India

Indonesia has established tax treaties with India to prevent double taxation and encourage cross-border investments. See detailed information on Indonesia-India tax treaties below.

AGREEMENT

BETWEEN

THE GOVERNMENT OF THE REPUBLIC OF INDONESIA

AND

THE GOVERNMENT OF THE REPUBLIC OF INDIA
FOR THE AVOIDANCE OF DOUBLE TAXATION
AND THE PREVENTION OF FISCAL EVASION
WITH RESPECT TO TAXES ON INCOME

 

The Government of the Republic of Indonesia and the
Government of the Republic of India, desiring to conclude an Agreement for the avoidance of double
taxation and the prevention of fiscal evasion with respect to taxes on income and with a view to promoting
economic cooperation between the two countries.

have agreed as follows:
 

CHAPTER I
SCOPE OF THE AGREEMENT

 

Article 1
PERSONS COVERED

This Agreement shall apply to persons who are residents of one or both of the Contracting States.
 

Article 2
TAXES COVERED

 

1. This Agreement shall
apply to taxes on income imposed on behalf of a Contracting State or of its political subdivisions
or local authorities. Irrespective of the manner in which they are levied
2. There shall be regarded
as taxes on income all taxes imposed on total income, or on elements of income, including taxes on
gains from the alienation of movable or immovable property and taxes on the totals amounts of wages
or salaries paid by enterprises.
3.

The existing taxes to which the Agreement
shall apply are in particular :

(a) in the case of the
Republic of Indonesia:
the income tax:
(hereinafter referred to as “Indonesian tax”);
(b)

in the case of the Republic of
India:
the income tax, including any surcharge thereon;
(hereinafter referred to as “Indian tax”).

4. The
Agreement shall also apply to any identical or substantially similar taxes that are imposed after
the date of signature of the Agreement in addition to, or in place of, the existing taxes The
competent authorities of the Contracting States shall notify each other of any significant changes
that have been made in their respective taxation laws.

 

CHAPTER II
DEFINITIONS

Article 3
GENERAL DEFINITIONS

 

1. For the purposes of
this Agreement, unless the context otherwise requires:
  (a) the term “Republic of Indonesia” means the
territory of the Republic of Indonesia as defined in its laws, and parts of the continental shelf,
exclusive economic zone and adjacent seas over which the Republic of Indonesia has sovereignty,
sovereign rights or jurisdiction in accordance with the United Nations Convention on the Law of the
Sea 1982;
  (b) 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 United Nations Convention on the Law of the Sea
1982;
  (c) the terms “a Contracting State” and “the other
Contracting State” mean the Republic of Indonesia or the Republic of India as the context requires;
  (d) the term “person” includes an individual, a
company, a body of persons and any other entity which is treated as a taxable unit under the
taxation laws in force in the respective Contracting States;
  (e) the term “company” means any body corporate or
any entity that is treated as 3 body corporate for tax purposes;
  (f) the term “enterprise” applies to the carrying
on of any business;
  (g) 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;
  (h) 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:
  (i) the term “national” means:

(1) any individual possessing the
nationality of a Contracting State; and
(2) any legal person, partnership or
association deriving its status as such from the laws in force in a Contracting State;
  (j) the term “competent authority” means:

(1) in the case of the Republic of
Indonesia, the Minister of Finance or his authorised representative;
(2) in the case of the Republic of India,
the Finance Minister or his authorised representative;
  (k) the term “tax” means Indonesian or Indian tax.
as the context requires, but shall not include any amount which is payable in respect of any default
or omission in relation to the taxes to which this Agreement applies or which represents a penally
or fine imposed relating to those taxes;
2. As regards the
application of the Agreement at any time by 3 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 Agreement 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 Agreement, 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,
place of incorporation, or any other criterion of a similar nature, and also includes that state and
any political subdivision or local authority thereof. This term, however, does not include any
person who is liable to lax in that State in respect only of income from sources in that State
2. Where by reason of the
provisions of paragraph 1 an individual is a resident of both Contracting States, then his status
shall be determined as follows:
  (a) he shall be deemed to be a resident only of the
State in which he has a permanent homo 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);
  (b) 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;
  (c) 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.
  (d) if his residential status cannot he determined
by reason of subparagraphs (a) to (c) in that sequence, the competent authorities of the Contracting
States shall endeavor to 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 endeavor to settle the
question by mutual agreement.

 

Article 5
PERMANENT ESTABLISHMENT

 

1. For the purposes of
this Agreement, 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 :
  (a) a place of management;
  (b) a branch;
  (c) an office;
  (d) a factory;
  (e) a workshop;
  (f) a warehouse in relation to a person providing
storage facilities for others;
  (g) premises as sales outlet;
  (h) farm or other place where agricultural,
forestry, plantation or related activities are carried on; and.
  (i) a mine, an oil or gas well, a quarry or any
other place of extraction of natural resources.
3. The term ‘permanent
establishment” also encompasses :
  (a) a building site or a construction or assembly
or installation project or supervisory activities in connection therewith, but only if such site,
project or activities last for a period of more than 183 days;
  (b) a drilling rig or working ship used for
exploration or exploitation of natural resources, but only if so used for a period more than 183
days;
  (c) the furnishing of services, including
consultancy services, by an enterprise through employees or other personnel engaged by the
enterprise for such purpose, but only if activities of that nature continue (for the same or a
connected project) within a Contracting State for a period or periods aggregating more than 91 days
within any twelve month period.
4. Notwithstanding the
preceding provisions of this article, the term “permanent establishment” shall be deemed not to
include :
  (a) the use of facilities solely for the purpose of
storage or display of goods or merchandise belonging to the enterprise;
  (b) the maintenance of a stock of goods or
merchandise belonging to the enterprise solely for the purpose of storage or display;
  (c) the maintenance of a stock of goods or
merchandise belonging to the enterprise solely for the purpose of processing by another enterprise;
  (d) the maintenance of a fixed place of business
solely for the purpose of purchasing goods or merchandise, or of collecting information, for the
enterprise;
  (e) the maintenance of fixed place of business
solely for the purpose of carrying on, for the enterprise, any other activity of a preparatory or
auxiliary character.
  (f) the maintenance of a fixed place of business
solely for any combination of activities mentioned in sub-paragraphs (a) to (e), 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 I 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:
  (a) 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
  (b) 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.
  (c) habitually secures orders in the
first-mentioned State, wholly or almost wholly for the enterprise itself
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 of a
Contracting State shall not be deemed to have a permanent establishment in the other Contracting
State merely because it carries on business in that other Contracting 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.

 

CHAPTER III
TAXATION OF INCOME

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 Contracting 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, and aircraft shall not be regarded as immovable property.
3. The provisions of paragraph 1 shall also apply
to income derived from the direct use, letting, or use in any other from 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 the provisions of and subject to the limitations of the 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 lights, or by way or 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 banking enterprise, by way of interest on
money 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 Agreement, then the provisions of those Articles
shall not be affected by the provisions of this Article.

 

Article 8
SHIPPING AND AIR TRANSPORT

 

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 the Contracting State in which the place of effective management of the enterprise is
situated .
2. If the place of effective management of a
shipping enterprise is aboard a ship, then it shall be deemed to be situated in the Contracting
State in which the home harbor of the ship is situated, or, if there is no such home harbor, in the
Contracting State of which the operator of the ship is a resident.
3. The term “operation of ships or aircraft” means
business of transportation by sea or by air of passengers, mail, livestock or goods carried on by
the owners, fessees or charterers of ships or aircraft, including the sale of tickets for such
transportation on behalf of other enterprises, the incidental lease of ships or aircraft and any
other activity directly connected with such transportation.
4. Notwithstanding the provisions of paragraphs 1
and 2, profits from sources within a Contracting State derived by an enterprise of the other
Contracting State from the operation of ships in international traffic may be taxed in the
first-mentioned State, but the tax imposed in that Contracting State shall be reduced by an amount
equal to 50 per cent thereof.
5. Profits derived by a transportation enterprise
which is a resident of a Contracting State from the use, maintenance, or rental of containers
(including trailers and other equipment for the transport of containers) used for the transport of
goods or merchandise in international traffic shall be taxable only in that Contracting State unless
the containers are used solely within the other contracting State.
6. For the purposes of this Article interest on
investments 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
integral to the carrying on of such business, and the provisions of Article 11 shall not apply in
relation to such interest.
7. 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 :
  (a) 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
  (b) 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 which 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 Agreement and the competent
authorities of the Contracting States shall if necessary consult each other.
3. The provision of
paragraph 2 shall not apply where judicial, administrative or other legal proceedings have resulted
in a final ruling that by actions giving rise to an adjustment of profits under paragraph 1, one of
the enterprises concerned is liable to penalty with respect to fraud, gross negligence or wilful
default.

 

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 10 % (ten per cent) of the gross amount of
the dividends.
This paragraph shall not affect ihe 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 14, 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% (ten percent) of the gross amount of the interest.
3. Notwithstanding the provisions of paragraph 2,
interest arising in a Contracting State shall be exempt from tax in that State, provided that it is
derived and beneficially owned by :

(a) the Government,
a political sub-division or a local authority of the other Contracting Stale; or
(b) (i) in the case of the Republic of
Indonesia:

(1) Bank Indonesia (the Central
Bank of Indonesia);
(2) Pusat Investasi Pemerintah (the
Centre for Government Investment), and
(3) Lembaga Pembiayaan Ekspor
Indonesia (the indonesia Eximbank);
  (ii) in the case of India:

(1) Reserve Bank of India;
(2) Export-Import bank of India;
and
(3) National Housing bank; or
(c) a statutory
body or any institution wholly owned by the Government of the Contracting States, as may he
agreed from time to time between the competent authorities of the Contracting States;
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 debtors 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
apply 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 14, 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 home by such permanent establishment or fixed
base, then such interest shall be deemed to arise in the State in which the permanent establishment
or 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 of
interest. 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 Agreement.

 

Article 12
ROYALTIES AND FEES FOR TECHNICAL SERVICES

 

1. Royalties or 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 royalties
or fees for technical services may also be taxed in the Contracting State in which they arise, and
according to the laws ot that State, but if the beneficial owner of the royalties or fees for
technical services is a resident of the other Contracting State, the tax so charged shall not exceed
10% (ten per cent) of the gross amount of the royalties or fees for technical services.
3. (a) 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.
  (b) The term “fees for technical services” as used
in this Article means payments of any kind, other than those mentioned in Articles 14 and 15 of this
Agreement as consideration for managerial or technical or consultancy services, including the
provision of services of technical or technical personnel.
4. The provisions of
paragraphs 1 and 2 shall not apply if the beneficial owner of the royalties or fees for technical
services, being a resident of a Contracting State, carries on business in the other Contracting
State in which the royalties or 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 right or property in respect of which the royalties or fees for technical
services are paid is effectively connected with such permanent establishment or fixed base. In such
case, the provisions of Article 7 or Article 14, as the case may be, shall apply.
5. (a) Royalties and fees
for technical services shall be deemed to arise in a Contracting State when the payer is that State
itself, a political sub-division, a local authority, or a resident of that State. Where, however,
the person paying the royalties or 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 royalties or fees for technical services was
incurred, and such royalties or fees for technical services are borne by such permanent
establishment or fixed base, then such royalties or fees for technical services shall be deemed to
arise in the Contracting State in which the permanent establishment or fixed base is situated.
(b) Where under sub-paragraph (a) royalties or fees for technical services do not arise in one of
the Contracting States, and the royalties relate to the use of, or the right to use, the right or
property, or the fees for technical services relate to services performed, in one of the Contracting
States, the royalties or fees for technical services shall be deemed to arise in that Contracting
State.
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 or fees for technical services, 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 of royalties. 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 Agreement.

 

Article 13
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 Contracting
State in which the place of effective management of the enterprise is situated.
4. Gains derived by a resident of a Contracting
State from the alienation of shares deriving more than 50 per cent of their value directly or
indirectly from immovable property situated in the other Contracting State may be taxed in that
other State.
5. Gains from the alienation of shares other than
those mentioned in paragraph 4 in a company which is a resident of a Contracting State may be taxed
in that State.
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 14
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 a 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:
  (a) 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 State; or
  (b) if his stay in the other Contracting State is
for a period oi periods amounting to or exceeding in the aggregate 91 days in any period of twelve
months; in that case, only so much of the income as is derived from his activities performed in that
other State may be taxed in that other State.
2. The term “professional
services” includes especially independent scientific, literary, artistic, educational of teaching
activities as well as the independent activities of physicians, lawyers, engineers, architects,
surgeons, dentists and accountants.

 

Article 15
DEPENDENT PERSONAL SERVICES

 

1. Subject to the
provisions of Articles 16, 18, 19 and 20. 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:
  (a) the recipient is present in the other State for
a period or periods not exceeding in the aggregate 183 days in any twelve month period commencing or
ending in the fiscal year concerned, and
  (b) the remuneration is paid by, or on behalf of,
an employer who is not a resident of the other State; and
  (c) the remuneration is not borne by a permanent
establishment or a fixed base which the employer has in the other State.
3. Notwithstanding the
preceding provisions of this Article, remuneration derived in respect of an employment exercised
aboard a ship or aircraft operated in international traffic, may be faxed in the Contracting State
in which the place of effective management of the enterprise is situated.

 

Article 16
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 or similar organ of a company which is a resident of the other
Contracting State may be taxed in that other State.
 

Article 17
ARTISTES AND SPORTSPERSONS

 

1. Notwithstanding the provisions of Articles 14
and 15, 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 his 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, 14 and 15, be taxed in the Contracting State in which the activities of the entertainer
or sportsperson are exercised.
3. The provisions of paragraphs 1 and 2 shall not
apply to income from activities performed in a Contracting State by entertainers or sportspersons if
the activities are substantially supported by public funds of one or both of the Contracting States,
a local authority or public institution thereof, in such a case, the income shall be taxable only in
the Contracting State of which the entertainer or sportsperson is a resident.

 

Article 18
PENSIONS AND ANNUITY

 

1. Subject to the provisions of paragraph 2 of
Article 19, pensions and other similar remuneration paid in consideration of past employment and
annuity paid to a resident of a Contracting State shall be taxable only in that State.
2. The term annuity” means a stated sum payable
periodically at stated times during life or during a specified or ascertainable period of time under
an obligation to make the payments in return for adequate and full consideration in money or money’s
worth.

 

Article 19
GOVERNMENT SERVICE

1. (a) Salaries, wages and other similar remuneration,
other than a pension, paid by a Contracting State, or a political subdivision, or a local authority
thereof to an individual in respect of services rendered to that State or subdivision or authority
or body shall be taxable only in that State;
  (b) 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;

(i) is a national of that State, or
(ii) did not become a resident ofthat State
solely for the purpose of rendering the services.
2. (a) Any pension paid by, or out of funds created
by, a Contracting State or a political subdivision or a local authority thereof to an individual in
respect of services rendered to that State or subdivision or authority shall be taxable only in that
State.
  (b) However, such pension shall be taxable only in
the other Contracting State if the individual is a resident of, and a national of, that other State;
3. The provisions of
Article 15, 16, 17, and 18 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 subdivision or a local authority body thereof.

 

Article 20
PROFESSORS, TEACHERS AND RESEARCH SCHOLARS

 

1. A professor, teacher or research scholars who
is or was a resident of one of the Contracting States immediately before visiting the other
Contracting State for the purpose of teaching or engaging in research, or both, at a university,
college, school, museum or other approved institution in that other Contracting State shall be
exempt from tax in that other State on any remuneration for such teaching or research for a period
not exceeding two years from the date of his first arrival in that other State.
2. This Article shall not apply to income from
research if such research is undertaken primarily for the private benefit of a specific person or
persons.
3. For the purposes of this Article, an individual
shall be deemed to be a resident of a Contracting State if he is resident in that Contracting State
in the fiscal year of income in which he visits the other Contracting State or in the immediately
preceding fiscal year of income.
4. For the purposes of paragraph 1, “approved
institution” means an institution which has been approved in this regard by the competent authority
of the concerned Contracting State.

 

Article 21
STUDENTS AND APPRENTICES

 

1. Payments which a
student or apprentice who is or was immediately before visiting a Contracting State a resident of
the other Contracting State and who is present in the frist- 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. The benefits 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:
  (i) in the case of student: for more than five
consecutive years from the date of his first arrival for the purposes of his education in the
Contracting State.
  (ii) in the case of apprentice: for more than two
consecutive years from the date of his first arrival for the purposes of his training in the
Contracting State.

 

Article 22
OTHER INCOME

 

1. Items of income of a resident of a Contracting
State, wherever arising, not dealt with in the foregoing Articles of this Agreement shall be taxable
only in that State.
2. The provisions of paragraph 1 shall nol 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 14, as the case may be, shall
apply.
3. Notwithstanding the provisions of paragraphs 1
and 2, Items of income of a resident of a Contracting State not dealt with in the foregoing Articles
of this Agreement and arising in the other Contracting State may also be taxed in that other State.

 

CHAPTER IV
METHODS FOR ELIMINATION OF DOUBLE TAXATION

Article 23
METHODS FOR ELIMINATION OF DOUBLE TAXATION

 

1. Where a resident of a Contracting State derives
income which, in accordance with the provisions of this Agreement, may be taxed in the other
Contracting State, the first-mentioned State shall allow as deduction from the tax on the income of
that resident an amount equal to the income tax paid in that other State, Such deduction shall not,
however, exceed the part of the income tax as computed before the deduction is given, which is
attributable as the case may be, to the income which may be taxed in that other State.
2. Where in accordance with any provision of the
Agreement, income derived by a resident of a Contracting State is exempt from tax in that State,
that State may nevertheless, in calculating the amount of tax on the remaining income of such
resident, take into account the exempted income.

 

CHAPTER V
SPECIAL PROVISIONS

Article 24
LIMITATION OF BENEFITS

 

1. The provisions of this Agreement shall in no
case prevent a Contracting Stale from the application of the provisions of its domestic law and
measures concerning tax avoidance or evasion, whether or not described as such.
2. A resident of a Contracting State shall not be
entitled to the benefits of this Agreement if its affairs were arranged in such a manner as if it
was tire main purpose or one of the main purposes to take the benefits ot this Agreement.
3. The case of legal entities not having bonafide
business activities shall be covered by the provisions of this Article.

 

Article 25
NON-DISCRIMINATION

 

1. Nationals of a Contracting State shall not be
subjected in the other Contracting State to any taxation ot 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
favorably levied in that other State than the taxation levied on enterprise of that other State
carrying on the same activities. This provision shall not bo construed as obliging a Contracting
State to grant to resident 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. 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 other similar enterprises of the first mentioned State are or may be
subjected.
4. Except where the provisions of paragraph 1 of
Article 9, paragraph 7 of Article 11, or paragraph 6 of Article 12 apply, interest, royalties and
other disbursement 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 it they had been paid to a resident of the first-mentioned
State.
5. In this Article the term “taxation” means taxes
which are the subject of this Agreement.

 

Article 26
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 Agreement, 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 25, 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
Agreement.
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 the
Agreement 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 Agreement They may also consult together for the elimination of
double taxation in cases not provided for in the Agreement.
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. The competent authorities, through consultations, shall develop
appropriate bilateral procedures, conditions, methods and techniques for the implementation of the
mutual agreement procedure provided for in this Article.

 

Article 27
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 foreseeably relevant for carrying out the provisions of
this Agreement or to the administration or enforcement of the domestic laws concerning taxes of
every kind and description imposed on behalf of the Contracting States, or of their political
subdivisions or local authorities, insofar as the taxation thereunder is not contrary to the
Agreement. The exchange of information is not restricted by Articles 1 and 2.
2. Any information
received under paragraph 1 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 referred to in paragraph 1, or the oversight of the above. 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.
3. In no case shall the
provisions of paragraphs 1 and 2 be construed so as to impose on a Contracting State the obligation:
  (a) to carry out administrative measures at
variance with the laws and the administrative practice of that or of the other Contracting State.
  (b) to supply information (including documents or
certified copies of the documents) which is not obtainable under the laws or in the normal course of
the administration of that or of the other Contracting State;
  (c) 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).
4. If the information is
requested by a Contracting State in accordance with this Article, the other Contracting State shall
use its information gathering measures to obtain, the requested information, even though that other
State may not need such information for its own tax purposes The obligation contained in the
preceding sentence is subject to the limitations of paragraph 3, but in no case shall such
limitations be construed to permit a Contracting State to decline to supply information solely
because it has no domestic interest in such information.
5. In no case shall the
provisions of paragraph 3 be construed to permit a Contracting State to decline to supply
information solely because the information is held by a bank, other financial institution, nominee
or person acting in an agency or a fiduciary capacity or because it relates to ownership interests
in a person.

 

Article 28
ASSISTANCE IN COLLECTION

 

1. The Contracting States
shall lend assistance to each other in the collection of revenue claims. This assistance is not
restricted by Articles 1 and 2. The competent authorities of the Contracting States may by mutual
agreement settle the mode of application of this Article.
2. The term “revenue
claim” as used in this Article means an amount owed in respect of taxes of every kind and
description imposed on behalf of the Contracting States, or of their political subdivisions or local
authorities, insofar as the taxation thereunder is not contrary to this Convention or any other
instrument to which the Contracting States are parties, as well as interest, administrative
penalties and costs of collection or conservancy related to such amount.
3. When a revenue claim of
a Contracting State is enforceable under the laws of that State and is owed by a person who, at that
time, cannot, under the laws of that State, prevent its collection, that revenue claim shall at the
request of the competent authority of that State, be accepted for purposes of collection by the
competent authority of the other Contracting State. That revenue claim shall be collected by that
other State in accordance with the provisions of its laws applicable to the enforcement and
collection of its own taxes as if the revenue claim were a revenue claim of that other State.
4. When a revenue claim of
a Contracting State is a claim in respect of which that State may, under its law, take measures of
conservancy with a view to ensure its collection, that revenue claim shall, at the request of the
competent authority of that State, be accepted for purposes of taking measures of conservancy by the
competent authority of the other Contracting State. That other State shall take measures of
conservancy in respect of that revenue claim in accordance with the provisions of its laws as if the
revenue claim were a revenue claim of that other State even if, at the time when such measures are
applied, the revenue claim is not enforceable in the first-mentioned State or is owed by a person
who has a right to prevent its collection.
5. Notwithstanding the
provisions of paragraphs 3 and 4, a revenue claim accepted by a Contracting State for purposes of
paragraph 3 or 4 shall not, in that State, be subject to the time limits or accorded any priority
applicable to a revenue claim under the laws of that State by reason of its nature as such. In
addition, a revenue claim accepted by a Contracting State for the purposes of paragraph 3 or 4 shall
not, in that State, have any priority applicable to that revenue claim under the laws of the other
Contracting State.
6. Proceedings with
respect to the existence, validity or the amount of a revenue claim of a Contracting State shall
only be brought before the courts or administrative bodies of that State. Nothing in this Article
shall be construed as creating or providing any right to such proceedings before any court or
administrative body of the other Contracting State.
7. Where, at any time
after a request has been made by a Contracting State under paragraph 3 or 4 and before the other
Contracting State has collected and remitted the relevant revenue claim to the first-mentioned
State, the relevant revenue claim ceases to be:
  (a) in the case of a request under paragraph 3, a
revenue claim of the first- mentioned State that is Enforceable under the laws of that State and is
owed by a person who, at that time, cannot, under the laws of that State prevent its collection, or
  (b) in the case of a request under paragraph 4, a
revenue claim of the first-mentioned State in respect of which that State may, under its laws, take
measures of conservancy with a view to ensure its collection.
  the competent authority
of the first-mentioned State shall promptly notify the competent authority of the other State of
thal fact and, at the option of the other State, the first-mentioned State shall either suspend or
withdraw its request.
8. In no case shall the
provisions of this Article be construed so as to impose on a Contracting State the obligation:
  (a) to carry out administrative measures at
variance with the laws and administrative practice of that of of the other Contracting State;
  (b) to carry out measures which would be contrary
to public policy (order public);
  (c) to provide assistance if the other Contracting
State has not pursued all reasonable measures of collection or conservancy, as the case may be,
available under its laws or administrative practice,
  (d) to provide assistance in those cases where the
administrative burden for that State is clearly disproportionate to the benefit to be derived by the
other Contracting State.

 

Article 29
MEMBERS OF DIPLOMATIC MISSIONS AND CONSULAR POSTS

Nothing in this Agreement 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.
 

CHAPTER VI
FINAL PROVISIONS

Article 30
ENTRY INTO FORCE

 

1. Each of the Contracting
States shall notify the other Contracting State through diplomatic channels the completion of the
procedures required by its law for the bringing into force of this Agreement.
2. This Agreement shall
enter into force on the date of the later of the notifications referred to in paragraph 1 of this
Article.
3. The provisions of this
Agreement shall have effect as follows:
  (a) In Indonesia;

(i) in respect of taxes withheld at source:
for amounts paid or credited on or after the first day of January next following the date on
which this Agreement enters into force, and
(ii) in respect of other taxes: for any tax
year commencing on or after the first day of January next following the date on which this
Agreement enters into force.
  (b) In India, in respect of income derived in any
fiscal year beginning on or after the first day of April next following the calendar year in which
the Agreement enters into force.
4. The Agreement between
the Government of the Republic of Indonesia and the Government of the Republic of India for the
Avoidance of Double Taxation and Prevention of fiscal evasion with respect to taxes on income signed
at Jakarta on the 7th August, 1987 shall cease to have effect when the provisions of this Agreement
become effective in accordance with the provisions of paragraph 3 of this Article.

 

Article 31
TERMINATION

This Agreement shall remain in force indefinitely until terminated by one of the Contracting States.
Either Contracting State may terminate the Agreement, through diplomatic channels, by giving notice of
termination at least six months before the end of any calendar year beginning after the expiration of five
years from the date of entry into force of the Agreement. In such event, the Agreement shall cease to have
effect:

(a) In Indonesia ;
  (i) in respect of taxes withheld at source: for
amount paid or credited on or after the first day of January in the calendar year immediately
following that in which the notice of such termination is given, and
  (ii) in respect of other taxes: for any tax year
commencing on or after the first day of January in the calendar year immediately following that in
which the notice of such termination is given.
(b) In India, in respect of
income derived in any fiscal year on or after the first day of April next following the calendar
year in which the notice is given .

IN WITNESS WHEREOF, the undersigned, duly authorized thereto, have signed this Agreement.

Done at New Delhi on the 27th day of July 2012 in two identical originals each in the Bahasa Indonesia,
Hindi and English languages, all texts being equally authentic. In case of divergence of interpretation,
the English text shall prevail.

 

For the
Government of
the Republic of Indonesia;

Signed

DR. R.M. MARTY M. NATALEGAWA
Minister for Foreign Affairs

For the
Government of
Republic of India

Signed

S.M. KRISHNA
Minister for External Affairs

 

P R O T O C O L

At the moment of signing the Agreement this day concluded between the Government of the Republic of
Indonesia and the Government of the Republic of India for the Avoidance of Double Taxation and the
Prevention of Fiscal Evasion with respect to Taxes on Income, the undersigned have agreed upon the
following provisions which shall be an integral part of the Agreement :
 

1. With reference to
paragraph 1 of Article 7 (Business Profits), it is understood that profits derived from the sale of
goods or merchandise of the same or similar kind as those sold, or from other business activities of
the same or similar kind as those effected, through that permanent establishment, may be considered
attributable to that permanent establishment if it is proved that :
  (i) this transaction has been resorted to in order
to avoid taxation in the Contracting State where the permanent establishment is situated, and
  (ii) the permanent establishment in any way was
involved in this transaction.
2. It is understood that
the provisions of paragraphs 1 and 2 of Articles 11 (Interest) and 12 (Royalties and Fees for
Technical Services) shall not apply and provisions of Article 7 (Business Profits) shall apply if
the income is effectively connected wilh business activities referred to in paragraph 1 of this
Protocol.
3. Notwithstanding
anything contained in this Agreement, it is understood that nothing shall prevent a Contracting
State from charging the profits of a permanent establishment of an enterprise of the other
Contracting State at a rate of tax which is higher than that imposed on the profits of a Similar
company of the first mentioned State and it shall neither be construed as discriminatory with
respect to Article 25 (Non-discrimination) nor as being in conflict with the provisions of paragraph
3 of Article 7 (Business Profits)
4. For purposes of Article
7 where a company which is a resident of a Contracting State has a permanent establishment in the
other Contracting State, the profits attributable to the permanent establishment may be subjected to
an additional tax or branch profits tax in that other State in accordance with its law, but such tax
so charged shall not exceed a rate of 15% (fifteen per cent).
5. It is understood that
in the event of conflict in application between the provisions of this Agreement and the provisions
of production sharing contracts relating to the exploitation and production of oil and natural gas
in a Contracting State entered into by the Government or any person authorized by it the latter
shall prevail.
6. In respect of paragraph
2 of Article 27 (Exchange of Information), it is understood that, information received by a
Contracting State may be used for other Government enforcement purposes when such information may be
used for such other Government enforcement purposes under the laws of both States and the competent
authority of the supplying State authorises such use.

IN WITNESS WHEREOF, the undersigned, duly authorized thereto, have signed this Protocol.

DONE at New Delhi on the 27th day of July 2012 in two identical originals each in the Bahasa Indonesia,
Hindi and English languages, all texts being equally authentic. In case of divergence of interpretation,
the English text shall prevail.

 

For the
Government of
the Republic of Indonesia;

Signed

DR. R.M. MARTY M. NATALEGAWA
Minister for Foreign Affairs

For the
Government of
Republic of India

Signed

S.M. KRISHNA
Minister for External Affairs