Article 11 Interest
     1. Interest arising in one of the States and paid to a resident of the other State may be taxed in that other State.
     2. However, such interest may also be taxed in the State in which it arises and according to the laws of that State, but if the recipient is the beneficial owner of the interest the tax so charged shall not exceed:
(a) 10 per cent of the gross amount of the interest on loans made or guaranteed by a bank or other financial institution carrying on bona fide banking or financing business or by an enterprise which holds directly or indirectly at least 10 per cent of the capital of the company paying the interest;
(b) 15 per cent of the gross amount of the interest in all other cases.
     3. Notwithstanding the provisions of paragraph 2:
(a) the Government of one of the States shall be exempt from tax in the other State in respect of interest derived directly or indirectly by that Government from that other State;
(b) interest arising in one of the States and paid in respect of a loan guaranteed or insured by the Government of the other State shall be exempt from tax in the first-mentioned State.
     4. For the purposes of paragraph 3 the term "Government" means:
(a) in the case of the Netherlands, the Government of the Kingdom of the Netherlands and shall include:
--the local authorities;
--the Nederlandsche Bank (Central Bank);
--such institutions, the capital of which is wholly owned by the Government of the Kingdom of the Netherlands or the local authorities;
--the Nederlandse Financierings Maatschappij voor Ontwikkelingslanden N.V. (Netherlands finance company for developing countries) and the Nederlandse Investeringsbank voor Ontwikkelingslanden N.V. (Netherlands investment bank for developing countries);
--all other institutions as may be agreed from time to time between the competent authorities of the States;
(b) in the case of India, the Government of India and shall include:
--a political subdivision;
--a local authority;
--the Reserve Bank of India (Central Bank);
--the Export-Import Bank of India;
--such institutions, the capital of which is wholly owned by the Government of India or a political subdivision of a local authority;
--all other institutions as may be agreed from time to time between the competent authorities of the States.
     5. The competent authorities of the States shall by mutual agreement settle the mode of application of paragraph 2.
     6. The term "interest" as used in this Article means income from debt-claims of every kind, whether or not secured by mortgage, but not carrying a right to participate in the debtor's profits, and in particular, income from government securities and income from bonds or debentures, including premiums and prizes attaching to such securities, bonds or debentures. Penalty charges for late payment shall not be regarded as interest for the purpose of this Article.
     7. The provisions of paragraphs 1, 2 and 3 shall not apply if the beneficial owner of the interest, being a resident of one of the States, carries on business in the other State in which the interest arises, through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein and the debt claim in respect of which the interest 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.
     8. Interest shall be deemed to arise in one of the States when the payer is that State itself, a political subdivision, a local authority or a resident of that State. Where, however, the person paying the interest, whether he is a resident of one of the States or not, has in one of the States a permanent establishment or a fixed base in connection with which the indebtedness on which the interest is paid was incurred, and such interest is borne by such permanent establishment or fixed base, then such interest shall be deemed to arise in the State in which the permanent establishment or fixed base is situated.
     9. Where, by reason of a special relationship between the payer and the beneficial owner or between both of them and some other person, the amount of the interest, having regard to the debt claim for which it is paid, exceeds the amount which would have been agreed upon by the payer and the beneficial owner in the absence of such relationship, the provisions of this Article shall apply only to the last-mentioned amount. In such case, the excess part of the payments shall remain taxable according to the laws of each State, due regard being had to the other provisions of this Convention.