ARTICLE 25
Relief From Double Taxation
1. In accordance with the provisions and subject to the
limitations of the law of the United States (as it may be amended
from time to time without changing the general principle hereof),
the United States shall allow to a resident or citizen of the
United States as a credit against the United States tax on income
a) the income tax paid to India by or on behalf of such
citizen or resident; and
b) in the case of a United States company owning at
least 10 percent of the voting stock of a company which is a
resident of India and from which the United States company
receives dividends, the income tax paid to India by or on
behalf of the distributing company with respect to the
profits out of which the dividends are paid.
For the purposes of this paragraph, the taxes referred to in
paragraphs lb) and 2 of Article 2 (Taxes Covered) shall be
considered income taxes.
2. a) Where a resident of India derives income which, in
accordance with the provisions of this Convention, may be
taxed in the United States, India shall allow as a deduction
from the tax on the income of that resident an amount equal
to the income tax paid in the United States, whether directly
or by deduction. Such deduction 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 the United States.
b) Further, where such resident is a company by which a
surtax is payable in India, the deduction in respect of
income tax paid in the United States shall be be allowed in
the first instance from income tax payable by the company in
India and as to the balance, if any, from surtax payable by
it in India.
3. For the purposes of allowing relief from double taxation
pursuant to this Article, income shall be deemed to arise as
follows:
a) income derived by a resident of a Contracting state
which may be taxed in the other Contracting state in
accordance with this Convention (other than solely by reason
of citizenship in accordance with paragraph 3 of Article 1
(General Scope)) shall be deemed to arise in that other
State;
b) income derived by a resident of a Contracting state
which may not be taxed in the other Contracting state in
accordance with the Convention shall be deemed to arise in
the first-mentioned state.
Notwithstanding the preceding sentence, the determination of the
source of income for purposes of this Article shall be subject to
such source rules in the domestic laws of the Contracting States
as apply for the purpose of limiting the foreign tax credit. The
preceding sentence shall not apply with respect to income dealt
with in Article 12 (Royalties and Fees for Included Services).
The rules of this paragraph shall not apply in determining
credits against United States tax for foreign taxes other than
the taxes referred to in paragraphs lb) and 2 of Article 2 (Taxes
Covered).