India–Russian Federation tax treaty — rates, PE and MLI

The rates, at a glance

Every figure below is taken from the article named beside it, not from a rates table. Read the condition in the same row before you use the rate — in this treaty the condition is usually the whole answer.

Income	Rate	The condition attached to it	Article
Dividends	10 per cent of the gross amount — A single flat ceiling with no shareholding threshold and no second tier. Art. 10(2). But the condition attached to the rate is not the ordinary one, and this is the most important qualifier on this treaty. Every other treaty in this sweep conditions the reduced dividend rate on the recipient being the beneficial owner and nothing more. Art. 10(2) here reads: '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 subject to tax thereon in the other state, the tax so charged shall not exceed 10 per cent of the gross amount of the dividends.' that is A subject-to-tax condition written into the rate itself. Two elements have to be satisfied: the recipient must be the beneficial owner, and that beneficial owner must be subject to tax on those dividends in its State of residence. If the beneficial owner is exempt on the dividends in its home State — a tax-exempt fund, a participation-exemption holding company, an entity in a tax holiday — the 10 per cent ceiling does not apply at all and the source State may tax under its domestic law without limit. A rates table showing '10 per cent' for India-Russia dividends states only half the provision.	No shareholding threshold — there is no participation test and no minimum holding period. The operative condition is the subject-to-tax requirement set out above, which is a condition of a different kind…	Article 10, paragraph 2 (rate, beneficial ownership AND the subject-to-tax condition, with the profits-of-the-company saving as a separate sentence); 3 (definition); 4 (PE/fixed-base carve-out disapplying paragraphs 1 AND 2, throwing the income to Art. 7 or Art. 14); 5 (no extra-territorial taxation of dividends, no tax on undistributed profits)
Interest	10 per cent of the gross amount, conditional on 'the recipient [being] the beneficial owner of the interest'. Art. 11(2). Note that Article 11 does not carry the subject-to-tax condition that Article 10 attaches to dividends.	The exemption is in article 11 itself, at paragraph 3: 'Notwithstanding the provisions of paragraph 2, interest arising in a Contracting State shall be exempt from tax in that State provided it is derived and…	Article 11, paragraph 2 (10 per cent ceiling); 3(i), (ii) and (iii) (Government, Central Bank, and agencies or financial institutions agreed by exchange of notes); 4 (definition, expressly excluding PENALTY CHARGES FOR LATE PAYMENT); 5 (PE/fixed-base carve-out); 6 (source rule — the WIDE payer formula plus PE-borne deeming); 7 (special-relationship excess)
Royalties	10 per cent of the gross amount, conditional on 'the recipient [being] the beneficial owner of the royalties or fees for technical services'. Art. 12(2), which covers royalties and fees for technical services together at a single rate. Article 12 is properly headed 'royalties and fees for technical services'.	The royalty definition is split into two lettered sub-paragraphs — which no other treaty in this batch does — and both carry the same 10 per cent rate, so the split is structural rather than fiscal. Art…	Article 12, paragraph 2 (rate, covering royalties and FTS together); 3(a) and 3(b) (the two-limb definition of royalties); 4 (definition of fees for technical services); 5 (PE/fixed-base carve-out); 6 (source rule — wide payer formula plus PE-borne deeming); 7 (special-relationship excess)
Fees for technical services	10 per cent of the gross amount, conditional on the recipient being the beneficial owner. Art. 12(2) — the same rate and the same paragraph as royalties. There is a fees-for-technical-services article and it is properly signposted: Article 12 is headed 'royalties and fees for technical services', and the FTS definition has a numbered paragraph of its own (paragraph 4) rather than being a lettered sub-paragraph of the definition paragraph.	There is no make-available limb, no 'ancillary and subsidiary' limb and no exclusion list of the israeli kind. Art. 12(4) in full: 'For the purposes of this Article, "fees for technical services" means…	Article 12, paragraph 2 (rate, shared with royalties); 4 (definition)

Status

In force	11 april 1998 — and the entry-into-force rule is a delayed one: Art. 28(2) provides that 'This Agreement shall enter into force thirty days after the receipt of the latter of the notifications referred to in paragraph 1.' signed at moscow on 25 march 1997 in Russian, Hindi and English, all three texts equally authentic, 'in case of divergence between the texts, the english text shall be the operative one'. Note the treaty'S own title: the annexed instrument is 'for the avoidance of double taxation with respect to taxes on income' — it does not include the words 'and the prevention of fiscal evasion', unlike every other treaty in this batch. Effect under Art. 28(3), and the two sides are not symmetrical: in russia, (i) for taxes withheld at source, to income arising on or after 1 january in the calendar year next following the year of entry into force, and (ii) for other taxes on income, for any fiscal year beginning on or after 1 january next following — so 1 January 1999. In india, a single rule with no separate withholding date: 'in respect of income arising in any fiscal year beginning on or after the first day of April next following the calendar year in which this Agreement enters into force' — so 1 april 1999 (FY 1999-2000 onwards). Art. 28(4) terminates A soviet-era predecessor: 'The provisions of this Agreement between the Government of the union of the soviet socialist republics and the Government of the Republic of India for the avoidance of double taxation of income signed in New Delhi on 20th of November, 1988 and subsequently extended to the russian federation on the basis of mutual agreement of the contracting states shall cease to have effect on the date of coming into force of this Agreement.'
Given effect by	Notification No. G.S.R. 507(E) [No. 10677 (F. No. 501/6/92-ftd)], dated 21-8-1998 — issued under section 90 of the Income-tax Act 1961, directing that all the provisions of the Agreement be given effect to in the Union of India. The citation line as carried in the notified text ends with an asterisk, which is editorial apparatus. There is no 'as amended by' clause on the citation line: the Comprehensive Agreement as notified has never been amended by a further Indian notification.
Modified by the MLI	Yes — a synthesised text exists. Prepared on the basis of the MLI position of india submitted to the Depositary upon ratification on 25 june 2019 and the MLI position of russia submitted upon ratification on 18 june 2019. Both States signed the MLI on 7 june 2017. The document is a separate synthesised text sitting alongside the unamended Comprehensive Agreement, and it carries the standard disclaimer that it represents the shared understanding of the modifications made by the MLI and that the authentic legal texts of the Agreement and the MLI take precedence.
Principal purpose test	Yes — and IT applies alongside the simplified limitation on benefits provision, not instead of IT. That combination is unique in this sweep. The synthesised text carries a separate box after Article 27 recording that 'The following paragraph 1 of Article 7 of the MLI applies and supersedes the provisions of this Agreement', and setting out the principal purposes test in the standard form: 'Notwithstanding any provisions of [the Agreement], a benefit under [the Agreement] shall not be granted in respect of an item of income 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].' SO A russian claimant must clear two independent anti-abuse gates: the objective slob (be a qualified person, or fit the active-business or derivative-benefits relief, or obtain discretionary relief), and the subjective PPT. On every other treaty in this sweep that carries an MLI anti-abuse provision, only the PPT applies. The object and purpose against which the PPT saving is measured is supplied by the MLI Art. 6(1) preamble, which the synthesised text records as included in the preamble of this Agreement.

Dividends

Rate	10 per cent of the gross amount — A single flat ceiling with no shareholding threshold and no second tier. Art. 10(2). But the condition attached to the rate is not the ordinary one, and this is the most important qualifier on this treaty. Every other treaty in this sweep conditions the reduced dividend rate on the recipient being the beneficial owner and nothing more. Art. 10(2) here reads: '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 subject to tax thereon in the other state, the tax so charged shall not exceed 10 per cent of the gross amount of the dividends.' that is A subject-to-tax condition written into the rate itself. Two elements have to be satisfied: the recipient must be the beneficial owner, and that beneficial owner must be subject to tax on those dividends in its State of residence. If the beneficial owner is exempt on the dividends in its home State — a tax-exempt fund, a participation-exemption holding company, an entity in a tax holiday — the 10 per cent ceiling does not apply at all and the source State may tax under its domestic law without limit. A rates table showing '10 per cent' for India-Russia dividends states only half the provision.
The holding that unlocks it	No shareholding threshold — there is no participation test and no minimum holding period. The operative condition is the subject-to-tax requirement set out above, which is a condition of a different kind altogether. Note that Art. 10(2) is the only provision in this treaty that uses the phrase 'is subject to tax thereon' — Art. 11(2) (interest) and Art. 12(2) (royalties and FTS) both use the ordinary beneficial-ownership formula, so the subject-to-tax requirement is confined to dividends and must not be generalised across the treaty. Note also that the words describe the beneficial owner being subject to tax on the dividends ('thereon'), not merely being a taxable person in general.
Where this comes from	Article 10, paragraph 2 (rate, beneficial ownership AND the subject-to-tax condition, with the profits-of-the-company saving as a separate sentence); 3 (definition); 4 (PE/fixed-base carve-out disapplying paragraphs 1 AND 2, throwing the income to Art. 7 or Art. 14); 5 (no extra-territorial taxation of dividends, no tax on undistributed profits)

Art. 10(4) is drafted by reference to dividends being 'attributable to' the permanent establishment or fixed base, rather than the holding being 'effectively connected with' it as in most treaties — although Art. 10(5) reverts to the effectively-connected language. The MLI did not touch article 10: there is no MLI Art. 8 dividend-transfer-transactions box in the synthesised text, so no 365-day holding period was added. There is no sovereign or central-bank exemption in article 10 — contrast Kuwait and Qatar; on this treaty the sovereign relief is confined to the interest article. There is no underlying tax credit. On tax sparing see practitioner_notes: Art. 23(3) had one, but it was limited by activity and by a ten-year sunset.

Interest

Rate	10 per cent of the gross amount, conditional on 'the recipient [being] the beneficial owner of the interest'. Art. 11(2). Note that Article 11 does not carry the subject-to-tax condition that Article 10 attaches to dividends.
Exemptions	The exemption is in article 11 itself, at paragraph 3: 'Notwithstanding the provisions of paragraph 2, interest arising in a Contracting State shall be exempt from tax in that State provided it is derived and beneficially owned by' the listed persons. The double test — derived and beneficially owned — defeats nominee and conduit arrangements. Art. 11(3)(i) is the generic government limb: 'the Government, a political sub-division or a local authority of the other Contracting State'. Art. 11(3)(ii) is A generic central-bank limb: 'the Central Bank of the other Contracting State'. Like the Kuwaiti and Omani treaties and unlike Malaysia, Thailand, Sri Lanka, Nepal, Bangladesh and Saudi Arabia, it does not name the institutions — so it cannot be defeated by a renaming, which is the difficulty that arises on the Saudi treaty (where the Saudi central bank is named by its former title). Art. 11(3)(iii) is the safety valve and IT is not self-executing, and its form is prescribed: 'the other Governmental agencies or financial institutions as may be specified and agreed to in an exchange of notes between the competent authorities of the Contracting States.' Until such an exchange of notes exists, the exemption is confined to the two Governments, their political subdivisions and local authorities, and the two central banks. Note that limb (iii) says 'financial institutions' without the word 'governmental' before it — the same textual width as the Kuwaiti Art. 11(3)(c) and wider than the Kuwaiti dividend equivalent. What is absent: there is no Export-Import Bank, no development finance institution and no sovereign wealth vehicle named anywhere; there is no government-approved-loan exemption of the Omani kind; and there is no guarantee-or-insurance limb of the Israeli kind. Art. 11(5) disapplies only 'paragraphs 1 and 2' where the debt-claim is PE-connected, so on its face the paragraph 3 exemption survives a PE connection.
Where this comes from	Article 11, paragraph 2 (10 per cent ceiling); 3(i), (ii) and (iii) (Government, Central Bank, and agencies or financial institutions agreed by exchange of notes); 4 (definition, expressly excluding PENALTY CHARGES FOR LATE PAYMENT); 5 (PE/fixed-base carve-out); 6 (source rule — the WIDE payer formula plus PE-borne deeming); 7 (special-relationship excess)

The art. 11(4) definition is shorter than its counterparts and the omission should be noted: 'income from debt-claims of every kind, and in particular income from Government securities, bonds or debentures, including premiums and prizes attaching to such securities, bonds or debentures.' The words 'whether or not secured by mortgage and whether or not carrying A right to participate in the debtor'S profits' — present in every other interest definition in this batch — are absent. The opening phrase 'debt-claims of every kind' is wide enough to cover the same ground, but the express confirmation for profit-participating debt is not there. There is no renvoi limb and no Islamic-finance limb. Penalty charges for late payment are expressly excluded from Article 11 and fall to Art. 22, where paragraph 3 is confined to winnings and prizes — so they land in Art. 22(1) and residence-only taxation.

Royalties

Rate	10 per cent of the gross amount, conditional on 'the recipient [being] the beneficial owner of the royalties or fees for technical services'. Art. 12(2), which covers royalties and fees for technical services together at a single rate. Article 12 is properly headed 'royalties and fees for technical services'.
Where this comes from	Article 12, paragraph 2 (rate, covering royalties and FTS together); 3(a) and 3(b) (the two-limb definition of royalties); 4 (definition of fees for technical services); 5 (PE/fixed-base carve-out); 6 (source rule — wide payer formula plus PE-borne deeming); 7 (special-relationship excess)

The royalty definition is split into two lettered sub-paragraphs — which no other treaty in this batch does — and both carry the same 10 per cent rate, so the split is structural rather than fiscal. Art. 12(3)(a) covers intellectual property and is unusually explicit: 'any copyright of a literary, artistic, or scientific work, including cinematography films or recordings on any means of reproduction for use in connection with radio or television broadcasting, any patent, trade mark, design or model, plan, know-how, computer software programme, secret formula or process, or for information concerning industrial, commercial or scientific experience'. Two items in that list appear in no other treaty in this batch and both matter in india: 'know-how' is named as a standalone item rather than being left to the closing 'information concerning industrial, commercial or scientific experience' formula, and — far more significantly — 'computer software programme' is expressly listed as A royalty. Given how heavily the characterisation of software payments has been litigated in India, an express treaty listing is a material difference from the position under the Malaysian, Thai, Sri Lankan, Nepalese, Bangladeshi, Qatari, Saudi, Kuwaiti, Omani and Israeli definitions, none of which mentions software. Art. 12(3)(b) is the equipment limb: 'payments of any kind received as consideration for the use of, or the right to use, any industrial, commercial, or scientific equipment.' It is at the same 10 per cent, so there is no equipment/ip rate split — but note that the Israeli treaty has no equipment limb at all. The source rule in art. 12(6) is the wide payer form plus PE-borne deeming, with no place-of-use fallback and — unlike the Israeli Art. 13(5) — no place-of-rendering requirement for FTS. There is no MFN clause on royalties or FTS; the only MFN-flavoured provision in this treaty is Protocol para 3's third-country clause on permanent establishment taxation.

Fees for technical services

Rate	10 per cent of the gross amount, conditional on the recipient being the beneficial owner. Art. 12(2) — the same rate and the same paragraph as royalties. There is a fees-for-technical-services article and it is properly signposted: Article 12 is headed 'royalties and fees for technical services', and the FTS definition has a numbered paragraph of its own (paragraph 4) rather than being a lettered sub-paragraph of the definition paragraph.
Make-available requirement	No
Where this comes from	Article 12, paragraph 2 (rate, shared with royalties); 4 (definition)

There is no make-available limb, no 'ancillary and subsidiary' limb and no exclusion list of the israeli kind. Art. 12(4) in full: 'For the purposes of this Article, "fees for technical services" means payments of any kind in consideration for the rendering of any managerial, technical or consultancy services including the provision of services by technical or other personnel but does not include payments for services mentioned in articles 14 and 15 of this Agreement.' That is the entire definition — 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 so 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, with no threshold and no de minimis. The only carve-outs are the two cross-references: payments falling under Art. 14 (Independent Personal Services) and Art. 15 (Dependent Personal Services) are excluded, pushing individual professionals into Art. 14 and its own thresholds — a fixed base which the individual 'has or had regularly available' in the other State (note the retrospective 'or had'), or presence 'for a period or periods exceeding in the aggregate 183 days in any 12 month period'. And note the interaction with article 5, which is the opposite of the usual one: there is no service PE limb in this treaty (see pe.service_days), so ordinary technical services can never create a permanent establishment on a days basis, and the 10 per cent gross charge under Article 12 is the whole of India's taxing right unless a fixed place of business or an agency PE arises. The one exception is supervisory activities on A construction project, which fall within Art. 5(2)(j) and its 12-month threshold, and which protocol para 2 can then bring back down to a 10 per cent gross charge if six conditions are met.

Capital gains on shares

Treatment	Article 13 as drafted is the simplest capital gains article in this batch, and its simplicity is the point. It has five paragraphs and no immovable-property-rich limb whatever. Art. 13(4) is a single sentence: 'Gains from the alienation of shares of A company which is A resident of A contracting state may be taxed in that State.' There is no separate paragraph for shares deriving their value from immovable property, no 'principally' test, no 50 per cent threshold and no interest-in-partnership limb. Art. 13(5) is the residual: gains on any other property are 'taxable only in the Contracting State of which the alienator is a resident'. So under the Agreement alone, India could tax gains on shares of an indian company and nothing else — a gain on shares of a third-country company holding Indian real estate, or on an interest in a partnership or trust, fell squarely into Art. 13(5) and residence-only taxation. The MLI has changed that, and here IT adds A taxing right rather than merely refining one. MLI Article 9(4) now applies to Article 13: 'gains derived by a resident of a [Contracting State] from the alienation of shares or comparable interests, such as interests in A partnership or trust, may be taxed in the other [Contracting State] if, at any time during the 365 days preceding the alienation, these shares or comparable interests derived more than 50 per cent of their value directly or indirectly from immovable property (real property) situated in that other [contracting state].' Because the underlying Article 13(4) is confined to shares of a company resident in A contracting state, the MLI provision reaches cases the treaty never did: interests in partnerships and trusts, and shares of companies resident in neither State, wherever the value comes from Indian or Russian real property.
Grandfathering	None. There is no grandfathering date, no acquisition-date test, no disposal-date test, no transitional window and no reduced-rate period anywhere in Article 13 or in the MLI Art. 9(4) box. The only temporal rule is the 365-day look-back introduced by the MLI, which is a widening device, not a relief. The relevant timing question is instead when the MLI provision took effect for this treaty pair — see gaps.
Conditions	(i) under the agreement alone, Art. 13(4) is confined to shares of A company which is A resident of A contracting state. There is no look-through, no indirect-transfer limb and no asset-composition test. (ii) the MLI adds the more-than-50-per-cent immovable property test with a 365-day look-back, extending to shares and comparable interests such as partnership and trust interests, and applying directly or indirectly. That test is not in the Comprehensive Agreement text and can only be found in the Synthesised Text record. (iii) Art. 13(1) and 13(2) use the formulation 'may also be taxed' for immovable property and PE movable property. (iv) Art. 13(3) gives exclusive residence taxation for ships and aircraft in international traffic. (v) every limb of article 13 is now subject to both the simplified limitation on benefits provision and the principal purposes test — see anti_abuse. A Russian claimant must be a 'qualified person' under MLI Art. 7(9), or fall within the active-business or derivative-benefits relief in MLI Art. 7(10) and (11), or obtain discretionary relief under MLI Art. 7(12), and survive the PPT. (vi) A dual-resident company with no competent-authority determination under the replaced Art. 4(3) does not reach Article 13 at all.
Where this comes from	Article 13, as supplemented by paragraph 4 of Article 9 of the MLI, paragraph 1 (immovable property); 2 (PE/fixed-base movable property); 3 (ships and aircraft, residence only); 4 (shares of a company resident of a Contracting State); 5 (residual — residence only); plus the MLI Art. 9(4) box applying to Article 13 as a whole

Permanent establishment

Construction or installation PE	More than 12 months — the longest construction threshold in this batch, and IT sits inside the art. 5(2) inclusive list rather than in A paragraph of its own. Art. 5(2)(j): 'a building site or construction, installation or assembly project or supervisory activities in connection therewith, but only if such site, project or activities continue for A period of more than 12 months.' Compare Qatar and Israel at six months, Malaysia at nine, Thailand, Sri Lanka, Nepal, Bangladesh and Kuwait at 183 days and Saudi Arabia at 182. And art. 5(2)(j) carries A second sentence that exists nowhere else in this sweep — A discretionary relief even after the threshold is crossed: 'However, the competent authorities of the Contracting States may, in particular cases, agree by mutual agreement to consider the supervisory activities in connection with a building site or construction, installation or assembly project as not constituting A permanent establishment also in the cases in which the duration of works on A building site or construction, installation or assembly project exceeds 12 months.' protocol para 2 then sets out the six conditions on which that discretion is to be exercised and the 10 per cent gross charge that replaces PE taxation — see amending_notifications. The MLI has also added A contract-splitting rule: MLI Art. 14(1) applies and supersedes Art. 5(2)(j), aggregating periods exceeding 30 days by the enterprise with connected activities exceeding 30 days by closely related enterprises at the same site for the purposes of the 12-month test.
Service PE	There is no service PE limb in this agreement. Article 5 has no 'furnishing of services' paragraph and no days threshold for services. Its structure is: (1) fixed place of business definition; (2) an unusually long inclusive list running (a) to (j) and ending with the 12-month construction limb; (3) the preparatory-and-auxiliary exclusion list; (4) the agency limb in four sub-paragraphs; (5) the independent-agent protection; (6) the control-is-not-PE saving. That is the whole article, and the MLI did not add a service PE limb either. Russia is the fourth treaty in this batch with no service PE limb, alongside Bangladesh, Oman and Israel. The consequence here is the same as on the oman and israel treaties, not the bangladesh one: because there is a full FTS article at Article 12 taxing at 10 per cent gross, service income is taxed at source anyway — the absence of a service PE limb means only that a long engagement never converts the gross charge into net taxation of attributed profits. The one exception is supervisory activities on a construction project, which are inside Art. 5(2)(j) and its 12-month threshold.
Agency PE	Yes — Art. 5(4), with four sub-paragraphs, and each has been read against the MLI. (a) as originally drafted was already wider than the standard form — 'he has, and habitually exercises in that State, an authority to conclude contracts or carry on any business activities on behalf of the enterprise' (note the second limb, 'or carry on any business activities', which most treaties do not have) — but it is now modified by MLI art. 12(1), the commissionnaire rule, so the test becomes whether the person 'habitually concludes contracts, or habitually plays the principal role leading to the conclusion of contracts that are routinely concluded without material modification by the enterprise', where those contracts are in the name of the enterprise or for the transfer of ownership of, or the granting of the right to use, property, or for the provision of services. (b) 'he habitually secures orders for the sale of goods or merchandise in that State exclusively or almost exclusively on behalf of the enterprise or other enterprises controlled by it or which have a controlling interest in it' — note two narrowing features: it is confined to orders for the sale of goods or merchandise (not orders generally), and the standard is exclusively or almost exclusively rather than 'wholly or almost wholly'. (c) the stock-and-regular-delivery limb. (d) A manufacturing or processing limb, as in the Kuwait treaty: 'in acting as described in (b) above, he manufactures or processes in that State for the enterprise, goods or merchandise belonging to the enterprise' — note that limb (d) is expressly tied to acting as described in (b), which the Kuwaiti equivalent is not. Art. 5(5) as drafted withdrew independent status where the agent's activities were 'devoted wholly or almost wholly on behalf of that enterprise itself or on behalf of that enterprise and other enterprises controlling, controlled by, or subject to the same common control'; IT is now modified by MLI art. 12(2), so the test is whether the person 'acts exclusively or almost exclusively on behalf of one or more enterprises to which it is closely related', with 'closely related' defined by MLI Art. 15(1) as more than 50 per cent of beneficial interest, or of aggregate vote and value.
Where this comes from	Article 5, as modified by MLI Articles 12(1), 12(2), 13(2), 13(4), 14(1) and 15(1), and read with Protocol paragraph 2

Art. 5(2) is the longest inclusive list in this batch and three of its items are distinctive: (g) 'an installation or structure used for the exploration or exploitation of natural resources' — a separate limb from the mine and oil-or-gas-well item at (f), and one that catches exploration structures which are not places of extraction; (h) a farm or plantation; and (i) 'A premises used as A sales outlet or for receiving or soliciting orders' — the words 'or for receiving or soliciting orders' appear in no other treaty in this batch and make a pure order-taking office a permanent establishment on the face of the list. Art. 5(3) as drafted was the old wide form with only six sub-paragraphs, no preparatory-or-auxiliary condition on (a) to (d), and a combination rule at (f) that carried no such condition either; IT has now been modified by MLI art. 13(2) (option A), which reorganises the list into seven sub-paragraphs (a) to (g) and subjects every limb to the closing proviso 'provided that such activity or, in the case of subparagraph g), the overall activity of the fixed place of business, is of A preparatory or auxiliary character'. MLI art. 13(4) then adds the anti-fragmentation rule, with its proviso that the activities 'constitute complementary functions that are part of A cohesive business operation'. There is no insurance PE paragraph in this treaty. Note that in the notified Art. 5(3)(a) the text reads 'storage are display', evidently for 'or display'.

Anti-abuse: limitation of benefits, and the MLI

LOB	The agreement itself contains no limitation-of-benefits article and no anti-abuse article of any kind. The articles run Article 24 Non-Discrimination, Article 25 Mutual Agreement Procedure, Article 26 Exchange of Information, Article 27 Members of Diplomatic Missions and Consular Posts, Article 28 Entry into Force, Article 29 Termination. There is no purpose test, no bona fide business test and no domestic-law saving anywhere in the notified text. But the MLI has supplied one, and IT has supplied the heavy version. The simplified limitation on benefits provision — MLI article 7, paragraphs 8 to 13 — applies and supersedes the provisions of the agreement. This is the only treaty in the entire sweep where the slob applies. Its structure: MLI Art. 7(8) is the gateway — a resident is not entitled to a benefit that would otherwise be accorded by the Agreement, other than a benefit under the replaced Art. 4(3), under Art. 9 as modified by MLI Art. 17(1), or under Art. 25, unless such resident is a 'qualified person' as defined in MLI Art. 7(9) at the time that the benefit would be accorded. MLI Art. 7(9) defines qualified person by an objective list (individuals; the Contracting State, its political subdivisions and local authorities and their wholly-owned bodies; certain publicly listed companies and entities; certain non-profit and pension entities; and entities at least 50 per cent of whose shares are owned directly or indirectly by persons entitled to benefits under the earlier sub-paragraphs). MLI Art. 7(10) is the active conduct of A business relief, with its own connected-persons attribution rule and a requirement that the item of income emanate from or be incidental to that business. MLI Art. 7(11) is the derivative benefits relief for entities owned by equivalent beneficiaries. MLI Art. 7(12) is discretionary relief: the competent authority may nevertheless grant benefits 'taking into account the object and purpose of [the Agreement], but only if such resident demonstrates to the satisfaction of such competent authority that neither its establishment, acquisition or maintenance, nor the conduct of its operations, had as one of its principal purposes the obtaining of benefits' — the burden is expressly on the taxpayer, and the competent authority approached must consult the other competent authority before granting or denying. Separately, MLI article 10 (paragraphs 1 to 3) also applies and supersedes: the anti-abuse rule for permanent establishments situated in third jurisdictions, which denies treaty benefits to income attributable to a PE in a third jurisdiction that is exempt in the residence State and taxed at a low rate in the third jurisdiction.
PPT	Yes — and IT applies alongside the simplified limitation on benefits provision, not instead of IT. That combination is unique in this sweep. The synthesised text carries a separate box after Article 27 recording that 'The following paragraph 1 of Article 7 of the MLI applies and supersedes the provisions of this Agreement', and setting out the principal purposes test in the standard form: 'Notwithstanding any provisions of [the Agreement], a benefit under [the Agreement] shall not be granted in respect of an item of income 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].' SO A russian claimant must clear two independent anti-abuse gates: the objective slob (be a qualified person, or fit the active-business or derivative-benefits relief, or obtain discretionary relief), and the subjective PPT. On every other treaty in this sweep that carries an MLI anti-abuse provision, only the PPT applies. The object and purpose against which the PPT saving is measured is supplied by the MLI Art. 6(1) preamble, which the synthesised text records as included in the preamble of this Agreement.
Subject to tax	There is A genuine subject-to-tax condition in this treaty and IT is in the dividend article, not in the residence article. Art. 10(2) makes the 10 per cent dividend ceiling available only 'if the beneficial owner of the dividends is subject to tax thereon in the other state' — see dividends. No equivalent condition attaches to interest under Art. 11(2) or to royalties and fees for technical services under Art. 12(2). The residence article itself is the ordinary liable-to-tax formula with one additional connecting factor: Art. 4(1) defines a resident as any person who 'under the laws of that State, is liable to tax therein by reason of his domicile, residence, place of registration, place of management or any other similar criterion.' place of registration is listed in its own right — a formulation apt to Russian corporate law and one that appears in no other treaty in this batch (Thailand, Sri Lanka and Qatar use 'place of incorporation'; Malaysia, Nepal, Bangladesh, Oman and Israel list neither). There is no second sentence excluding A person liable to tax only on source income, and no sentence bringing the State or its subdivisions within the definition. The corporate tie-breaker has been replaced by the MLI: Art. 4(3), which deemed a dual-resident non-individual to be a resident of the State of its place of effective management, is expressly replaced by MLI Art. 4(1), so the question now goes to the competent authorities and, absent agreement, the person gets no relief or exemption except as they may agree. Note also that MLI art. 11(1) applies — the saving clause — so the Agreement does not affect either State's taxation of its own residents, subject to the listed exceptions.
Where this comes from	Article None in the Agreement itself. The anti-abuse provisions are MLI Article 7(8) to (13) (Simplified Limitation on Benefits), MLI Article 7(1) (Principal Purposes Test), MLI Article 10(1) to (3) (permanent establishments in third jurisdictions), MLI Article 11(1) (saving clause) and MLI Article 4(1) (dual resident entities, replacing Article 4(3)) — all in the Synthesised Text. Article 10(2) of the Agreement carries the subject-to-tax condition on dividends.

This is by some distance the most heavily MLI-modified treaty in the entire sweep — fourteen MLI provisions apply, against two for cyprus, luxembourg, hong kong and korea. In order through the synthesised text: (1) MLI art. 6(1) — the beps treaty-shopping preamble, included in the preamble. (2) MLI art. 11(1) — the saving clause, applying and superseding: the Agreement shall not affect a Contracting State's taxation of its own residents, subject to listed exceptions. (3) MLI art. 4(1) — dual resident entities, expressly replacing paragraph 3 of Article 4; the place-of-effective-management deeming rule is gone and a competent-authority determination takes its place. (4) MLI art. 14(1) — splitting-up of contracts, applying and superseding Art. 5(2)(j): activities of more than 30 days by the enterprise, aggregated with connected activities of more than 30 days by closely related enterprises at the same site, are added together for the 12-month test. (5) MLI art. 13(2) — the option A specific-activity exemptions, modifying Art. 5(3), so that every limb of the preparatory-and-auxiliary list is now subject to a preparatory-or-auxiliary condition. (6) MLI art. 13(4) — the anti-fragmentation rule, with its 'complementary functions that are part of a cohesive business operation' proviso. (7) MLI art. 12(1) — the commissionnaire rule, replacing the Art. 5(4)(a) 'authority to conclude contracts' test with 'habitually concludes contracts, or habitually plays the principal role leading to the conclusion of contracts that are routinely concluded without material modification by the enterprise'. (8) MLI art. 12(2) — the narrowed independent agent test, so that a person acting exclusively or almost exclusively for one or more closely related enterprises is not an independent agent. (9) MLI art. 15(1) — the closely related definition (more than 50 per cent of beneficial interest, or of aggregate vote and value). (10) MLI art. 17(1) — corresponding adjustments on transfer pricing. (11) MLI art. 9(4) — capital gains from alienation of shares or comparable interests deriving value from immovable property, with a 365-day look-back; on this treaty that is not a refinement but an addition, because Article 13 contains no immovable-property limb at all (see capital_gains_shares). (12) MLI art. 7(8) to (13) — the simplified limitation on benefits provision, applying and superseding the provisions of the Agreement. (13) MLI art. 10(1) to (3) — the anti-abuse rule for permanent establishments situated in third jurisdictions. (14) MLI art. 7(1) — the principal purposes test, applying and superseding the provisions of the Agreement. The headline for A practitioner is that this is the only treaty in this sweep where both the simplified limitation on benefits provision and the principal purposes test apply — see anti_abuse. Notably absent: no MLI Art. 8 dividend holding-period box, and no MLI Art. 16 mutual agreement procedure box.

The protocols, in order

A treaty read without its protocols is a wrong answer.

There is no amending protocol and no amending notification. The Comprehensive Agreement record carries no amendment markers anywhere in its text — every provision stands as notified in 1998. All of the modifications to this treaty come from the MLI and are carried in A separate synthesised text record, not written into the Comprehensive Agreement as they are for Sri Lanka and Oman. See synthesised_text — and note that the MLI has done more to this treaty than to any other in this batch.
The protocol is the original one, signed with the Agreement at Moscow on 25 March 1997, expressed to 'form an integral part of the Agreement'. IT has three numbered paragraphs and two of them are major.
Protocol para 2 creates A special 10-per-cent regime for supervisory fees on large turnkey projects, and IT has six cumulative conditions that must all be stated. It provides that, with respect to Art. 5(2)(j), the competent authorities may invoke the mutual agreement procedure referred to in that clause in particular cases of supervisory activities relating to a project which satisfies all of: '(a) the project has been approved by the government of the concerned Contracting State; (b) it is a turnkey project; (c) the fees for supervisory activities do not exceed 10 per cent of the total cost of the project, including the cost of the machinery and the equipment mentioned in the contract; (d) the total cost of the project is not less than US $10 million; (e) the duration of the project is for a period extending from 12 months to five years or such longer period as has been specified in the contract by the authority granting approval (including any further period extended by the project approving authority in consultation with the competent authority); and (f) the enterprise is not involved in avoidance or evasion of tax in the Contracting State in which supervisory activities are being rendered.' Where all six are met, 'the enterprise shall be liable to pay in that Contracting State where the project is situated, tax on its income by way of fees for supervisory activities at the rate not exceeding 10 per cent of the gross amount of such fees as is applicable under Article 12 in respect of royalties and fees for technical services.' So the effect is to convert what would be net taxation of a supervisory permanent establishment into a 10 per cent gross charge — but only for approved, large, time-limited turnkey projects, and only where the competent authorities actually invoke the mutual agreement procedure. It is not self-executing.
Protocol para 3 is A branch-profits differential with A hard cap and A third-country most-favoured-nation clause, and both limbs matter. First limb: 'Notwithstanding the provisions of paragraph 2 of Article 24 of this Agreement, either Contracting State may tax the profits of A permanent establishment of an enterprise of the other Contracting State at A rate which is higher than that applied to the profits of a similar enterprise of the first-mentioned Contracting State. It is also provided that in no case the differences in the two rates, referred to above will exceed 12 percentage points.' So a rate differential against a PE is expressly permitted, but capped at 12 percentage points — compare the Korea Protocol, which caps the equivalent Korean branch charge at 15 per cent of after-tax profits, and the Thai Protocol, which preserves the branch remittance charge with no cap at all. Second limb, and it is a genuine MFN clause that is easy to miss because it is an unnumbered continuation: 'The taxation of a permanent establishment of an enterprise of one Contracting State in the other Contracting State shall not, after the coming into force of this Agreement, be less favourable than the tax treatment given by that other contracting state to A permanent establishment of an enterprise of any third country.' That imports, automatically, whatever better PE treatment either State gives to a third country's enterprises.
Protocol para 1 is A sunset clause on an international transport provision: 'With reference to paragraph 4 of Article 8 of the Agreement, the Contracting States agree that at the end of three years from the date of entry into force of this Agreement, the provisions of paragraph 4 will cease to have effect.' Entry into force was 11 April 1998, so Art. 8(4) lapsed on or about 11 April 2001. Anyone reading Article 8 today must disregard its paragraph 4.

The words themselves

Quoted from the treaty as notified.

but if the beneficial owner of the dividends is subject to tax thereon in the other State, the tax so charged shall not exceed 10 per cent of the gross amount of the dividends.

Article 10, paragraph 2 of the treaty as notified.

Notwithstanding the provisions of paragraph 2, interest arising in a Contracting State shall be exempt from tax in that State provided it is derived and beneficially owned by: (i) the Government, a political sub-division or a local authority of the other Contracting State; or (ii) the Central Bank of the other Contracting State

Article 11, paragraph 3 of the treaty as notified.

any patent, trade mark, design or model, plan, know-how, computer software programme, secret formula or process, or for information concerning industrial, commercial or scientific experience

Article 12, paragraph 3(a) of the treaty as notified.

Gains from the alienation of shares of a company which is a resident of a Contracting State may be taxed in that State.

Article 13, paragraph 4 — quoted in full to show that the Agreement contains no immovable-property-rich limb of the treaty as notified.

For purposes of [this Agreement], gains derived by a resident of a [Contracting State] from the alienation of shares or comparable interests, such as interests in a partnership or trust, may be taxed in the other [Contracting State] if, at any time during the 365 days preceding the alienation, these shares or comparable interests derived more than 50 per cent of their value directly or indirectly from immovable property (real property) situated in that other [Contracting State].

Article MLI Article 9, paragraph 4, applying to Article 13 of the Agreement (Synthesised Text) of the treaty as notified.

a premises used as a sales outlet or for receiving or soliciting orders ;

Article 5, paragraph 2(i) of the treaty as notified.

However, the competent authorities of the Contracting States may, in particular cases, agree by mutual agreement to consider the supervisory activities in connection with a building site or construction, installation or assembly project as not constituting a permanent establishment also in the cases in which the duration of works on a building site or construction, installation or assembly project exceeds 12 months.

Article 5, paragraph 2(j), second sentence of the treaty as notified.

the total cost of the project is not less than US $ 10 million ;

Article Protocol, paragraph 2(d) of the treaty as notified.

It is also provided that in no case the differences in the two rates, referred to above will exceed 12 percentage points.

Article Protocol, paragraph 3 of the treaty as notified.

The taxation of a permanent establishment of an enterprise of one Contracting State in the other Contracting State shall not, after the coming into force of this Agreement, be less favourable than the tax treatment given by that other Contracting State to a permanent establishment of an enterprise of any third country.

Article Protocol, paragraph 3, closing sentence of the treaty as notified.

Except as otherwise provided in the Simplified Limitation on Benefits Provision, a resident of a [Contracting State] shall not be entitled to a benefit that would otherwise be accorded by [this Agreement] ... unless such resident is a "qualified person", as defined in paragraph 9 [of Article 7 of the MLI] at the time that the benefit would be accorded.

Article MLI Article 7, paragraph 8 (Synthesised Text) of the treaty as notified.

The provisions of this paragraph shall apply only for the first ten years during which this Agreement is effective. This period may be extended by a mutual agreement between the competent authorities.

Article 23, paragraph 3, closing words of the treaty as notified.

What to watch

The dividend rate carries A subject-to-tax condition and no other treaty in this sweep does. Art. 10(2) gives the 10 per cent ceiling only 'if the beneficial owner of the dividends is subject to tax thereon in the other state'. An exempt fund, a participation-exemption holding company or an entity in a tax holiday fails that test, and the source State is then free to tax the dividend under domestic law with no treaty cap. The condition is confined to Article 10 — Articles 11 and 12 use the ordinary beneficial-ownership formula.
This treaty is the most heavily MLI-modified in the sweep — fourteen MLI provisions. Preamble (Art. 6), saving clause (Art. 11), dual-resident replacement (Art. 4), contract splitting (Art. 14), specific-activity exemptions and anti-fragmentation (Art. 13(2) and (4)), commissionnaire and independent agent (Art. 12(1) and (2)), closely-related definition (Art. 15), corresponding adjustments (Art. 17), capital gains (Art. 9(4)), slob (Art. 7(8)-(13)), third-jurisdiction PE anti-abuse (Art. 10) and the PPT (Art. 7(1)). None of this appears in the Comprehensive Agreement record; it is all in the separate Synthesised Text.
IT is the only treaty in this sweep where the simplified limitation on benefits provision applies, and IT applies alongside the PPT. A Russian claimant must be a qualified person under MLI Art. 7(9), or satisfy the active-business relief in Art. 7(10) or the derivative-benefits relief in Art. 7(11), or obtain discretionary relief under Art. 7(12) — and separately survive the principal purposes test. Everywhere else in this sweep the PPT stands alone.
The capital gains article has no immovable-property limb — the MLI supplied one. Art. 13(4) reaches only shares of a company resident in a Contracting State. MLI Art. 9(4) now adds a more-than-50-per-cent immovable property test with a 365-day look-back, extending to 'comparable interests, such as interests in a partnership or trust'. On this treaty the MLI provision creates a taxing right that did not exist, rather than tightening one that did.
The construction PE threshold is twelve months — the longest in the batch — but IT now has A contract-splitting rule on top of IT. MLI Art. 14(1) aggregates periods of more than 30 days by the enterprise with connected activities of more than 30 days by closely related enterprises at the same site. Splitting a project across group companies no longer works.
And art. 5(2)(j) contains A discretionary escape that exists nowhere else. Even where works exceed 12 months, the competent authorities may agree by mutual agreement to treat supervisory activities as not constituting a permanent establishment. Protocol para 2 then sets the six conditions — government approval, turnkey, supervisory fees not exceeding 10 per cent of total project cost, total cost not less than US$10 million, duration of 12 months to five years, and no involvement in tax avoidance or evasion — and the consequence: a 10 per cent gross charge on the supervisory fees instead of net PE taxation. It is not self-executing; the competent authorities must invoke the procedure.
'computer software programme' is expressly A royalty. Art. 12(3)(a) names it, along with 'know-how'. No other treaty in this batch does. Given the volume of Indian litigation on software payments, the express listing is a material difference and should be checked before any argument built on the general royalty definition.
There is no service PE limb, but there is A full FTS article. Technical, managerial and consultancy fees are taxable at 10 per cent gross from the first rupee under Art. 12, and no length of engagement converts that into net PE taxation. The exception is supervisory activities on a construction project, which fall under Art. 5(2)(j).
The agency PE has four limbs and one of them catches manufacturing. Art. 5(4)(d) — 'in acting as described in (b) above, he manufactures or processes in that State for the enterprise, goods or merchandise belonging to the enterprise'. Note that it is expressly conditioned on also acting as described in limb (b), which the equivalent Kuwaiti limb is not. Limb (b) itself is narrower than most: it covers orders 'for the sale of goods or merchandise' only, and requires the agent to act 'exclusively or almost exclusively'.
A pure order-taking office is on the face of the PE list. Art. 5(2)(i): 'a premises used as a sales outlet or for receiving or soliciting orders'. Those last words appear in no other treaty in this batch and cut across the usual argument that a liaison or marketing office is preparatory or auxiliary.
Protocol para 3 permits A higher tax rate on PE profits but caps the differential at 12 percentage points — and then adds a third-country MFN clause requiring that PE taxation be no less favourable than that given to a permanent establishment of an enterprise of any third country. Both limbs are in the same paragraph and the MFN limb is an unnumbered continuation that is easy to miss.
The tax sparing clause was narrow and had A ten-year sunset. Art. 23(3) deemed tax to include tax spared under incentive provisions designed to promote economic development — but only 'to the extent that such exemption or reduction is granted for profits from industrial, construction, manufacturing or agricultural activities provided that the activities have been carried out within the Contracting State', and it closes: 'The provisions of this paragraph shall apply only for the first ten years during which this Agreement is effective.' The Agreement became effective in India on 1 April 1999, so that ten-year period expired around 2009 unless extended by mutual agreement. Do not report tax sparing under this treaty as live without checking for an extension.
Article 8(4) is dead. Protocol para 1 provided that paragraph 4 of Article 8 (Income from International Transport) 'will cease to have effect' three years from entry into force — i.e. On or about 11 April 2001. It is still printed in the notified text.
Other income is residence-only except for winnings and prizes. Art. 22(3) confines the source-state override to 'any income in the form of winnings or prizes from lotteries, crossword puzzles, races including horse races, card games and other games of any form or nature whatsoever' — the same narrow form as Nepal and Israel. So everything outside Articles 6 to 21, including late-payment penalty charges expelled from Article 11, is taxable only in the State of residence.
The treaty itself, and the Indian notification, refer throughout to the Russian Federation.
The treaty'S own title omits fiscal evasion. The annexed instrument is 'for the avoidance of double taxation with respect to taxes on income' — the words 'and the prevention of fiscal evasion' appear in the editorial heading and in the Indian notification's own recital, but not in the Agreement's title. Since the MLI Art. 6(1) preamble has now been included, the object-and-purpose position has in any event moved on.

What this page does not tell you. The dates on which the MLI provisions took effect for this treaty pair are not established from the portion of the synthesised text read. The document records that India deposited its MLI position on ratification on 25 June 2019 and Russia on 18 June 2019, and that both signed on 7 June 2017, but the entry-into-force and entry-into-effect statements for the two States — which normally distinguish withholding taxes from other taxes and give different first dates for each — were not captured. Those dates are essential for any period between 2019 and the present, and for deciding which version of Article 5, Article 4(3) and Article 13 applies to a given transaction. Whether the art. 23(3) tax-sparing clause was extended beyond its ten-year term is not established. The clause is expressed to apply 'only for the first ten years during which this Agreement is effective', extendable 'by a mutual agreement between the competent authorities'. The Agreement became effective in India on 1 April 1999. No extension agreement was found, and nothing read shows whether one was made. Whether the competent authorities have ever invoked the protocol para 2 turnkey-project procedure is not established, nor is there any published guidance on how the six conditions are applied, on which authority grants the project approval required by condition (a), or on how condition (f) ('not involved in avoidance or evasion of tax') is tested. No exchange of notes specifying additional governmental agencies or financial institutions under Art. 11(3)(iii) was found, and none is reproduced in this record. That list may be empty, leaving the interest exemption confined to the two Governments, their political subdivisions and local authorities, and the two central banks. The protocol para 3 third-country MFN clause on permanent establishment taxation has not been tested against either state'S treaty network in this record. It requires that PE taxation be no less favourable than that given to a PE of an enterprise of any third country, and whether either State currently gives better treatment to a third country's PEs was not examined. The subject-to-tax condition in art. 10(2) is not defined or glossed anywhere. What 'subject to tax thereon' requires — actual payment, inclusion in the tax base, or merely being within the charge — is not addressed in the Agreement or the Protocol, and no competent-authority guidance was found. The full text of the MLI Art. 7(9) qualified-person definition, Art. 7(10) active-business relief and Art. 7(11) derivative-benefits relief was read only in outline in the synthesised text; the detailed conditions of each, including the ownership and base-erosion tests within Art. 7(9), are not set out in this record. Article 8 (Income from International Transport) was not read beyond the fact that its paragraph 4 lapsed under Protocol para 1; Articles 24 (Non-Discrimination), 25 (Mutual Agreement Procedure) and 26 (Exchange of Information) were read only in outline. The Agreement has no assistance-in-collection article. The superseded 1988 Agreement with the Union of the Soviet Socialist Republics, and the mutual agreement by which it was extended to the Russian Federation, were not read; only Art. 28(4)'s termination of them was.

The India–Russian Federation tax treaty