The domestic laws of contracting state imposes tax the business income of the non-residents arising in their states only if the non-resident has the economic presence in the contracting state. The economic presence in a contracting state is generally defined in domestic laws of the contracting state as existence of either ‘business connection’ or ‘permanent establishment’ (PE). For example: Indian Income Tax Act taxes the business income arising to non-resident in India through or from a business connection.