ARTICLE 24

Methods for Elimination of Double Taxation

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

(2) 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 Agreement, may be taxed in Malaysia, India shall allow as a deduction from the tax on the income of that resident an amount equal to the amount of tax paid in Malaysia whether directly or by deduction at source. Such amount shall not, however, exceed that part of the tax (as computed before the deduction is given) which is attributable to the income which may be taxed in Malaysia.

(3) For the purposes of paragraph (4), the term "tax paid in Malaysia" shall be deemed to include the tax which would, under the laws of Malaysia and in accordance with this Agreement, have been payable on any income derived from sources in Malaysia had the income not been taxed at a reduced rate or exempted from Malaysian tax in accordance with the provisions of this Agreement and the special incentives under the Malaysian laws for the promotion of economic development of Malaysia which were in force at the date of signature of this Agreement or any other provisions which may subsequently be introduced in Malaysia in modification of, or in addition to, those laws so far as they are agreed by the competent authorities of the Contracting States to be of a substantially similar character.

(4) In the case of Malaysia, double taxation shall be eliminated as follows:

• Subject to the laws of Malaysia regarding the allowance as a credit against Malaysian tax of tax payable in any country other than Malaysia, tax paid in India under the taxation laws of India and in accordance with the provisions of this Agreement, by a resident of Malaysia in respect of income derived from India shall be allowed as a credit against tax payable in Malaysia in respect of that income. Where such income is a dividend paid by a company which is a resident of India to a company which is a resident of Malaysia and which owns not less than 10 percent of the voting shares of the company paying the dividend, the credit shall take into account tax paid in India by that company in respect of its income out of which the dividend is paid. The credit shall not, however, exceed that part of the Malaysian tax, as computed before the credit is given, which is attributable to such item of income.

(5) For the purposes of paragraph (2), the term "tax paid in India" shall be deemed to include the tax which would, under the laws of India and in accordance with this Agreement, have been payable on any income derived from sources in India had the income not been taxed at a reduced rate or exempted from Indian tax in accordance with the provisions of this Agreement and the special incentives under the Indian laws for the promotion of economic development of India which were in force at the date of signature of this Agreement or any other provisions which may subsequently be introduced in India in modification of, or in addition to, those laws so far as they are agreed by the competent authorities of the Contracting States to be of a substantially similar character.