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AGREEMENT BETWEEN
THE ISLAMIC REPUBLIC OF PAKISTAN AND THE REPUBLIC OF INDIA FOR AVOIDANCE OF DOUBLE
TAXATION OF INCOME DERIVED FROM INTERNATIONAL AIR TRANSPORT
Notification No. S.R.O. 146(I)/89, dated the 18th February, 1989.
-WHEREAS the annexed agreement for the avoidance of double taxation of income derived from
international air transport has been made between the Government of the Islamic Republic
of Pakistan and the Government of the Republic of india;
Now, THEREFORE, in exercise of the powers conferred by Section 163 of the
Income Tax Ordinance, 1979 (XXXI of 1979), the Federal Government is pleased to direct
that the provisions of the said agreement shall enter into force in Pakistan on 1st day of
March, 1989 and the provisions of the said agreement shall be given effect to in Pakistan
in respect of income derived on or after the 1st day of July, 1986.
Annex
AGREEMENT BETWEEN THE ISLAMIC REPUBLIC OF PAKISTAN
AND
THE REPUBLIC OF INDIA
FOR
AVOIDANCE OF DOUBLE TAXATION OF INCOME DERIVED
FROM
INTERNATIONAL AIR TRANSPORT
The Government of the Islamic Republic of Pakistan and the
Government of the Republic of India
DESIRING to conclude an agreement for the avoidance of double taxation of income derived
from international air transport.
HAVE AGREED as follows:
ARTICLE 1
TAXES COVERED
(1) This Agreement shall apply to taxes on income 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) The existing taxes to which this Agreement shall apply are:
(a) in the case of Pakistan:
(i) the income tax;
(ii) the super-tax; and
(iii) the surcharge;
(hereinafter referred to as "Pakistan tax").
(b) in the case of India:
(i) the income-tax including any surcharge thereon; and
(ii) the surtax;
(hereinafter referred to as "Indian tax")
(3) This Agreement shall also apply to any identical or substantially similar taxes which
are imposed after the date of signature of this Agreement in addition to, or in place of,
the taxes referred to in paragraph 2 of this Article. The competent authority of a
Contracting State shall as soon as possible or at least at the end of each year notify the
other of any substantive changes which are made in its taxation law.
ARTICLE 2
DEFINITIONS
(1) In this Agreement, unless the context otherwise requires:
(a) the terms "a Contracting State" and "the other Contracting
State" mean Pakistan or India, as the context requires;
(b) the term "tax" means "Pakistan tax", or "Indian tax", as
the context requires;
(c) the term "enterprise of a Contracting State" means ·
(i) an airline designated by the Government of that State in pursuance of the Agreement
between the Government of the Islamic Republic of Pakistan and the Government of the
Republic of India relating to air services, dated 16th July, 1976 (as amended or revised
from time to time); or
(ii) an airline which is authorised by the Government of that State by a general or
special arrangement between the two Contracting States to operate chartered flights
between or beyond their territories;
(d) the term "international traffic" means any transport by an aircraft operated
by an enterprise of a Contracting State, except when the aircraft is operated solely
between places in the other Contracting States;
(e) the term competent authority" means:
(i) in the case of the India, the Central Government in the Ministry of Finance
(Department of Revenue) or their authorised representative; and
(ii) In the case of the Pakistan the Central Board of Revenue or their authorised
representative.
(2) As regards the application of the Agreement by a Contracting State any term not
defined therein shall, unless the context otherwise requires, have the meaning which it
has under the law of that State concerning the taxes to which the Agreement applies.
ARTICLE 3
AVOIDANCE OF DOUBLE TAXATION
1. Profits derived by an enterprise of a Contracting State from
the operation of aircraft in international traffic shall be exempt from tax in the other
Contracting State.
2. The provisions of paragraph I shall also apply to 'the profits from the participation
in a pool, a joint business or an international operating agency.
3. For the purposes of paragraph 1, interest on funds connected with the operation of
aircraft in international traffic shall be regarded as profits derived from the operation
of such aircraft.
ARTICLE 4
RESIDUAL PROVISIONS
The laws in force in either of the Contracting States will continue to govern the assessment and taxation of income in the Contracting States except where express provision to the contrary is made in this Agreement.
ARTICLE 5
ENTRY INTO FORCE
Each Contracting State shall notify, to the other the completion of the procedure required by its law for the bringing into force of this Agreement. The Agreement shall enter into force that first day of the second month following the month in which the later of these notifications has been given and shall have effect in respect of income derived on or after the 1st day of July, 1986.
ARTICLE 6
TERMINATION
1. This Agreement shall continue in effect indefinitely but
either Contracting State may, on or before the 13th day of June in any calendar year
beginning not earlier than the expiry of a period of five years from the date of its entry
into force, give notice of termination to the other Contracting State and in such event
this Agreement shall cease to be effective:
(a) in Pakistan, in respect of any assessment year on or after the 1st day of July of the
second calendar year following the year in which the notice is given;
(b) in India, in respect of any assessment year commencing on or after the 1st day of
April of the second calendar year following the year in which the notice is given.
2. In case a comprehensive agreement for the avoidance of double taxation with respect to
taxes on income, including inter alia, income derived from International Air
Transport is concluded between the Contracting States, then notwithstanding anything to
the contrary in paragraph I , this Agreement shall cease to have effect from the date on
which such comprehensive Agreement enters into force.
IN WITNESS WHEREOF the undersigned, duly authorised thereto, have signed this Agreement.
DONE at Islamabad on this Thirty-First day of December, One thousand nine hundred and
eighty eight in two originals, each in the Hindi and English languages, both texts being
equally authentic. In case of divergence between the two texts, the English text. shall be
the operative one.
Issued by the Federal Government, under the signatures of Mr. S.K. Singh, Ambassador of
India to Pakistan, for the Government of the Republic of India. Mr. Niaz A. Naik,
Ambassador of Pakistan to India, for the Government of the Islamic Republic of Pakistan
Mr. Sajjad Hassan, Additional Secretary, vide Ex. Ord Gaz. of Pak , 1989, Pt. II, P. 181
File C. No. 2(4)IT-2/76.
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