Income From Royalties Taxed Under A DTA Agreement

Regarding Royalties, arising in a Contracting State, that are paid to a resident of the other Contracting State:-

• Some DTA agreements provide for taxation in the other Contracting State.
• Some agreements provide for taxation in the contracting State.
• Some agreements provide for taxation in both the States.

Income From Capital Gains Taxed Under A DTA Agreement

Capital Gains will usually be taxed in the state where the capital asset is situated at the time of sale. However, some DTAAs-- e.g. India's agreements with Mauritius and with Cyprus provide that there will be no Capital gains tax on the sale of shares in one contracting state by a resident of the other Contracting State.

Income From Professional Services Taxed Under A DTA Agreement

Income will be taxed in the state where the person is resident and practicing his profession. However, if he has a fixed base in the other Contracting State, the income, attributable to the fixed base, will be taxed in the other contracting state. Some treaties also specify that a professional will be liable to tax if he stays in another country for more than a specified number of days, (183 days for most treaties but 90 for the US) and derives income in that country, even if he does not have a 'fixed base' there.

Disputes, Regarding The Interpretation Of A DTA Agreement, Resolved

If there are any disputes in the interpretation or implementation of the terms of DTA Agreements, normal remedies of appeal, provided in the Income-tax Act, are available to the aggrieved party. The DTA Agreements also contain mutual agreement procedures. The aggrieved party may approach the Competent Authority of the Contracting State wherein he is a resident, who, if he is unable to resolve the dispute by himself, will approach the competent Authority of the other Contracting State to arrive at a solution after mutual discussion.

The (Indian) Income-Tax Act also contains a special provision, which is offered to those Non- residents who would like to have advance ruling on a matter of law or fact, in relation to a transaction undertaken or proposed to be undertaken by them. The facilities, available in such provision, can be availed of by Non-residents in the matters regarding Double Taxation of income, also.

The Term 'Other Income' In DTA Agreement

Any income, not specifically covered in the treaties, is usually subject to tax in the State in which the income arises.