application of the domestic provisions to prevent tax evasion or tax avoidance. 2. Benefits of this Agreement shall not be available to a resident of a Contracting State, or with respect to any transaction undertaken, by such a resident, if the main purpose or one of the main purposes of the creation or existence of such a resident or of the transaction undertaken by him, was to obtain benefits under this Agreement that would not otherwise be available. 3. The case of legal entities not having bona fide business activities shall be covered by the provisions of this Article. 4. Where by reason of this Article a resident of a Contracting State is denied the benefits of this Agreement in the other Contracting State, the competent authority of the other Contracting State shall notify the competent authority of the first mentioned Contracting State." Paragraph 1 is a domestic-law saving, narrower in its wording than the Colombian equivalent (which extends to measures "whether or not described as such") but to the same effect. Paragraph 3 is the weak form: like Colombia's Art. 28(3) and unlike Kenya's Art. 29(3), it contains no operative denial of its own and merely brings shell entities within the reach of the Article. Paragraph 4 is unusual and survives the MLI intact because nothing in the PPT is incompatible with it: it imposes a procedural duty on the State that denies benefits to notify the other State's competent authority. That duty is worth knowing — it is not a condition of denial, and nothing in the Agreement makes a denial invalid for want of notification, but it gives the taxpayer's home State a route into the matter and pairs with the mutual agreement procedure in Article 26. There is no objective limitation-of-benefits machinery of the American type anywhere in this Agreement — no ownership test, no base-erosion test, no stock-exchange test, no active-trade-or-business clause and no competent-authority discretion to grant benefits. Contrast the Albania Agreement, which carries a full qualified-person article with all of those elements.
PPT	Yes, and from Indian fiscal year 2020-21 it is the operative anti-abuse rule. The synthesised text records that "The following paragraph 1 of Article 7 of the MLI applies and supersedes the provisions of this Agreement to the extent of incompatibility", and then sets out the principal purposes test: "Notwithstanding any provisions of [the Agreement], a benefit under [the Agreement] shall not be granted in respect of an item of income or capital if it is reasonable to conclude, having regard to all relevant facts and circumstances, that obtaining that benefit was one of the principal purposes of any arrangement or transaction that resulted directly or indirectly in that benefit, unless it is established that granting that benefit in these circumstances would be in accordance with the object and purpose of the relevant provisions of [the Agreement]." It has effect in India for taxes withheld at source where the event giving rise to the tax occurs on or after 1 April 2020, and for all other Indian taxes for taxable periods beginning on or after 1 April 2020; in Georgia from 1 January 2020 for withholding and 1 January 2021 for other taxes. The comparison with the bilateral test in Art. 30(2) is where the practical difference lies, and it runs in both directions. Three respects in which the PPT is wider. (i) It is transaction- and income-focused: it denies a benefit "in respect of an item of income or capital" arising from "any arrangement or transaction that resulted directly or indirectly in that benefit". Art. 30(2) is directed at the creation or existence of the resident, or a transaction undertaken by him — so it reaches transactions but only those undertaken by the resident claiming the benefit, whereas the PPT reaches any arrangement anywhere in the chain that indirectly produced the benefit. (ii) The PPT's standard is whether "it is reasonable to conclude, having regard to all relevant facts and circumstances" that obtaining the benefit was one of the principal purposes — an objective reasonableness standard, easier for the revenue to satisfy than proof of actual purpose. (iii) The PPT operates "Notwithstanding any provisions" of the Agreement, so it overrides every distributive rule without exception. One respect in which the PPT is narrower, and it is a real protection: it carries an object-and-purpose escape — the benefit is still granted if "it is established that granting that benefit in these circumstances would be in accordance with the object and purpose of the relevant provisions". Art. 30(2) has no such proviso. And this is where the other MLI change earns its place: Article 6(1) of the MLI inserted into the preamble the recital about not 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 jurisdictions". That recital is the object and purpose against which the escape clause is measured, so the two MLI provisions work as a pair and neither should be read alone. For Indian fiscal years 2012-13 to 2019-20 the applicable test is Art. 30(2) alone, on its own narrower terms and against the original preamble.
Where this comes from	Article 30 (four paragraphs, modified by Article 7(1) of the MLI which applies and supersedes to the extent of incompatibility), read with Article 6(1) of the MLI in the preamble

Two provisions of the MLI apply to this Agreement and no others. That is a short list, and knowing what is not on it is as useful as knowing what is. First, Article 6(1) of the MLI is included in the preamble: "Intending to eliminate double taxation with respect to the taxes covered by this agreement 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 jurisdictions)". The original preamble recited only the desire to avoid double taxation, prevent fiscal evasion and promote economic cooperation. The new recital matters because it supplies the interpretive object against which the principal purposes test is applied — the PPT's own escape clause turns on whether granting a benefit "would be in accordance with the object and purpose of the relevant provisions", and the MLI preamble is what those words point to. Second, Article 7(1) of the MLI — the principal purposes test — "applies and supersedes the provisions of this Agreement to the extent of incompatibility" in relation to Article 30 (Limitation of Benefits). The synthesised text prints Article 30 in square brackets under the marker "[modified by paragraph 1 of Article 7 of the MLI]", with all four of its paragraphs retained, and then sets out the PPT. The relationship is supersession to the extent of incompatibility, not replacement: Article 30 is not struck out, and its paragraphs continue to operate so far as they can stand with the PPT. That is a materially different position from a treaty in which the synthesised text deletes the bilateral article, and it means Article 30(1) (preservation of domestic anti-avoidance law), Article 30(3) (bona fide business activities) and Article 30(4) (the notification duty on the denying State) survive intact, since none of them is incompatible with the PPT. Only Article 30(2), the bilateral main-purpose test, occupies the same ground as the PPT, and where the two differ the PPT prevails. See anti_abuse for how they differ. What the MLI did not do to this Agreement: there is no Article 3 (transparent entities) provision, no Article 4 (dual-resident entities) provision replacing the place-of-effective-management tie-break in Art. 4(3), no Article 5 (methods for elimination) change to Art. 24, no Article 8 (365-day holding period) condition added to the dividend rate in Art. 10(2), no Article 9 (365-day look-back or partnership/trust extension) change to the immovable-property share-gains rule in Art. 13(4), no Article 10 (third-jurisdiction permanent establishments) rule, no Article 12 (commissionnaire) replacement of the agency limb in Art. 5(5), no Article 13 (anti-fragmentation) overlay on the specific-activity exclusions in Art. 5(4), no Article 14 (splitting-up of contracts) rule on the 90-day thresholds in Art. 5(3), no Article 16 (mutual agreement procedure) change to Art. 26, and no Part VI arbitration. Every distributive rule in the Agreement — dividends, interest, royalties, technical fees, capital gains and permanent establishment — is exactly as notified in 2012. The whole of the MLI's effect on this treaty is the preamble and the principal purposes test.

The protocols, in order

A treaty read without its protocols is a wrong answer.

None by way of a bilateral amending notification. The notification of 6 January 2012 annexes the Agreement alone; the Gazette text runs from Article 1 to Article 32 and the signatures, with no protocol, no exchange of letters and no side agreement, and no amending notification appears on the face of the document. The Agreement has never been amended bilaterally.
It has, however, been modified multilaterally. The Income Tax Department publishes a synthesised text of the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting and this Agreement, prepared jointly by the competent authorities of India and Georgia and representing their shared understanding of the modifications made by the MLI. Two provisions of the MLI apply: Article 6(1), inserted into the preamble, and Article 7(1), the principal purposes test, which applies to and supersedes Article 30 of the Agreement to the extent of incompatibility. Nothing else in the Agreement is touched. The synthesised text records that "The authentic legal texts of the Agreement and the MLI take precedence and remain the legal texts applicable", so the synthesised text is an aid, not the instrument. See synthesised_text.
This record was first written from the scanned Gazette images of S.O. 34(E), in which the English text occupies the second half of a 58-page image file with no text layer. The synthesised text published by the department carries the same Agreement as clean text, together with the MLI overlay, and is what the present record is written from. The two are consistent on every provision compared.

The words themselves

Quoted from the treaty as notified.

Notwithstanding any provisions of [the Agreement], a benefit under [the Agreement] shall not be granted in respect of an item of income or capital if it is reasonable to conclude, having regard to all relevant facts and circumstances, that obtaining that benefit was one of the principal purposes of any arrangement or transaction that resulted directly or indirectly in that benefit, unless it is established that granting that benefit in these circumstances would be in accordance with the object and purpose of the relevant provisions of [the Agreement].

Article 7 of the MLI, applying to and superseding Article 30, paragraph 1 of the treaty as notified.

A building site or construction, installation or assembly project or supervisory activities in connection therewith constitutes a permanent establishment only if such site, project or activities last more than 90 days.

Article 5, paragraph 3(a) of the treaty as notified.

Benefits of this Agreement shall not be available to a resident of a Contracting State, or with respect to any transaction undertaken, by such a resident, if the main purpose or one of the main purposes of the creation or existence of such a resident or of the transaction undertaken by him, was to obtain benefits under this Agreement that would not otherwise be available.

Article 30, paragraph 2 of the treaty as notified.

Where by reason of this Article a resident of a Contracting State is denied the benefits of this Agreement in the other Contracting State, the competent authority of the other Contracting State shall notify the competent authority of the first mentioned Contracting State.

Article 30, paragraph 4 of the treaty as notified.

Gains from the alienation of shares other than those mentioned in paragraph 4 in a company which is a resident of a Contracting State may be taxed in that State.

Article 13, paragraph 5 of the treaty as notified.

What to watch

This Agreement has been modified by the MLI and a synthesised text exists, prepared jointly by the two competent authorities. Exactly two MLI provisions apply: Article 6(1) in the preamble and Article 7(1), the principal purposes test, which applies to and supersedes Article 30 to the extent of incompatibility. Nothing else changed — no dividend holding period under MLI Article 8, no 365-day look-back or partnership extension on share gains under MLI Article 9, no commissionnaire rule under MLI Article 12, no anti-fragmentation under MLI Article 13, no contract-splitting rule under MLI Article 14, no change to the mutual agreement procedure and no arbitration. Every distributive rule is as notified in 2012.
There are two periods to answer for, and the dividing line is the tax rather than the calendar. The MLI has effect in India for taxes withheld at source where the event giving rise to the tax occurs on or after 1 April 2020, and for all other Indian taxes for taxable periods beginning on or after 1 April 2020. Before that, the applicable anti-abuse rule is the bilateral main-purpose test in Art. 30(2); after it, the MLI principal purposes test. In Georgia the dates differ again and are not aligned with each other — withholding from 1 January 2020, other taxes from 1 January 2021 — so the same arrangement can be subject to the PPT in one State and not yet in the other for a period of a year.
The PPT is wider than Art. 30(2) in three ways and narrower in one. Wider: it is income- and transaction-focused, denying a benefit in respect of an item of income or capital arising from "any arrangement or transaction that resulted directly or indirectly in that benefit", where Art. 30(2) reaches only the creation or existence of the resident or a transaction undertaken by him; its standard is objective reasonableness on all the facts rather than proof of actual purpose; and it operates "Notwithstanding any provisions" of the Agreement. Narrower: it carries an object-and-purpose escape that Art. 30(2) has no equivalent of. That escape is measured against the preamble as amended by MLI Article 6(1), which now expressly targets treaty-shopping for the indirect benefit of third-jurisdiction residents — so the two MLI changes work as a pair and the escape is correspondingly harder to make out for a conduit.
Article 30 is not deleted by the MLI. The synthesised text prints all four paragraphs under a "modified" marker, and the relationship is supersession "to the extent of incompatibility", not replacement. So Art. 30(1) (domestic anti-avoidance law preserved), Art. 30(3) (bona fide business activities) and Art. 30(4) survive intact; only Art. 30(2) occupies the same ground as the PPT. Art. 30(4) is the one to remember in practice: where benefits are denied under the Article, the denying State's competent authority "shall notify" the competent authority of the other State. It is not a condition of denial, but it is a procedural hook and it pairs with the mutual agreement procedure in Article 26.
Both permanent-establishment thresholds are more than 90 days — construction under Art. 5(3)(a), services under Art. 5(3)(b) — which is the shortest pair in this group and among the shortest in India's network. A four-month contract creates an Indian PE here where six months would not under the Colombia, Kyrgyz, Namibia or Albania treaties. Against that, there is no aggregation rule of any kind: MLI Article 14 was not applied, MLI Article 13 was not applied, and there is no protocol clause aggregating related-enterprise time as in Colombia. The thresholds therefore apply to each enterprise separately, and the treaty's only aggregation is its own "same or connected project" rule applied within the one enterprise.
Article 12 has no make-available limb and Art. 5(3)(b) has no carve-out for services taxed under it, so a Georgian service provider is exposed on two fronts at once: 10 per cent gross under Art. 12 from the first rupee, and net-basis PE taxation once 90 days is crossed. Contrast the Namibia Convention, where the service PE expressly excludes services falling within the technical-fee article and the two are mutually exclusive. The Georgian combination of a short service threshold and an unfiltered FTS charge is the harshest in this group for a services business.
Interest and royalties do not arise on the same source test. Art. 11(6) is narrow — interest arises where "the payer is a resident of that State", with no government-payer limb — while Art. 12(5)(a) is the widest in this group, covering "that State itself, a political sub-division, a political-administrative sub-division, a local authority, or a resident of that State". Art. 12(5)(b) then adds a residual source rule with no counterpart in Article 11: where a royalty or technical fee would arise in neither State under (a), it is deemed to arise where the right or property is used or the services are performed. So a fee paid by a third-State payer for services performed in India is Indian-source, while interest from an Indian government body arguably is not.
The interest exemption in Art. 11(3) is drafted country by country and the two sides are not symmetrical. India's limb (i) covers the Government, a political sub-division and a local authority; Georgia's covers only the Government and a local authority, with political-administrative sub-divisions relegated to the extension limb. India names three institutions — the Reserve Bank of India, the Export-Import Bank of India and the National Housing Bank, the most generous list in this group — and its extension limb reaches "any other institution" without restriction, where Georgia's is confined to governmental agencies, sub-divisions and institutions of Georgia. Both extension limbs require an exchange of letters and neither is self-executing; none is recorded in the notified text.

What this page does not tell you. The synthesised text is an aid to application, not the instrument: it states in terms that "The authentic legal texts of the Agreement and the MLI take precedence and remain the legal texts applicable", and it also warns that the MLI positions of India and Georgia "are subject to modifications as provided in the MLI" and that later modifications could change the effect of the MLI on this Agreement. The positions used were those deposited on 25 June 2019 (India) and 29 March 2019 (Georgia); whether either has been modified since is not established from the sources used here. "Principally" in Art. 13(4) is undefined — no percentage, no valuation date, no averaging rule — and because MLI Article 9 was not applied there is not even a 365-day look-back to fix a measurement period. Art. 5(3)(a) says nothing about when the 90-day construction clock starts, so whether purely preparatory mobilisation time counts is open, and there is no protocol. Art. 11(3)(iii) on the Indian side and its Georgian counterpart contemplate further exempt institutions agreed "through exchange of letters"; whether any such exchange has occurred since 2011, and which institutions it names, is not established from the sources used here, so as matters stand only the named bodies operate. Art. 30(3) denies nothing on its own terms and does not define "bona fide business activities", supply a safe harbour, or indicate on whom the burden lies. Art. 30(4) imposes a notification duty on the denying State but does not say what follows from a failure to notify. The PPT's object-and-purpose escape turns on the object and purpose of "the relevant provisions", which the instrument does not elaborate beyond the preamble as amended by MLI Article 6(1). This record does not reproduce Articles 6 to 9 and 15 to 29 in detail; the business-profits attribution rules in Article 7, the associated-enterprises adjustment in Article 9, the capital article at Article 23, the elimination method at Article 24, non-discrimination at Article 25 and the mutual agreement procedure at Article 26 are described only where they bear on the points covered above. The Hindi and Georgian texts were not used; only the English, which prevails on divergence. The Gazette scan of S.O. 34(E) was not re-read for this pass, the synthesised text having supplied the same Agreement as clean text; the two are consistent on every provision compared, but no line-by-line collation of the whole instrument against the Gazette images was performed. Domestic-law questions that decide many cases in practice — surcharge and cess on top of the treaty rate, section 206AA, and the certification requirements in Rule 21AB — are outside the notification and outside this record.

The India–Georgia tax treaty

The rates, at a glance