LIIofIndia Home | Databases | WorldLII | Search | Feedback

Indian Treaty Series

You are here:  LIIofIndia >> Databases >> Indian Treaty Series >> 1956 >> [1956] INTSer 16

Database Search | Name Search | Recent Treaties | Noteup | LawCite | Help



Colombo, 10 September 1956

Whereas the Government of India and the Government of Ceylon desire to conclude an Agreement for relief from or the avoidance of double taxation of income chargeable in the two countries in accordance with their respective laws; Now, therefore, the said two Governments do hereby agree as follows

Article I

The taxer, which are the subject of the present Agreement are: (a) In India; the taxes imposed by the Indian Income-tax Act. 1922 (XI of 1922).

(b) In Ceylon; (i) the tax imposed by the Ceylon Profits Tax Act, 1948 (No. 5 of 1948), (ii) the tax imposed by the Ceylon Income-tax Ordinance, 1932 (2 of 1932) exclusive of the taxes mentioned in sub-clauses (i), (ii) and (iii) of section 45(4) (b) of the said Ordinance. The present Agreement shall also apply to taxes that may be levied in India under a Profits Tax Act, similar to the Ceylon Profits Tax Act, 1948 (No. 5 of 1948), passed after the date of the present Agreement.

Article II

The present Agreement shall come into force on the date on which the last of all such things shall have been done in India and Ceylon as are necessary to give the Agreement the force of law in India and Ceylon respectively, and shall thereupon have effect for the assessment year 1950-51 and subsequent assesment years : Provided that in respect of the two assessment years 1950-51 and 1951-52, instead of the abatement provided for in Article III, IV, and V of this Agreement, double income tax relief in respect of incomes taxed both in India and Ceylon shall be computed and allowed as if the provisions of W the Income Tax (Double Taxation Relief) (Ceylon) Rules, 1942 in India and (ii) section 46 of the Ceylon Income-tax Ordinance, 1932 (2 of 1932) in Ceylon apply.

Article III

Each country shall make assessment in the ordinary way under its own laws; and where either country under the operation of its laws charges any income from the sources or categories of transactions specified in column 1 of the Schedule to this Agreement (hereafter referred to as the Schedule) in excess of the amount calculated according to the precentages specified in columns II and III thereof, that country shall allow an abatement equal to the lower of the amounts of tax attributable to such excess in either country.

Article IV

Where any income accruing or arising outside the two countries is chargeable to tax in both the countries, each country shall allow an abatement equal to one half of the lower"amount of tax attributable in either country to such doubly taxed income.

Article V

Where at the time of assessment in one country the tax attributable in the other country to the excess or the doubly taxed income referred to in Article III and IV is not known, the first country shall make a demand without allowing any abatement but shall hold in abeyance for a period of one year (or such longer period as may be allowed by the Income-tax Officer in his discretion) the collection of a portion of the demand equal to an amount estimated by him to be the abatement likely to be due. If the assesee produces a certificate of assessment in the other country within the period of one year or any longer period allowed by the Income-tax Officer, the uncollected portion of the demand shall be adjusted against the abatement allowable under the Agreement; but if no such cerficate is produced within the aforesaid period, the abatement shall cease to be operative and the outstanding demand shall be collected forthwith.

Article VI

An individual of Indian domicile, who is non-resident in Ceylon, shall be entitled to relief from the Ceylon Government equal to the excess of the Ceylon tax paid by him, by deduction or otherwise, on his Ceylon income for any assessment year over the amount which bears the same proportion to the amount which would be payable by him for that year by way of Ceylon tax if he were resident in Ceylon and chargeable in respect of his total income from all sources, wherever arising, as the amount of such Ceylon income bears to the amount of such total income from all sources :

(a) in respect of the five assessment years commencing with the assessment year 1950-51, and

(b) in respect of any assessment year subsequent to the assesment year 1954-55 provided that during that assessment year the option provided for in the first and second provisos to sub-section (I) of section 17 of the Indian Income-tax Act, 1922 is available to individuals resident in Ceylon in regard to the Indian tax payable by them.

Article VII

(1) The taxation authorities of the Contracting Governments shall exchange such information (being information which is at their disposal under their respective taxation laws in the normal course of administration) as is necessary for carrying out the provisions of the present Agreement. Amy information so exchanged shall be treated as secret and shall not be disclosed to any person other than those concerned with the assessment and collection of the taxes which are the subject of the present Agreement. No information as aforesaid shall be exchanged which would disclose any trade, business, industrial or professional secret or trade process.

(2) As used in this article, the term "taxation authorities" means, in the case of India, the Commissioners of Income-tax, the Assistant Commissioners of Income-tax or the Income-tax Officers; in the case of Ceylon, the Commissioner of Income-tax or his authorised representative.

Article VIII

(a) Nothing in this Agreement shall be construed as modifying or interpreting in any manner the provisions of the relevant Taxation laws in force in either country.

(b) If any question arises in any country as to whether any income falls within any one of the items specified in the Schedule and if so under which item, the question shall be decided without any reference to the treatment of such income in the assessment made by the other country.

Article IX

The Schedule to this Agreement may be modified from time to time by agreement between the Governments of the two countries and reference to the Schedule in the foregoing Articles shall be read as references to the Schedule as modified.

Article X

The present Agreement shall continue in effect indefinitely but either of the Contracting Governments may, on or before the 30th September in any calendar year, give to the other Contracting Government written notice of termination, and in such event the present Agreement shall cease to have effect in relation to assessments for the years of assessment commencing after the said date.






IN FAITH WHEREOF, the plenipotentiaries of India and Ceylon have signed the present Agreement in Hindi and English languages (the English text shall prevail in case of conflict between the two texts) and have affixed thereto their seals.

DONE in duplicate in Colombo on the 10th of September, 1956.

For the Government of Ceylon-


In the presence of

Permanent Secretary of the
Ministry of Finance.

For the Government of India-


In the presence of

First Secretary (Commercial),
High Commission for India in Ceylon Colombo.

Notification [No. 25/3/51-IT], dated 6-2-1957. S.R.O. 456-In exercise of the powers conferred by section 46A of the Indian Income-tax Act, 1922 ( 11 of 1922), the Central Government hereby directs that all provisions of the annexed agreement for the avoidance of double taxation of income, profits and gains under the said Act which has been concluded between the Government of India and theGovernment of Ceylon shall be given effect to in the Union of India.

India Bilateral

Ministry of External Affairs, India

LIIofIndia: Copyright Policy | Disclaimers | Privacy Policy | Feedback