India–Turkey 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	15 per cent of the gross amount of the dividends — Art. 10(2). A single flat ceiling, and a high one by the standards of the rest of this batch, where 10 per cent is the norm.	There is no shareholding threshold, no second tier and no holding period — but note that here the absence works against the taxpayer, not for him. In Malta, Czech Republic and Hungary the single flat rate is…	Article 10, paragraph 2
Interest	15 per cent of the gross amount in all other cases — Art. 11(2)(b). There are two tiers and the lower one turns on the identity of the lender, not on the size or term of the loan.	The exemptions sit in the article itself, at art. 11(3), not in the protocol. The chapeau: 'Notwithstanding the provisions of paragraph 2, interest arising in a Contracting State shall be exempt from tax in…	Article 11, paragraph 2 and 3
Royalties	15 per cent of the gross amount — Art. 12(2). Royalties and fees for technical services share one article and one rate. Fifteen per cent is the highest royalty/FTS ceiling in this batch — Portugal, Malta, the Czech Republic and Hungary are all at 10. Conditional on the recipient being the beneficial owner.	The Art. 12(3) royalty definition is the standard wide Indian form — copyright of literary, artistic or scientific work including cinematograph films or films or tapes used for radio or television…	Article 12, paragraph 2
Fees for technical services	15 per cent of the gross amount — the same rate as royalties, under the same Art. 12(2). This is the highest FTS rate in the batch and there is no MFN clause by which to reduce it.	There is an FTS article and IT has no make-available limb. Art. 12(4): 'The term fees for technical services as used in this Article means payments of any amount to any person other than payments to an…	Article 12, paragraph 2 and 4

Status

In force	1 february 1997 — the Introduction records that the annexed Agreement 'has come into force on the first day of February, 1997, after the notification by the Contracting States to each other of the completion of the procedures required for bringing into force the said Agreement in accordance with paragraph 1 of Article 27'. Signed at new delhi on 31 january 1995 (testimonium of both the Agreement and the Protocol) 'in the Hindi, Turkish and English languages, all three texts being equally authentic. In case of divergence between the texts, the English text shall be the operative one.' The parties are named as the republic of india and the republic of turkey in the Protocol and as the two Governments in the Agreement.
Given effect by	S.O. 74(E), dated 3-2-1997 — issued under s.90 of the Income-tax Act 1961, directing that all the provisions of the annexed Agreement be given effect to in the Union of India. The Agreement covers taxes on income only; there is no capital article and no wealth-tax notification.
Modified by the MLI	No synthesised text was found for this treaty in the source searched.
Principal purpose test	None. There is no principal purposes test and no main-purpose test of any kind, in any article or in the Protocol — and no MLI PPT, because no synthesised text for Turkey has been identified from the sources used here. This treaty currently has no general anti-abuse rule at all. Together with Philippines, it is one of only two treaties in this batch in that position. The Indian revenue's recourse is limited to the beneficial-ownership conditions in Arts. 10-12, the force-of-attraction rule in Protocol paragraph 3, and Indian domestic law including Chapter X-A GAAR read with s.90(2A).

Dividends

Rate	15 per cent of the gross amount of the dividends — Art. 10(2). A single flat ceiling, and a high one by the standards of the rest of this batch, where 10 per cent is the norm.
The holding that unlocks it	There is no shareholding threshold, no second tier and no holding period — but note that here the absence works against the taxpayer, not for him. In Malta, Czech Republic and Hungary the single flat rate is 10 per cent; in Turkey it is 15 per cent, and there is no lower tier available to a substantial corporate shareholder. The only condition is that 'the recipient is the beneficial owner of the dividends'. The paragraph closes with the standard saving that it does not affect taxation of the company on the profits out of which the dividends are paid.
Where this comes from	Article 10, paragraph 2

Two features of article 10 that are not in the other treaties in this batch. First, art. 10(4) is A branch profits tax authorisation sitting inside the dividends article: 'Profits of a company of a Contracting State carrying on business in the other Contracting State through a permanent establishment situated therein may, after having been taxed under article 7, be taxed on the remaining amount in the Contracting State in which the permanent establishment is situated and in accordance with paragraph 2 of this article.' So a second-tier tax on branch profits is expressly permitted, capped at the Art. 10(2) rate of 15 per cent of the amount remaining after the Art. 7 charge. It is reciprocal — unlike Hungary's one-way branch profits permission — and it operates without any of the Art. 10(5) extra-territoriality bar, because Art. 10(4) is drafted as a free-standing permission. Second, the art. 10(3) dividend definition expressly includes 'income derived from an investment fund and investment trust', as well as jouissance shares and rights and founders' shares. Distributions from a fund vehicle are therefore dividends for treaty purposes and get the 15 per cent cap rather than falling into Other Income. Art. 10(5) disapplies paras 1 and 2 for effectively-connected holdings and refers the income to Art. 7 only — there is no fixed-base limb, because Art. 10 in this treaty makes no reference to independent personal services at all.

Interest

Rate	15 per cent of the gross amount in all other cases — Art. 11(2)(b). There are two tiers and the lower one turns on the identity of the lender, not on the size or term of the loan.
Exemptions	The exemptions sit in the article itself, at art. 11(3), not in the protocol. The chapeau: 'Notwithstanding the provisions of paragraph 2, interest arising in a Contracting State shall be exempt from tax in that State, provided that IT is derived and beneficially owned by:' — the double requirement, derived and beneficially owned. Limb (a) — 'the Government, a political sub-division or a local authority of the other Contracting State'. Limb (b) — 'the central bank of the other contracting state', expressly and generically, so no argument arises about which entity qualifies on either side. Limb (c) — 'the turkish export-import bank (exim bank) and the exim bank of india'. Note the conjunction as printed is 'and', not 'or', and the two are named in a single limb; the sense is plainly that each is exempt in the other State. Note also what is absent: unlike Hungary, there is no limb extending the exemption to an ordinary resident lender whose loan was guaranteed or insured by the Exim Bank, and unlike the Czech Republic there is no 'extended or endorsed by' gateway. The Turkish exemption is confined to interest derived and beneficially owned by the named bodies themselves. There is no residual 'any other institution as may be agreed' limb. The Malta, Czech and Hungarian treaties all contain one; Turkey's Art. 11(3) is a closed list of three limbs with no mechanism for the competent authorities to add to it. Extending the exemption to any other institution would require a protocol. Penalty charges for late payment are not expressly excluded from the definition of interest in Art. 11(4) — the usual final sentence is missing. Instead Art. 11(4) has an unusual extension: interest includes 'and other income assimilated to income from money lent which is treated as interest', a wide sweep-up. Art. 11(4) also refers only to 'premiums attaching to such securities' and omits the usual 'and prizes'.
Where this comes from	Article 11, paragraph 2 and 3

The lower tier: Art. 11(2)(a) caps the tax at '10 per cent of the gross amount, if such interest is paid on any loan of whatever kind granted by A bank or A financial institution'. Read both halves. The words 'of whatever kind' mean the loan's character is irrelevant — term, purpose and security do not matter; what matters is that the lender is A bank or A financial institution. Neither term is defined in the Agreement. If the lender is not a bank or a financial institution, the rate is 15 per cent under sub-para (b), not 10. Both tiers are conditional on the recipient being the beneficial owner of the interest. Art. 11(5) disapplies paras 1 and 2 only for effectively-connected debt-claims of a permanent establishment, referring the income to Art. 7 — there is no fixed-base limb in para 5, though para 6 does mention a fixed base, an internal inconsistency carried in the notified text.

Royalties

Rate	15 per cent of the gross amount — Art. 12(2). Royalties and fees for technical services share one article and one rate. Fifteen per cent is the highest royalty/FTS ceiling in this batch — Portugal, Malta, the Czech Republic and Hungary are all at 10. Conditional on the recipient being the beneficial owner.
Where this comes from	Article 12, paragraph 2

The Art. 12(3) royalty definition is the standard wide Indian form — copyright of literary, artistic or scientific work including cinematograph films or films or tapes used for radio or television broadcasting, patent, trade mark, design or model, plan, secret formula or process, use of or right to use industrial, commercial or scientific equipment, and information concerning industrial, commercial or scientific experiment. Note the last word: the text as printed reads 'experiment', not the standard 'experience'. That is almost certainly a transcription error for 'experience', but it is what the record prints and it should not be quoted without the caveat. Art. 12(6) is the source rule, and it is drafted differently from the norm: the PE/fixed-base deeming applies where the PE or fixed base is one 'in connection with which the right or property or contract giving rise to the royalties or fees for technical services is effectively connected' — an effective-connection test rather than the usual 'liability to pay was incurred' test, and it expressly extends to a contract as well as a right or property.

Fees for technical services

Rate	15 per cent of the gross amount — the same rate as royalties, under the same Art. 12(2). This is the highest FTS rate in the batch and there is no MFN clause by which to reduce it.
Make-available requirement	No
Where this comes from	Article 12, paragraph 2 and 4

There is an FTS article and IT has no make-available limb. Art. 12(4): 'The term fees for technical services as used in this Article means payments of any amount to any person other than payments to an employee of the person making payments, in consideration for the services of A managerial, technical or consultancy nature, 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 or the Protocol — verified by full-text search. Four points. First, no make-available filter: the character of the service is the whole test, and managerial services are expressly included. Second, the only carve-out is for payments to an employee of the payer — and note what that means by contrast with every other treaty in this batch. Malta, the Czech Republic and Hungary all exclude payments for services 'mentioned in Articles 14 and 15' (independent and dependent personal services); Turkey excludes only payments to the payer's own employee. There is no exclusion for payments to an independent professional within article 14. So a payment to an individual Turkish professional for consultancy can fall within both Art. 12 (FTS, 15 per cent gross) and Art. 14 (independent personal services, taxable only on a fixed base or 183 days' presence), and the Agreement supplies no ordering rule between them except in the single case dealt with by Protocol paragraph 2 (mineral-oil services, where Art. 7 prevails over Arts. 12 and 14). This overlap is a real and unresolved feature of the Turkish treaty. Third, there is no negative list of the US/Portugal kind — nothing carved out for services ancillary to a sale of property, for construction, for teaching or for personal-use services. Fourth, there is no MFN clause anywhere in this treaty (see practitioner_notes), so unlike Hungary there is no textual hook by which a make-available requirement or a lower rate could be imported from a later Indian treaty. The 15 per cent gross charge on managerial, technical and consultancy fees is final as a matter of treaty law, and the only remaining comparison is with India's domestic s.115A rate under s.90(2).

Capital gains on shares

Treatment	Full source-state taxing right over share gains, and — uniquely in this batch — A one-year holding rule that reaches even the residual paragraph. Article 13 has six paragraphs. Art. 13(4): '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.' Art. 13(5): '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.' Paragraph 5 is an unrestricted source-State taxing right over ordinary share gains — no percentage test, no minimum holding, no listing carve-out, no de minimis. India may therefore tax a Turkish resident's gain on shares of an Indian company whatever the company's asset mix. Then comes the provision that no other treaty in this batch has. Art. 13(6): 'Gains from the alienation of any property other than that referred to in paragraphs 1 to 5 shall be taxable in the Contracting State of which the alienator is a resident. However, the capital gains mentioned in the foregoing sentence and derived from the other contracting state shall be taxable in the other contracting state if the time period does not exceed one year between acquisition and alienation.' So even the residual category — everything that is not immovable property, PE property, ships and aircraft, or shares — is taxable in the source State where the asset was held for one year or less. A short-term gain on any Indian-situate asset is exposed to Indian tax under this treaty; only a holding period exceeding one year takes it out. Note that the sentence says 'shall be taxable in the other Contracting State', not 'may also be taxed' — it is drafted as a transfer of the taxing right rather than a shared right, and Art. 22(3)(b) confirms it by giving Turkish residents a credit (not an exemption) specifically for income 'in accordance with the provisions of Articles 10, 11, 12 and paragraph 6 of article 13'.
Grandfathering	None, and none is needed. This taxing right has been in the treaty since 1 February 1997 and has never been added, removed or narrowed — zero amendment markers, no protocol touching Article 13, no MLI. There is no shares-acquired-before date, no transition rate and no limitation-of-benefits gateway attached to Art. 13.
Conditions	Art. 13(5) is unconditional. Art. 13(4) turns on the undefined word 'principally' — no percentage, no valuation date, and no 365-day look-back, because MLI Art. 9(4) has never been applied to this treaty (there is no synthesised text). Art. 13(6) turns on a one-year period 'between acquisition and alienation', which the treaty does not further define — it does not say whether the period is counted inclusively, how it applies to assets acquired in tranches, or what happens on a deemed acquisition. Art. 13(3) is also drafted unusually: gains on ships and aircraft in international traffic are taxable only in the Contracting State 'in which the registered office of the enterprise is situated' — a registered-office test, not the usual place-of-effective-management or residence test.
Where this comes from	Article 13, paragraph 4, 5 and 6

Permanent establishment

Construction or installation PE	More than six months, with A bilateral aggregation rule and A second, separate trigger that has no time threshold at all. Art. 5(2)(j)(i): 'a building site or construction, installation or assembly project or supervisory activities in connection therewith, where such site, project or activities (together with other such sites, projects or activities, if any) continue for a period of more than six months'. The parenthesis is an anti-splitting rule agreed bilaterally in 1995 — it aggregates other sites, projects and activities, which is what MLI Art. 14 would later have supplied, and it is why the absence of a synthesised text costs less here than it might. Art. 5(2)(j)(ii) then adds A second and quite different trigger: 'where such project or supervisory activity, being incidental to the sale of machinery or equipment, continues for A period not exceeding six months and the charges payable for the project or supervisory activity exceed 10 per cent of the sale price of the machinery and equipment'. Read it carefully: this limb bites where the activity lasts six months or less — it is not a duration threshold but a value threshold. A three-month supervision job incidental to an equipment sale creates a PE if the supervision charges exceed ten per cent of the equipment price. A practitioner who checks only the six-month test in sub-clause (i) and finds it not met will reach the wrong answer.
Service PE	There is no general service PE — but there is A mineral-oil services PE at more than six months, and IT is buried in A proviso. The proviso to Art. 5(2) reads: 'Provided that for the purpose of this paragraph, an enterprise shall be deemed to have A permanent establishment in A contracting state and to carry on business through that permanent establishment if IT provides services or facilities in that contracting state for more than six months in connection with or supplies plant and machinery on hire used or to be used in, the prospecting for, or extraction or production of mineral oils in the state.' Two triggers, only one of which carries the six-month test on a natural reading: providing services or facilities in connection with mineral-oil prospecting, extraction or production for more than six months; or supplying plant and machinery on hire for such use — where the placement of the words leaves it arguable whether the six-month period governs the hire limb too. The drafting is defective (the comma after 'used in' and the missing comma before 'or supplies' make it read awkwardly), and this ambiguity is in the notified text. Outside the mineral-oil sector there is no service PE at all: no 'furnishing of services, including consultancy services, through employees or other personnel' limb and no day threshold. A Turkish enterprise rendering ordinary technical or consultancy services in India creates no PE however long its personnel stay, and is taxed instead under Art. 12 at 15 per cent gross.
Agency PE	Yes — Art. 5(4), three limbs: (a) has and habitually exercises an authority to conclude contracts on behalf of the enterprise, 'unless his activities are limited to the purchase of goods or merchandise for the enterprise' — note the exception is confined to purchasing, and does not cross-refer to the whole of the para 3 exclusion list as the Malta, Czech and Hungarian treaties do, so an agent whose activities are limited to, say, information-collecting is not within the exception; (b) no such authority but habitually maintains a stock of goods from which he regularly delivers on behalf of the enterprise; or (c) 'he habitually secures orders in the first-mentioned State, wholly for the enterprise itself or for the enterprise and other enterprises controlling, controlled by, or subject to the same common control, as that enterprise' — a group-orders limb, but note it says 'wholly', not the usual 'wholly or almost wholly', so an agent who does even a small amount of genuinely third-party business falls outside limb (c). Art. 5(5) is the independent-agent exclusion with no anti-exclusivity rider at all — the sentence 'However, when the activities of such an agent are devoted wholly or almost wholly on behalf of that enterprise, he will not be considered an agent of an independent status' that appears in the Malta, Czech and Hungarian treaties is absent here. An exclusive agent acting in the ordinary course of his business therefore remains an independent agent under the Turkish treaty. That is markedly taxpayer-favourable and is the counterweight to the wide para 4.
Where this comes from	Article 5

Art. 5(2) is one of the longest inclusive lists in the indian network — ten limbs, several with no duration test: '(g) an installation or structure used for the exploration or exploitation of natural resources' (no time threshold, contrast Portugal's 120 days); '(h) A warehouse in relation to A person providing storage facilities for others'; and '(i) A premises used as A sales outlet or for receiving or soliciting orders' — the order-soliciting premises limb is unusual and cuts directly across any argument that an order-collection office is preparatory or auxiliary. Art. 5(3) (the exclusions) is also non-standard in three respects. Limbs (a) and (b) exclude only 'storage, display or occasional delivery' — the word occasional narrows the delivery exclusion so that a regular delivery function is not excluded. Limb (e) is not the general 'any other activity of a preparatory or auxiliary character' formula but an enumerated list — 'solely for the purpose of advertising, for the supply of information, for scientific research, or for similar activities which have a preparatory or auxiliary character' — so an activity that is preparatory or auxiliary but not of that enumerated kind is not excluded. Limb (f) is a one-off: 'the selling of goods or merchandise belonging to the enterprise displayed in an occasional temporary fair or exhibition in the process of closing down of such fair or exhibition' — closing-down sales at trade fairs. And limb (g), the combination limb, has no 'provided that the overall activity ... Is of a preparatory or auxiliary character' proviso, unlike every other treaty in this batch. There is no insurance PE. Since no synthesised text exists, MLI Art. 13 has not been applied and there is no anti-fragmentation overlay — but note that Art. 5(3) here is already substantially narrower than the pre-beps norm.

Anti-abuse: limitation of benefits, and the MLI

LOB	None. There is no limitation-of-benefits article, no shell or conduit test, no bona fide business test, no listed-company gateway and no expenditure test. The Agreement runs Art. 23 Non-discrimination, Art. 24 Exchange of Information, Art. 25 map, Art. 26 Diplomatic and Consular Officials, Art. 27 Entry into force, Art. 28 Termination — and no anti-abuse article anywhere. Beneficial ownership in Arts. 10, 11 and 12 is the only bilateral abuse filter in the rate articles.
PPT	None. There is no principal purposes test and no main-purpose test of any kind, in any article or in the Protocol — and no MLI PPT, because no synthesised text for Turkey has been identified from the sources used here. This treaty currently has no general anti-abuse rule at all. Together with Philippines, it is one of only two treaties in this batch in that position. The Indian revenue's recourse is limited to the beneficial-ownership conditions in Arts. 10-12, the force-of-attraction rule in Protocol paragraph 3, and Indian domestic law including Chapter X-A GAAR read with s.90(2A).
Subject to tax	None in the ordinary sense — but protocol paragraph 6 is A complete sectoral exclusion that functions like one and that is easy to miss because it is the last line of the Protocol and carries no 'With respect to Article' heading: 'It is understood that the provisions of this agreement shall not apply to income derived by A resident of A contracting state from agricultural activities in the other contracting state.' Not a rate carve-out, not an article carve-out — the whole agreement is disapplied to agricultural-activity income. A Turkish resident with Indian agricultural income has no treaty protection of any kind: no PE threshold, no rate cap, no non-discrimination, no map access. Compare Malta's Protocol paragraph 2, which disapplies only Articles 6 to 22 and only to special-regime entities.
Where this comes from	Article none — no LOB or PPT exists; Protocol para 6 for the agricultural-income exclusion

No synthesised text for turkey has been identified from the sources used here. There is therefore only one text of this treaty in the sources used here and nothing to reconcile — the Poland/Belgium divergence problem does not arise here. Consequences, and they are substantial: none of the MLI overlay applies on the face of the record. No anti-treaty-shopping preamble; no principal purposes test; no saving clause; no anti-fragmentation rule on the specific-activity exemptions; no commissionnaire rule; no 365-day look-back on immovable-property share gains; no splitting-up-of-contracts rule (which would have mattered here, because Art. 5(2)(j)(i) already contains its own bilateral aggregation wording). Turkey signed the MLI on 7 June 2017 but its ratification and deposit are not evidenced by anything in the sources used here, and no synthesised text has been prepared with India. Until one is, this treaty has no general anti-abuse rule of any kind — no limitation-of-benefits article, no main-purpose test in any rate article, and no PPT. The Indian revenue's only recourse is domestic law, including Chapter X-A GAAR read with s.90(2A), and the beneficial-ownership conditions in Arts. 10, 11 and 12.

The protocols, in order

A treaty read without its protocols is a wrong answer.

None. The citation line names one notification and one date — 'notification: No. S.O. 74(E), dated 3-2-1997.' — with no 'as amended by', no 'as corrected by' and no trailing footnote asterisk. There is no amendment marker anywhere in the notified text, across all 28 Articles and the Protocol. This treaty has never been amended since it entered into force in 1997.
The protocol was agreed 'At the time of signing the Agreement', states that its provisions 'shall form an integral part of the Agreement', and was notified with it. It was opened and read separately, as required. It has six numbered paragraphs and several of them are operative in ways the Articles alone do not disclose — see practitioner_notes.
No synthesised text exists, so no MLI change to this treaty is established here. See synthesised_text.

The words themselves

Quoted from the treaty as notified.

where such project or supervisory activity, being incidental to the sale of machinery or equipment, continues for a period not exceeding six months and the charges payable for the project or supervisory activity exceed 10 per cent of the sale price of the machinery and equipment

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

Provided that for the purpose of this paragraph, an enterprise shall be deemed to have a permanent establishment in a Contracting State and to carry on business through that permanent establishment if it provides services or facilities in that Contracting State for more than six months in connection with or supplies plant and machinery on hire used or to be used in, the prospecting for, or extraction or production of mineral oils in the State.

Article 5, paragraph 2, proviso of the treaty as notified.

However, the capital gains mentioned in the foregoing sentence and derived from the other Contracting State shall be taxable in the other Contracting State if the time period does not exceed one year between acquisition and alienation.

Article 13, paragraph 6, second sentence of the treaty as notified.

10 per cent of the gross amount, if such interest is paid on any loan of whatever kind granted by a bank or a financial institution

Article 11, paragraph 2(a) of the treaty as notified.

The term "fees for technical services" as used in this Article means payments of any amount to any person other than payments to an employee of the person making payments, in consideration for the services of a managerial, technical or consultancy nature, including the provisions of services of technical or other personnel.

Article 12, paragraph 4 of the treaty as notified.

Profits of a company of a Contracting State carrying on business in the other Contracting State through a permanent establishment situated therein may, after having been taxed under Article 7 be taxed on the remaining amount in the Contracting State in which the permanent establishment is situated and in accordance with paragraph 2 of this Article.

Article 10, paragraph 4 of the treaty as notified.

It is understood that the provisions of this Agreement shall not apply to income derived by a resident of a Contracting State from agricultural activities in the other Contracting State.

Article Protocol, paragraph 6 of the treaty as notified.

What to watch

No most-favoured-nation clause — and this matters more for turkey than for any other treaty in this batch, because the rates are the worst. A full-text search of the whole record returned no hit for 'most favoured', 'most-favoured' or 'OECD' anywhere in the Agreement or the Protocol. The only appearance of the words 'third State' is in protocol paragraph 5, which is not an MFN clause at all but an elaboration of the non-discrimination phrase 'in the same circumstances' in Art. 23(1): it explains that a national of one State who is resident in a third State and doing business in the other State is to be treated the same as a national of that other State who is resident in a third State and doing business there. That is a non-discrimination comparator, not a benefit-importing clause; nothing flows through from any other treaty. Nothing is tied to A later indian treaty, nothing covers scope, and no notification has ever been or could be issued under such A clause. So the 15 per cent on dividends, the 15 per cent on royalties and FTS, and the 15 per cent residual on interest are final as a matter of treaty law. Since India's domestic s.115A rates for royalty and FTS are 20 per cent plus surcharge and cess for non-residents without a PE, the treaty is still beneficial — but it is the least beneficial in this batch by a wide margin, and s.90(2) requires the comparison to be run in every case.
The protocol has six paragraphs and four of them change answers. Paragraph 2 is an ordering rule and IT is the most important: it provides that an enterprise caught by the mineral-oil deemed-PE proviso 'will be subject to taxation accordingly and not in accordance with provisions of article 12 (Royalties and Fees for Technical Services) and article 14 (Independent Personal Services)'. So oilfield services income that crosses the six-month proviso is taxed on a net basis under Art. 7 and is expressly taken out of the 15 per cent gross FTS charge. This is the treaty's own solution to the Art. 12 / Art. 7 overlap, and it exists only for mineral-oil services — nowhere else. Note A defect in the cross-reference: the heading of Protocol paragraph 2 reads 'With respect to proviso to sub-paragraph (j) of paragraph 2 of article 6'. Article 6 is Income from Immovable Property and has no sub-paragraph (j); the proviso and sub-paragraph (j) are both in article 5. The reference to Article 6 is plainly an error for Article 5 in the notified text. Paragraph 3 is A force-of-attraction rule, and a wide one: where an enterprise has a PE in the other State and also 'effects sales in that other State of goods or merchandise of the same or similar kind as those sold through that permanent establishment' or 'carries on other business activities in that other State of the same or similar kind as those effected through that permanent establishment', the profits from those direct sales and activities 'may be taxed in that other contracting state as part of the profits of the permanent establishment'. Once a PE exists, direct same-or-similar business bypassing it is dragged into the PE charge. Paragraph 4 spells out the head-office expense limit for an Indian PE as the least of three amounts — 5 per cent of adjusted total income, average head office expenditure, or the head-office expenditure attributable to the Indian PE — with a loss-year rule using 5 per cent of average adjusted total income, and adopts the Indian Income-tax Act definitions of those expressions. Unlike Hungary's protocol, it is not frozen at the date of signature; it incorporates the Indian definitions as such.
Article 21 (other income) is not residence-only, and this is A trap. Para 1 states the residence-only rule but is expressly made 'subject to the provisions of paragraph 2'; para 2 is the ordinary PE carve-out; and para 3 then overrides both: 'Notwithstanding the provisions of paragraphs 1 and 2, items of income of a resident of a Contracting State not dealt with the foregoing Articles of this Agreement arising in the other contracting state may also be taxed in that other state.' So any income not covered by a distributive rule remains fully taxable at source. Contrast the Malta, Czech and Hungarian treaties, whose Other Income articles are residence-only save for a gambling limb, and the Philippines treaty, whose Other Income article is residence-only without exception. Note also that Art. 21(1) uses 'not expressly dealt with in the foregoing Articles' — the word 'expressly' narrows the article's reach.
Article 22 (elimination of double taxation) is asymmetric. India gives ordinary credit (Art. 22(2)(a)) and, for income taxable only in Turkey, exemption with progression achieved by including the income in the tax base and allowing a deduction of the attributable Indian tax (Art. 22(2)(b)). Turkey gives exemption with progression as its general method (Art. 22(3)(a)) but switches to credit for a defined list — income taxable in India 'in accordance with the provisions of articles 10, 11, 12 and paragraph 6 of article 13'. The express inclusion of Art. 13(6) in the credit list confirms that the one-year short-term-gains rule in Art. 13(6) was intended to be a real Indian taxing right, not a drafting accident. Art. 22(1) also opens with the older-style saving: 'The laws in force in either of the Contracting States shall continue to govern the taxation of income ... Except where express provisions to the contrary is made in this Agreement.'
The shape of this treaty, summarised. It is a high-rate, wide-PE, no-anti-abuse treaty. Rates: 15 per cent on dividends, royalties and FTS, and on interest other than bank/financial-institution loans (10 per cent). PE: a ten-limb inclusive list with a warehouse, an order-soliciting premises and an untimed natural-resources installation; a six-month construction test with bilateral aggregation; a value-based equipment-supervision PE with no minimum duration; a six-month mineral-oil services PE; and narrowed exclusions that omit 'delivery' except where occasional and that replace the general preparatory-or-auxiliary formula with an enumerated list. Capital gains: unrestricted source taxation of shares, plus a one-year short-term rule reaching all other property. Anti-abuse: nothing — no LOB, no PPT, no MLI. Protocol: a force-of-attraction rule, a total exclusion of agricultural income, and an ordering rule for oilfield services.
What the absence of A synthesised text costs and saves here. It saves the taxpayer the PPT — there is no principal purposes test applying to this treaty at all. It costs the revenue the anti-fragmentation rule, the commissionnaire rule and the 365-day capital-gains look-back; but two of those matter less than usual, because Art. 5(3) is already narrow and Art. 13(5) already gives India an unrestricted shares right. The one thing genuinely lost is the anti-fragmentation overlay on Art. 5(3). If a synthesised text is later prepared, the point to watch is whether MLI Art. 7(1) is introduced as a pure addition (as in Czech Republic and Hungary, where there was no anti-abuse article) — it must be, because this treaty has no anti-abuse article for it to replace.

What this page does not tell you. The Gazette page/part reference for S.O. 74(E) of 3-2-1997 is not given; only the number and date. Turkey'S MLI position is not established from the sources used here. The inference that the MLI does not currently modify this treaty rests solely on the absence of a Synthesised Text record. Whether Turkey has deposited its instrument of ratification, whether India and Turkey have listed each other as Covered Tax Agreements, and whether a synthesised text is in preparation, cannot be answered from here — the OECD Depositary listing would settle it. If Turkey has ratified, this record's 'no PPT' conclusion would need revisiting. The mineral-oil proviso to Art. 5(2) is defectively punctuated and it is genuinely unclear whether the 'more than six months' period governs the plant-and-machinery-on-hire limb as well as the services-or-facilities limb. The Gazette copy would show the punctuation as notified but might not resolve the ambiguity. Protocol paragraph 2 cross-refers to 'sub-paragraph (j) of paragraph 2 of Article 6' where Article 5 is plainly meant. Whether the error is in the notified text or in the copy read here cannot be settled from the sources used. Art. 12(3) as rendered ends 'information concerning industrial, commercial, or scientific experiment'. Whether the notified text reads 'experiment' or 'experience' cannot be checked from the sources used here. The overlap between Art. 12 (fees for technical services, 15 per cent gross) and Art. 14 (independent personal services, fixed base or 183 days) is unresolved on the face of the treaty: Art. 12(4) excludes only payments to the payer's own employee, not payments for services within Art. 14. Except for mineral-oil services under Protocol paragraph 2, the Agreement supplies no ordering rule. Art. 13(4) uses 'principally' without definition, and Art. 13(6) uses a one-year period 'between acquisition and alienation' without defining how it is counted or how it applies to assets acquired in tranches. 'Bank' and 'financial institution' in Art. 11(2)(a) are not defined in the Agreement, and Art. 3(2) would refer the question to the domestic law of the applying State. Art. 11(3) is a closed list with no residual 'any other institution as may be agreed' limb, so there is no mechanism short of a protocol for extending the interest exemption. Whether the parties have ever considered doing so is not established.

The India–Turkey tax treaty