Considering the actual working days of machinery for the purpose of no. of days for `put to use` and restrict depreciation u/s 32 of IT Act

Considering the actual working days of machinery for the purpose of no. of days for `put to use` and restrict depreciation u/s 32 of IT Act

12:18 AM Add Comment
*Business Expenditure*
*Deputy Commissioner of Income Tax Vs. Siv Industries Ltd. * 10/29/2007
[2008] 306 ITR 114 (Mad)

Case Fact: Whether the learned commissioner was justified in considering the
actual working days of machinery for the purpose of no. of days for `put to
use` and restrict depreciation u/s 32 of The Income Tax Act,1961 to 50%?

Decision: Held by the Hon`able Court that the term `put to use` cannot be
construed as actual working days. The date of first user shall be considered
for the purpose of `put to use` for determing the period of more than 180
days. Full depreciation shall be allowable u/s 32 of the income tax Act,
1961 for machinery used or kept ready for use for 180 days.
Taxable event is rendering of taxable service., not raising of invoice or payment: Gujarat HC

Taxable event is rendering of taxable service., not raising of invoice or payment: Gujarat HC

12:17 AM Add Comment
*Service Tax – Taxable event is rendering of taxable service., not raising
of invoice or payment: Gujarat HC*
*By TIOL News Service *
*AHMEDABAD, FEB 19, 2009: CAN* you imagine Revenue raising a demand of
service tax for the period when there was no tax was payable, simply for the
reason that payment was received when it was taxable? It not only happened,
but they went in appeal to the High Court after they lost it CESTAT.
Revenue is in appeal with the questions,

"Whether or not, in Service Tax, the taxable event is realization of payment
for taxable services rendered and not the time of rendering of the taxable
service"

"Whether or not, at the time of realization of payment for the taxable
service provided, the provisions of Rule 2(i)(d)(iv) had come into force,
making the service receiver liable for payment of service tax in respect of
taxable services provided by a non-resident or a person who is from outside
India and who does not have any office/establishmen t in India"
It was submitted that the impugned order dated 03.08.2007 made by
CESTAT [*2007-TIOL-1813-
CESTAT-AHM
*] overlooks the fact that by virtue of amendment of relevant Rule of the
Service Tax Rules, the liability to pay Service Tax has been shifted to the
recipient of the service w.e.f. 16.08.2002 by virtue of Rule 2(1)(d)(iv) of
the Rules. That in the circumstances, the respondent-assessee was required
to pay the Service Tax on the services received from a sister company
located in Germany.
CESTAT has found that admittedly, the services were received by respondent
between November 2001 and March 2002 while the invoice has been raised and
settled in September 2003. It is also an accepted position that at the point
of time when the services were rendered by the service provider and received
by the respondent the liability was not cast on the recipient of the
services. The liability to pay Service Tax has been cast on the recipient of
the service only w.e.f. 16.08.2002.
The High Court observed,
1.The taxable event is providing all taxable services which has been defined
by Section 65(105) of the Act.
2.The taxable event in relation to Service Tax is admittedly the rendering
of taxable service.
3.The said taxable services were rendered between November 2001 and March
2002.
4.In the circumstances, merely because the invoice is raised and payment
made subsequently viz. after 16.05.2002 the liability cannot be fastened on
the recipient of the services as the taxable event had already occurred past
and raising of invoices and/or making of payment cannot be considered to be
a taxable event.
5.Nor is it possible to hold that the provision of Rule 2(1)(d)(iv) of the
Rules is retrospectively applicable to services rendered prior to
16.08.2002.
6.Thus, neither the Section nor the Rule even suggests that the taxable
event is the raising of an invoice for making of payment.
7.It is well settled in law that a taxing statute has to be read and plain
meaning assigned to the provisions without importing any extraneous
consideration on a presumption.
8.The Tribunal has decided the matter in accordance with law and based on
the facts and material available on record.
9.In absence of any legal infirmity in the impugned order of the Tribunal,
no interference is called for.
10. Accordingly, in absence of any substantial question of law, the appeal
is dismissed.
Concealment of Income

Concealment of Income

12:15 AM Add Comment
*COMMISSIONER OF INCOME TAX Vs. Nellai trading Automobile Agency *
08/23/2006
[2008] 172 TAXMAN 330 (MAD )

Case Fact: Whether, levied penalty on the explanation that the stock
received in March were not included in inventory of assessee as they
remained unpacked is justified in law?

Decision: Held by the Hon’ble Court that, the tribunal concluded that there
was no intention to conceal the income and it was a genuine mistake, no
substantial question of law arose for consideration.
Nature of Expenses - Pre Operative or Post Operative? (Case Law)

Nature of Expenses - Pre Operative or Post Operative? (Case Law)

12:15 AM Add Comment
Income Tax - CIT Versus M/s. Geoffrey Manners & Co. Ltd. (Now known
as Wyeth Limited) [2009 - TMI - 32441 - *BOMBAY HIGH COURT*]

Date of Decision: February 9, 2009

Expenses incurred on film production by way of advertisement for marketing
of products manufactured by them - if the expenditure is in respect of
business which is yet to commence then the same cannot be treated as revenue
expenditure but if the expenditure is in respect of an ongoing business and
there is no enduring benefit it can be treated as revenue expenditure -
Since expenditure was in
respect of promoting ongoing products of the assessee, they are held as by
way of revenue expenditure
Empanelment of CA Firms with Serious Fraud Investigation Office (SFIO) - (23-02-2009)

Empanelment of CA Firms with Serious Fraud Investigation Office (SFIO) - (23-02-2009)

12:14 AM Add Comment
Serious Fraud Investigation Office has invited applications from Chartered Accountants empanelled with the office of C&AG and who may like to be associated with SFIO for carrying out forensic examination of records of companies ordered for investigation by the government.

Serious Fraud Investigation Office, Ministry of Corporate Affairs intends to outsource certain Forensic Audit services in cases under investigation. The interested firms/ individuals empanelled with the CAG office or the Cost Auditing firms with expertise in forensic investigation field may apply immediately furnishing therewith, their expertise in the area of Forensic Accounting and audit including Cyber Forensic, the software that will be used and details of any Government/Public Sector or other undertaking where their services had been used. The interested firm shall be paid at the rate of Rs. 5000/- per day, for a team consisting of at least five individuals, with service tax and government dues extra.

Those interested may write at the following address:

Director
Serious Fraud Investigation Office (SFIO)
Paryavaran Bhawan
2nd Floor, CGO Complex
Lodhi Road
New Delhi- 110 003
Internal Auditor cannot be tax auditor – Further Clarification

Internal Auditor cannot be tax auditor – Further Clarification

12:13 AM Add Comment
*DEAR MEMBERS,*

It has been further clarified by the Central Council on the earlier decision
taken by the Council regarding; *an internal auditor of an assessee, could
not be appointed as his tax auditor........* These directions will not be
applicable in case of, internal auditors whose appointment have been made as
tax auditors before December 12, 2008 and they can carry out the tax audit
of the financial year ending on March 31, 2009, i.e., Assessment Year
2009-2010.

Internal Auditor cannot be tax auditor – Further Clarification

*Details are hoisted on **www.icai.org* * as follows:*

**
The Council in its 281st meeting held from 3rd to 5th October, 2008 decided
that an internal auditor of an assessee, whether working with the
organization or an independently practicing Chartered Accountant being an
individual chartered accountants or a firm of chartered accountants, could
not be appointed as his tax auditor.

The said decision came into effect from December 12, 2008. As per the
decision an internal auditor cannot carryout tax audit on or after December
12, 2008. Subsequently representations have been received pointing out the
hardship being caused by the above said decision in respect of those
internal auditors who have been appointed as tax auditors for the financial
2008-09 on or before December 12, 2008. The Council considering this
hardship has decided that the decision taken by the Council at its meeting
between 3rd to 5th October, 2008 shall be applicable to all appointments as
tax auditor made on or after December 12, 2008 and accordingly those
internal auditors whose appointment have been made as tax auditors before
December 12, 2008, can carry out the tax audit of the financial year ending
on March 31, 2009, i.e., Assessment Year 2009-2010 only.
Even confessed undisclosed income can not be assessed

Even confessed undisclosed income can not be assessed

12:13 AM Add Comment
*DCIT vs. M/s Premsons (ITAT Mumbai)*

Where during a survey, the assessee surrendered an amount of Rs. 29 lakhs
towards “any other discrepancy” but later retracted from the
same and the question arose whether the assessee could be assessed despite
the said retraction, HELD:

(a) While conducting a survey u/s 133A the department has no power to
examine any person on oath. Consequently, such a statement has no
evidentiary value and no addition can be made solely on the basis of such
statement;

(b) The CBDT is not oblivious of the practice of obtaining forced
confessions and accordingly Circular dated 10.3.2003 makes it clear
that no attempt should be made to obtain confessions of undisclosed income;

(c) On facts, as there was no other material to show undisclosed income nor
were there any ‘discrepancies’ the addition could not be
sustained.

See Also: Vinod Solanki vs. UOI (Supreme Court) (law on retraction of
confessions) and Bhuvanendra 303 ITR 235 (Mad.)
supersession of the notification  of the Government of India, Ministry of Finance ( Department of Revenue), No. 4/2004-ServiceTax, 31st Mar 2k4

supersession of the notification of the Government of India, Ministry of Finance ( Department of Revenue), No. 4/2004-ServiceTax, 31st Mar 2k4

12:10 AM Add Comment
[TO BE PUBLISHED IN THE GAZETTE OF INDIA, EXTRAORDINARY, PART II, SECTION 3, SUB-SECTION (i)]



GOVERNMENT OF INDIA

MINISTRY OF FINANCE

(Department of Revenue)

New Delhi, the 3rd March, 2009.

Notification No.9/2009-Service Tax



G.S.R. (E).- In exercise of the powers conferred by sub-section (1) of section 93 of the Finance Act, 1994 (32 of 1994), and in supersession of the notification of the Government of India, Ministry of Finance ( Department of Revenue), No. 4/2004-ServiceTax, dated the 31st March, 2004, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section ( i ) dated the 31st March, 2004, vide, G.S.R.248(E), dated the 31st March, 2004, except as respects things done or omitted to be done before such supersession, the Central Government, on being satisfied that it is necessary in the public interest so to do, hereby exempts the taxable services specified in clause (105) of section 65 of the said Finance Act, which are provided in relation to the authorised operations in a Special Economic Zone, and received by a developer or units of a Special Economic Zone, whether or not the said taxable services are provided inside the Special Economic Zone, from the whole of the service tax leviable thereon under section 66 of the said Finance Act:



Provided that–



(a) the developer or units of Special Economic Zone shall get the list of services specified in clause (105) of section 65 of the said Finance Act as are required in relation to the authorised operations in the Special Economic Zone, approved from the Approval Committee (hereinafter referred to as the specified services);



(b) the developer or units of Special Economic Zone claiming the exemption actually uses the specified services in relation to the authorised operations in the Special Economic Zone;



(c) the exemption claimed by the developer or units of Special Economic Zone shall be provided by way of refund of service tax paid on the specified services used in relation to the authorised operations in the Special Economic Zone;



(d) the developer or units of Special Economic Zone claiming the exemption has actually paid the service tax on the specified services;



(e) no CENVAT credit of service tax paid on the specified services used in relation to the authorised operations in the Special Economic Zone has been taken under the CENVAT Credit Rules, 2004;



(f) exemption or refund of service tax paid on the specified services used in relation to the authorised operations in the Special Economic Zone shall not be claimed except under this notification.



2. The exemption contained in this notification shall be subject to the following conditions, namely:-



(a) the person liable to pay service tax under sub-section (1) or sub-section (2) of section 68 of the said Finance Act shall pay service tax as applicable on the specified services provided to the developer or units of Special Economic Zone and used in relation to the authorised operations in the Special Economic Zone, and such person shall not be eligible to claim exemption for the specified services:

Provided that where the developer or units of Special Economic Zone and the person liable to pay service tax under sub-section (2) of section 68 for the said services are the same person, then in such cases exemption for the specified services shall be claimed by that person;



(b) the developer or units of Special Economic Zone shall claim the exemption by filing a claim for refund of service tax paid on specified services;



(c) the developer or units of Special Economic Zone shall file the claim for refund to the jurisdictional Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise, as the case may be;



(d) the developer or units of Special Economic Zone who is not registered as an assessee under the Central Excise Act, 1944 (1 of 1944) or the rules made thereunder, or the said Finance Act or the rules made thereunder, shall, prior to filing a claim for refund of service tax under this notification, file a declaration in the Form annexed hereto with the respective jurisdictional Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise, as the case may be;



(e) the jurisdictional Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise, as the case may be, shall, after due verification, allot a service tax code (STC) number to the developer or units of Special Economic Zone within seven days from the date of receipt of the said Form;



(f) the claim for refund shall be filed, within six months or such extended period as the Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise, as the case may be, shall permit, from the date of actual payment of service tax by such developer or unit to service provider;



(g) the refund claim shall be accompanied by the following documents, namely:-

(i) a copy of the list of specified services required in relation to the authorised operations in the Special Economic Zone, as approved by the Approval Committee;

(ii) documents for having paid service tax;

(iii) a declaration by the Special Economic Zone developer or unit, claiming such exemption, to the effect that such service is received by him in relation to authorised operation in Special Economic Zone.



(h) the Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise, as the case may be, shall, after satisfying himself that the said services have been actually used in relation to the authorised operations in the Special Economic Zone, refund the service tax paid on the specified services used in relation to the authorised operations in the Special Economic Zone;



(i) where any refund of service tax paid on specified services is erroneously refunded for any reasons whatsoever, such service tax refunded shall be recoverable under the provisions of the said Finance Act and the rules made thereunder, as if it is a recovery of service tax erroneously refunded.



3. The exemption contained in this notification shall apply only in respect of service tax paid on the specified services on or after the date of publication of this notification in the Official Gazette.



4. Words and expressions used in this notification and defined in the Special Economic Zones Act, 2005 (28 of 2005) or the rules made thereunder, shall apply, so far as may be, in relation to refund of service tax under this notification as they apply in relation to a Special Economic Zone.
Service Tax Exemption of services specified in sub-clauses (j), (k), (zr), (zza), (zzb), (zzzf), (zzzq) and (zzzzj) of clause (105) of section 65

Service Tax Exemption of services specified in sub-clauses (j), (k), (zr), (zza), (zzb), (zzzf), (zzzq) and (zzzzj) of clause (105) of section 65

12:07 AM Add Comment
[TO BE PUBLISHED IN THE GAZETTE OF INDIA, EXTRAORDINARY, IN PART II, SECTION 3, SUB-SECTION (i)]



GOVERNMENT OF INDIA

MINISTRY OF FINANCE

(Department of Revenue)



New Delhi, the 5th January, 2009



Notification No.1/2009 – Service Tax





G.S.R. (E). – In exercise of the powers conferred by sub-section (1) of section 93 of the Finance Act, 1994 (32 of 1994) (hereinafter referred to as the Finance Act), and in supercession of the notification of the Government of India in the Ministry of Finance (Department of Revenue), No.29/2008- Service Tax, dated the 29thJune, 2008, published in the Gazette of India Extraordinary, vide G.S.R.482 (E), dated the 29th June, 2008, except as things done or omitted to be done before such supercession, the Central Government, on being satisfied that it is necessary in the public interest so to do, hereby exempts the taxable services specified in sub-clauses (j), (k), (zr), (zza), (zzb), (zzzf), (zzzq) and (zzzzj) of clause (105) of section 65 of the Finance Act, provided by any person to a goods transport agency for use by the said goods transport agency to provide any service, referred to in sub-clause (zzp) of clause (105) of section 65 of the Finance Act, to a customer in relation to transport of goods by road, from the whole of the service tax leviable thereon under section 66 of the Finance Act subject to the condition that the invoice issued by such service provider, providing services should mention the name and address of the goods transport agency and also the name and date of the consignment note, by whatever name called, issued in his behalf.



(Unmesh Sharad Wagh )

Under Secretary to the Government of India

[F. No. 137/175/2008-CX-4]
Service Tax- Giving a mega relief to manufacturers who were denied Credit of Service Tax paid on Outward Transportation

Service Tax- Giving a mega relief to manufacturers who were denied Credit of Service Tax paid on Outward Transportation

12:06 AM Add Comment
Giving a mega relief to manufacturers who were denied Credit of Service Tax paid on Outward Transportation of goods from their factory; HC has ruled that the manufacturers are entitled for the Credit of the same during the relevant period.
HC vide AIT-2009-95-HC has ruled that the service of transportation up to the customer’s doorstep, in the case of “FOR destination” sales where the entire cost of freight is paid and borne by the manufacturer, would be “input service” within the meaning of Rule 2( l) of the CENVAT Credit Rules
The Ruling of CESTAT in case of Gujarat Ambuja Cement AIT-2007-151-CESTAT was overruled by HC. CESTAT in the said ruling held that the credit covers duty paid on input materials as well as tax paid on services, used in or in relation to the manufacture of the ‘final product’. Therefore, extending the credit beyond the point of duty paid removal of the final product would be contrary to the Scheme of Cenvat Credit Rules.
HC has ruled that the ‘input service’ has been defined to mean any service used by the manufacturer whether directly or indirectly and also includes, inter alia, services used in relation to inward transportation of inputs or export goods and outward transportation up to the place of removal. It has also remain un-controverted that for transportation purposes insurance cover has also been taken by the appellant which further shows that the ownership of the goods and the property in the goods has not been transferred to the seller till the delivery of the goods in acceptable condition to the purchaser at his door step. Accordingly, even the second condition that the seller has to bear the risk of loss or damage to the goods during transit to the destination stand fulfilled.
Though the issue is also pending with the Larger Bench of CESTAT in case of India Cement AIT-2007-308-CESTAT; the Ruling of Larger Bench is also expected to be in favour of manufacturers as the issue has already been settled by the High Court.
However, CBEC has also amended the definition of input service vide Central Excise Non-Tariff Notification No. 10/2008 dated 1st March 2008 as under:
“input service” means any service,-
(i) used by a provider of taxable service for providing an output service; or
(ii) used by the manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products and clearance of final products, up to the place of removal,
and includes services used in relation to setting up, modernization, renovation or repairs of a factory, premises of provider of output service or an office relating to such factory or premises, advertisement or sales promotion, market research, storage upto the place of removal, procurement of inputs, activities relating to business, such as accounting, auditing, financing, recruitment and quality control, coaching and training, computer networking, credit rating, share registry, and security, inward transportation of inputs or capital goods and outward transportation up to the place of removal;
Landmark Judgement - First time that the judiciary has allowed reinvestment benefits   for purchase of more than one residential house

Landmark Judgement - First time that the judiciary has allowed reinvestment benefits for purchase of more than one residential house

12:02 AM Add Comment
In a recent landmark case, the Karnataka High Court has allowed reinvestment
benefits for purchase of more than one residential house.
------------------------------

Tax law allows exemption from capital gains tax when you sell a residential
house and reinvest the proceeds in another residential house. Section 54 of
the Income-Tax Act 1961 prescribes the mode of dealing with profits on sale
of property used for residence.

The subject of transfer should be a long term capital asset being buildings,
lands appurtenant thereto and a residential house. The income from the
residential house should be chargeable under the head ‘income from house
property’.

Such a property should have been transferred giving rise to taxable capital
gains. Within one year of the date of transfer, another property should have
been purchased for residence. Such purchase could have been either one year
before or two years after the date of transfer. Or another residential house
should have been constructed within three years from the date of transfer.

The sale proceeds should have been utilised for the purchase or
construction. If these conditions are satisfied, there will be no liability
for capital gains tax in respect of the sale of residential house. It should
be noted that Section 54(1) refers to purchase or construction of a
residential house

The Ananda Basappa case

Ananda Basappa sold a residential house in Bangalore for Rs 2.12 crore in
October 1995. He purchased two residential flats adjacent to each other from
a developer. He took two separate sale deeds for the two flats on the same
day. The vendor certified that he has effected necessary modification to the
two flats to make it one residential apartment.

Basappa sought exemption under Section 54 in respect of the capital gains
arising from transfer of the residential house. The income-tax officer (ITO)
gave exemption for capital gains tax to the extent of purchase of one
residential flat. The income-tax inspector inspected the newly acquired
property and reported that the residential flats were in occupation of two
different tenants disclosing separate enjoyment.

The ITO consequently held that Section 54(1) does not permit exemption for
the purchasers for more than one residential premise. On appeal, the Income
Tax Appellate Tribunal (ITAT) held that the purchase of the two flats by
Basappa should be treated as one single residential unit and granted full
exemption.

The Revenue took up the matter in appeal to the Karnataka High Court (*309
ITR 329*). It was argued for the Revenue that Section 54(1) used the phrase
a residential house.

This limits the exemption to only one flat. This argument is based on plain
common sense. The High Court did not agree. It pointed out that Section
54(1) allows exemption both to individuals and Hindu Undivided Family (HUF).
It will be incorrect to argue that sale proceeds of a residential house of a
HUF should be invested for the purchase of only one residential house. The
HUF property is held by the members as joint tenants. The members keeping in
view the future needs in event of separation may purchase more than one
residential building.

It cannot be said that the benefit of exemption is to be denied under
Section 54(1) of the Act.

The apartments were situated side by side. The builder had effected
modifications of the flat to make it as one unit by opening the door in
between the two apartments.

The fact that at the time of inspection by the inspector, the flats were
occupied by two different tenants cannot be a ground to hold that the
apartment is not one residential unit. The fact that Basappa could have
purchased both the flat in one single sale deed or could have narrated the
purchase of two premises as one unit in the sale deed cannot also be a
ground to hold that Basappa had no intention to purchase the two flats as
one unit.

Singular includes Plural

How does the court meet the objection that Section 54(1) talks only of a
residential house and not two? The High Court brought in the General Clauses
Act, 1897 to help in interpretation. Section 13 of this Act declares that
whenever the singular is used for a word, it is permissible to include the
plural. This is an ingenious way of interpreting words and phrases in the
Act.

*Black’s Law Dictionary* lays down that the article “a” is not necessarily a
singular term. It is often used in the sense of “any” and then is applied to
more than one individual object. The meaning depends on the context.

There have been judgments allowing exemption even for purchase of a
fractional interest, taking it as sufficient compliance with the
requirements of Section 54 (*132 ITR 661*).
Service Tax Return Form ST-3 amended

Service Tax Return Form ST-3 amended

12:01 AM Add Comment
[TO BE PUBLISHED IN THE GAZATTE OF INDIA, EXTRAORDINARY PART II, SECTION 3, SUB-SECTION (i)]

MINISTRY OF FINANCE
(Department of Revenue)
(Central Board of Excise and Customs)

New Delhi, the 17th March,2009

Notification No. 10 / 2009-ST

G.S.R…. (E). In exercise of the powers conferred by section 94 of the Finance Act, 1994 (32 of 1994), the Central Government hereby makes the following rules further to amend the Service Tax Rules, 1994 namely : -



1. (1) These rules may be called the Service Tax (Amendment) Rules, 2009.

(2) They shall come into force on the date of their publication in the Official Gazette.



2. In the Service Tax Rules, 1994, in Form ST-3, after S. No. 7 and the entries relating thereto, the following shall be inserted, namely,-



“8. If the return has been prepared by a Service Tax Return Preparer (STRP), furnish further details as below:


(a)
Identification No. of STRP


(b)
Name of STRP

(Signatures of Service Tax Return Preparer)”.





[F. No. 137/318/2007-CX.4 (Pt. 2)]







(Ashima Bansal)

Under Secretary to Government of India



Note.- The principal rules were notified vide notification No. 2/94-Service Tax, dated the 28th June 1994 and published in the Gazette of India, Extraordinary vide number G.S.R.546 (E), dated the 28th June 1994 and were last amended vide notification No. 31/2008-Service Tax, dated the 2nd September, 2008 which was published vide number G.S.R.633 (E), 2nd September, 2008.
*Income-tax (Sixth Amendment) Rules, 2009-Insertion of rules 37 BA and   37-I-Rules regarding credit for TDS/TCS*

*Income-tax (Sixth Amendment) Rules, 2009-Insertion of rules 37 BA and 37-I-Rules regarding credit for TDS/TCS*

12:00 AM Add Comment
Notification No. 28/2009, dt. 16-3-2009 [F.No. 133/93/2008-TPL]

In exercise of the powers conferred by section 295 read with sub-section (3)
of section 199 and sub-section (4) of section 206C of the Income-tax Act,
1961 (43 of 1961), the Central Board of Direct Taxes hereby makes the
following rules further to amend the Income-tax Rules, 1962, namely :-

*1.* (1) These rules may be called the Income-tax (Sixth Amendment) Rules,
2009.

(2) They shall come into force with effect from the 1st day of April, 2009.

*2.* In the Income-tax Rules, 1962,-

(A) after rule 37B, the following rule shall be inserted, namely:

*37BA. (1) Credit for tax deducted at source for the purposes of section 199
*-Credit for tax deducted at source and paid to the Central Government in
accordance with the provisions of Chapter XVII, shall be given to the person
to whom payment has been made or credit has been given (hereinafter referred
to as deductee) on the basis of information relating to deduction of tax
furnished by the deductor to the income-tax authority or the person
authorised by such authority.

(2) (i) If the income on which tax has been deducted at source is assessable
in the hands of a person other than the deductee, credit for tax deducted at
source shall be given to the other person in cases where–

(a) the income of the deductee is included in the total income of another
person under the provisions of section 60, section 61, section 64, section
93 or section 94;

(b) the income of a deductee being an association of persons or a trust is
assessable in the hands of members of the association of persons, or in the
hands of trustees, as the case may be;

(c) the income from an asset held in the name of a deductee, being a partner
of a firm or a karta of a Hindu undivided family, is assessable as the
income of the firm, or Hindu undivided family, as the case may be;

(d) the income from a property, deposit, security, unit or share held in the
name of a deductee is owned jointly by the deductee and other persons and
the income is assessable in their hands in the same proportion as their
ownership of the asset:

*Provided that *the deductee files a declaration with the deductor and the
deductor reports the tax deduction in the name of the other person in the
information relating to deduction of tax referred to in sub-rule (1).

(ii) The declaration filed by the deductee under clause (i) shall contain
the name, address, permanent account number of the person to whom credit is
to be given, payment or credit in relation to which credit is to be given
and reasons for giving credit to such person.

(iii) The deductor shall issue the certificate for decuction of tax at
source in the name of the person in whose name credit is shown in the
information relating to deduction of tax referred to in sub-rule (1) and
shall keep the declaration in his safe custody.

(3) (i) Credit for tax deducted at source and paid to the Central
Government, shall be given for the assessment year for which such income is
assessable.

(ii) Where tax has been deducted at source and paid to the Central
Government and the income is assessable over a number of years, credit for
tax deducted at source shall be allowed across those years in the same
proportion in which the income is assessable to tax.

(4) Credit for tax deducted at source and paid to the account of the Central
Government shall be granted on the basis of -

(i) the information relating to deduction of tax furnished by the deductor
to the income-tax authority or the person authorized by such authority: and

(ii) the information in the return of income in respect of the claim for the
credit,

subject to verification in accordance with the risk management strategy
formulated by the Board from time to time.”

(B) after rule 37H, the following rule shall be inserted, namely:–

*37-I.(1) Credit for tax collected a source for the purposes of sub-section
(4) of section 206C.-*Credit for tax collect at source and paid to the
Central Government in accordance with provisions of section 260C of the Act,
shall be given to the person form whom the tax has been collected, on the
basis of the information relating to collection of tax at source
(hereinafter referred to as the collector) to the income-tax authority or
the person authorized by such authority.

(2) (i) Where tax has been collected at source and paid to the Central
Government, credit for such tax shall be given for the assessment year for
which the income is assessable to tax.

(iii) Where tax has been collected at source and paid to the Central
Government and the lease or license is relatable to more than one year,
credit for tax collected at source shall be allowed across those years to
which the lease or license relates in the same proportion.

(3) Credit for tax collected at source and paid to the account of the
Central Government shall be granted on the basis of -

(i) the information relating to collection of tax furnished by the collector
to the income-tax authority or the person authorized by such authority; and

(ii) the information in the return of income in respect of the claim for the
credit,
subject to verification in accordance with the risk management strategy
formulated by the Board from time to time.”
Govt  exempts taxable services   provided   to Special Economic Zone, and received by a developer or units of a Special Economic Zone

Govt exempts taxable services provided to Special Economic Zone, and received by a developer or units of a Special Economic Zone

4:23 PM Add Comment
NOTIFICATION NO 9/2009-SERVICE TAX


Dated: March 3, 2009


In exercise of the powers conferred by sub-section (1) of section 93 of the Finance Act, 1994 (32 of 1994), and in supersession of the notification of the Government of India, Ministry of Finance ( Department of Revenue), No. 4/2004-ServiceTax, dated the 31st March, 2004, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section ( i ) dated the 31st March, 2004, vide, G.S.R.248(E), dated the 31st March, 2004, except as respects things done or omitted to be done before such supersession, the Central Government, on being satisfied that it is necessary in the public interest so to do, hereby exempts the taxable services specified in clause (105) of section 65 of the said Finance Act, which are provided in relation to the authorised operations in a Special Economic Zone, and received by a developer or units of a Special Economic Zone, whether or not the said taxable services are provided inside the Special Economic Zone, from the whole of the service tax leviable thereon under section 66 of the said Finance Act:


Provided that–


(a) the developer or units of Special Economic Zone shall get the list of services specified in clause (105) of section 65 of the said Finance Act as are required in relation to the authorised operations in the Special Economic Zone, approved from the Approval Committee (hereinafter referred to as the specified services);


(b) the developer or units of Special Economic Zone claiming the exemption actually uses the specified services in relation to the authorised operations in the Special Economic Zone;


(c) the exemption claimed by the developer or units of Special Economic Zone shall be provided by way of refund of service tax paid on the specified services used in relation to the authorised operations in the Special Economic Zone;


(d) the developer or units of Special Economic Zone claiming the exemption has actually paid the service tax on the specified services;


(e) no CENVAT credit of service tax paid on the specified services used in relation to the authorised operations in the Special Economic Zone has been taken under the CENVAT Credit Rules, 2004;


(f) exemption or refund of service tax paid on the specified services used in relation to the authorised operations in the Special Economic Zone shall not be claimed except under this notification.


2. The exemption contained in this notification shall be subject to the following conditions, namely:-


(a) the person liable to pay service tax under sub-section (1) or sub-section (2) of section 68 of the said Finance Act shall pay service tax as applicable on the specified services provided to the developer or units of Special Economic Zone and used in relation to the authorised operations in the Special Economic Zone, and such person shall not be eligible to claim exemption for the specified services:

Provided that where the developer or units of Special Economic Zone and the person liable to pay service tax under sub-section (2) of section 68 for the said services are the same person, then in such cases exemption for the specified services shall be claimed by that person;


(b) the developer or units of Special Economic Zone shall claim the exemption by filing a claim for refund of service tax paid on specified services;


(c) the developer or units of Special Economic Zone shall file the claim for refund to the jurisdictional Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise, as the case may be;


(d) the developer or units of Special Economic Zone who is not registered as an assessee under the Central Excise Act, 1944 (1 of 1944) or the rules made thereunder, or the said Finance Act or the rules made thereunder, shall, prior to filing a claim for refund of service tax under this notification, file a declaration in the Form annexed hereto with the respective jurisdictional Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise, as the case may be;


(e) the jurisdictional Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise, as the case may be, shall, after due verification, allot a service tax code (STC) number to the developer or units of Special Economic Zone within seven days from the date of receipt of the said Form;


(f) the claim for refund shall be filed, within six months or such extended period as the Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise, as the case may be, shall permit, from the date of actual payment of service tax by such developer or unit to service provider;


(g) the refund claim shall be accompanied by the following documents, namely:-

(i) a copy of the list of specified services required in relation to the authorised operations in the Special Economic Zone, as approved by the Approval Committee;

(ii) documents for having paid service tax;

(iii) a declaration by the Special Economic Zone developer or unit, claiming such exemption, to the effect that such service is received by him in relation to authorised operation in Special Economic Zone.


(h) the Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise, as the case may be, shall, after satisfying himself that the said services have been actually used in relation to the authorised operations in the Special Economic Zone, refund the service tax paid on the specified services used in relation to the authorised operations in the Special Economic Zone;



(i) where any refund of service tax paid on specified services is erroneously refunded for any reasons whatsoever, such service tax refunded shall be recoverable under the provisions of the said Finance Act and the rules made thereunder, as if it is a recovery of service tax erroneously refunded.


3. The exemption contained in this notification shall apply only in respect of service tax paid on the specified services on or after the date of publication of this notification in the Official Gazette.


4. Words and expressions used in this notification and defined in the Special Economic Zones Act, 2005 (28 of 2005) or the rules made thereunder, shall apply, so far as may be, in relation to refund of service tax under this notification as they apply in relation to a Special Economic Zone.

Full Text
DISALLOWANCE U/S 40(a)(ia) TDS DEFAULT ALLOWED

DISALLOWANCE U/S 40(a)(ia) TDS DEFAULT ALLOWED

4:07 PM Add Comment
Provision relating to section 40(a)(ia) has been amend to give us relief from minor tds deduction defaults from retrospective effect from assessment year 2005-06 means since inception of this controversial amendments.

what was the position earlier

as per section 40(a)(ia) all the expenses u/s 30-38 will be disallowed if
tds has not been deducted
tds has been deducted but has not been paid during previous year or in subsequent year in time as prescribed in section 200.
on
Interest,
commission,
brokerage,
rent,
royalty,
fees for technical/professional services payable to a resident ,
amounts payable (for carrying out any work contract)
to a resident contractor/sub-contractor

provided that
if tax has been deducted and paid in subsequent year or
deducted in previous year but paid in subsequent year after expiry of the time limit u/s 200
then expenditure will be allowed in the year of payment of tds.

what is position now after changes in budget


Tax is deductible but not deducted

No deduction in the current previous year
If tax is deducted in any subsequent year, the expenditure will be deducted in the year in which TDS will be deposited by the assessee with the Government.

Tax is deductible (and is so deducted) during the last month (i.e., in the month of March) of the previous year but it is not deposited on or before the due date of submission of return of income under section 139(1)

No deduction in the current previous year
If tax is deposited with the Government after the due date of submission of return of income, the expenditure will be deductible in that year in which tax will be deposited.

Tax is deductible (and is so deducted) during any month but other than the last month (i.e., any time before March 1) of the previous year but it is not deposited on or before March 31 of the previous year

No deduction in the current previous year
If tax is deposited with the Government after the end of the current previous year, the expenditure will be deductible in that year in which tax is deposited.
though some relief has been given that in case we pay tds on or before due date of filing of the income tax return expenditure will be allowed in the same previous year but in case of non deduction of the tds when it is deductible then expenditure will be disallowed fully.


suppose xyz ltd has paid for work of 100000 to abc ltd for some non recurring work and forget to deduct tds ,the expenses of 100000 will be disallowed to xyz ltd.if there will no further transaction between xyzltd and abc ltd ,in that case xyz ltd can not deduct tax from abc ltd hence can not claim expenditure in subsequent year also.

my point is that tds is not a source of revenue for income tax department ,they only collect it as a advance tax on behalf of the firm abc.if abc ltd has discharged his tax liability fully by paying tax
then there will be no loss of revenue to the state .these provision seems valid where the deductee is non resident and tax can not be recovered from non resident.so in the above example dis allowance of the expenditure to xyz ltd even abc ltd has discharged his tax liability fully is not justified but that is the position of law we can not do nothing in this and have to bear with these provisions .so we should be more care full in deduction of tax so that all genuine expenditure will allowed while calculating income of the previous year.
SERVICES TO ASSOCIATED ENTERPRISES TAXABLE

SERVICES TO ASSOCIATED ENTERPRISES TAXABLE

4:05 PM Add Comment
Earlier the services provided to "customers" and "clients" are taxable but now in budget a new provision has been inserted in which it is stated that services provided to associate enterprises are also taxable and to give effect to this provision a amendment has been done that service tax is payable on receipt of credit in the book of accounts .this amendment will be applicable from 10.05.2008.
The following points main points are comes from these amendments

Section 67 has been amended. As per this amendment, service tax is required to be paid by the person liable to pay service tax on the taxable services provided even if the consideration for the taxable services provided is not actually received.
In such cases, service tax is required to be paid immediately after crediting/debiting of the amount in the books of accounts or receipt of payment, whichever is earlier.
This provision is restricted to transaction between associated enterprises
This amendment Comes into force w.e.f. 10th May, 2008.
Removal of doubts stating that any payment received towards the value of taxable service shall include any amount credited or debited, as case may be, to any account, whether called 'Suspense account' or by any other name, in the books of account of a person liable to pay service tax [Refer Explanation to Rule 6(1) of the Service Tax Rules, 1994].

optional service tax scheme to person providing foreign exchange sale & purchase has also been notified ,now they can pay 0.25 % service tax on total gross currency exchanged by them.This option has been started as you may aware of that money changer generally don't show there charges to client billing and only give buy rate and sell rate and earn through arbitrage between buy rate and sell rate.


text of the notification is given hereunder


[TO BE PUBLISHED IN THE GAZETTE OF INDIA, EXTRAORDINARY, PART II, SECTION 3, SUB-SECTION (i)]


Government of India

Ministry of Finance
(Department of Revenue)
New Delhi, the 10th May, 2008

Notification No.19/2008-Service Tax


G.S.R. (E).- In exercise of the powers conferred by sub-sections (1) and (2) of section 94 of the Finance Act, 1994 (32 of 1994), the Central Government hereby makes the following rules to further amend the Service Tax Rules, 1994, namely :-


1. (1) These rules may be called the Service Tax (Second Amendment) Rules, 2008.

(2) Save as otherwise provided in these rules, they shall come into force on the date of their publication in the Official Gazette.


2. In the Service Tax Rules, 1994,-


(i) in rule 4A, for the words “to a customer” wherever they occur, the words “to any person” shall be substituted with effect from the 16th day of May, 2008;


(ii) in rule 4B, for the words “to the customer”, the words “to the recipient of service” shall be substituted with effect from the 16th day of May, 2008;


(iii) in rule 6,-


(a) in sub-rule (1), after the third proviso, the following Explanation shall be inserted, namely:-


“Explanation.- For the removal of doubts, it is hereby declared that where the transaction of taxable service is with any associated enterprise, any payment received towards the value of taxable service, in such case shall include any amount credited or debited, as the case may be, to any account, whether called ‘Suspense account’ or by any other name, in the books of account of a person liable to pay service tax.”;


(b) after sub-rule (7A), the following sub-rule shall be inserted with effect from the 16th day of May, 2008, namely:-


“(7B). The person liable to pay service tax in relation to purchase or sale of foreign currency, including money changing, provided by a foreign exchange broker, including an authorised dealer in foreign exchange or an authorized money changer, referred to in sub-clauses (zm) and (zzk) of clause (105) of section 65 of the Act, shall have the option to pay an amount calculated at the rate of 0.25 per cent. of the gross amount of currency exchanged towards discharge of his service tax liability instead of paying service tax at the rate specified in section 66 of Chapter V of the Act:


Provided that such option shall not be available in cases where the consideration for the service provided or to be provided is shown separately in the invoice, bill or, as the case may be, challan issued by the service provider.


Illustration


Buying rate $US 1 = Rs.38, selling rate $US 1 = Rs.40


(i) Person exchanged $100 for equivalent rupees

Transaction value = Rs.3800 (Rs.38 x 100)

Service tax payable = Rs.9.5 (0.25% x 3800)


(ii) Person exchanged equivalent rupees for $100

Transaction value = Rs.4000 (40 x 100)

Service tax payable = Rs.10 (0.25% x 4000).”.


[F. No. B1/5/2008-TRU]

(G.G. Pai)

Under Secretary to the Government of India


Note.- The principal rules were notified vide notification No.2/94-Service Tax, dated the 28th June, 1994 and published in the Gazette of India, Extraordinary vide number G.S.R.546 (E), dated the 28th June, 1994 and were last amended vide notification No.4/2008-Service Tax, dated the 1st March, 2008 and published vide number G.S.R. 148(E), dated the 1st March, 2008.
Clarification on deduction of tax at source (TDS) on service tax component on rental income under section 194-I of the Income-tax Act

Clarification on deduction of tax at source (TDS) on service tax component on rental income under section 194-I of the Income-tax Act

4:05 PM Add Comment
CIRCULAR NO. 4/2008, DATED 28-4-2008



Representations/letters have been received in the Board seeking clarification as to whether TDS provisions under section 194-I of the Income-tax Act will be applicable on the gross rental amount payable (inclusive of service tax) or net rental amount payable (exclusive of service tax).

2. The matter has been examined by the Board. As per the provisions of 194-I, tax is deductible at source on income by way rent paid to any resident. Further rent has been defined in 194-I as

rent means any payment, by whatever name called, under any lease, sub-lease, tenancy or any other agreement or arrangement for the use of (either separately or together) any,-

(a) land; or

(b) building (including factory building); or

(c) land appurtenant to a building (including factory building); or

(d) machinery; or

(e) plant; or

(f) equipment; or

(g) furniture; or

(h) fittings,

whether or not any or all of the above are owned by the payee;

3. Service tax paid by the tenant doesn't partake the nature of income of the landlord. The landlord only acts as a collecting agency for Government for collection of service tax. Therefore it has been decided that tax deduction at source (TDS) under sections 194-I of Income-tax Act would be required to be made on the amount of rent paid/payable without including the service tax.

4. These instructions may be brought to the notice of all officers working in your region for strict compliance.

5. These instructions should also be brought to the notice of the officers responsible for conducting internal audit and adherence to these should be checked by the auditing parties.



[F.No.275/73/2007-IT(B)]
HOW TO DEPOSITE ONLINE INCOME TAX

HOW TO DEPOSITE ONLINE INCOME TAX

4:03 PM Add Comment
Posted: 29 Mar 2033 10:11 AM CDT
As I have earlier written that income tax payment online would be mandatory from January 1,2008BUT THE DATE HAS BEEN NOW 1/04/08PRESS RELEASE HAS BEEN ISSUED BY CBDT READ THIS.So one should also interested in how to make e payment of taxes through internet.

in my view internet payment is easier than manual payment(deposit in bank branch).The basic advantages are given below.

In e payment of taxes ,there is no need to issue a cheque or deposit cash for taxes.
No need to download software or purchase income tax challan form.
Your Pan /Tan will be verified from income tax database .so less risk for wrong deposit of taxes
No Q,instant receipt of challan
chances of uploading wrong data by Bank Employees will reduced
and there are other benefit also. Now lets know how to make e payment of tax.

you can select one of the two gateways.
Start the process from NSDL/INCOME TAX web site
Start the Process From you bank website.
presently only six banks are authorize to receive payment through internet for income tax .
i.e
Axis Bank
State Bank of India
Punjab National Bank
Indian Overseas Bank
Canara Bank
Indian Bank
Bank of India
Corporation Bank
State Bank of Bikaner & Jaipur
State Bank of Travancore
State Bank of Indore
Vijaya Bank
HDFC Bank
Oriental Bank of Commerce
State Bank of Patiala
IDBI Bank
Union Bank of India

lets learn Start the process from NSDL/INCOME TAX web site
click the above link & than select link given at bottom of your bank's name
select the appropriate challan form from 280,281,282,283
fill the the selected form and select the bank from which you want to transfer funds
click submit
a message will appear"

For the TAN/pan given by you above, the name as per Income Tax Department database is '...........................................................................................'. If the name is right, then click on "Submit to the bank"
if your name is matched with income tax data base than click the submit to bank button otherwise check your pan/tan or correct the name filled by you
you will lead to your net banking site ,login your self and confirm the payment .
a e receipt will be genrated ,save it for future use.
your e-payment process is complete now
PAY LESS SHORT TERM CAPITAL GAIN -HOW?

PAY LESS SHORT TERM CAPITAL GAIN -HOW?

4:01 PM Add Comment
Finance Minister has increased the short term capital gain on share transaction, on which securities transaction tax (STT) has been paid, from 10% to 15 % .This has been done under section 111A for indian resident and under section 111d for FII from Assessment year 2009-10.

what was in section 111A

As per section 111A
if a person's total income includes Short term capital gain from transfer equity shares or unit of a equity oriented fund and
STT has paid on transfer
than rate of tax will 10% flat and on other income of the assessee tax will be calculated as if such balance amount is total income of the assessee

however in case of HUF and Individual if assessee balance income is less than the total exemption limit than such short-term capital gains shall be reduced by the amount by which the balnce total income as so reduced falls short of the maximum amount which is not chargeable to income-tax and the tax on the balance of such short-term capital gains shall be computed at the rate of 10% per cent.

In this case deduction under chapter VI also available from balance income i.e income without short term capital gain as discussed above
What is current position after amendment

This section is yet beneficial to those who tax rate is more 15 % like companies ,AOP,BOI ,partnership companies and individual and huf who's income is more than 300000.But this the fact as most of the person who shows income from STCG has income less than 300000 as big fishes show income of sale purchase of shares as business Income.

What are the option available after Budget

First option:show income from shares as Business Income instead of short term capital gain, while we discuss under which head income from share to be taken ,as you all know there is a thin linn between income from share as a business and short term capital gain . If your trading volume is large as compare to your net worth, you can go for it.
benefit:
as your income will be covered under business you can charge /book various expenses which has been incurred to earn share income which can not be done in short term capital gain .In some cases it will be beneficial for person whos income will be more than 300000 rs also.
You can set off loss from business of shares from any other head except salary.
You can also claim benefit of deduction under chapter VI also.
STT paid will be allowed as Expenditure.
dis advantages;

you have to prepare proper books of accounts if the income from shares is more than 120000 rs in a year or gross trunover is more than 1000000 in any of the proceeding proceeding three years.
if trunover is morethan 4000000 than audit is required.

Second option

Sell the equity share out of market /off the market than section 111A will not apply

Benefit:

your short term capital gain will be treated as income and income tax will be calculated as it it required to calculated in on any other income. means STCG will be part of total income and normal slab rate will be applied.
You can also claim benefit of deduction under chapter VI also.
No STT is required to paid as transaction is to be done off market.
disadvantages:

generally off market transaction creates doubt in ITO mind ,but it is done on the same rate as were in stock exchange than it can be proved easily.
other expenses as compare to business income is not allowed under STGC.
off market buyer and seller are difficult to find but they are existed.

So in both the above conditions you will save considerable money ,at least five % of tax.

Example

lets take example of a Individual for Assessement year=2009-10

Income from salary= 200000
Income from shares as Short term capital gain (STT PAID 5000)=150000
saving U/s 80C =50000

case 1:tax liability if we take income as SHORT TERM CAPITAL GAIN

tax on STGC 150000@ 15 %=22500
other income
(200000-50000)=150000=nil tax

total tax payable=22500



Case 2:if we take as a Business Income (and lets suppose there are exp which can not be shown in STCG as 20000)

Income from salary=200000
Income from business=(150000-20000other exp-5000stt)=125000
Gross income=325000
less :saving=50000
net taxable income=275000
tax payable=12500


Case 3= if we do the transaction off market out of stock exchange

short term capital gain=150000
salary= 200000
GT=350000
less :saving=50000
taxable income=300000
tax due=15000
and saving of stt =5000 rs so effective tax =10000
Life Insurance premium paid on wife's Policy eligible for tax rebate?

Life Insurance premium paid on wife's Policy eligible for tax rebate?

3:58 PM Add Comment
By Going through analysis of Incoming traffic to this site and online search given on our blog site I found that more of the visitors are looking for basic tax concepts so I have decided to give important and widely used section details on blog,though I know most of the email readers of BLOG are professional in accounts and tax and does not like concepts in feeds ,yet it is necessary to give detail of basic concepts also.Today I will discuss life Insurance premium.

Important Point in this regards are given below

Deduction u/s 80c of income tax is available to Individual and Huf Assessee.
Maximum total eligible amount under this head (LIFE insurance Premium) is Rs. 1.,00,000 /-
The limit of one lac as above is total limit u/s 80C for all type of savings ,plus section 80CCC(pension policy) plus u/s 80CCD(Contributory Pension Plan).Means the aggregate amount of deduction under above referred sections can not exceed Rs. 1,00,000.
If policy taken after 1.4.2003 then Premium paid up to 20% of sum Assured is Eligible for deduction.
Payment should not be necessarily from income chargeable to tax.
Minimum Period of holding of policy is Two years ,if policy terminated before two year then all benefit claim taken in earlier year will also be taxable in the year of termination.
Premium paid is eligible on "payment basis" means deduction is available in the year of payment no matter to which year premium relates to.
In my opinion late fees paid in addition to premium payable is also eligible for deduction as late payment fees is paid "to keep in force an Insurance".but it is advised not to claim as there are different opinion on this issue.
TUITION FEES PAID FOR CHILDREN U/S 80C

TUITION FEES PAID FOR CHILDREN U/S 80C

3:58 PM Add Comment
Today we will discuss important points regarding deduction available for payment of tuition fees .we try to cover each and every aspect on the issue ,if any left ,or you have different opinion than of us ,please record in comments.

Relevant part of the section 80c is reproduced here under.

"(xvii) as tuition fees (excluding any payment towards any development fees or donation or payment of similar nature), whether at the time of admission or thereafter,

(a) to any university, college, school or other educational institution situated within India;

(b) for the purpose of full-time education of any of the persons specified in sub-section (4) "

"(4) The persons referred to in sub-section (2) shall be the following, namely:

(a) ......................
b) .......................
c) for the purposes of clause (xvii) of that sub-section, in the case of an individual, any two children of such individual."

on the basic of above following points are to be noted .

Deduction for tuition Fees is available up to Rs.100000 /-
The limit of one lac as above is total limit u/s 80C for all type of savings ,plus section 80CCC(pension policy) plus u/s 80CCD(Contributory Pension Plan).Means the aggregate amount of deduction under above referred sections can not exceed Rs. 1,00,000.
The deduction is available to Individual Assessee and not for HUF.
The Deduction is available for any two children.
This the only clause u/s 80 C where assessee can not claim tax benefit for expenditure done on himself.Means if assessee has paid tuition fess for his studies ,he will not be eligible.
Deduction is not available for tuition fees paid for studies of spouse.
The deduction is available for Full Time courses only,so no deduction for part time or distance learning courses.(This is my opinion but point is not very clear)
The fees should be paid to university, college, school or other educational institution,so no rebate for private tuitions.
Tuition fees paid for coaching courses for admission in professional courses or any other type of courses are not covered as that fees is not paid for FULL time eduction.
The center mention above in point 8 must be situated in India,so location should be in India though it can be affiliated to any foreign institutes.
In This section tuition fees has a wide meaning than normal parlance ,means here tuition fees means total fees paid minus any payment towards any development fees or donation or payment of similar nature.so admission fees is also allowed.
In My Opinion Transport charges ,hostel charges,Mess charges ,library fees ,scooter/cycle/car stand charges is not allowed.
Building fund or any donation etc not allowed.
MANDATORY PAN % INCREASED IN ETDS ETCS RETURN.

MANDATORY PAN % INCREASED IN ETDS ETCS RETURN.

3:55 PM Add Comment
The CBDT through a press notification Issued on 12.02.2008 has increased the mandatory Pan % (Earlier issued on 25/09/2007)in e-tds and e-tcs return o and from quarter ending 31.03.08 and no return will be accepted if mandatory pan has not been filled on or after 01.04.2008.

New % will as under.

For form 24q (etds return for salary mandatory pan limit will be 95% increased from 90%
For Form 26q and form 27eq(e-TCS) mandatory pan limit will be 85% increased from 70% earlier.

This new % will be applicable from 01.04.2008 on each & every return filed on or after 01.04.2008 though related to a period earlier than quarter ending 31.03.2008

This is surprise to me and you because on 04/02/2008 in a earlier press release CBDT has increased the due date of filing etds/etcs return to 29.02.2008 for quarter ending 30.09.2007 and has mentioned the reason as hereunder

"This is in view of the difficulties being faced by the tax deductors /collectors in filing statements with the correct PAN data mandatorily required to be furnished to the extent of at least 90% in the cases of salaried deductees and 70% in the cases of other deductees."

so my point is that a week ago CBDT is of a view of that it is difficult for a deductor to collect mandatory pan % of 70/90% so date of etds/etcs return has been increased but now after a week,

Is circumstances are improved so much that lead them(CBDT) to increase the mandatory percentage from 90 to 95 percent in case of salary and 70 to 85 % in any other case?
Do They (CBDT) think that it is easy to collect 95/85 % pan easier than 90/70% ?
If they relaxing the time period a week ago due to non collection of mandatory pan % by deductor than why they are increasing the mandatory pan %?
The last date to file etds /etcs return for quarter ending 30.09.2007 has been increased to 29.02.2008 but due date for quarter ending 31.12.2007 remains 15.01.2008 .why?.

all the answer they know better.

Though I am firm believer in etax management should be applied as early as possible and its more beneficial to tax payers than deptt yet policy should not be changed frequently.

one thing good they done in all this episode is that they have declared the policy at reasonable time before the applicable date.so we should make ourselves ready for the event and should take following steps so that no problem arises at the time of filing of etds/etcs return.

For salary return.

To all your present employees (who has been deducted or to be deducted has not submitted their pan ) issue instruction to submit their pan /Photocopy of pan card in 10-15 days.
Check present employees Pan Structure as FUV will check only structure of pan .
Help employees to get Pan card issued if they don't have earlier
For new employees release first month salary only if the they give pan card photocopy
verify/find pan online from deptt site with input data name,fathers name and date of birth which generally with the employer.
print occasionally a note on payslip that submission and correctness of pan is mandatory and obligation of the employee and by not doing so they will not only have difficulties in getting tax credit of tax but will face penal proceedings under the income tax act.
For other than salary return
Insert a clause in NIT (notice inviting tender) that contractor who has a valid pan on their name can only apply and they will give proof of pan as and when required.
Issue letters to earlier /present contractor to submit their pan.
Try to find the pan of contractor on internet as some time date of incorporation is given on bill of the company of firm.
Encourage/help the Small Contractors to get pan issued from income tax deptt.

all the above are indicative list and I write as it come to my mind .

For Deductees

one more thing I would like to share with you ,if you are a deductee than please provide your pan to deductor as this will not only help your deductor to file their etds return but also in the era of annexure less income tax return due credit of your tds will be available to you through your online pan ledger (form 26as).
Scientific research expenditure - Approved scientific research associations/institutions

Scientific research expenditure - Approved scientific research associations/institutions

12:57 PM Add Comment
Section 35(1)(ii) of the Income-tax Act, 1961 - Scientific research expenditure - Approved scientific research associations/institutions
NOTIFICATION NO. 8/2009, DATED 7-1-2009

It is hereby notified for general information that the organization Aeronautical Development Agency, DRDO Bhawan, New Delhi has been approved by the Central Government for the purpose of clause (ii) of sub-section (1) of section 35 of the Income-tax Act, 1961 (said Act), read with rules 5C and 5D of the Income-tax Rules, 1962 (said Rules) with effect from 1-4-2006 in the category of "scientific research association' subject to the following conditions, namely:—
(i) The sole objective of the approved 'scientific research association' shall be to undertake scientific research;
(ii) The approved organization shall carry out the scientific research activity by itself;
(iii) The approved organization shall maintain books of account and get such books audited by an accountant as defined in the explanation to sub-section (2) of section 288 of the said Act and furnish the report of such audit duly signed and verified by such accountant to the Commissioner of Income-tax or the Director of Income-tax having jurisdiction over the case, by the due date of furnishing the return of income under sub-section (1) of section 139 of the said Act;
(iv) The approved organization shall maintain a separate statement of donations received and amounts applied for scientific research and a copy of such statement duly certified by the auditor shall accompany the report of audit referred to above.
2. The Central Government shall withdraw the approval if the approved organization.—
(a) fails to maintain books of account referred to in sub-paragraph (iii) of paragraph 1; or
(b) fails to furnish its audit report referred to in sub-paragraph (iii) of paragraph 1; or
(c) fails to furnish its statement of donations received and amounts applied for scientific research referred to in sub-paragraph (iv) of paragraph 1; or
(d) ceases to carry on its research activities or its research activities are not found to be genuine; or
(e) ceases to conform to and comply with the provisions of cLause (ii) of sub-section (1) of section 35 of the said Act read with rules 5C and 5D of the said Rules.

[F. No. 203/105/2008/ITA-II]
Exemption of - Interest payable by public sector company on specified bonds/debentures

Exemption of - Interest payable by public sector company on specified bonds/debentures

12:55 PM Add Comment
Section 10(15) (IV) of the Income-tax Act, 1961 - Exemption of - Interest payable by public sector company on specified bonds/debentures
NOTIFICATION NO. 9/2009 [S.O. 99(E)], DATED 7-1-2009


In exercise of the powers conferred by item (h) of sub-clause (iv) of clause (15) of section 10 of the Income-tax Act, 1961 (43 of 1961), the Central Government hereby specifies the issue of tax free bonds by India Infrastructure Finance Company Limited, carrying an interest rate of upto maximum 8 percent annum, aggregating to an amount of ten thousand crore rupees only, to be issued by India Infrastructure Finance Company Limited, New Delhi during the financial year 2008-09, for the purpose of the said section :
Provided that the benefit under the said section shall be admissible only if the holder of such bonds registers his or her name and the holding with the said Corporation.

[F. NO. 178/95/2008 IT (A-1]
Agreement for Avoidance of Double Taxation and Prevention of Fiscal Evasion with Foreign Countries Council of Ministers of Serbia and Montenegro

Agreement for Avoidance of Double Taxation and Prevention of Fiscal Evasion with Foreign Countries Council of Ministers of Serbia and Montenegro

12:53 PM Add Comment
Whereas the annexed Convention between the Government of Republic of India and the Council of Ministers of Serbia and Montenegro for the Avoidance of Double Taxation with respect to Taxes on Income and on Capital was signed at New Delhi on 8-2-2006;
And whereas the State Union of Serbia and Montenegro was disintegrated into two independent States after Montenegro’s formal declaration of independence on 3-6-2006 and Serbia’s formal declaration of independence on 5-6-2006;
And whereas the National Assembly of the Republic of Serbia has ratified the said Convention as published in the Official Gazette of the Republic of Serbia - International Treaties No. 102/07, dated 7-11-2007 and accordingly reference in the said Convention to ‘Serbia and Montenegro’ shall be read as reference to Serbia;
And whereas the date of entry into force of the said Convention is the 23rd day of September, 2008, being the date of later of the notifications of completion of the procedures as required by the respective laws for entry into force of this Convention, in accordance with paragraph 2 of Article 30 of the said Convention;
And whereas sub-paragraph (2) of paragraph 2 of Article 30 of the said Convention provides that the provisions of the Convention shall have effect in India in respect of the taxes on income derived and taxes on capital owned in each fiscal year beginning on or after the first day of April in the calendar year next following the year in which the Convention enters into force;
Now, therefore, in exercise of the powers conferred by section 90 of the Income-tax Act, 1961 (43 of 1961) and section 44A of the Wealth-tax Act, 1957 (27 of 1957), the Central Government hereby directs that all the provisions of the said Convention shall be given effect to in the Union of India.
Annexure
CONVENTION BETWEEN THE GOVERNMENT OF THE REPUBLIC OF INDIA AND THE COUNCIL OF MINISTERS OF SERBIA AND MONTENEGRO FOR THE AVOIDANCE OF DOUBLE TAXATION WITH RESPECT TO TAXES ON INCOME AND ON CAPITAL THE GOVERNMENT OF THE REPUBLIC OF INDIA AND THE COUNCIL OF MINISTERS OF SERBIA AND MONTENEGRO
desiring to conclude a Convention for the avoidance of double taxation with respect to taxes on income and on capital and with a view to promoting economic co-operation between the two countries,
have agreed as follows:
Article 1 : PERSONAL SCOPE - This Convention shall apply to persons who are residents of one or both of the Contracting States.
Article 2 : TAXES COVERED - 1. This Convention shall apply to taxes on income and on capital imposed on behalf of a Contracting State or of its political sub-divisions or local authorities, irrespective of the manner in which they are levied.
2. There shall be regarded as taxes on income and on capital all taxes imposed on total income, on total capital, or on elements of income or of capital, including taxes on gains from the alienation of movable or immovable property, taxes on the total amounts of wages or salaries paid by enterprises, as well as taxes on capital appreciation.
3. The existing taxes to which the Convention shall apply are in particular:
in Serbia and Montenegro:
(1) the tax on profit;
(2) the tax on income;
(3) the tax on capital;
(4) the tax on revenue from international transport (hereinafter referred to as “Serbian and Montenegrin tax”);
in India:
(1) the Income-tax, including any surcharge thereon; and
(2) the wealth tax.
(hereinafter referred to as “Indian tax”).
4. The Convention shall apply also to any identical or substantially similar taxes which are imposed after the date of signature of the Convention in addition to, or in place of, the existing taxes. The competent authorities of the Contracting States shall notify each other of any substantial changes which have been made in their respective taxation laws.
Article 3 : GENERAL DEFINITIONS - 1. For the purposes of this Convention:
(1) the terms “a Contracting State” and “the other Contracting State” mean Serbia and Montenegro or India, as the context requires;
(2) the term “Serbia and Montenegro” means the State community Serbia and Montenegro and when used in a geographical sense it means the land territory of Serbia and Montenegro, its internal sea waters and the belt of the territorial sea, the air space thereover, as well as the seabed and subsoil of the part of the continental shelf outside the outer limit of the territorial sea over which Serbia and Montenegro exercises its sovereign rights for the purpose of exploration and exploitation of their natural resources in accordance with its internal legislation and international law;
(3) the term “India” means the territory of India and includes the territorial sea and airspace above it, as well as any other maritime zone in which India has sovereign rights, other rights and jurisdiction, according to the Indian law and in accordance with international law, including the U.N. Convention on the Law of the Sea;
(4) the term “political sub-divisions”, in the State community Serbia and Montenegro, means Member States;
(5) the term “national” means:
- any individual possessing the nationality of a Contracting State;
- any legal person, partnership or association deriving its status as such from the laws in force in a Contracting State;
(6) the term “person” includes an individual, a company, a body of persons and, in the case of India, any other entity which is treated as a taxable unit under the taxation laws in force in that country;
(7) the term “company” means any body corporate or any entity which is treated as a body corporate for tax purposes;
(8) the terms “enterprise of a Contracting State” and “enterprise of the other Contracting State” mean respectively an enterprise carried on by a resident of a Contracting State and an enterprise carried on by a resident of the other Contracting State;
(9) the term “international traffic” means any transport by a ship or aircraft operated by an enterprise of a Contracting State, except when the ship or aircraft is operated solely between places in the other Contracting State;
(10) the term “fiscal year” means:
- in the case of Serbia and Montenegro, the year beginning on the first day of January;
- in the case of India, the year beginning on the first day of April.
(11) the term “competent authority” means:
- in the case of Serbia and Montenegro, the Ministry for International Economic Relations or its authorized representative;
- in the case of India, the Central Government in the Ministry of Finance (Department of Revenue) or their authorized representatives.
2. As regards the application of the Convention at any time by a Contracting State, any term not defined therein shall, unless the context otherwise requires, have the meaning that it has at that time under the law of that State for the purposes of the taxes to which the Convention applies, any meaning under the applicable tax laws of that State prevailing over a meaning given to the term under other laws of that State.
Article 4 : RESIDENT - 1. For the purposes of this Convention, the term “resident of a Contracting State” means any person who, under the laws of that State, is liable to tax therein by reason of his domicile, residence, place of management or any other criterion of a similar nature, and also includes that State and any political sub-division or local authority thereof. But this term does not include any person who is liable to tax in that State in respect only of income from sources in that State, or capital situated therein.
2. Where by reason of the provisions of paragraph 1 an individual is a resident of both Contacting States, then his status shall be determined as follows:
(1) he shall be deemed to be a resident only of the State in which he has a permanent home available to him; if he has a permanent home available to him in both States, he shall be deemed to be a resident only of the State with which his personal and economic relations are closer (centre of vital interests);
(2) if the State in which he has his centre of vital interests cannot be determined, or if he has not a permanent home available to him in either State, he shall be deemed to be a resident only of the State in which he has an habitual abode;
(3) if he has an habitual abode in both States or in neither of them, he shall be deemed to be a resident only of the State of which he is a national;
(4) if he is a national of both States or of neither of them, the competent authorities of the Contracting States shall settle the question by mutual agreement.
3. Where by reason of the provisions of paragraph 1 a person other than an individual is a resident of both Contracting States, then it shall be deemed to be a resident only of the State in which its place of effective management is situated. If the State in which its place of effective management is situated cannot be determined, then the competent authorities of the Contracting States shall settle the question by mutual agreement.
Article 5 : PERMANENT ESTABLISHMENT - 1. For the purposes of this Convention, the term “permanent establishment” means a fixed place of business through which the business of an enterprise is wholly or partly carried on.
2. The term “permanent establishment” includes especially:
(1) a place of management;
(2) a branch;
(3) an office;
(4) a factory;
(5) a workshop;
(6) a mine, an oil or gas well, a quarry or any other place of extraction of natural resources;
(7) a sales outlet;
(8) a warehouse in relation to a person providing storage facilities for others; and
(9) a farm, plantation or other place where agricultural, forestry, plantation or related activities are carried on.
3. The term “permanent establishment” likewise encompasses a building site, or a construction, assembly or installation project or supervisory activities in connection therewith, but only where such site, project or activities continue for a period of more than twelve months;
4. Notwithstanding the preceding provisions of this Article, the term “permanent establishment” shall be deemed not to include:
(1) the use of facilities solely for the purpose of storage, display or occasional delivery of goods or merchandise belonging to the enterprise;
(2) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of storage, display or occasional delivery;
(3) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of processing by another enterprise;
(4) the maintenance of a fixed place of business solely for the purpose of purchasing goods or merchandise or of collecting information, for the enterprise;
(5) the maintenance of a fixed place of business solely for the purpose of advertising, supply of information, scientific research or similar activities which have a preparatory or auxiliary character, for the enterprise;
(6) the maintenance of a fixed place of business solely for any combination of activities mentioned in sub-paragraphs (1) to (5) provided that the overall activity of the fixed place of business resulting from this combination is of a preparatory or auxiliary character.
5. Notwithstanding the provisions of paragraphs 1 and 2, where a person - other than an agent of an independent status to whom paragraph 7 applies - is acting in a Contracting State on behalf of an enterprise of the other Contracting State, that enterprise shall be deemed to have a permanent establishment in the first-mentioned Contracting State in respect of any activities which that person undertakes for the enterprise, if such a person:
(1) has and habitually exercises in that State an authority to conclude contracts in the name of the enterprise, unless the activities of such person are limited to those mentioned in paragraph 4 which, if exercised through a fixed place of business, would not make this fixed place of business a permanent establishment under the provisions of that paragraph; or
(2) has no such authority, but habitually maintains in the first-mentioned State a stock of goods or merchandise from which he regularly delivers goods or merchandise on behalf of the enterprise.
6. Notwithstanding the preceding provisions of this Article, an insurance enterprise of a Contracting State shall, except in regard to re-insurance, be deemed to have a permanent establishment in the other Contracting State if it collects premiums in the territory of that other State or insures risks situated therein through a person other than an agent of an independent status to whom paragraph 7 applies.
7. An enterprise shall not be deemed to have a permanent establishment in a Contracting State merely because it carries on business in that State through a broker, general commission agent or any other agent of an independent status, provided that such persons are acting in the ordinary course of their business. 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 within the meaning of this paragraph.
8. The fact that a company which is a resident of a Contracting State controls or is controlled by a company which is a resident of the other Contracting State, or which carries on business in that other State (whether through a permanent establishment or otherwise) shall not of itself constitute either company a permanent establishment of the other.
Article 6 : INCOME FROM IMMOVABLE PROPERTY - 1. Income derived by a resident of a Contracting State from immovable property (including income from agriculture or forestry) situated in the other Contracting State may be taxed in that other State.
2. The term “immovable property” shall have the meaning, which it has under the law of the Contracting State in which the property in question is situated. The term shall in any case include property accessory to immovable property, livestock and equipment used in agriculture and forestry, rights to which the provisions of general law respecting landed property apply, usufruct of immovable property and rights to variable or fixed payments as consideration for the working of, or the right to work, mineral deposits, sources and other natural resources; ships, boats and aircraft shall not be regarded as immovable property.
3. The provisions of paragraph 1 shall apply to income derived from the direct use, letting, or use in any other form of immovable property.
4. The provisions of paragraphs 1 and 3 shall also apply to the income from immovable property of an enterprise and to income from immovable property used for the performance of independent personal services.
Article 7 : BUSINESS PROFITS - 1. The profits of an enterprise of a Contracting State shall be taxable only in that State unless the enterprise carries on business in the other Contracting State through a permanent establishment situated therein. If the enterprise carries on business as aforesaid, the profits of the enterprise may be taxed in the other State but only so much of them as is attributable to that permanent establishment.
2. Subject to the provisions of paragraph 3, where an enterprise of a Contracting State carries on business in the other Contracting State through a permanent establishment situated therein, there shall in each Contracting State be attributed to that permanent establishment the profits which it might be expected to make if it were a distinct and separate enterprise engaged in the same or similar activities under the same or similar conditions and dealing wholly independently with the enterprise of which it is a permanent establishment.
3. In determining the profits of a permanent establishment, there shall be allowed as deductions expenses which are incurred for the purposes of the business of the permanent establishment, including executive and general administrative expenses so incurred, whether in the State in which the permanent establishment is situated or elsewhere, in accordance with and subject to the limitations of domestic tax laws of that State. However, no such deduction shall be allowed in respect of amounts, if any, paid (otherwise than towards reimbursement of actual expenses) by the permanent establishment to the head office of the enterprise or any of its other offices, by way of royalties, fees or other similar payments in return for the use of patents or other rights, or by way of commission, for specific services performed or for management, or except in the case of a banking enterprise, by way of interest on moneys lent to the permanent establishment. Likewise, no account shall be taken, in the determination of the profits of a permanent establishment, for amounts charged (otherwise than towards reimbursement of actual expenses) by the permanent establishment to the head office of the enterprise or any of its other offices, by way of royalties, fees or other similar payments in return for the use of patents or other rights, or by way of commission for specific services performed or for management, or, except in the case of a banking enterprise, by way of interest on moneys lent to the head office of the enterprise or any of its other offices.
4. Insofar as it has been customary in a Contracting State to determine the profits to be attributed to a permanent establishment on the basis of an apportionment of the total profits of the enterprise to its various parts, nothing in paragraph 2 shall preclude that Contracting State from determining the profits to be taxed by such an apportionment as may be customary; the method of apportionment adopted shall, however, be such that the result shall be in accordance with the principles contained in this Article.
5. No profits shall be attributed to a permanent establishment by reason of the mere purchase by that permanent establishment of goods or merchandise for the enterprise.
6. For the purposes of the preceding paragraphs, the profits to be attributed to the permanent establishment shall be determined by the same method year by year unless there is good and sufficient reason to the contrary.
7. Where profits include items of income which are dealt with separately in other Articles of this Convention, then the provisions of those Articles shall not be affected by the provisions of this Article.
Article 8 : INTERNATIONAL TRAFFIC - 1. Profits derived by an enterprise of a Contracting State from the operation of ships or aircraft in international traffic shall be taxable only in that State.
2. For the purposes of this Article, profits from the operation of ships or aircraft in international traffic shall mean the profits derived by an enterprise referred to in paragraph 1, from transportation by sea or air of passengers, goods, mail or livestock.
3. Profits derived by an enterprise referred to in paragraph 1, which is a resident of a Contracting State from the use or rental of containers (including trailers and other equipment for the transport of containers) used for the transport of goods or merchandise by that enterprise in international traffic shall be taxable only in that Contracting State unless the containers are used solely within the other Contracting State.
4. For the purposes of this Article, interest on funds directly connected with the operation of ships or aircraft in international traffic shall be regarded as profits derived from the operation of such ships or aircraft, if they are incidental to the carrying on of such business, and the provisions of Article 11 shall not apply in relation to such interest.
5. The provisions of paragraph 1 shall also apply to profits from the participation in a pool, a joint business or an international operating agency.
Article 9 : ASSOCIATED ENTERPRISES - 1. Where
(1) an enterprise of a Contracting State participates directly or indirectly in the management, control or capital of an enterprise of the other Contracting State, or
(2) the same persons participate directly or indirectly in the management, control or capital of an enterprise of a Contracting State and an enterprise of the other Contracting State,
and in either case conditions are made or imposed between the two enterprises in their commercial or financial relations which differ from those which would be made between independent enterprises, then any profits which would, but for those conditions, have accrued to one of the enterprises, but, by reason of those conditions, have not so accrued, may be included in the profits of that enterprise and taxed accordingly.
2. Where a Contracting State includes in the profits of an enterprise of that State - and taxes accordingly - profits on which an enterprise of the other Contracting State has been charged to tax in that other State and the profits so included are profits winch would have accrued to the enterprise of the first-mentioned State if the conditions made between the two enterprises had been those which would have been made between independent enterprises, then that other State shall make an appropriate adjustment to the amount of the tax charged therein on those profits. In determining such adjustment, due regard shall be had to the other provisions of this Convention and the competent authorities of the Contracting States shall if necessary consult each other.
Article 10 : DIVIDENDS - 1. Dividends paid by a company which is a resident of a Contracting State to a resident of the other Contracting State may be taxed in that other State.
2. However, such dividends may also be taxed in the Contracting State of which the company paying the dividends is a resident and according to the laws of that State, but if the beneficial owner of the dividends is a resident of the other Contracting State, the tax so charged shall not exceed :
(1) 5 per cent of the gross amount of the dividends if the beneficial owner is a company (other than a partnership) which holds directly at least 25 per cent of the capital of the company paying the dividends;
(2) 15 per cent of the gross amount of the dividends in all other cases.
The competent authorities of the Contracting States shall by mutual agreement settle the mode of application of these limitations.
This paragraph shall not affect the taxation of the company in respect of the profits out of which the dividends are paid.
3. The term “dividends” as used in this Article means income from shares, or other rights, not being debt-claims, participating in profits, as well as income from other corporate rights which is subjected to the same taxation treatment as income from shares by the laws of the State of which the company making the distribution, is a resident.
4. The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the dividends, being a resident of a Contracting State, carries on business in the other Contracting State of which the company paying the dividends is a resident, through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the holding in respect of which the dividends are paid is effectively connected with such permanent establishment or fixed base. In such case the provisions of article 7 or article 15, as the case may be, shall apply.
5. Where a company which is a resident of a Contracting State derives profits or income from the other Contracting State, that other State may not impose any tax on the dividends paid by the company, except insofar as such dividends are paid to a resident of that other State or insofar as the holding in respect of which the dividends are paid is effectively connected with a permanent establishment or a fixed base situated in that other State, nor subject the company’s undistributed profits to a tax on the company’s undistributed profits, even if the dividends paid or the undistributed profits consist wholly or partly of profits or income arising in such other State.
Article 11 : INTEREST - 1. Interest arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State.
2. However, such interest may also be taxed in the Contracting State in which it arises and according to the laws of that State, but if the beneficial owner of the interest is a resident of the other Contracting State, the tax so charged shall not exceed 10 per cent of the gross amount of the interest. The competent authorities of the Contracting States shall by mutual agreement settle the mode of application of this limitation.
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 :
(1) the Government, a political sub-division or a local authority of the other Contracting State; or
(2) the Reserve Bank, Central Bank or National Bank of the other Contracting State.
4. The term “interest” as used in this Article means income from debt-claims of every kind, whether or not secured by mortgage and whether or not carrying a right to participate in the debtor’s profits, and in particular, income from Government securities and income from bonds or debentures, including premiums and prizes attaching to such securities, bonds or debentures. Penalty charges for late payment shall not be regarded as interest for the purpose of this Article.
5. The provisions of paragraphs 1 and 2 shall not supply if the beneficial owner of the interest, being a resident of a Contracting State, carries on business in the other Contracting State in which the interest arises, through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the debt-claim in respect of which the interest is paid is effectively connected with such permanent establishment or fixed base. In such case the provisions of Article 7 or Article 15, as the case may be, shall apply.
6. Interest shall be deemed to arise in a Contracting State when the payer is a resident of that State. Where, however, the person paying the interest, whether he is a resident of a Contracting State or not, has in a Contracting State a permanent establishment or a fixed base in connection with which the indebtedness on which the interest is paid was incurred, and such interest is borne by such permanent establishment or a fixed base, then such interest shall be deemed to arise in the State in which the permanent establishment of fixed base is situated.
7. Where, by reason of a special relationship between the payer and the beneficial owner or between both of them and some other person, the amount of the interest, having regard to the debt-claim for which it is paid, exceeds the amount which would have been agreed upon by the payer and the beneficial owner in the absence of such relationship, the provisions of this article shall apply only to the last-mentioned amount. In such case, the excess part of the payments shall remain taxable according to the laws of each Contracting State, due regard being had to the other provisions of this Convention.
Article 12 : ROYALTIES - 1. Royalties arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State.
2. However, such royalties may also be taxed in the Contracting State in which they arise and according to the laws of that State, but if the beneficial owner of the royalties is a resident of the other Contracting State, the tax so charged shall not exceed 10 per cent of the gross amount, of the royalties. The competent authorities of the Contracting States shall by mutual agreement settle the mode of application of this limitation.
3. The term “royalties” as used in this Article means payments of any kind received as a consideration for the use of, or the right to use, any copyright of literary, artistic or scientific work including cinematograph films or films or tapes used for radio or television broadcasting, any patent, trade mark, design or model, plan, secret formula or process, or for the use of, or the right to use, industrial, commercial, or scientific equipment, or for information concerning industrial, commercial or scientific experience.
4. The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the royalties, being a resident of a Contracting State, carries on business in the other Contracting State in which the royalties arise, through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the right or property in respect of which the royalties are paid is effectively connected with such permanent establishment or fixed base. In such case the provisions of article 7 or article 15, as the case may be, shall apply.
5. Royalties shall be deemed to arise in a Contracting State when the payer is a resident of that State. Where, however, the person paying the royalties, whether he is a resident of a Contracting State or not, has in a Contracting State a permanent establishment or a fixed base in connection with which the liability to pay the royalties was incurred, and such royalties are borne by such permanent establishment or fixed base, then such royalties shall be deemed to arise in the State in which the permanent establishment or fixed base is situated.
6. Where, by reason of a special relationship between the payer and the beneficial owner or between both of them and some other person, the amount of the royalties, having regard to the use, right or information for which they are paid, exceeds the amount which would have been agreed upon by the payer and the beneficial owner in the absence of such relationship, the provisions of this article shall apply only to the last-mentioned amount. In such case, the excess part of the payments shall remain taxable according to the laws of each Contracting State, due regard being had to the other provisions of this Convention.
Article 13 : FEES FOR TECHNICAL SERVICES - 1. Fees for technical services arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State.
2. However, such fees for technical services may also be taxed in the Contracting State in which they arise and according to the laws of that State, but if the beneficial owner of the fees for technical services is a resident of the other Contracting State, the tax so charged shall not exceed 10 per cent of the gross amount of the fees for technical services. The competent authorities of the Contracting States shall by mutual agreement settle the mode of application of this limitation.
3. The term “fees for technical services” as used in this article means payments of any kind received as a 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 15 and 16.
4. The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the fees for technical services, being a resident of a Contracting State, carries on business in the other Contracting State in which the fees for technical services arise, through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the fees for technical services are effectively connected with such permanent establishment or fixed base. In such case the provisions of article 7 or article 15, as the case may be, shall apply.
5. Fees for technical services shall be deemed to arise in a Contracting State when the payer is a resident of that State. Where, however, the person paying the fees for technical services, whether he is a resident of a Contracting State or not, has in a Contracting State a permanent establishment or a fixed base in connection with which the liability to pay the fees for technical services was incurred, and such fees for technical services are borne by such permanent establishment or fixed base, then such fees for technical services shall be deemed to arise in the State in which the permanent establishment or fixed base is situated.
6. Where, by reason of a special relationship between the payer and the beneficial owner or between both of them and some other person; the amount of the fees for technical services, having regard to the services for which they are paid, exceeds the amount which would have been agreed upon by the payer and the beneficial owner in the absence of such relationship, the provisions of this article shall apply only to the last-mentioned amount. In such case, the excess part of the payments shall remain taxable according to the laws of each Contracting State, due regard being had to the other provisions of this Convention.
Article 14 : CAPITAL GAINS - 1. Gains derived by a resident of a Contracting State from the alienation of immovable property referred to in article 6 and situated in the other Contracting State may be taxed in that other State.
2. Gains from the alienation of movable property forming part of the business property of a permanent establishment which an enterprise of a Contracting State has in the other Contracting State or of movable property pertaining to a fixed base available to a resident of a Contracting State in the other Contracting State for the purpose of performing independent personal services, including such gains from the alienation of such a permanent establishment (alone or with the whole enterprise) or of such fixed base, may be taxed in that other State.
3. Gains derived by an enterprise of a Contracting State from the alienation of ships or aircraft operated in international traffic or movable property pertaining to the operation of such ships or aircraft shall be taxable only in that State.
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.
5. Gains from the alienation of shares other than those mentioned in paragraph 4 of a company which is a resident of a Contracting State may be taxed in that State.
6. Gains from the alienation of any property other than that referred to in paragraphs 1, 2, 3, 4 and 5 shall be taxable only in the Contracting State of which the alienator is a resident.
Article 15 : INDEPENDENT PERSONAL SERVICES - 1. Income derived by an individual who is a resident of a Contracting State from the performance of professional services or other independent activities of any similar character shall be taxable only in that State, except in the following circumstances, when such income may also be taxed in the other Contracting State :
(1) if he has a fixed base regularly available to him in the other Contracting State for the purpose of performing his activities; in that case, only so much of the income as is attributable to that fixed base may be taxed in that other Contracting State; or
(2) if his stay in the other Contracting State is for a period or periods amounting to or exceeding in the aggregate 183 days in any twelve month period commencing or ending in the fiscal year concerned; in that case, only so much of the income, as is derived from his activities performed in that other Contracting State may be taxed in that other State.
2. The term “professional services” includes especially independent scientific, literary, artistic, educational or teaching activities as well as the independent activities of physicians, lawyers, engineers, architects, surgeons, dentists and accountants.
Article 16 : DEPENDENT PERSONAL SERVICES - 1. Subject to the provisions of articles 17, 19, 20, 21 and 22, salaries, wages and other similar remuneration derived by a resident of a Contracting State in respect of an employment shall be taxable only in that State unless the employment is exercised in the other Contracting State. If the employment is so exercised, such remuneration as is derived therefrom may be taxed in that other State.
2. Notwithstanding the provisions of paragraph 1, remuneration derived by a resident of a Contracting State in respect of an employment exercised in the other Contracting State shall be taxable only in the first-mentioned State if :
(1) the recipient is present in the other State for a period or periods not exceeding in the aggregate 183 days in any twelve months period commencing or ending in the fiscal year concerned; and
(2) the remuneration is paid by, or on behalf of, an employer who is not a resident of the other State; and
(3) the remuneration is not borne by a permanent establishment or a fixed base which the employer has in the other State.
2. Notwithstanding the preceding provisions of this Article, remuneration derived in respect of an employment exercised aboard a ship or aircraft operated in international traffic by an enterprise of a Contracting State may be taxed in that State.
Article 17 : DIRECTORS’ FEES - Directors’ fees and other similar payments derived by a resident of a Contracting State in his capacity as a member of the board of directors of a company which is a resident of the other Contracting State may be taxed in that other State.
Article 18 : ENTERTAINERS AND SPORT PERSONS - 1. Notwithstanding the provisions of articles 15 and 16, income derived by a resident of a Contracting State as an entertainer, such as a theatre, motion picture, radio or television artiste, or a musician, or as a sportsperson, from personal activities as such exercised in the other Contracting State, may be taxed in that other State.
2. Where income in respect of personal activities exercised by an entertainer or a sportsperson in his capacity as such accrues not to the entertainer or sportsperson himself but to another person, that income may, notwithstanding the provisions of articles 7, 15 and 16, be taxed in the Contracting State in which the activities of the entertainer or sportsperson are exercised.
3. Notwithstanding the provisions of paragraphs 1 and 2, income derived by a resident of a Contracting State from his personal activities as an entertainer or as a sportsperson shall be taxable only in that State if the activities are exercised in the other Contracting State within the framework of a cultural or sports exchange programme approved by both Contracting States.
Article 19 : PENSIONS - Subject to the provisions of paragraph 2 of Article 20, pensions and other similar remuneration paid to a resident of a Contracting State in consideration of past employment shall be taxable only in that State.
Article 20 : GOVERNMENT SERVICE - 1. (1) Salaries, wages and other similar remuneration, other than a pension, paid by a Contracting State or a political sub-division or a local authority thereof to an individual in respect of services rendered to that State or sub-division or authority shall be taxable only in that State.
(2) However, such salaries, wages and other similar remuneration shall be taxable only in the other Contracting State if the services are rendered in that State and the individual is a resident of that State who :
- is a national of that State; or
- did not become a resident of that State solely for the purpose of rendering the services.
2. (1) Any pension paid by, or out of funds created by, a Contracting State or a political sub-division or a local authority thereof to an individual in respect of services rendered to that State or sub-division or authority shall be taxable only in that State.
(2) However, such pension shall be taxable only in the other Contracting State if the individual is a resident of, and a national of that State.
3. The provisions of Articles 16, 17, 18 and 19 shall apply to salaries, wages and other similar remuneration and to pensions, in respect of services rendered in connection with a business carried on by a Contracting State or a political sub-division or a local authority thereof.
Article 21 : STUDENTS - 1. Payments which a student or business apprentice who is or was immediately before visiting a Contracting State a resident of the other Contracting State and who is present in the first-mentioned State solely for the purpose of his education or training receives for the purpose of his maintenance, education or training shall not be taxed in that State, provided that such payments arise from sources outside that State.
2. In respect of grants, scholarships and remuneration from employment not covered by paragraph 1, a student or business apprentice referred to in paragraph 1 shall, in addition, be entitled during such education or training to the same exemptions, reliefs or reductions in respect of taxes available to residents of the Contracting State which he is visiting.
3. The benefit of this Article shall extend only for such period of time as may be reasonable or customarily required to complete the education or training undertaken, but in no event shall any individual have the benefits of this Article for more than five years from the date of his first arrival in that other Contracting State.
Article 22 : PROFESSORS, TEACHERS AND RESEARCHERS - 1. A professor or teacher who visits a Contracting State for the purpose of teaching or carrying out research at a university, college, school or other approved educational institution in that State and who is or was immediately before that visit a resident of the other Contracting State, shall be exempt from taxation in the first-mentioned Contracting State on remuneration for such teaching or research for a period not exceeding two years from the date of his first visit for that purpose, provided that such remuneration arise from sources outside that State.
2. The provisions of paragraph 1 of this Article shall not apply to remuneration from research, if such research is undertaken primarily for the private benefit of a specific person or persons.
Article 23 : OTHER INCOME - 1. Items of income of a resident of a Contracting State, wherever arising, not dealt with in the foregoing Articles of this Convention shall be taxable only in that State.
2. The provisions of paragraph 1 shall not apply to income, other than income from immovable property as defined in paragraph 2 of Article 6, if the recipient of such income, being a resident of a Contracting State, carries on business in the other Contracting State through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the right or property in respect of which the income is paid is effectively connected with such permanent establishment or fixed base. In such case the provisions of Article 7 or Article 15, as the case may be, shall apply.
3. Notwithstanding the provisions of paragraph 1, if a resident of a Contracting State derives income from sources within the other Contracting State in the form of lotteries, crossword puzzles, races including horse races, card games and other games of any sort or gambling or betting of any form or nature whatsoever, such income may be taxed in that other Contracting State.
Article 24 : CAPITAL - 1. Capital represented by immovable property referred to in Article 6, owned by a resident of a Contracting State and situated in the other Contracting State, may be taxed in that other State.
2. Capital represented by movable property forming part of the business property of a permanent establishment which an enterprise of a Contracting State has in the other Contracting State or by movable property pertaining to a fixed base available to a resident of a Contracting State in the other Contracting State for the purpose of performing independent personal services, may be taxed in that other State.
3. Capital represented by ships and aircraft operated in international traffic, and by movable property pertaining to the operation of such ships and aircraft shall be taxable only in the Contracting State of which the enterprise owning such property is a resident.
4. All other elements of capital of a resident of a Contracting State shall be taxable only in that State.
Article 25 : ELIMINATION OF DOUBLE TAXATION - 1. Where a resident of a Contracting State derives income or owns capital which, in accordance with the provisions of this Convention, may be taxed in the other Contracting State, the first-mentioned State shall allow:
- as a deduction from the tax on the income of that resident, an amount equal to the income-tax paid in that other State;
- as a deduction from the tax on the capital of that resident, an amount equal to the capital tax paid in that other State.
Such deduction in either case shall not, however, exceed that part of the income-tax or capital tax, as computed before the deduction is given, which is attributable, as the case may be, to the income or the capital which may be taxed in that other State.
2. Where in accordance with any provision of the Convention income derived or capital owned by a resident of a Contracting State is exempt from tax in that State, such State may nevertheless, in calculating the amount of tax on the remaining income or capital of such resident, take into account the exempted income or capital.
3. For the purpose of allowance as a credit in a Contracting State the tax paid in the other Contracting State shall be deemed to include the tax which is otherwise payable in that other State but has been reduced or waived by that State under its legal provisions for tax incentives.
4. For the purposes of this Article, the term “tax paid” shall not include any amount which is payable in respect of any default or omission in relation to taxes to which this Convention applies.
Article 26 : NON-DISCRIMINATION - 1. Nationals of a Contracting State shall not be subjected in the other Contracting State to any taxation or any requirement connected therewith, which is other or more burdensome than the taxation and connected requirements to which nationals of that other State in the same circumstances, in particular with respect to residence, are or may be subjected. This provision shall, notwithstanding the provisions of Article 1, also apply to persons who are not residents of one or both of the Contracting States.
2. The taxation on a permanent establishment which an enterprise of a Contracting State has in the other Contracting State shall not be less favourably levied in that other State than the taxation levied on enterprises of that other State carrying on the same activities. This provision shall not be construed as preventing a Contracting State from charging the profits of a permanent establishment which a company of the other Contracting State has in the first-mentioned State at a rate of tax which is higher than that imposed on the profits of a similar company of the first-mentioned Contracting State, nor as being in conflict with the provisions of paragraph 3 of Article 7 of this Convention. Further, this provision shall also not be construed as obliging a Contracting State to grant to residents of the other Contracting State any personal allowances, reliefs and reductions for taxation purposes on account of civil status or family responsibilities which it grants to its own residents.
3. Except where the provisions of Article 9, paragraph 7 of Article 11, or paragraph 6 of Article 12, apply, interest, royalties and other disbursements paid by an enterprise of a Contracting State to a resident of the other Contracting State shall, for the purpose of determining the taxable profits of such enterprise, be deductible under the same conditions as if they had been paid to a resident of the first-mentioned State. Similarly, any debts of an enterprise of a Contracting State to a resident of the other Contracting State shall, for the purpose of determining the taxable capital of such enterprise, be deductible under the same conditions as if they had been contracted to a resident of the first-mentioned State.
4. Enterprises of a Contracting State, the capital of which is wholly or partly owned or controlled, directly or indirectly, by one or more residents of the other Contracting State, shall not be subjected in the first-mentioned State to any taxation or any requirement connected therewith which is other or more burdensome than the taxation and connected requirements to which other similar enterprises of the first-mentioned State are or may be subjected.
5. The provisions of this Article shall apply to the taxes referred to in Article 2.
Article 27 : MUTUAL AGREEMENT PROCEDURE - 1. Where a person considers that the actions of one or both of the Contracting States result or will result for him in taxation not in accordance with the provisions of this Convention, he may, irrespective of the remedies provided by the domestic law of those States, present his case to the competent authority of the Contracting State of which he is a resident or, if his case comes under paragraph 1 of Article 26, to that of the Contracting State of which he is a national. The case must be presented within three years from the first notification of the action resulting in taxation not in accordance with the provisions of the Convention.
2. The competent authority shall endeavour, if the objection appears to it to be justified and if it is not itself able to arrive at a satisfactory solution, to resolve the case by mutual agreement with the competent authority of the other Contracting State, with a view to the avoidance of taxation which is not in accordance with this Convention. Any agreement reached shall be implemented notwithstanding any time limits in the domestic law of the Contracting States.
3. The competent authorities of the Contracting States shall endeavour to resolve by mutual agreement any difficulties or doubts arising as to the interpretation or application of the Convention. They may also consult together for the elimination of double taxation in cases not provided for in the Convention.
4. The competent authorities of the Contracting States may communicate with each other directly for the purpose of reaching an agreement in the sense of the preceding paragraphs. When it seems advisable in order to reach an agreement to have oral exchange of opinions, such exchange may take place through a Commission consisting of representatives of the competent authorities of the Contracting States.
Article 28 : EXCHANGE OF INFORMATION - 1. The competent authorities of the Contracting States shall exchange such information (including documents or certified copies of the documents) as is necessary for carrying out the provisions of this Convention or of the domestic laws of the Contracting States concerning taxes covered by the Convention insofar as the taxation thereunder is not contrary to the Convention in particular for the prevention of fraud or evasion of such taxes. The exchange of information is not restricted by Article 1. Any information received by a Contracting State shall be treated as secret in the same manner as information obtained under the domestic laws of that State and shall be disclosed only to persons or authorities (including courts and administrative bodies) concerned with the assessment or collection of, the enforcement or prosecution in respect of, or the determination of appeals in relation to, the taxes covered by the Convention. Such persons or authorities shall use the information only for such purposes. They may disclose the information in public court proceedings or in judicial decisions.
2. In no case shall the provisions of paragraph 1 be construed so as to impose on the competent authority of a Contracting State the obligation:
(1) to carry out administrative measures at variance with the laws and administrative practice of that or of the other Contracting State;
(2) to supply information which is not obtainable under the laws or in the normal course of the administration of that or of the other Contracting State;
(3) to supply information which would disclose any trade, business, industrial, commercial or professional secret or trade process, or information, the disclosure of which would be contrary to public policy (ordre public).
Article 29 : MEMBERS OF DIPLOMATIC MISSIONS AND CONSULAR POSTS - Nothing in this Convention shall affect the fiscal privileges of members of diplomatic missions or consular posts under the general rules of international law or under the provisions of special agreements.
Article 30 : ENTRY INTO FORCE - 1. The Contracting States shall notify each other in writing, through diplomatic channels, the completion of the procedure required by the respective laws for the entry into force of this Convention.
2. The Convention shall enter into force on the date of the later of the notifications referred to in paragraph 1 of this Article and its provisions shall have effect:
(1) in Serbia and Montenegro : in respect of the taxes on income derived and the taxes on capital owned in each fiscal year beginning on or after the first day of January in the calendar year next following the year in which this Convention enters into force;
(2) in India: in respect of the taxes on income derived and the taxes on capital owned in each fiscal year beginning on or after the first day of April in the calendar year, next following the year in which this Convention enters into force.
Article 31 : TERMINATION - This Convention shall remain in force until terminated by a Contracting State. Either Contracting State may terminate the Convention, through diplomatic channels, by giving notice of termination at least six months before the end of any calendar year after the fifth year from the date of entry into force of the Convention. In such event the Convention shall cease to have effect:
(1) in Serbia and Montenegro: in respect of the taxes on income derived and the taxes on capital owned in each fiscal year beginning on or after the first day of January in the calendar year next following the year in which the notice of termination is given;
(2) in India: in respect of the taxes on income derived and the taxes on capital owned each fiscal year beginning on or after the first day of April in the calendar year next following the year in which the notice of termination is given.
In Witness whereof the undersigned, being duly authorised thereto, have signed this Convention.
Done in duplicate at New Delhi this 8th day of February, 2006 in the English, Hindi and Serbian languages, all three texts being equally authentic. In case of any divergence of interpretation, the English text shall prevail.
For the Government of the Republic of India For the Council of Ministers of Serbia and Montenegro

Sd/-
Shri P. Chidambaram
Finance Minister Sd/-
Prof. Dr. Predrag Ivanovic
Minister for International Economic Relations
PROTOCOL
At the moment of signing the Convention between the Council of Ministers of Serbia and Montenegro and the Government of the Republic of India for the Avoidance of Double Taxation with respect to taxes on Income and on Capital, the undersigned have agreed that the following provision shall form an integral part of the Convention.
Ad. Articles 6 and 14
With reference to paragraphs 1 of Article 6 and Article 14, it is understood that income from immovable property and capital gains on alienation of immovable property respectively may be taxed in both Contracting States.
IN WITNESS whereof the undersigned, being duly authorized thereto, have signed this Protocol.
DONE in duplicate at New Delhi this 8th day of February, 2006 in the, English, Hindi and Serbian languages, all three texts being equally authentic. In case of any divergence of interpretation, the English text shall prevail.

FOR THE GOVERNMENT OF THE REPUBLIC OF INDIA FOR THE COUNCIL OF MINISTERS OF SERBIA AND MONTENEGRO

Sd/- Sd/-

Shri P. Chidambaram
Finance Minister Prof. Dr. Predrag Ivanovic
Minister for International Economic Relations