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
Notification F.No.
11/11/65-FTD, dated 18 January, 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 effect 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.
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 States;
(e) the terms "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 individual 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
interests");
(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. Where by reason of the
provisions of paragraph 1, a person other than an individual is a resident of
both of the 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; and
(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 the
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 first-mentioned 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 he
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 enterprise
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, oil wells, 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 rendered 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
profits 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 derived 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 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 of
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 effectively 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 by 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 or 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 if 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; or
(c) his remuneration for his services or activities in the other
Contracting State derived from residents of that Contracting States 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 independent 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 as 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 substantially,
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 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
first-mentioned 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
that other Contracting State with respect to amounts described in sub-paragraph
(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 an employee of, or under contract with, a
resident of the first-mentioned 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 be 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. The article shall not
apply to income from research if the such research is undertaken primarily for
the private benefit of a specific person or persons.
3. For the purposes of
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 Contracting State,
wherever 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.
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 any 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, aircraft, 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 other
Contracting State shall not 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
term "taxation" means taxes which are the subject of this Convention.
ARTICLE 26: Mutual
agreement procedure.--1. Where a resident of 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 national 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 interpretation 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
States.
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 documents 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 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 are 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 indefinitely 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 States 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 assessable 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
undersigned, being duly authorised thereto, have signed the present Convention.
Done in duplicate at
Lusaka this fifth day of June, one thousand nine hundred and eighty-one in
English language.
Sd/- Sd/-
Kedar Pandey Hon.
S.K. Mussokotwane, M.P.,
Minister of Railways, Minister
of Finance,
Government of the Republic
of India. Government
of the Republic of Zambia.