The India–Oman tax treaty

The rates, at a glance

Status

Dividends

The Art. 11(3) definition is the plain one — income from shares or other rights, not being debt-claims, participating in profits — with none of the 'jouissance', mining-share or founders'-share extensions found in the Saudi, Kuwaiti and Bangladeshi definitions. There is no underlying tax credit and no tax sparing on either side: Article 25 gives ordinary credit only (paragraphs 2 and 3), plus exemption-with-progression in the substituted paragraph 4. Note that the Article 11(4) carve-out routes effectively-connected dividends to 'Article 7 or Article 16' — Article 16 being Independent Personal Services on this treaty's numbering, which runs two articles later than most because of the separate Technical Fees article at Article 14.

Interest

The Art. 12(4) definition is the plain one — debt-claims of every kind, Government securities, bonds and debentures including premiums and prizes — with no renvoi limb (contrast Thailand and Saudi Arabia) and no Islamic-finance limb (contrast Qatar). Penalty charges for late payment are expressly excluded from Article 12 and fall to Article 24, where paragraph 3 preserves source taxation with no ceiling. The source rule in art. 12(6) is the wide form — interest arises where the payer is 'that Contracting State itself, a political sub-division, a local authority or a resident of that Contracting State' — matching Art. 13(5) for royalties and Art. 14(5) for technical fees; all three source rules on this treaty use the same wide formula, which is unusually consistent. Art. 12(5) disapplies only 'paragraphs 1 and 2' where the debt-claim is PE-connected, so on its face both limbs of the paragraph 3 exemption survive a PE connection.

Royalties

The Art. 13(3) definition is the standard one: copyright of literary, artistic or scientific work including cinematograph films, or films or tapes used for radio or television broadcasting; any patent, trade mark, design or model, plan, secret formula or process; the use of, or the right to use, industrial, commercial or scientific equipment (equipment rental is a royalty at the same rate); and information concerning industrial, commercial or scientific experience. There is no carve-out for mineral or natural-resource payments (contrast Bangladesh). The source rule in art. 13(5) is the wide form, sourcing royalties where the payer is 'that Contracting State itself, a political sub-division, a local authority or a resident of that Contracting State', plus the PE-borne deeming — but there is no place-of-use fallback of the kind found in the Sri Lankan and Nepalese Art. 12(5)(b). There is no MFN clause anywhere in the Agreement or Protocol.

Fees for technical services

There is no make-available limb, and the definition is drafted differently from every other FTS definition in this batch — its only exclusion is an employment exclusion, not A cross-reference to the personal services articles. Art. 14(3) in full: 'The term "technical fees" as used in this Article means payments of any kind to any person, other than to an employee of the person making the payments, in consideration for any services of A technical, managerial or consultancy nature.' Compare the others, which all say 'other than those mentioned in Articles 14 and 15' (Sri Lanka, Kuwait, Qatar) or 'does not include payments for services mentioned in Article 15 and Article 16' (Malaysia). The consequence is that independent personal services income is not expressly carved out of the technical fees article on this treaty. A self-employed consultant who is not an employee of the payer falls within the literal words of Art. 14(3), and there is no textual instruction routing him to Article 16 instead — so the relationship between Article 14 and Article 16 (Independent Personal Services, with its fixed base or 183-days-in-the-relevant-fiscal-year test) has to be worked out without the express cross-reference every other treaty in this batch supplies. Note also that the definition covers 'any services of A technical, managerial or consultancy nature' — the broad Indian-domestic-law style formula, with managerial services inside it, and nothing turning on whether technology, knowledge, skill or know-how is transmitted to the payer such that the payer can apply it independently. Routine, repetitive technical support that would escape FTS taxation under the Singapore, UK or US treaties is fully taxable at 10 per cent here from the first rupee. And the absence of any service PE limb in article 5 makes article 14 the only route by which india can tax omani service income without A fixed place of business — which is why the June 2025 cut from 15 to 10 per cent matters so much on this particular treaty.

Capital gains on shares

Permanent establishment

Article 5 is the narrowest in this batch and the june 2025 overhaul left IT completely untouched — a striking choice, given that the same notification rewrote the preamble, the residence tie-breaker, the associated-enterprises article and four administrative articles, and added a principal purposes test. Art. 5(2) lists a place of management, branch, office, factory, workshop, 'a mine, an oil or gas well, a quarry or any other place of extraction of natural resources' (an oil well is named, unlike the Saudi treaty) and the six-month construction limb. There is no sales outlet, no warehouse limb and no farm or plantation limb — all of which appear in most of the other treaties in this batch. Art. 5(3) is the old, wide exclusion list and IT expressly covers delivery: sub-paragraphs (a) and (b) exclude facilities and stock used for 'storage, display or delivery', so a delivery warehouse is outside the PE definition. It has only five sub-paragraphs, with no combination-of-activities sub-paragraph, and (a), (b) and (c) are standalone exclusions not themselves subject to a preparatory-or-auxiliary condition; note also that (e) reads 'any activity of a preparatory or auxiliary character' rather than 'any other activity'. Art. 5(6) is the standard control-is-not-PE saving. There is no oilfield deemed PE (contrast Qatar's Art. 5(4)), no entertainers-and-athletes deemed PE (contrast Bangladesh's Art. 5(7)), and no Protocol paragraph restricting attribution once a PE exists (contrast Sri Lanka, Saudi Arabia and Kuwait, all of which have one).

Anti-abuse: limitation of benefits, and the MLI

No separate synthesised text for Oman has been identified from the sources used here. But, as with sri lanka and unlike most of this batch, that does not mean the MLI outcomes are absent. They have been written directly into the notified comprehensive agreement by Notification No. S.O. 2858(E) [No. 69/2025] dated 25-6-2025 w.e.f. 25-6-2025, and they appear in the current text as marked amended matter. What is now in the treaty itself: the MLI Art. 6(1) beps preamble; the MLI Art. 4 dual-resident competent-authority rule at Art. 4(3), with denial of all relief absent agreement; the MLI Art. 17 corresponding-adjustment rule as the new Art. 10(2); and the MLI Art. 7(1) principal purposes test as a wholly new article 27B, 'Entitlement to Benefits'. Alongside those, the same notification cut the royalty and technical-fee ceilings from 15 to 10 per cent and inserted a non-discrimination article, a modern exchange-of-information article and an assistance-in-collection article. So for Oman there is one document to read and it already contains the beps package. What was not adopted is equally worth recording: there is no MLI Art. 12 commissionnaire rule, no MLI Art. 13 anti-fragmentation rule, no MLI Art. 14 contract-splitting rule and no MLI Art. 15 closely-related definition — article 5 was left entirely untouched, and it is the narrowest permanent establishment article in this batch. Nor is there an MLI Art. 9 capital-gains look-back at Article 15.

The protocols, in order

• This treaty was comprehensively overhauled in june 2025 and the amendment is the most important fact about IT. Notification no. S.O. 2858(E) [No. 69/2025, F. No. 501/6/1991-ftd-II], dated 25-6-2025, with effect from 25-6-2025, made a long series of substitutions, omissions and insertions running through the whole instrument. Every one of the changes listed below appears in the current notified text as marked amended matter. Any note on the india-oman DTAA written before mid-2025 is out of date on rates, on anti-abuse and on administrative assistance alike.
• The two rate cuts are the headline, and both were reductions from 15 per cent to 10 per cent. Art. 13(2) royalties: the words 'ten per cent' were substituted for '15 per cent' by S.O. 2858(E) w.e.f. 25-6-2025. Art. 14(2) technical fees: the words 'ten per cent' were likewise substituted for '15 per cent' by the same notification with effect from the same date. So from 25 June 2025 the Indian withholding ceiling on Omani-resident royalties and technical fees fell by a third. For any period before that date the ceiling was 15 per cent on both, and the two must not be conflated.
• An entirely new anti-abuse article was inserted: article 27B, 'entitlement to benefits', containing the MLI Article 7(1) principal purposes test verbatim. There was no anti-abuse article of any kind in the 1997 Agreement — no limitation of benefits, no purpose test, no domestic-law saving. See anti_abuse.ppt for the text.
• The preamble was substituted to insert the beps recital: the States now recite that they are '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 States)'. That recital is what now supplies the 'object and purpose' against which the Article 27B saving clause is measured, and the two changes must be read together.
• The corporate tie-breaker was replaced. Art. 4(3) was substituted with the MLI Article 4 rule: where a person other than an individual is a resident of both States, the competent authorities 'shall endeavour to determine by mutual agreement' the State of residence having regard to place of effective management, place of incorporation or constitution and any other relevant factors, and 'in the absence of such agreement, such person shall not be entitled to any relief or exemption of tax provided by this agreement except to the extent and in such manner as may be agreed upon by the competent authorities.' A dual-resident company now gets nothing by default.
• Four articles were added or replaced wholesale. (i) article 25A, non-discrimination, was inserted — the 1997 Agreement had no non-discrimination article at all, and the new one closes with the limitation that 'the provisions of this Article shall apply only to taxes which are covered by this Agreement'. (ii) article 26, mutual agreement procedure, appears as inserted or substituted matter. (iii) article 27, exchange of information, was substituted with the modern OECD text — 'foreseeably relevant' standard, exchange not restricted by Articles 1 and 2, the no-domestic-interest obligation, and the bank-secrecy override (no declining solely because the information is held by a bank, other financial institution, nominee or person acting in an agency or fiduciary capacity, or because it relates to ownership interests). (iv) article 27A, assistance in the collection of taxes, was inserted — the 1997 Agreement had none — and it opens 'The Contracting States shall lend assistance to each other in the collection of revenue claims. This assistance is not restricted by articles 1 and 2', with the usual refusal grounds including that a State need not provide assistance where the administrative burden is clearly disproportionate to the benefit to the other State.
• Several definitional and machinery provisions were also changed: Art. 2(1)(b) (the Omani tax, now simply 'the income tax'); Art. 3(1)(e) (competent authority — for India the Finance Minister or his authorised representative, for Oman the Chairman of the relevant authority); Art. 3(1)(g)(ii) ('tax year' as defined in Oman's Income-tax Law); Art. 8(5) was omitted; Art. 10 (Associated Enterprises) was renumbered and a new paragraph 2 inserted providing for corresponding adjustments where one State makes a primary transfer-pricing adjustment (the MLI Article 17 outcome); and in Art. 25 the old paragraph 4 was omitted and replaced with a new paragraph 4 preserving exemption-with-progression.
• The protocol is the original one, signed with the Agreement at New Delhi on 2 April 1997, expressed to 'be an integral part of the Agreement'. IT has A single unnumbered paragraph and IT is about gulf air, not about any of the matters A practitioner usually looks to A protocol for: 'If an air transport enterprise of India with respect to profits referred to in Article 8 is charged to any tax of the kind referred to in Article 2 in one of the shareholding states of gulf air, the Contracting States shall reopen negotiations without delay with a view to arriving at an appropriate solution in respect of the application of Article 8 of the Agreement.' There is no residence gloss, no PE gloss, no attribution rule and no interest-exemption gloss anywhere in the Protocol.

The words themselves

What to watch

• The royalty and technical fee ceilings both fell from 15 per cent to 10 per cent on 25 june 2025. Notification No. S.O. 2858(E) [No. 69/2025] dated 25-6-2025, w.e.f. 25-6-2025, substituted 'ten per cent' for '15 per cent' in Art. 13(2) and Art. 14(2). This is the single most commercially significant change to any treaty in this batch, and it is recent enough that most published material still carries 15 per cent. Periods before 25 June 2025 remain at 15 per cent.
• The same notification added the treaty'S first-ever anti-abuse article. New Article 27B, 'Entitlement to Benefits', is the MLI Article 7(1) principal purposes test. Before 25 June 2025 the India-Oman Agreement contained no limitation of benefits, no purpose test and not even a domestic-law saving. Structures put in place under the old regime now face a PPT that did not exist when they were built.
• And IT replaced the corporate tie-breaker with A competent-authority rule that denies everything by default. Substituted Art. 4(3): no mutual agreement, no relief or exemption. That is a harder rule than the place-of-effective-management test it replaced, and it applies from 25 June 2025.
• There is no service PE limb — and article 5 was deliberately left alone in the 2025 overhaul. No 'furnishing of services' paragraph, no days threshold, no oilfield deemed PE, no insurance PE. Combined with the six-paragraph structure this is the narrowest Article 5 in the batch. An Omani enterprise rendering services in India creates no PE on that ground however long it stays — but its fees are still caught by Article 14 at 10 per cent.
• The agency PE has one limb only, and the independent-agent protection has no exclusivity disqualifier. Art. 5(4) requires an authority to conclude contracts in the name of the enterprise, habitually exercised — there is no stock-and-delivery limb and no order-securing limb. Art. 5(5) protects any broker, general commission agent or other independent-status agent acting in the ordinary course of his business, full stop; the 'devoted wholly or almost wholly' sentence that appears in every other treaty in this batch is absent. Marketing, liaison and exclusive-distributor arrangements that create a PE elsewhere do not create one here.
• Article 12(3)(b) is A government-approved-loan interest exemption open to any lender, and nothing like IT exists in the other eleven treaties. Any resident of the other State — not just governments and central banks — can obtain exemption, but only to the extent approved by the source State's Government and only if the transaction giving rise to the debt-claim has itself been approved. Both qualifiers are essential; the exemption is neither automatic nor institution-based.
• The default dividend rate is 12½ per cent. Not 12, not 15. Art. 11(2)(b). The 10 per cent rate requires a company beneficial owner holding at least 10 per cent of the shares.
• The article numbering is off by one or two from what practitioners expect, because technical fees has its own article. Dividends 11, Interest 12, Royalties 13, technical fees 14, Capital Gains 15, Independent Personal Services 16. A cross-reference to 'Article 13' on this treaty is to Royalties, not Capital Gains.
• The technical fees definition excludes only payments to an employee of the payer. Art. 14(3) does not cross-refer to the personal services articles, as Sri Lanka, Kuwait, Qatar and Malaysia all do. A self-employed consultant falls within its literal words, and the boundary with Article 16 has to be argued rather than read off the text.
• The article 5 construction limb omits 'installation'. Art. 5(2)(g) covers 'a building site or construction or assembly project'. Unlike Bangladesh, which omits installation but adds 'or the like', there is no catch-all here. An installation project that is not a construction or assembly project is arguably outside the six-month limb and must be tested under Art. 5(1) instead.
• The residence article has no governmental limb and no special rule for individuals in A no-tax state. Art. 4(1) is one sentence. Kuwait solves the same problem by nationality plus 183 days in Art. 4(1)(b) and by a governmental-institutions paragraph; Saudi Arabia solves it by Protocol para 4. Oman has neither, which makes the 'liable to tax' question harder here than on either of the other Gulf treaties in this batch.
• But note the compensating absence: there is no source-only exclusion either. Art. 4(1) has no second sentence excluding persons liable to tax only on source income. That exclusion is the usual weapon against territorial-system claimants, and on this treaty India does not have it.
• Other income is A source-state article. Art. 24(3) provides that items not dealt with in the foregoing Articles and arising in the other State 'may also be taxed in that other State'. So anything outside Articles 6 to 23 — including late-payment penalty charges expelled from Article 12 — remains taxable at source under domestic law with no treaty ceiling. Note also that Art. 24(1) is drafted with an evident slip: income 'shall be taxable only in the Contracting State', omitting the word 'that'.
• No tax sparing and no underlying credit. Article 25 gives ordinary credit only in paragraphs 2 and 3, plus exemption-with-progression in the substituted paragraph 4. Contrast Qatar and Kuwait, both of which have open-ended tax-sparing clauses.
• The 1984 international transport agreement and the exemptions under IT are both gone. Art. 29(2) terminated them from 3 June 1997, and the termination expressly extends to the exemptions granted, not merely to the agreement. Shipping and air transport are now governed by Articles 8 and 9, and the Protocol's Gulf Air clause sits on top of Article 8.