South Africa Legal Draft Template

Double Taxation

Avoidance AgreementIncome Tax-Act,1961:

Notification under section 90: Agreement between the Government of the Republic

of India and the Government of the Republic of South Africa for the avoidance

of double taxation and the prevention of fiscal evasion with respect to taxes

on incomeNotification

No.G.S.R. No.198(E), dtd. 21.04.1998Whereas

the annexed agreement between the Government of the Republic of India and the

Government of the Republic of South Africa for the avoidance of double taxation

and the prevention of fiscal evasion with respect to taxes on income, has

entered into force on the twenty-eighth day of November, 1997, in accordance

with article 28 of the said Agreement, after the notification by both the

contracting States to each other of the completion of the procedures required

under their laws for the bringing into force of the said agreement;Now,

therefore, in exercise of the powers conferred by section 90 of the Income-tax

Act, 1961 (43 of 1961), the Central Government hereby directs that all the

provisions of the said agreement shall be given effect to in the Union of

India.ANNEXUREAGREEMENT

BETWEEN THE GOVERNMENT OF THE REPUBLIC OF INDIA AND THE GOVERNMENT OF THE

REPUBLIC OF SOUTH AFRICA FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE

PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME.PreambleThe

Government of the Republic of India and the Government of the Republic of South

Africa desiring to conclude an Agreement for the avoidance of double taxation

and the prevention of fiscal evasion with respect to taxes on income,Have

agreed as follows:Article

1PERSONAL

SCOPEThis

Agreement shall apply to persons who are residents of one or both of the

Contracting States.Article

2TAXES

COVERED1. The existing taxes to

which this Agreement shall apply are:a. In India,The

income-tax (including any surcharge thereon);(hereinafter

referred to as "Indian tax");a.b. In South Africa:i.

the

income tax (the normal tax) andii.

the

secondary tax on companies;(hereinafter

referred to as "South African tax").1.2. The Agreement shall

apply also to any identical or substantially similar taxes which are imposed by

either Contracting State after the date of signature of the Agreement in

addition to, or in place of, the existing taxes. The competent authorities of

the Contracting States shall notify each other of any significant changes which

have been made in their respective taxation laws.Article

3GENERAL

DEFINITIONS1. For the purposes of

this Agreement, unless the context otherwise requires:a. the term

"India" means the territory of the Republic of India and includes the

territorial sea and airspace above it. For the purposes of this Agreement the

term shall cover any other maritime zone in which the Republic of India has

sovereign rights, other rights and jurisdiction, according to the Indian law

and in accordance with international law in particular as laid down in the UN

Convention of the Law of the Sea, 1982; andb. the term "South

Africa" means the Republic of South Africa and, when used in a

geographical sense, includes the territorial sea thereof as well as any area

outside the territorial sea, including the continental shelf, which has been or

may hereafter be designated, under the laws of South Africa and in accordance

with international law, as an area within which South Africa may exercise

sovereign rights or jurisdiction;c. the terms "a

Contracting State" and "the other Contracting State" mean India

or South Africa, as the context requires;d. the term

"company" means any body corporate or any entity which is treated as

a company or body corporate for tax purposes;e. the term

"competent authority" means;i.

in

India, the Central Government in the Ministry of Finance (Department of

Revenue) or their authorised representative; andii.

in

South Africa, the Commissioner for Inland Revenue or his authorised

representative;a.b.c.d.e.f. 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;g. the term "fiscal

year" means:i.

in

India, the twelve-month period beginning on 1 April;ii.

in

South Africa, the "year of assessment" as defined in the Income-tax

Act, 1962;a.b.c.d.e.f.g.h. the term

"international traffic" means any transport by a ship or aircraft

operated by an enterprise of a Contracting State, except when the ship or

aircraft is operated solely between places in the other Contracting State;i. the term

"national" means:i.

any

individual possessing the nationality of a Contracting State;ii.

any

legal person or association deriving its status as such from the laws in force

in a Contracting State;a.b.c.d.e.f.g.h.i.j. the term

"person" includes an individual, a company and any other body of persons

which is treated as an entity for tax purposes under the taxation laws in force

in the respective Contracting States; andk. the term

"tax" means Indian tax or South African 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 Agreement applies or which

represents a penalty imposed relating to those taxes.1.2. As regards the

application of the provisions of the Agreement at any time by a Contracting State,

any term not defined therein shall, unless the context otherwise requires, have

the meaning which it has at that time under the law of that State for the

purposes of the taxes to which the Agreement applies, any meaning under the

applicable tax laws of that State prevailing over a meaning given to the term

under other laws of that State.Article

4RESIDENT1. For the purposes of

this Agreement, the term "resident of a Contracting State" means;a. in India, any person

who, under the laws of India, is liable to tax therein by reason of his

domicile, residence, place of management or any other criterion of a similar

nature, but this term does not include any person who is liable to tax in India

in respect only of income from sources in India;b. in South Africa, any

individual who is ordinarily resident in South Africa and any other person

which has its place of effective management in South Africa;1.2. Where by reason of

the provisions of paragraph 1 an individual is a resident of both Contracting

States, then his status shall be determined as follows:a. he shall be deemed to

be a resident only of the State in which he has a permanent home available to

him; if he has a permanent home available to him in both States, he shall be

deemed to be a resident of the State with which his personal and economic

relations are closer (centre of vital interests);b. if the State in which

he has his centre of vital interests cannot be determined, or if he has not a

permanent home available to him in either State, he shall be deemed to be a resident

only of the State in which he has an habitual abode;c. if he has an habitual

abode in both States or in neither of them, he shall be deemed to be a resident

only of the State of which he is a national;d. if he is a national

of both States or of neither of them, the competent authorities of the

Contracting States shall settle the question by mutual agreement.1.2.3. Where by reason of

the provisions of paragraph 1 a person other than an individual is a resident

of both Contracting States, then it shall be deemed to be a resident only of

the State in which its place of effective management is situated. If the State

in which its place of effective management is situated cannot be determined,

then the competent authorities of the Contracting States shall settle the

question by mutual agreement.Article

5PERMANENT

ESTABLISHMENT1. For the purposes of

this Agreement, the term "permanent establishment" means a fixed

place of business through which the business of an enterprise is wholly or

partly carried on.2. The term

"permanent establishment" includes especially:a. a place of

management;b. a branch;c. an office;d. a factory;e. a workshop;f. a mine, an oil or gas

well, a quarry or any other place of extraction of natural resources, including

an installation or structure used for the exploration or exploitation of

natural resources; andg. a warehouse, in

relation to a person providing storage facilities for others.1.2.3. A building site, a

construction, installation or assembly project or any supervisory activity in

connection with such site or project constitutes a permanent establishment only

if it lasts more than six months.4. Notwithstanding the

preceding provisions of this Article, the term permanent establishment shall be

deemed not to include:a. the use of facilities

solely for the purpose of storage, display or delivery 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, display or delivery;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, or for collecting information, for the enterprise;e. the maintenance of a

fixed place of business solely for the purpose of carrying on, for the

enterprise, any other activity of a preparatory or auxiliary character; andf. the maintenance of a

fixed place of business solely for any combination of activities mentioned in

sub-paragraphs (a) to (e), provided that the overall activity of the fixed

place of business resulting from this combination is of a preparatory or

auxiliary character.1.2.3.4.5. Notwithstanding the

provisions of paragraph 1 and 2, where a person---other than an agent of an

independent status to whom paragraph 6 applies---is acting on behalf of an

enterprise and has, and habitually exercises, in a Contracting State an

authority to conclude contracts in the name of the enterprise, that enterprise

shall be deemed to have a permanent establishment in that State in respect of

any activities which that person undertakes for the enterprise, unless the

activities of such person are limited to those mentioned in paragraph 4 which,

if exercised through a fixed place of business, would not make this fixed place

of business a permanent establishment under the provisions of that paragraph.6. An enterprise shall

not be deemed to have a permanent establishment in a Contracting State merely

because it carries on business in that State through a broker, general

commission agent or any other agent of an independent status, provided that

such persons are acting in the ordinary course of their business.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 State (whether through a permanent establishment or

otherwise), shall not of itself constitute either company a permanent

establishment of the other.Article

6INCOME

FROM IMMOVABLE PROPERTY1. Income derived by a

resident of a Contracting State from immovable property, including income from

agriculture or forestry, situated in the other Contracting State may be taxed

in that other State.2. The term

"immovable property" shall have the meaning which it has under the

law of the Contracting State in which the property in question 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, sources and other

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

paragraph 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

independent personal services.Article

7BUSINESS

PROFITS1. The profits of an

enterprise of a Contracting State shall be taxable only in that State unless

the enterprise carries on business in the other Contracting State through a

permanent establishment situated therein. If the enterprise carried on business

as aforesaid, the profits of the enterprise may be taxed in the other State but

only so much of them as is attributable to that permanent establishment.2. Subject to the

provisions of paragraph 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 that

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.3. In determining the

profits of a permanent establishment, there shall be allowed as deductions expenses

which are incurred for the purposes of the permanent establishment, including

executive and general administrative expenses so incurred, whether in the

Contracting State in which the permanent establishment is situated or

elsewhere, in accordance with and subject to the limitations prescribed in the

taxation laws in that Contracting State.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 2 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 contained in this article.5. 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 enterprise.6. 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.7. Where profits include

items of income which are dealt with separately in other articles of this

Agreement, then the provisions of those articles shall not be affected by the

provisions of this article.Article

8SHIPPING

AND AIR TRANSPORT1. Profits of an

enterprise of a Contracting State from the operation of ships or aircraft in

international traffic shall be taxable only in that State.2. For the purposes of

this Article, profits from the operation of ships or aircraft in international

traffic shall include:a. profits derived from

the rental on a bare boat basis of ships or aircraft used in international

traffic,b. profits derived from

the use or rental of containers,if

such profits are incidental to the profits to which the provisions of paragraph

1 apply.1.2.3. For the purposes of

this Article, interest on funds connected with the operation of ships or

aircraft in international traffic shall be regarded as profits derived from the

operation of such ships or aircraft and the provisions of article 11 shall not

apply in relation to such interest.4. The provisions of

paragraph 1 shall also apply to profits from the participation in a pool, a

joint business or an international operating agency.Article

9ASSOCIATED

ENTERPRISES1. 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; orb. 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.1.2. Where a Contracting

State includes in the profits of an enterprise of that State and taxes

accordingly-profits on which an enterprise of the other Contracting State has

been charged to tax in that other State and the profits so included are profits

which would have accrued to the enterprise of the first-mentioned State if the

conditions made between the two enterprises had been those which would have

been made between independent enterprises, then that other State shall make an

appropriate adjustment to the amount of the tax charged therein on those

profits if that other State considers the adjustment justified. In determining

such adjustment, due regard shall be had to the other provisions of this

Agreement and the competent authorities of the Contracting State shall if

necessary consult each other.Article

10DIVIDENDS1. Dividends paid by a

company which is a resident of a Contracting State to a resident of the other

Contracting State may be taxed in that other 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 laws of that State, but

if the beneficial owner of the dividends is a resident of the other Contracting

State, the tax so charged shall not exceed 10 per cent. of the gross amount of

the dividends.The

competent authorities of the Contracting States shall settle the mode of

application of these limitations by mutual agreement.This

paragraph shall not affect the taxation of the company in respect of the

profits out of which the dividends are paid.1.2.3. The term

"dividends" as used in this article means income from shares or other

rights participating in profits (not being debt-claims), as well as income from

other corporate rights which is subjected to the same taxation treatment as

income from shares by the laws 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 beneficial owner of the dividends,

being a resident of a Contracting State, carries on business in the other

Contracting State of which the company paying the dividends is a resident,

through a permanent establishment situated therein, or performs in that other

State independent personal services from a fixed base situated therein, and the

holding in respect of which the dividends are paid is effectively connected

with such permanent establishment or fixed base. In such case, the provisions

of Article 7 or Article 14, as the case may be, 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, except in so far as such dividends are paid to a resident

of that other State or in so far as the holding in respect of which the dividends

are paid is effectively connected with a permanent establishment or a fixed

base situated in that other State, nor 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 of profits or income arising in

such other State.Article

11INTEREST1. 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 laws of that State, but if the recipient is the beneficial

owner of the interest the tax so charged shall not exceed 10 per cent. of the

gross amount of the interest.3. Notwithstanding the

provisions of paragraphs 1 and 2, interest arising in a Contracting State shall

be exempt from tax in that State if it is derived and beneficially owned y:a. the Government, a

political sub-division or a local authority of the other Contracting State;b. the Reserve Bank of

India or the South African Reserve Bank; orc. any agency or

instrumentality which is wholly owned by the Government of a Contracting State

and which has been approved in writing by the competent authorities of the

Contracting States for the purposes of this paragraph.1.2.3.4. The term

"interest" as used in this article means income from debt-claims of

every kind, whether or not secured by mortgage and whether or not carrying a

right to participate in the debtor's profits, and in particular, income from

government securities and income from bonds or debentures, including premiums

and prizes attaching to such securities, bonds or debentures. Penalty charges

for late payment shall not be regarded as interest for the purposes of this

article.5. The provisions of

paragraph 1 shall not apply if the beneficial owner of the interest, being a

resident of a Contracting State, carries on business in the other Contracting

State in which the interest arises, through a permanent establishment situated

therein, or performs in that other State independent personal services from a

fixed base situated therein, and the debt-claim in respect of which the

interest is paid is effectively connected with such permanent establishment or

fixed base. In such case, the provisions of Article 7 or Article 14, as the

case may be, shall apply.6. Interest shall be

deemed to arise in a Contracting State when the payer is that 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

or a fixed base in connection with which the indebtedness on which the interest

is paid was incurred, and such interest is borne by such permanent

establishment or fixed base, then such interest shall be deemed to arise in the

State in which the permanent establishment or fixed base is situated.7. Where, by reason of a

special relationship between the payer and the beneficial owner or between both

of them and some other person, the amount of the interest, 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 beneficial owner in the absence of such

relationship, the provisions of this article shall apply only to the

last-mentioned amount. In such case, the excess part of the payments shall

remain taxable according to the laws of each Contracting State, due regard

being had to the other provisions of this Agreement.Article

12ROYALTIES

AND FEES FOR TECHNICAL SERVICES1. Royalties or fees for

technical services 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 or fees for technical services may also be taxed in the Contracting

State in which they arise, and according to the laws of that State, but if the

recipient is the beneficial owner of the royalties or fees for technical

services, the tax so charged shall not exceed 10 per cent. of the gross amount

of the royalties or fees for technical services.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, tapes or discs 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 term "fees

for technical services" as used in this article means payments of any kind

received as a consideration for services of a managerial, technical or

consultancy nature, including the provision of services by technical or other

personnel, but does not include payments for services mentioned in article 15.5. The provisions of

paragraph 1 and 2 shall not apply if the beneficial owner of the royalties or

fees for technical services, being a resident of a Contracting State, carries

on business in the other Contracting State in which the royalties or fees for

technical services arise, through a permanent establishment situated therein,

or performs in that other State independent personal services from a fixed base

situated therein, and the right, property or contract in respect of which the

royalties or fees for technical services are paid is effectively connected with

such permanent establishment or fixed base. In such case, the provisions of

article 7 or article 14 as the case may be, shall apply.6. Royalties or fees for

technical services shall be deemed to arise in a Contracting State when the

payer is that State itself, a political subdivision, a local authority or a

resident of that State. Where, however, the person paying the royalties or fees

for technical services, whether he is a resident of a Contracting State or not,

has in a Contracting State a permanent establishment or a fixed base with which

the right, property or contract in respect of which the royalties or fees for

technical services are paid is effectively connected, and such royalties or

fees for technical services are borne by such permanent establishment or fixed

base, then such royalties or fees for technical services shall be deemed to

arise in the State in which the permanent establishment or fixed base is

situated.7. Where, by reason of a

special relationship between the payer and the beneficial owner or between both

of them and some other person, the amount of the royalties or fees for

technical services exceeds the amount which would have been agreed upon by the

payer and the beneficial owner in the absence of such relationship, the

provisions of this article shall apply only to the last-mentioned amount. In

such case, the excess part of the payments shall remain taxable according to

the laws of each Contracting State, due regard being had to the other

provisions of this Agreement.Article

13CAPITAL

GAINS1. Gains derived by a

resident of a Contracting State from the alienation of immovable property

referred to in article 6 and situated in the other Contracting State may be

taxed in that other State.2. Gains from the

alienation of movable property forming part of the 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 independent personal services, including such

gains from the alienation of such a permanent establishment (alone or with the

whole enterprise) or of such fixed base, may be taxed in that other State.3. Gains of an

enterprise of a Contracting State from the alienation of ships or aircraft

operated in international traffic or movable property pertaining to the

operation of such ships or aircraft, shall be taxable only in that State.4. Gains from the

alienation of shares or similar rights in a company, or of an interest in a

partnership, trust or estate, the assets of which consist principally of

immovable property situated in a Contracting State, may be taxed in that State.5. Gains derived by a

resident of a Contracting State from the sale, exchange or other disposition,

directly or indirectly, of shares or similar rights in a company, other than

those mentioned in paragraph 4, which is a resident of the other Contracting

State, may be taxed in that other State.6. Gains from the

alienation of any property other than that referred to in the preceding

paragraphs, shall be taxable only in the Contracting State of which the

alienator is a resident.Article

14INDEPENDENT

PERSONAL SERVICES1. Income derived by an

individual who is a resident of a Contracting State in respect of professional

services or other activities of an independent character shall be taxable only

in that State unless he has a fixed base regularly available to him in the other

Contracting State for the purpose of performing his activities. If he has such

a fixed base, the income may be taxed in the other State but only so much of it

as is attributable to that fixed base. For the purposes of this Agreement,

where an individual who is a resident of a Contracting State stays in the other

Contracting State for a period or periods exceeding in the aggregate 183 days

in any twelve-months period commencing or ending in the fiscal year concerned,

he shall be deemed to have a fixed base regularly available to him in that

other State and the income that is derived from his activities that are

performed in that other State shall be attributable to that fixed base.2. The term

"professional services" includes especially independent scientific,

literary, artistic, educational or teaching activities as well as the

independent activities of physicians, lawyers, engineers, architects, dentists

and accountants.Article

15DEPENDENT

PERSONAL SERVICES1. Subject to the

provisions of Articles 16, 18 and 19, 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 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 State if:a. the recipient is

present in the other State for a period or periods not exceeding in the

aggregate 183 days in any twelve-months period commencing or ending in the

fiscal year concerned; andb. the remuneration is

paid by or on behalf of an employer who is not a resident of the other State;

andc. the remuneration is

not borne by a permanent establishment or a fixed base which the employer has

in the other State.1.2.3. Notwithstanding the

preceding provisions of this article, remuneration derived in respect of an

employment exercised aboard a ship or aircraft operated in international

traffic by an enterprise of a Contracting State may be taxed in that State.Article

16DIRECTORS'

FEESDirectors'

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 State.Article

17ENTERTAINERS

AND SPORTSPERSONS1. Notwithstanding the

provisions of Articles 7, 14 and 15, income derived by a resident of a

Contracting State as an entertainer such as a theatre, motion picture, radio or

television artiste, or a musician, or as a sportsperson, from his personal

activities as such exercised in the other Contracting State, may be taxed in

that other State.2. Where income in

respect of personal activities exercised by an entertainer or a sportsperson in

his capacity as such accrues not to the entertainer or sportsperson himself but

to another person, that income may, notwithstanding the provisions of Articles

7, 14 and 15, be taxed in the Contracting State in which the activities of the

entertainer or sportsperson are exercised.3. Notwithstanding the

provisions of paragraph 1, income derived by an entertainer or sportsperson

from his personal activities as such shall be exempt from tax in the

Contracting State in which these activities are exercised if the activities are

exercised within the framework of a visit which is wholly or mainly supported

by the other Contracting State, political sub-division, a local authority or

public institution thereof.Article

18PENSIONS

AND ANNUITIES1. Subject to the

provisions of paragraph 2 of Article 19, pensions and other similar

remuneration and annuities arising in a Contracting State and paid to a

resident of the other Contracting State, may be taxed in the first-mentioned

State.2. The term

"annuity" means a stated sum payable periodically at stated times

during 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

19GOVERNMENT

SERVICE1.a. Salaries, wages and

similar remuneration, other than a pension, paid by a Contracting State or a

political sub-division or a local authority thereof to an individual in respect

of services rendered to that State or sub-division or authority shall be

taxable only in that State.b. However, such

salaries, wages and similar remuneration shall be taxable only in the other

Contracting State if the services are rendered in that State and the individual

is a resident of that State who:i.

is

a national of that State; orii.

did

not become a resident of that State solely for the purpose of rendering the services.1.2. .a. Any pension paid by,

or out of funds created by, a Contracting State or a political sub-division or

a local authority thereof to an individual in respect of services rendered to

that State or sub-division or authority shall be taxable only in that State.b. However, such pension

shall be taxable only in the other Contracting State if the individual is a

resident of, and a national of, that State.1.2.3. The provisions of

Article 15, 16, 17 or 18 shall apply to salaries, wages and similar

remuneration, and to pensions, in respect of services rendered in connection

with a business carried on by a Contracting State or a political sub-division

or a local authority thereof.Article

20STUDENTS,

APPRENTICES AND BUSINESS TRAINEES1. A student, apprentice

or business trainee who is present in a Contracting State solely for the

purpose of his education or training and who is, or immediately before being so

present was, a resident of the other Contracting State, shall be exempt from

tax in the first-mentioned State on payments received from outside that

first-mentioned State for the purposes of his maintenance, education or

training.2. Payments which a

student or business apprentice receives as remuneration from employment in the

first-mentioned State, in an amount not exceeding a sum equivalent to 3000 US

dollars in the currency of the first-mentioned State during any fiscal year

shall be exempt from tax in the first-mentioned State during the period ending

five years after the date of his first arrival in the first-mentioned

Contracting State.Article

21OTHER

INCOMEItems

of income arising in a Contracting State which are not dealt with in the

foregoing articles of this agreement may be taxed in that State.Article

22ELIMINATION

OF DOUBLE TAXATIONDouble

taxation shall be eliminated as follows:a. In India, where a

resident of India derives income which, in accordance with the provisions of

this Agreement, may be taxed in South Africa, India shall allow as a deduction

from the tax on the income of that resident an amount equal to the South

African tax paid, whether directly or by deduction. Such deduction shall not,

however, exceed that part of the income-tax (as computed before the deduction

is given) which is attributable to the income which may be taxed in South Africa.b. In South Africa,

Indian tax paid by residents of South Africa in respect of income taxable in

India, in accordance with the provisions of the Agreement, shall be deducted

from the taxes due according to South African fiscal law. Such deduction shall

not, however, exceed an amount which bears to the total South African tax

payable the same ratio as the income concerned bears to the total income.Article

23NON-DISCRIMINATION1. 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. This

provision shall notwithstanding the provisions of Article 1, also apply to

persons who are not residents of one or both of the Contracting States.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. This provision shall not be construed as preventing a

Contracting State from charging the profits of a permanent establishment which

a company of the other Contracting State has in the first-mentioned State at a

rate of tax which is not more than 10 per centage points higher than that

imposed on the profits of a similar company of the first-mentioned Contracting

State, nor as being in conflict with the provisions of paragraph 3 of Article 7

of this Agreement.3. Nothing contained in

this article shall be construed as obliging a Contracting State to grant to

residents of the other Contracting State any personal allowances, reliefs and

reductions for taxation purposes on account of civil status or family

responsibilities which it grants to its own residents.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 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.5. Except where the

provisions of paragraph 1 of Article 9, paragraph 5 of Article 11 or paragraph

6 of Article 12 apply, interest, royalties, fees for technical services and

other disbursements paid by an enterprise of a Contracting State to a resident

of the other Contracting State shall, for the purpose of determining the

taxable profits of such enterprise, be deductible under the same conditions as

if they had been paid to a resident of the first-mentioned State.6. In this article the

term "taxation" means taxes which are the subject of the Agreement.Article

24MUTUAL

AGREEMENT PROCEDURE1. Where a person

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 Agreement, he may,

irrespective of the remedies provided by the domestic law of those States,

present his case to the competent authority of the Contracting State of which

he is a resident or, if his case comes under paragraph 1 of Article 23, to that

of the Contracting State of which he is a national. The case must be presented

within three years from the first notification of the action resulting in

taxation not in accordance with the Agreement.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 a satisfactory 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 which is not in accordance with

the Agreement. Any Agreement reached shall be implemented notwithstanding any

time limits in the domestic law 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 Agreement. They may also consult together for the

elimination of double taxation in cases not provided for in the Agreement.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 joint commission

consisting of representatives of the competent authorities of the Contracting

States.Article

25EXCHANGE

OF INFORMATION1. The competent

authorities of the Contracting States shall exchange such information,

including documents, as is necessary for carrying out the provisions of this

Agreement or of the domestic laws of the Contracting States concerning taxes

covered by the Agreement in so far as the taxation thereunder is not contrary

to the Agreement. The exchange of information is not restricted by Article 1.

Any information received by a Contracting State shall be treated as secret in

the same manner as information obtained under the domestic law of that State

and shall be disclosed only to persons or authorities (including courts and

administrative bodies) concerned with the assessment or collection of, the

enforcement or prosecution in respect of, or the determination of appeals in

relation to, the taxes covered by the Agreement. Such persons or authorities

shall use the information only for such purposes. They may disclose the

information in public court proceedings or in judicial decisions.2. 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 the administrative

practice of that or of the other Contracting State;b. to supply information

which is 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

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 (ordre public).Article

26ASSISTANCE

IN RECOVERY1. The Contracting

States shall, to the extent permitted by their respective domestic law, lend

assistance to each other in order to recover the taxes referred to in Article 2

as well as interest and penalties with regard to such taxes, provided that

reasonable steps to recover such taxes have been taken by the Contracting State

requesting such assistance.2. Claims which are the

subject of requests for assistance shall not have priority over taxes owing in

the Contracting State rendering assistance and the provisions of paragraph 1 of

Article 25 shall also apply to any information which, by virtue of this

article, is supplied to the competent authority of a Contracting State.3. The competent

authorities of the Contracting States shall by mutual Agreement settle the mode

of application of the provisions of this article.Article

27MEMBERS

OF DIPLOMATIC MISSIONS AND CONSULAR POSTSNothing

in this Agreement shall affect the fiscal privileges of members of diplomatic

missions or consular posts under the general rules of international law or

under the provisions of special agreements.Article

28ENTRY

INTO FORCE1. Each of the Contracting

States shall notify to the other the completion of the procedures required by

its law for the bringing into force of this Agreement. The Agreement shall

enter into force on the date of receipt of the later of these notifications.2. The provisions of the

agreement shall apply:a. In India:i.

in

respect of taxes withheld at source, for amounts paid or credited in the fiscal

year beginning in the calendar year next following that in which the Agreement

enters into force; andii.

in

respect of other taxes, for any fiscal year beginning in the calendar year next

following that in which the Agreement enters into force;a.b. In South Africa,In

respect of fiscal years beginning on or after the first day of January next

following the date upon which the Agreement enters into force.Article

29TERMINATION1. This agreement shall

remain in force indefinitely but either of the Contracting States may terminate

the Agreement through the diplomatic channel, by giving to the other

Contracting State written notice of termination not later than 30th June of any

calendar year starting five years after the year in which the Agreement entered

into force.2. In such event the

agreement shall cease to apply:a. In India;i.

in

respect of taxes withheld at source, for amounts paid or credited in the fiscal

year beginning in the calendar year next following that in which such notice is

given; andii.

in

respect of other taxes, for any fiscal year beginning in the calendar year next

following that in which such notice is given;a.b. In South Africa,In

respect of fiscal years beginning after the end of the calendar year in which

such notice is given.In

witness whereof the undersigned, being duly authorised thereto, have signed

this agreement.Done

at New Delhi in duplicate, this fourth day of December, 1996, in the English

and Hindi languages, both texts being equally authentic. In case of divergence

in interpretation, the English text shall prevail.(Sd.)

P. Chidambaram, (Sd.) Alec Erwin,The

Minister of Finance. The Minister of Trade and Industry.For

the Government of the Republic of IndiaFor

the Government of the Republic of South Africa.PROTOCOLAt

the signing of the Agreement concluded today between the Government of the

Republic of India and the Government of the Republic of South Africa for the

avoidance of double taxation and the prevention of fiscal evasion with respect

to taxes on income, the undersigned have agreed that the following provisions

shall form an integral part of the said Agreement:1.

With

reference to any provision of the Agreement in terms of which income derived by

a resident of a Contracting State may be taxed in the other Contracting State,

it is understood that such income may, subject to the provisions of Article 22,

also be taxed in the first-mentioned