1868-(44)

II SÉRIE-A — NÚMERO 66

Article 21

Students and trainees

Payments which a student, a business apprentice or

trainee wdo is or was immediately before visiting a Contracting State a resident of the other Contracting State

and who is present in the first-mentioned State solely for the purpose of his education or training receives, for the purpose of his maintenance, education or training, shall not be taxed in that State, provided that such payments:

a) Arise from sources outside that State;

b) Are remuneration from employment in that other State in an amount not exceeding US$ 3000 per annum during a period not exceeding two years from the day of his first arrival in that other Contracting State, provided that such employment is directly related to his studies.

Article 22 Other income

1 — Items of income of a resident of a Contracting State, wherever arising, not dealt with in the foregoing articles of this Convention shall be taxable only in that State.

2 — The provisions of paragraph 1 shall not apply to income, other than income from immovable property as defined in paragraph 2 of article 6, if the recipient of such income, being a resident of a Contracting State, carries on business in the other Contracting State through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the right or property in respect of which the income is paid is effectively connected with such permanent establishment or fixed base. In such case the provisions of article 7 or article 14, as the case may be, shall apply.

3 — Notwithstanding the provisions of paragraph 1, if a resident of a Contracting State derives income from sources within the other Contracting State in the form of lotteries, crossword puzzles, races including horse races, card games and other games of any sort or gambling or betting of any form or nature whatsoever, such income may be taxed in the other Contracting State.

CHAPTER IV Methods for elimination of double taxation

Article 23 Elimination of double taxation

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

2 — In the case of Portugal double taxation shall be eliminated as follows:

Where a resident of Portugal derives income which, in accordance with the provisions of this Convention, may be taxed in India, Portugal shall allow as a deduction from the tax on the income of that resident an amount equal to the income tax paid in India. Such deduction shall not, howe-

ver, 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 India.

3 — In the case of India double taxation shall be eliminated as follows:

Where a resident of India derives income which, in accordance with the provisions of this Convention, may be taxed in Portugal, India shall allow as a deduction from the tax on the income of that resident an amount equal to the income tax paid in Portugal whether directly or by 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 Portugal.

4 — Where in accordance with any provisions of this Convention income derived by a resident of a Contracting State is exempt from tax in that State, such State may nevertheless, in calculating the amount of tax on the remaining income of such resident, take into account the exempted income.

5 — The tax paid in a Contracting State mentioned in paragraphs 1 and 2 of this article shall be deemed to include the tax on dividends, interest, royalties and fees for included services and business profits which would have been payable as laid down in this Convention but for the legal provisions concerning tax reduction or exemption of the Contracting States for the encouragement of genuine investment or economic development. The provisions of this paragraph shall apply for

the first seven years during which this Convention is

applicable. This period may be extended by mutual

agreement between the competent authorities.

CHAPTER V Special provisions

Article 24 Non-discrimination

1 — Nationals of a Contracting State shall not be subjected in the other Contracting State to any taxation or any requirement connected therewith, which is other or more burdensome than the taxation and connected requirements to which nationals of that other State in the same circumstances, in particular with respect to residence, are or may be subjected. This provision shall, notwithstanding the provisions of article 1, also apply to persons who are not residents of one or both of the Contracting States.

2 — The taxation on a permanent establishment which an enterprise of a Contracting State has in the other Contracting State shall not be less favourably levied in that other State than the taxation levied on enterprises of that other State carrying on the same activities. This provision shall not be construed as obliging a Contracting State to grant to residents of the other Contracting State any personal allowances, reliefs and reductions for taxation purposes on account of civil status or family responsibilities which it grants to its own residents.