Zambia

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 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 “)

a.     

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 “).

1.      

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;

                  
i.         
 

                  
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.

1.      

2.      

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.

1.      

2.      

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.

1.      

2.      

3.      

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 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.

1.      

2.      

3.      

4.      

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.

1.      

2.      

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.

1.      

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.

1.      

2.      

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.

1.      

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 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 by 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.

a.     

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.

1.      

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 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 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.

1.      

2.      

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.

1.      

2.      

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.

1.      

2.      

3.      

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

 

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