Direct Tax Avoidance Agreements

SWEDEN

Article 24 : Elimination of double taxation

(1) The laws in force in either of the ContractingState will continue to govern the taxation of income in the respective Contracting States except where provisions to the contrary are made in the Convention.

(2) In the case of India, double taxation shall be avoided as follows,--

(a) Where a resident of India derives income which, in accordance with the provisions of this Convention, may be taxed in Sweden, India shall allow as a deduction from the tax on the income of that resident an amount equal to the income tax paid in Sweden whether directly or by way of deduction at source.  Such amount shall not, however, exceed that part of the income tax, as computed before the deduction is given, which is attributable to the income which may be taxed in Sweden.

(b) Where a resident of India derives income which, in accordance with the provisions of this Convention, shall be taxable only in Sweden, India may, when determining the graduated rate of Indian tax, take into account the income which shall be taxable only in Sweden.

(c) Where a resident of India owns assets which, in accordance with the provisions of this Convention, may be taxed in Sweden, India shall allow as a deduction from tax on such assets an amount equal to the tax on net wealth paid in Sweden in respect of such assets.  Such deduction shall not, however, exceed that part of the Indian tax on net wealth as computed before the deduction is given which is appropriate to the assets which may be taxed in Sweden.

(3) In the case of Sweden, double taxation shall be avoided as follows,--

(a) Where a resident of Sweden derives income which under the laws of India and in accordance with the provisions of this Convention may be taxed in India, Sweden shall allow--subject to the provisions of the laws of Sweden concerning credit for foreign tax (as it may be amended from time to time without changing the general principle hereof)- as a deduction from the tax on such income, an amount equal to the Indian tax paid in respect of such income.

(b) Where a resident of Sweden derives income which, in accordance with the provisions of this Convention, shall be taxable only in India, Sweden may, when determining the graduated rate of Swedish tax, take into account the income which shall be taxable only in India.

(c) Notwithstanding the provisions of sub-paragraph (a) of this paragraph, dividends paid by a company which is a resident of India to a company which is a resident of Sweden shall be exempt from Swedish tax according to the provisions of Swedish law governing the exemption of tax on dividends paid to Swedish companies by subsidiaries abroad.

(d) For the purposes of sub-paragraph (a) of this paragraph, the term `Indian tax paid' shall be deemed to include the Indian tax which would have been paid but for any exemption or reduction of tax granted under incentive provisions contained in the Indian law designed to promote economic development to the extent that such exemption or reduction is granted for profits from industrial or manufacturing activities or from agriculture, fishing or tourism (including restaurants and hotels) provided that the activities have been carried out within India.  For the purpose of sub-paragraph (c) of this paragraph, a tax of 15 per cent calculated on a Swedish tax base shall be considered to have been paid for such activities under those conditions mentioned in the previous sentence.

(e) The provisions of paragraph (d) shall apply only for the first ten years during which this Convention is effective.  This period may be extended by a mutual agreement between the competent authorities.

(f) Where a resident of Sweden owns assets which, in accordance with the provisions of this convention, may be taxed in India, Sweden shall allow as a deduction from tax on such assets an amount equal to the tax on net wealth paid in India in respect of such assets.  Such deduction shall not, however, exceed that part of the Swedish tax on net wealth as computed before the deduction is given which is appropriate to the assets which may be taxed in India.