India and Slovenia
have signed a Convention for the Avoidance of Double Taxation
and for the Prevention of Fiscal Evasion with respect to Taxes
on Income and Capital. The Convention was signed by Shri Gingee
N. Ramachandran, Minister of State for Finance (Revenue) and Mr.
Darko Koncan, State Secretary in the Ministry of Finance on behalf
of Government of Slovenia, in the Slovenian capital Ljubljana
last week.
The Double Taxation
Avoidance Convention (DTAC) between India and Slovenia will cover
in the case of India, income-tax including surcharge thereon and
in the case of Slovenia, the tax on profits of legal persons,
the tax on income of individuals, including wages and salaries,
income from agricultural activities, income from business, capital
gains and income from immovable and movable property. (Corporation
tax and tax on capital gains is included in Income Tax in India).
DTAC provides for lower rates of tax vis-à-vis the domestic
rates in India in respect of interest and royalties etc.
In regard to taxation
of capital gains from alienation of shares of a company the same
will be taxable in the country where the company is resident.
The incidence of double taxation will be avoided by one country
giving credit for taxes paid by its nationals` in the other country.
The Convention provides
that the nationals and enterprises of one country will not be
taxed at a rate higher than the rate applicable to its own nationals
and enterprises. In India, permanent establishments are taxed
at a higher rate than domestic companies since the former are
not obliged to declare dividends here. Hence, it has been provided
specifically that such a practice will not be considered discriminatory.
There is also provision for exchange of information in cases,
which are under investigation in either of the two countries.
The proposed Convention
is in line with most of the Conventions, which India has entered
into, in the recent past.
