Zambia
THE
PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME [CD1]
(Notification F. No. 11/11/65-FTD dt. 18-1-1986)
G.S.R. 39(E).--- Whereas the Government of the
Republic of India and the Government of the Republic of Zambia have concluded a
Convention as set out in the Annexure hereto, for the avoidance of double
taxation and the prevention of fiscal evasion with respect to taxes on income;
And whereas all the requirements have been
completed in India and Zambia as are necessary to give the said Convention the
force of law in India and Zambia respectively, as required by paragraph 1 of
Article 29 of the said Convention;
And whereas the diplomatic notes to this
effective have been exchanged between the said two Governments, as required by
paragraph 2 of Article 29 of the said Convention;
Now, therefore, in exercise of the powers
conferred by section 90 of the Income-tax Act. 1961 (43 of 1961) and section
24A of the Companies (Profits) Surtax Act, 1964 (7 of 1964), the Central
Government hereby directs that all the provisions of the said Convention shall
be given effect to in the Union of India.
CONVENTION BETWEEN THE GOVERNMENT OF THE
REPUBLIC OF INDIA AND THE GOVERNMENT OF THE REPUBLIC OF ZAMBIA FOR THE
AVOIDANCE OF DOUBLE TAXATION AND
THE PREVENTION OF FISCAL EVASION WITH RESPECT
TO TAXES ON INCOME
CONVENTION
BETWEEN
THE GOVERNMENT OF THE REPUBLIC OF INDIA
AND
THE GOVERNMENT OF THE REPUBLIC OF ZAMBIA
FOR
THE AVOIDANCE OF DOUBLE TAXATION AND THE
PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME
The Government of the
Republic of India and the Government of the Republic of Zambia.
Desiring to conclude a convention for the
avoidance of double taxation and the prevention of fiscal evasion with respect
to taxes on income.
Have Agreed as follows:
CHAPTER I SCOPE OF
CONVENTION
ARTICLE 1 Personal Scope
This Convention shall apply to persons who are
residents of one or both of the Contracting States.
Article 2
TAXES COVERED
1.
The taxes to which this Convention shall apply are:
a.
In the case
of India:
i.
the income-tax including any surcharge thereon
imposed under the Income-tax Act, 1961 (43 of 1961); and
ii.
the surtax imposed under the Companies (Profits)
Surtax Act. 1964 (7 of 1964);
(hereinafter referred to as " Indian tax
")
b.
In the case
of Zambia:
i. the income-tax; ii. the mineral tax; and iii. the personal levy
(hereinafter referred to as " Zambian tax
").
2.
The Convention shall also apply to any identical or
substantially similar taxes which are imposed by either Contracting State after
the date of signature of the present Convention in addition to, or in place of,
the taxes referred to in paragraph 1 of this Article.
3.
At the end of each year, the competent authorities of
the Contracting States shall notify each other of any significant changes which
have been made in their respective taxation laws which are the subject of this
Convention, and furnish copies of relevant enactments and regulations. CHAPTER II
DEFINITIONS Article 3 GENERAL
DEFINITIONS
1.
In this Convention, unless the context otherwise
requires:
a.
the terms " a Contracting State " and "
the other Contracting State " mean India or Zambia, as the context
requires;
b.
the term " tax " means Indian tax or Zambian
tax, as the context requires, but shall not include any amount which is payable
in respect of any default or omission in relation to the taxes to which this
Convention applies or which represents a penalty imposed relating to those
taxes;
c.
the term " person " includes individuals,
companies and all other entities which are treated as taxable units under the
taxation laws in force in the respective Contracting States;
d.
the term " company " means any body corporate
or any entity which is treated as a company under the taxation laws in force in
the respective Contracting State;
e.
the term " enterprise of a Contracting State
" and " enterprise of the other Contracting State " mean,
respectively, an enterprise carried on by a resident of a Contracting State and
an enterprise carried on by a resident of the other Contracting State;
f.
the term " competent authority " means in the
case of India, the Central Government in the Ministry of Finance (Department of
Revenue); and in the case of Zambia, the Commissioner of Taxes or his
authorised representative;
g.
the term " nationals " means:
i.
in respect of India:
all individuals possessing the nationality of
India and all legal persons, partnerships and associations deriving their
status from the law in force in India;
ii.
in respect of Zambia:
all individuals possessing the nationality of
Zambia and all legal persons, partnerships and associations deriving their
status as such from the law in force in Zambia.
2.
In the application of the provisions of this Convention
by one of the Contracting States, any term not defined herein shall, unless the
context otherwise requires, have the meaning which it has under the laws in
force in that State relating to the taxes which are the subject of this
Convention.
Article-4 FISCAL DOMICILE
1.
For the purposes of this Convention, the term "
resident of a Contracting State " means any person who, under the laws of
that State, is liable to taxation therein by reason of his domicile, residence,
place of management or any other cirterion of similar nature.
2.
Where by reason of the provisions of paragraph 1, an
iidividual is a resident of both Contracting States, then his residential
status for the purposes of this Convention shall be determined in accordance
with the following rules---
a.
He shall be deemed to be a resident of the Contracting
State in which he has a permanent home available to him. If he has a permanent
home available to him in both Contracting States, he shall be deemed to be a
resident of the Contracting State with which his personal and economic
relations are closer (hereinafter referred to as his " centre of vital
interest ");
b.
If the Contracting State in which he has his centre of
vital interests cannot be determined, or if he does not have a permanent home
available to him in either Contracting State, he shall be deemed to be a
resident of the Contracting State in which he has an habitual abode;
c.
If he has an habitual abode in both Contracting States
or in neither of them he shall be deemed to be a resident of the Contracting
State of which he is a national;
d.
If he is a national of both Contracting States or of
neither of them the competent authorities of the Contracting States shall
settle the question by mutual agreement.
3.
Whereby reason of the provisions of paragraph 1, a
person other than an individual is a resident of both of Contracting States,
then it shall be deemed to be a resident of the Contracting State in which its
place of effective management is situated.
Article 5 PERMANENT
ESTABLISHMENT
1.
For the purposes of this Convention the term "
permanent establishment " means a fixed place of business in which the
business of the enterprise is wholly or partly carried on.
2.
The term " permanent establishment " shall
include:
a.
a place of management;
b.
a branch;
c.
an office;
d.
a factory;
e.
a workshop;
f.
a mine, a quarry, an oil field or other place of
extraction of natural resources;
g.
a farm, plantation or other place where, agricultural,
forestry plantation or related activities are carried on;
h.
a building site or construction or assembly project or
supervisory activities in connection therewith where such site, project or
supervisory activity continues for a period of more than 9 months;
i.
a warehouse or other facilities for the maintenance of
a stock of goods or merchandise belonging to the enterprise from which orders
are filled.
3.
The term " permanent establishment " shall
not be deemed to include:
a.
the use of facilities solely for the purpose of storage
or display of goods or merchandise belonging to the enterprise;
b.
the maintenance of a stock of goods or merchandise
belonging to the enterprise solely for the purpose of storage or display;
c.
the maintenance of a stock of goods or merchandise
belonging to the enterprise solely for the purpose of processing by another
enterprise;
d.
the maintenance of a fixed place of business solely for
he purpose of purchasing goods or merchandise, for collecting information, for
the enterprise;
e.
the maintenance of a fixed place of business solely for
the purpose of advertising, for the supply of information or for scientific
research, being activities solely of a preparatory or auxiliary character, in
the trade or business of the enterprise.
4.
A person acting in a Contracting State for or on behalf
of an enterprise of the other Contracting State----other than an agent of an
independent status to whom the provisions of paragraph 6 apply----shall be
deemed to be a permanent establishment of that enterprise in the firstmentioned
State if:
i.
he has, and habitually exercises in that State,
an authority to conclude contracts for or on behalf of the enterprise, unless
his activities are limited to the purchase of goods or merchandise for the
enterprise; or
ii.
he has no such authority but the habitually
maintains in the first-mentioned Contracting State a stock of goods or
merchandise belonging to that enterprise from which he regularly fulfils orders
on behalf of the enterprise.
5.
An insurance enteprise of a Contracting State shall,
except in regard to re-insurance, be deemed to have a permanent establishment
in the other Contracting State if it collects premiums in the territory of that
other State or insures risks situated therein through an employee or through a
representative who is not an agent of independent status within the meaning of
paragraph 6.
6.
An enterprise of a Contracting State shall not be
deemed to have a permanent establishment in the other Contracting State merely
because it carries on business in that other State through a broker, general
commission agent or any other agent of an independent status, where such
persons are acting in the ordinary course of their business. However, when the
activities of such an agent are devoted wholly or almost wholly on behalf of
that enterprise, he would not be considered an agent of an independent status
within the meaning of this paragraph.
7.
The fact that a company, which is a resident of a
Contracting State controls or is controlled by a company which is a resident of
the other Contracting State, or which carries on business in that other
Contracting State (whether through a permanent establishment or otherwise),
shall not, of itself, constitute for either company a permanent establishment
of the other.
8.
An enterprise of a Contracting State shall be deemed to
have a permanent establishment in the other Contracting State if it carries on
a business which consists of providing the services of public entertainers
(such as theatre, motion picture, radio or television artistes and musicians)
or athletes in that other Contracting State unless the enterprise is directly
or indirectly supported wholly or substantially, from the public funds of the
Government of the first-mentioned Contracting State in connection with the
provision of such services. CHAPTER III TAXATION OF INCOME
Article 6 INCOME FROM IMMOVABLE
PROPERTY
1.
Income from immovable property may be taxed in the
Contracting State in which such property is situated.
2.
The term " immovable property " shall be
defined in accordance with the law and usage of the Contracting State in which
the property is situated. The term shall in any case include property accessory
to immovable property, livestock and equipment used in agriculture and
forestry, rights to which the provisions of general law respecting landed
property apply, usufruct of immovable property and rights to variable or fixed
payments as consideration for the working of, or the right to work, mineral
deposits, oilwells, quarries and other places of extraction of natural
resources. Ships, boats and aircraft shall not be regarded as immovable
property.
3.
The provisions of paragraph 1 shall apply to income
derived from the direct use, letting, or use in any other form of immovable
property.
4.
The provisions of paragraphs 1 and 3 shall also apply
to the income from immovable property of an enterprise and to income from
immovable property used for the performance of professional services.
Article 7 BUSINESS PROFITS
1.
The profits of an enterprise of a Contracting State
shall be taxable only in that Contracting State unless the enterprise carried
on business in the other contracting State through a permanent establishment
situated therein. If the enterprise carries on business as aforesaid, the
profits of the enterprise may be taxed in the other Contracting State but only
so much of them as is attributable to that permanent establishment.
2.
If an enterprise of a Contracting State, which has a
permanent establishment in the other Contracting State, sells goods or
merchandise of the same or similar kind as those sold by the permanent
establishment or renders services of the same or similar kind as those tendered
by the permanent establishment, the profits of such activities may be
attributed to the permanent establishment unless the enterprise proves that
such sales or services are not attributable to the activity of the permanent
establishment.
3.
Where an enterprise of a Contracting State carries on
business in the other Contracting State through a permanent establishment
situated therein, there shall in each Contracting State be attributed to the
permanent establishment the profits which it might be expected to make if it
were a distinct and separate enterprise engaged in the same or similar
activities under the same or similar conditions and dealing wholly
independently with the enterprise of which it is a permanent establishment. In
any case, where the correct amount of profits attributable to a permanent
establishment is incapable of determination or the ascertainment thereof
presents exceptional difficulties, the profits attributable to the permanent
establishment may be estimated on a reasonable basis.
4.
In so far as it has been customary in a Contracting
State to determine the profits to be attributed to a permanent establishment on
the basis of an apportionment of the total profit of the enterprise to its
various parts, nothing in paragraph 3 shall preclude that Contracting State
from determining the profits to be taxed by such an apportionment as may be
customary, the method of apportionment adopted shall, however, be such that the
result shall be in accordance with the principles laid down in this Article.
5.
In the determination of the profits of a permanent
establishment, there shall be allowed as deductions expenses which are incurred
for the purposes of the business of the permanent establishment including
executive and general administrative expenses so incurred, whether in the State
in which the permanent establishment is situated or elsewhere, but this does
not include any expenses which, under the law of that State, would not be
allowed to be deducted by an enterprise of that State.
6.
No profits shall be attributed to a permanent
establishment by reason of the mere purchase by that permanent establishment of
goods or merchandise for the purpose of export to the enterprise of which it is
the permanent establishment.
7.
For the purposes of the preceding paragraphs, the
profits to be attributed to the permanent establishment shall be determined by
the same method year by year unless there is good and sufficient reason to the
contrary.
8.
The term " business profits " means income,
derived by an enterprise from the carrying on of trade or business; but does
not include income in the form of rents, royalties (including rents or
royalties in respect of cinematographic films or video tapes for television),
fees for technical services, management charges, or remuneration or fees for
providing services of technical or other personnel, interest, dividends,
capital gains, remuneration for labour or personal (including professional)
services or income from the operation of ships or aircraft.
Article 8 AIR TRANSPORT
1.
Profits dervied by an enterprise of a Contracting State
from the operation of aircraft in international traffic shall be taxable only
in the Contracting State in which the place of effective management of the
enterprise is situated.
2.
The provisions of paragraph 1 of this Article shall
also apply to a share of profits from the operation of aircraft in
international traffic derived by an enterprise of a Contracting State through
participation in a pooled service, in a joint air transport operation or in an
international operating agency.
3.
For the purpose of paragraph 1, interest on funds
connected with the operation of aircraft in international traffic shall be
regarded as income from the operation of such aircraft, and the provisions of
Article 11 shall not apply in relation to such interest.
Article 9 ASSOCIATED
ENTERPRISES
Where
a.
an enterprise of a Contracting State participates
directly or indirectly in the management, control or capital of an enterprise
of the other Contracting State, or
b.
the same persons participate directly or indirectly in
the management, control or capital of an enterprise of a Contracting State and
an enterprise of the other Contracting State;
and in either case conditions are made or
imposed between the two enterprises in their commercial or financial relations
which differ from those which would be made between independent enterprises,
then any profits which would, but for those conditions, have accrued to one of
the enterprises, but, by reason of those conditions, have not so accrued, may
be included in the profits of that enterprise and taxed accordingly. Article 10
DIVIDENDS
1.
Dividends paid, by a company which is resident of a
resident of the other Contracting State may be taxed in that other Contracting
State.
2.
However, such dividends may also be taxed in the
Contracting State of which the company paying the dividends is a resident, and
according to the law of that State, but the tax so charged shall not exceed:
a.
5 per cent of the gross amount of the dividends if the
recipient is a company which owns at least 25 per cent of the shares of the
company paying the dividends during the period of six months immediately
preceding the date of payment of the dividends;
b.
15 per cent of the gross amount of the dividends in all
other cases.
3.
The term " dividends " as used in this
Article means income from shares or other rights, not being debt-claims,
participating in profits, as well as income from other corporate rights
assimilated to income from shares or any other item which is deemed to be a
dividend or distribution of a company by the taxation law of the Contracting
State of which the company making the distribution is a resident.
4.
The provisions of paragraphs 1 and 2 shall not apply if
the recipient of the dividends, being a resident of a Contracting State, has in
the other Contracting State, of which the company paying the dividends is a
resident, a permanent establishment with which the holding by virtue of which
the dividends are paid is effectively connected. In such a case, the provisions
of Article 7 shall apply.
5.
Where a company which is a resident of a Contracting
State derives profits or income from the other Contracting State, that other
State may not impose any tax on the dividends paid by the company to persons
who are not residents of that other State, or subject the company's
undistributed profits to a tax on undistributed profits, even if the dividends
paid or the undistributed profits consist wholly or partly or profits or income
arising in that other State.
Article 11
INTEREST
1.
Interest arising in a Contracting State and paid to a
resident of the other Contracting State may be taxed in that other State.
2.
However, such interest may also be taxed in the
Contracting State in which it arises, and according to the law of that State,
but the tax so charged shall not exceed 10 per cent of the gross amount of the
interest.
3.
Notwithstanding the provisions of paragraph 2 interest
arising in a Contracting State and paid to the Government of the other
Contracting State or local Authority thereof, the Central Bank of that other
Contracting State, or any agency wholly owned by that Government or local
authority shall be exempt from tax of the first mentioned Contracting State.
The competent authorities of the Contracting States may determine by mutual
agreement any other governmental institution to which this paragraph shall
apply.
4.
The term " interest " as used in this Article
means income from Government securities, bonds or debentures, whether or not
secured by mortgage and whether or not carrying a right to participate in
profits, and other debt-claims of every kind as well as all other income
assimilated to income from money lent by the taxation law of the Contracting
State in which the income arises.
5.
The provisions of paragraphs 1 and 2 shall not apply if
the recipient of the interest, being a resident of a Contracting State, has in
the other Contracting State in which the interest arises a permanent
establishment with which the debt-claim from which the interest arises is
effectively connected. In such a case the provisions of Article 7 shall apply.
6.
Interest shall be deemed to arise in a Contracting
State when the payer is that Contracting State itself, a political
sub-division, a local authority or a resident of that State. Where, however,
the person paying the interest whether he is a resident of a Contracting State
or not, has in a
Contracting State a permanent establishment in connection
with which the indebtedness on which the interest is paid was incurred, and
such interest is borne by that permanent establishment, then such interest
shall be deemed to arise in the Contracting State in which the permanent
establishment is situated.
7.
Where, owing to a special relationship between the
payer and the recipient or between both of them and some other person, the
amount of the interest paid, 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
recipient in the absence of such relationship, the provisions of this Article
shall apply only to the last mentioned amount. In that case, the excess part of
the payments shall remain taxable according to the law of each Contracting
State, due regard being had to the other provisions of this Convention.
Article 12 ROYALTIES
1.
Royalties arising in a Contracting State and paid to a
resident of the other Contracting State may be taxed in that other State.
2.
However, such royalties may also be taxed in the
Contracting State in which they arise, and according to the law of that State,
but the tax so charged shall not exceed 10 per cent of the gross amount of the
royalties.
3.
The term " royalties " as used in this
Article means payments of any kind received as a consideration for the use of,
or the right to use, any copyright of literary, artistic or scientific work
(including cinematograph films and films or tapes for radio or television
broadcasting), any patent, trade mark, design or model, plan, secret formula or
process, or for the use of, or the right to use, industrial, commercial or
scientific equipment, or for information concerning industrial commercial or
scientific experience.
4.
The provisions of paragraphs 1 and 2 shall not apply if
the recipient of the royalties, being a resident of a Contracting State, has in
the other Contracting State in which the royalties arises a permanent
establishment with which the right or property giving rise to the royalties is
electively connected. In such a case, the provisions of Article 7 shall apply.
5.
Royalties shall be deemed to arise in a Contracting
State when the payer is that Contracting State itself, a political
sub-division, a local authority or a resident of that State. Where, however,
the person paying the royalties, whether he is a resident of a Contracting
State or not, has in a
Contracting State, a permanent establishment in connection
with which the liability to pay the royalties was incurred, and such royalties
are borne of such permanent establishment, then such royalties shall be deemed
to arise in the Contracting State in which the permanent establishment is
situated.
6.
Where, owing to a special relationship between the
payer and the recipient or between both of them and some other person, the
amount of royalties paid, having regard to the use, right or information for
which they are paid, exceeds the amount which would have been agreed upon by
the payer and the recipient in the absence of such relationship, the provisions
of this Article shall apply only to the last mentioned amount. In that case,
the excess part of the payments shall remain taxable according to the law of
each Contracting State, due regard being had to the other provisions of this
Convention.
Article 13 CAPITAL GAINS
1.
Gains from the alienation of immovable property, as
defined in paragraph 2 of Article 6, may be taxed in the Contracting State in
which such property is situated.
2.
Gains from the alienation of movable property forming
part of business property of a permanent establishment which an enterprise of a
Contracting State has in the other Contracting State or of movable property
pertaining to a fixed base available to a resident of a Contracting State in
the other Contracting State for the purpose of performing professional
services, including such gains from the alienation of such a permanent
establishment (alone or together with the whole enterprise) or of such a fixed
base, may be taxed in that other State.
3.
Notwithstanding the provisions of paragraph 2, gains
derived by an enterprise of a Contracting State from the alienation of ships
and aircraft which it operates in international traffic and movable property
pertaining to the operation of such ships and aircraft shall be taxable only in
that State.
4.
Gains derived by a resident of a Contracting State from
the alienation of any property other than those mentioned in paragraphs 1, 2
and 3 shall be taxable only in that State.
5.
The term " alienation " means the sale,
exchange, transfer, or relinquishment of the property or the extinguishment of
any rights therein or the compulsory acquisition thereof under any law in force
in the respective Contracting States.
Article 14 MANAGEMENT AND
CONSULTANCY FEES
1.
Management and consultancy fees arising in a
Contracting State and paid to a resident of the other Contracting State may be
taxed in that other State.
2.
However such fees may be taxed in the Contracting State
in which they arise and according to the law of the State, but the tax so
charged shall not exceed 10 per cent of the gross amount of the fees.
3.
The term " management and consultancy fees "
as used in this Article means payments of any kind to any person, other than to
an employee of the person making the payments, in consideration for any
services of a managerial technical or consultancy nature.
4.
The provisions of paragraphs 1 and 2 shall not apply it
the recipient of the management and consultancy fees, being a resident of a Contracting
State, has in the other Contracting State in which the fees arise a permanent
establishment with which the services giving rise to the fees are effectively
connected. In such a case, the provisions of Article 7 shall apply.
5.
Management and consultancy fees shall be deemed to rise
in a Contracting State when the payer is that Contracting State itself, a
political sub-division, a local authority or a resident of that State. Where,
however, the person paying the fees, whether he is a resident of that, State or
not. has in a Contracting State a permanent establishment in connection with
which the liability to pay the fees was incurred and such fees are borne by
such permanent establishment then such fees shall be deemed to arise in the
Contracting State in which the permanent establishment is situated.
6.
Where, owing to a special relationship between payer
and the recipient or between both of them and some other person, the amount of
the management and consultancy fees paid, having regard to the services for
which it is paid, exceeds the amount which would have been agreed upon by the
payer and the recipient in the absence of such relationship, the provisions of
this Article shall apply only to the last mentioned amount. In that case, the
excess part of the payments shall remain taxable according to the law of each
Contracting State, due regard being had to the other provisions of this
Convention.
Article 15 INDEPENDENT
PERSONAL SERVICES
1.
Subject to the provisions of Article 16, income derived
by a resident of a Contracting State in respect of professional services or
other independent activities of a similar character shall be taxable only in
that State unless:
a.
he has a fixed base regularly available to him in the
other Contracting State for the purposes of performing his activities in which
case so much of the income may be, taxed in that other State as is attributable
to that fixed base; or
b.
he is present in the other Contracting State for the
purpose of performing his activities for a period or periods exceeding in the
aggregate 183 days in relevant " previous year " in the case of India
and in the relevant " charge year " in the case of Zambia and in
which case so much of the income may be taxed in that other State as is attributable
to the activities performed in that other State.
c.
his remuneration for his services or activities in the
other Contracting State derived from residents of that Contracting State
exceeds K 10,000 or its equivalent in Indian currency in the taxable year (not
including travel expenses directly related to the services or activities in the
other Contracting State), notwithstanding that his stay in that State is for a
period or periods amounting to less than 183 days during the taxable year.
2.
The term " professional services " includes
independant scientific literary, artistic, educational or teaching activities,
as well as the independent activities of physicians, lawyers, engineers,
architects, dentists and accountants.
Article 16 DEPENDENT PERSONAL
SERVICES
1.
Subject to the provisions of Articles 17, 18, 19, 20,
21 and 22, salaries, wages and other similar remuneration derived by a resident
of a Contracting State in respect of an employment shall be taxable only in
that State unless the employment is exercised in the other Contracting State.
If the employment is so exercised such remuneration as is derived therefrom may
be taxed in that other Contracting State.
2.
Notwithstanding the provisions of paragraph 1,
remuneration derived by a resident of a Contracting State in respect of an
employment exercised in the other Contracting State shall be taxable only in
the first-mentioned Contracting State if:
a.
the recipient is present in the other Contracting State
for a period not exceeding in the aggregate 183 days in the fiscal year concerned;
and
b.
the remuneration is paid by, or on behalf of, an
employer who is not a resident of the other Contracting State; and
c.
the remuneration is not borne by a permanent,
establishment or a fixed base which the employer has in the other Contracting
State.
3.
Notwithstanding the provisions of paragraphs 1 and 2,
remuneration in respect of employment exercised aboard a ship or aircraft in
international traffic may be taxed only in the Contracting State in which the
place of effective management of the enterprise is situated.
Article 17 DIRECTORS' FEES
Directors' fees and similar payments derived
by a resident of a Contracting State in his capacity as a member of the Board
of Directors of a company which is a resident of the other Contracting State
may be taxed in that other Contracting State.
Article 18 ARTISTES AND
ATHLETES
1.
Notwithstanding the provisions of Articles 15 and 16,
income derived by public entertainers (such as theatre, motion picture, radio
or television artistes and musicians) or athletes, from their personal
activities as such may be taxed in the Contracting State in which these
activities are exercised:
Provided that such income shall not be taxed
in the said Contracting State if the visit of the public entertainers or
athletes to that State is supported, wholly or substantialy, from the public
funds of the Government of the other Contracting State.
2.
For the purposes of this Article, the term,Government'
includes a State Government, a political Government, a political sub-division,
or a local or statutory authority of either Contracting State. Article 19
GOVERNMENTAL FUNCTIONS
1.
Remuneration paid by or out of funds created by a
Contracting State, a political sub-division or a local authority thereof, to a
citizen of that State in respect of an employment shall be taxable only in that
State.
2.
Any person paid by or out of funds created by a
Contracting State a political sub-division, or a local authority thereof, to
any individual may be taxed in that Contracting State.
3.
The provisions of paragraph 1 of this Article shall not
apply to payments in respect of services rendered in connection with any
business carried on by the Government of either of the Contracting States for
the purposes of profit.
4.
For the purposes of this Article, the term "
Government " shall include any State Government or local authority of
either Contracting State and in particular the Reserve Bank of India and the
Bank of Zambia.
Article 20 NON-GOVERNMENT
PENSIONS AND ANNUITIES
1.
Any pension (other than a pension referred to in
Article 19) or annuity derived by a resident of a Contracting State from
sources within the other Contracting State may be taxed only in the
firstmentioned Contracting State.
2.
The term " pension " means a periodic payment
made in consideration of services rendered in the past or by way of
compensation for injuries received in the course of performance of services.
3.
The term " annuity " means a stated sum
payable periodically at stated times, during the life or during a specified or
ascertainable period of time, under an obligation to make the payments in
return for adequate and full consideration in money or money's worth.
Article 21 RESEARCH PERSONNEL, STUDENTS AND BUSINESS
APPRENTICES
1.
a.
An individual who is a resident of one of the Contracting
States at the time he becomes temporarily present in the other Contracting
State for the primary purpose of---
i.
studying at a University or other recognised
educational institution in that other Contracting State, or
ii.
securing training required to qualify him to
practise a profession or professional speciality, or
iii.
studying or doing research as a recipient of a
grant allowance, or award from a Governmental religious, charitable,
scientific, literary, or educational organisation,
shall be exempt from tax by that other
Contracting State with respect to amounts described in subparagraph (b) for a
period not exceeding 5 taxable years from the date of his arrival in that other
Contracting State.
b.
The amounts referred to in sub-paragraph (a) are:
i. gifts abroad for the purpose of
his maintenance, educational, study, research, or training; ii. the grant, allowance, or award:
and
iii. income from personal services
performed in that other Contracting State in an amount not in excess of 1,500
Zambian Kwacha or its equivalent Indian Rupees for any taxable year.
2.
An individual who is a resident of one of the
Contracting States and who is temporarily present in that other Contracting
State as on employee of, or under contract with, a resident of the
firstmentioned Contracting State, for the primary purpose of---
a.
acquiring technical, professional, or business
experience from a person other than that resident of the first-mentioned
Contracting State or other than a person, related to such resident, or
b.
studying at a University or other recognised
educational institution in that other Contracting State, shall by exempt from
tax in that other Contracting state for a period not exceeding 1 year with
respect to his income from personal services in an aggregate amount not in
excess of 2,500 Zambian Kwacha or its equivalent Indian Rupees.
3.
An individual who is a resident of one of the
Contracting States and who is temporarily present in that other Contracting
State for a period not exceeding 1 year, as a participant in a programme
sponsored by the Government of that other Contracting State, for the primary
purpose of training, research, or study, shall be exempt from tax in that other
Contracting State with respect to his income from personal services in respect
of such training, research, or study performed in that other Contracting State
in an aggregate amount not in excess of 3,500 Zambian Kwacha or its equivalent
Indian Rupees.
Article 22 PROFESSORS AND
TEACHERS
1.
A professor or teacher who 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 for a period not exceeding two
years for the purpose of carrying out advanced study or research or for
teaching at a university college, school or other educational institution shall
be exempt from tax in the first-mentioned State in respect of any remuneration
which he receives for such work, provided that such remuneration is derived by
him from outside that State.
2.
This Article shall not apply to income from research if
such research is undertaken primarily for the private benefit of a specific
person or persons.
3.
For the purposes of this Article 21 an individual shall
be deemed to be a resident of a
Contracting State if he is resident in that Contracting
State in the " previous year " or the " charge year ", as
the case may be, in which he visits the other Contracting State or in the
immediately preceding " previous year " or the " charge year
".
Article 23 INCOME NOT
EXPRESSLY MENTIONED
Items of income of a resident of a Contracting
State, whereever arising, not dealt with in the foregoing Articles of this
Convention shall be taxable only in that State except that if such income
arises in the other Contracting State, it may also be taxed in that other
State.
CHAPTER IV METHOD FOR
ELIMINATION OF DOUBLE TAXATION Article 24 AVOIDANCE 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 Convention.
2.
a.
The amount of Zambian tax payable, under the laws of
Zambia and in accordance with the provisions of this Convention, whether
directly or by deduction by a resident of India, in respect of income from
sources within Zambia which has been subjected to tax both in India and Zambia,
shall be allowed as a credit against the Indian tax payable in respect of such
income provided that such credit shall not exceed Indian tax (as computed
before allowing any such credit), which is appropriate to the income derived
from sources within Zambia; so, however, that where such resident is a company
by which surtax is payable in India, the credit aforesaid shall be allowed in
the first instance against income-tax payable by the company in India, and as
to the balance if any against surtax payable by it in India;
b.
For the purpose of the credit referred to in
sub-paragraph (a) above, the term " Zambian tax payable " shall be
deemed to include any amount which would have been payable as Zambian tax for
any year but for any provisions granting an exemption or reduction of tax which
the competent authorities of the Contracting States agree to be for the purpose
of economic development.
3.
a.
The amount of Indian tax payable, under the laws of
India and in accordance with the provisions of this Convention, whether directly
or by deduction, by a resident of Zambia in respect of income from sources
within India which has been subjected to tax both in India and Zambia shall be
allowed as a credit against Zambian tax payable in respect of such income
provided that such credit shall not exceed the Zambian tax (as computed before
allowing my such credit), which is appropriate to the income derived from
sources within India;
b.
For the purposes of the credit referred to in
sub-paragraph (a) above, the term " Indian tax payable " shall be
deemed to include any amount by which Indian tax has been reduced by the
special incentive measures set forth in the following sections of the
Income-tax Act, 1961.
i.
Section 10(4)----relating to exemption from tax
on interest payable to a non-resident on any security notified by the
Government of India.
ii.
Section 10(4A)----relating to exemption from tax
on interest payable to a non-resident on moneys in a Non-resident (External)
Account;
iii.
Section 10(15) (iv)----relating to exemption
from tax of (a) a non-resident in respect of moneys lent by him to the
Government or local authority in India; (b) an approved foreign financial
institution in respect of interest on moneys lent by it to an industrial
undertaking in India under a loan agreement; and (c) a non-resident in respect
of interest on moneys lent or credit facilities allowed by him to an industrial
undertaking in India for the purchase outside India of raw materials or capital
plant and machinery or for industrial development in India;
iv.
Section 32A----relating to investment allowance
in respect of ships, aircrafts, machinery or plant;
v.
Section 33A----relating to development allowance
for planting or replanting of tea bushes; vi. Section 35C----relating to the agricultural
development allowances;
vii.
Section 54E----relating to capital gains;
viii.
Section 80CC----relating to deduction in respect
of investment in certain new shares.
ix.
Section 80HH----relating to deduction in respect
of profits and gains from newly established industrial undertakings or hotel
business in backward areas;
x.
Section 80J----relating to deduction in respect
of profits and gains from eligible industrial undertakings or ships or hotels;
xi.
Section 80K----relating to deduction in respect
of dividends attributable to profits and gains from eligible industrial
undertakings or ships or hotels;
xii.
any other provisions which may subsequently be
enacted granting an exemption or reduction of tax which the competent
authorities of the contracting States agree to be for the purposes of economic
development.
4. Income which, in accordance
with the provisions of this Convention is not to be subjected to tax in a
Contracting State, may be taken into account for calculating the rate of tax to
be imposed in that Contracting State.
CHAPTER V SPECIAL PROVISIONS Article
25 NON-DISCRIMINATION
1.
The 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 are or may be subjected.
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 in the same
circumstances.
3.
Nothing contained in this Article shall be construed as
obliging a Contracting State to grant to persons not resident in that State any
personal allowances, reliefs and reductions for taxation purposes which are by
law available only to persons who are so resident.
4.
Enterprises of a Contracting State, the capital of
which is wholly or partly owned or controlled, directly or indirectly by one or
more residents of the other Contracting State, shall not be subjected in the
first-mentioned Contracting State to any taxation or any requirement connected
therewith which is other or more burdensome than the taxation and connected
requirements to which other similar enterprises of that first-mentioned State
are or may be subjected in the same circumstances.
5.
In this Article, the teem " taxation " means
taxes which are the subject of this Convention.
Article 26 MUTUAL AGREEMENT
PROCEDURE
1.
Where a resident of a Contracting State considers that
the actions of one or both of the Contracting States result or will result for
him in taxation not in accordance with this Convention, he may notwithstanding
the remedies provided by the national laws of those States, present his case to
the competent authority of the Contracting State of which he is a resident.
This case must
be presented within three years of the date
of receipt of notice of the action which gives rise to taxation not in
accordance with the Convention.
2.
The competent authority shall endeavour, if the
objection appears to it to be justified and if it is not itself able to arrive
at an appropriate solution, to resolve the case by mutual agreement with the
competent authority of the other Contracting State, with a view to the
avoidance of taxation not in accordance with the Convention. Any agreement
reached shall be implemented notwithstanding any time limits in the nationals
laws of the Contracting States.
3.
The competent authorities of the Contracting States
shall endeavour to resolve by mutual agreement any difficulties or doubts
arising as to the inter-pretation or application of the Convention. They may
also consult each other for the elimination of double taxation in cases not
provided for in the Convention.
4.
The competent authorities of the Contracting States may
communicate with each other directly for the purpose of reaching an agreement
in the sense of the preceding paragraphs. When it seems, advisable in order to
reach agreement to have an oral exchange of opinions, such exchange, may take
place through a Commission consisting of representatives of the competent
authorities of the Contracting State.
Article 27 EXCHANGE OF
INFORMATION
1.
The competent authorities of the Contracting States
shall exchange such information or document as is necessary for carrying out
the provisions of this Convention or for the prevention of evasion of taxes
which are the subject of this Convention. Any information or document so
exchanged shall be treated as secret but may be disclosed to persons (including
a court or other authorities) concerned with the assessment, collection, enforcement,
investigation or prosecution in respect of the taxes which are the subject of
this Convention or to persons with respect to whom the information or document
relates.
2.
The exchange of information or documents shall be
either on a routine basis or on request with reference to particular cases. The
competent authorities of the Contracting States shall agree from time to time
on the list of the information or documents which shall be furnished on a
routine basis.
3.
In no case shall the provisions of paragraph 1 be
construed so as to impose on a Contracting State the obligation:
a.
to carry out administrative measures at variance with
the laws or administrative practice of that or of the other Contracting State;
b.
to supply information or documents which are not
obtainable under the laws or in the normal course of the administration of that
or of the other Contracting State;
c.
to supply information or documents which would disclose
any trade, business, industrial, commercial or professional secret or trade
process or information the disclosure of which would be contrary to public
policy. Article 28
DIPLOMATIC AND CONSULAR ACTIVITIES
Nothing in this Convention shall affect the
fiscal privileges of diplomatic or consular officials under the general rules
of international law or under the provisions of special agreements.
CHAPTER VI
FINAL PROVISIONS Article 29 ENTRY
INTO FORCE
1.
This Convention shall come into force on the date when
the last of all such things shall have been done in India and Zambia as necessary
to give the Convention the force of law in India and Zambia respectively.
2.
The Contracting States shall notify each other of the
completion of the requirements mentioned in paragraph 1 of this Article. The
exchange of diplomatic notes certifying that this requirement has been
completed shall take place at Lusaka.
3.
Upon the exchange of such diplomatic notes, this
Convention shall have effect:
a.
In India, in respect of income assessable for any
assessment year commencing on or after the 1st day of April, 1979.
b.
In Zambia, in respect of income arising for any charge
year commencing on or after the 1st day of April. 1979
Article 30 TERMINATION
This Convention shall continue in effect
identifinitely but either of the Contracting States may, on or before the
thirtieth day of June in any calendar year beginning after the expiration of a
period of five years from the date of its entry into force, give the other
Contracting State through diplomatic channels, written notice of termination
and in such event this Convention shall cease to be effective:
a.
in Zambia, in respect of income asessable for the
assessment year commencing on the 1st day of April in the second calendar year
next following the calendar year in which the notice is given, and subsequent
years;
b.
in India, in respect of income arising for the year of
income next following the calendar year in which the notice of termination is
given, and subsequent years.
In witness whereof
the
[CD1]CONVENTION BETWEEN THE
GOVERNMENT OF THE REPUBLIC OF INDIA AND THE GOVERNMENT OF THE REPUBLIC OF
ZAMBIA FOR THE AVOIDANCE OF DOUBLE TAXATION AND
THE PREVENTION OF FISCAL EVASION WITH RESPECT
TO TAXES ON INCOME
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