India Nepal Double Taxation Avoidance Agreement

1. Legislation in force in one of the contracting states continues to govern the taxation of income in the relevant contracting state, unless otherwise stipulated in this agreement. Where income is taxable in the two contracting states, double taxation is exempt under this section. (2) Subject to the provisions of Nepal`s law relating to the Nepalese tax credit allowance due to the income tax of a territory outside Nepal (which does not affect the general principle of that tax), the Indian tax which, under Indian law and in accordance with the provisions of this agreement, is granted , directly or by deduction, to income from Indian sources as a tax-against credit in Nepal, calculated by reference to the same income items. Indian tax is calculated. 3. For the purposes of the credit covered in paragraph 2, the term “Indian tax” is considered to be the amount of the tax reduction by the specific incentives covered in paragraphs 10, 4A, 10 (viia), 10 (15) IV; 10 (28), 10A, 32A, 33A, 80HH, 80HHA, 80-I” and 80-L of the Indian Income Tax Act , 1961 (43 of 1961) and (ii) any other provision that may be adopted at a later date to grant a tax reduction that the competent authorities of the contracting state agree for economic development. 4. Subject to the provisions of the Indian Allowance Act as a credit against Indian tax due in a territory outside India (which does not affect the general principle of Nepalese tax), so that, if that resident is a corporation through which a surcharge is to be paid in India, the aforementioned credit is granted primarily against the income tax that the company must pay in India. and, if so, the balance of the property tax it must pay in India. 5.

For the purposes of paragraph 4 of this article, the concept of “Nepalese tax” is considered as any amount: which should have been paid for each year as a Nepalese tax, but for an exemption or training of taxes granted for that year or part of it, in accordance with: (a) subsection (2) of Section 42 of the Nepal Income Act , 2031 (1974), to the extent that they came into force on the date of signing this agreement and have not been amended since then, or have only been modified in a minor way so as not to affect their general character; or (b) any other provision that may be made at a later date for the granting of a tax exemption or reduction, which is agreed in a substantially similar way by the competent authorities, if they have not been subsequently amended or have been amended only in a minor way, so as not to alter their general character. 6. Where a resident of a contracting state in that contracting state is exempt from tax under this income agreement, the contracting state may apply, for the calculation of the tax on that person`s remaining income, the tax rate that would have been applicable if the income exempted under this agreement had not been exempted in this manner. Mukherjee said India welcomed the 7-point agreement and remained interested in the “success of Nepal`s transition to multi-party democracy and the completion of the peace process.” “India is committed to supporting the government and people of Nepal in these processes of historic change in Nepal.” The revised DBAA between India and Nepal will replace a previous agreement signed in 1987 between India and Nepal. “Today`s agreement is aimed at meeting the fiscal demands of the Nepalese government and the government of the People`s Republic of Bangladesh.