Tanzania - Legal Draft

Double Taxation

Avoidance AgreementAGREEMENT BETWEEN THE

GOVERNMENT OF THE REPUBLIC OF INDIA AND THE GOVERNMENT OF THE UNITED REPUBLIC

OF TANZANIA FOR THE AVOIDANCE DOUBLE TAXATION AND THE PREVENTION OF FISCAL

EVASION WITH RESPECT TO TAXES ON INCOMENotification

No. G.S.R. 559(E) dtd. 16-10-1981Whereas

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

Government of the United Republic of Tanzania for the avoidance of double

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

has been ratified and the instruments of ratification exchanged, as required by

Article 30 of the said Agreement: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 (Profit) Surtax Act,

1964 (7 of 1964) 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

UNITED REPUBLIC OF TANZANIA FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE

PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOMEThe

Government of the Republic of India and the Government of the United Republic

of Tanzania.Desiring

to conclude in Agreement for the avoidance of double taxation and the

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

agreed as follows:CHAPTER

ISCOPE

OF THE AGREEMENTArticle

1Personal

ScopeThis

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

Contracting States.Article

2Taxes

Covered1. The taxes to which

this Agreement shall apply are:a. In the case of India:1. the income-tax

including any surcharge thereon imposed under the Income-Tax Act, 1961 (43 of

1961);2. the surtax imposed

under the Companies (Profits) Surtax Act, 1964 (7 of 1964); (herein after

referred to as " Indian Tax ").a.b. In the case of

Tanzania;The

income-tax and any other tax deemed to be an income-tax under the Income-Tax

Act, 1973 (hereinafter referred to as " Tanzanian Tax ").1.2. The Agreement 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 Agreement

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 to each

other any significant changes which have been made in their respective taxation

laws which are the subject of this Agreement and furnish copies of relevant

enactments and regulations.CHAPTER

IIDEFINITIONSArticle

3General

Definitions1. In this Agreement,

unless the context otherwise requires:a. The term 'India'

means the territory of India and includes the territorial sea and airspace

above it as well as any other maritime zone referred to in the Territorial

Waters, Continental Shelf Exclusive Economic Zone and other Maritime Zones Act,

1976 (Act No. 80 of 1976), in which India has certain rights and to the extent

these rights can be exercised therein as if such maritime zone is a part of the

territory of India;b. The term "

Tanzania " means the United Republic of Tanzania, including any area

outside the territorial waters of Tanzania which, in accordance with

international law, has been or may be designated, under the laws of Tanzania

concerning the Continental Shelf, as an area over which Tanzania may exercise

sovereign rights with respect to the exploration for and exploitation of

natural resources;c. the terms " a

Contracting State " and " the other Contracting State " mean

India or Tanzania, as the context requires;d. the terms " tax

" means Indian tax or Tanzanian 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;e. the term "

person " includes individual companies and all other entitles which are

treated as taxable units under the taxation laws in force in the respective

Contracting States;f. the term "

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

company under the taxation laws in force in the respective Contracting States;g. 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;h. 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

Tanzania, the Minister responsible for Finance or his authorised

representative;i. the term "

nationals " means:1. all individuals

possessing the nationality of a Contracting State;2. all legal persons,

partnerships and associations deriving their status as such from the law in

force in a Contracting State.1.2. In the application of

the provisions of this Agreement 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 Agreement.Article

4Fiscal

Domicile1. For the purpose of

this Agreement, the term " resident of a Contracting State " means

any person who, under the law of that State, is liable to taxation therein by

reason of his domicile, residence, place of management or any other criterion

of similar nature.2. Where by reason of

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

States, then his residential status for the purpose of this Agreement shall be

determined in accordance with the followings rules:a. He shall be deemed to

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

to him. If he has a permanent home available to him in both Contracting States,

he shall be deemed to be a resident of the Contracting State with which his

personal and economic relations are closer (hereinafter referred to as his

" centre of vital interests ");b. If the Contracting

State in which he has his centre of vital interests cannot be determined, or if

he does not have a permanent home available to him in either Contracting State,

he shall be deemed to be a resident of the Contracting State in which he has an

habitual abode;c. If he has an habitual

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

be a resident of the Contracting State of which he is a national;d. If he is a national

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

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

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

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

Contracting State in which its place of effective management is situated.Article

5Permanent

Establishment1. For the purpose of

this Agreement, 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. in 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 continue for a

period of more than six months.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 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 advertising, for the supply

of information or for scientific research being activities solely of a

prepartory 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 5 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; orii.

he

habitually maintains in the first-mentioned Contracting State a stock of goods

or merchandise belonging to that enterprise from which he regularly fulfills

orders on behalf of the enterprise.1.2.3.4.5. 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.6. 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.7. 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 artists and musicians) or atheletes 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

IIITAXATION

OF INCOMEArticle

6Income

from Immovable Property1. 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, 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 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

7Business

Profits1. The profits of an

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

State unless the enterprise carries on business in the other Contracting State

through a permanent establishment situated therein. If the enterprise carries

on business as aforesaid, the profits of the enterprise may be taxed in the

other Contracting State but only so much of them as is attributable to that

permanent establishment.2. If an enterprise of a

Contracting State, which has a permanent establishment in the other Contracting

State, sells goods or merchandise of the same or similar kind as those sold by

the permanent establishment or renders services of the same or similar kind as

those rendered by the permanent establishment, the profits of such activities

may be attributed to the permanent establishment unless the enterprise proves

that such sales or services are not attributable to the activity of the

permanent establishment.3. Where an enterprise,

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

through a permanent establishment situated therein, there shall in each

Contracting State be attributed to 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. In any case, where the correct amount of profits

attributable to a permanent establishment is incapable of determination or the

ascertainment thereof persents exceptional difficulties, the profits

attributable to the permanent establishment may be estimated on a reasonable

basis.4. In so far is it has

been customary in a Contracting State to determine the profits to be attributed

to a permanent establishment on the basis of an apportionment of the total

profits of the enterprise to its various parts, nothing in paragraph 3 shall

preclude that Contracting State from determining the profits to be taxed by

such an apportionment as may be customary; the method of appointment adopted

shall, however, be such that the result shall be 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 enterprise.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

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

8Air

Transport1. Profits derived by an

enterprise of a Contracting State from the operation of aircraft in

international traffic 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 purposes of

paragraph 1, interests on funds directly 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 12 shall not apply in

relation to such interest.Article

9Shipping1. Income of an

enterprise of one of the Contracting States derived from the other Contracting

State from the operation of ships in international traffic may be taxed in that

other, Contracting State, but the tax chargeable in that other Contracting

State on such income shall be reduced by an amount equal to 50 per cent of such

tax.2. For the purposes of

paragraph 1 of this Article, income derived from the other Contracting State

from the operation of ships shall mean income from the carriage of passengers,

mail, livestock, or goods shipped in that other Contracting State.3. Paragraph 1 shall not

apply to profits arising as a result of coastal traffic.Article

10Associated

EnterprisesWherea. 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 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

11Dividends1. Dividends paid by a

company which is 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 law of that State, but

the tax so charged shall not exceed:a. 10 per cent of the

gross amount of the dividends if the recipient is a company which owns at least

10 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, 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

professional 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 of fixed base. In such a case the provisions of Article

7 or Article 16, 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 to persons who are not resident 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 consists wholly or

partly of profits or income arising in that other State.Article

12Interest1. 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 12

1/2 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 Bank 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 government institution to which this paragraph shall apply.1.2.3.4. 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, 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 a case the provisions of Article 7 or Article 16, as the case may

be, 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 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. 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 Agreement.Article

13Royalties1. 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 20

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,

aristic 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, carries on business in the other Contracting

State in which the royalities arise through a permanent establishment situated

therein, or performs in that other State professional services from a fixed

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

royalties are paid is effectively connected with such permanent establishment

or fixed base. In such a case, the provisions of Article 7 or Article 16, as

the case may be, shall apply.5. Royalties shall be

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

itself, a political sub-division, a local authority or a resident of that

State. Where, however, the person paying the royalties, whether he is a

resident of a Contracting State or not, has in a Contracting State a permanent

establishment in connection with which the liability to pay the royalties was

incurred, and such royalties are borne by such permanent establishment, then

such royalties shall be deemed to arise in the Contracting State in which the

permanent establishment is situated.6. Where, owing to a

special relationship between the payer and the recipient or between both of

them and some other person, the amount of royalties paid, having regard to the

use, right or information for which they are paid, exceeds the amount which

would have been agreed upon by the payer and the recipient in the absence of

such relationship, the provisions of this Article shall apply only to the last

mentioned amount. In that case, the excess part of the payments shall remain

taxable according to the law of each Contracting State, due regard being had to

the other provision of this Agreement.Article

14Capital

Gains1. 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 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 professional services, including such gains from

the alienation of such 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 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

15Management

Fees1. Management or

professional 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

management or professional fees may 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 twenty per cent of the gross amount of the management or

professional fees.3. The term "

management or professional 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 if the recipient of the management or

professional fees, being a resident of a Contracting State, carries on business

in the other Contracting State in which the management or professional fees

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

other State professional services from a fixed base situated therein, and the

right of property in respect of which the management or professional fees are

paid, is effectively connected with such permanent establishment or fixed base.

In such a case, the provisions of article 7 or article 16, as the case may be,

shall apply.5. Management or

professional fees 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

management or professional 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 management, or professional fees was incurred and such

management or professional fees are borne by such permanent establishment, then

such management or professional 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 the payer and the recipient or between both of

them and some other person, the amount of the management or professional 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 Agreement.Article

16Independent

Personal Services1. Subject to the

provisions of Article 15, 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 States for the purpose 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; orb. 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 the relevant year of

income 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.1.2. The term "

professional services " includes independent scientific, literary,

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

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

accountants.Article

17Dependent

personal services1. Subject to the

provisions of Articles 18, 19, 20, 21, 22 and 23, 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 there from 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 the relevant year of income, 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 fixed base which the employer has in

the other State.1.2.3. Notwithstanding the

preceding provisions of this Article, remuneration in respect of an employment

exercised aboard a ship or aircraft in international traffic, may be taxed in

the Contracting State in which the place of effective management of the enterprise

is situated.Article

18Directors'

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 Contracting State.Article

19Artists

and Athletes1.

Notwithstanding

the provisions of Articles 16 and 17, 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 directly or indirectly

supported, wholly or substantially, 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

sub-division, or a local or statutory authority of either Contracting State.Article

20Government

Functions1. Remuneration (not

being a pension) paid by the Government of a Contracting State to any

individual who is a citizen of that State in respect of services rendered in

the discharge of governmental functions in the other Contracting State shall be

taxable only in the first-mentioned Contracting State.2. Any pension paid by

the Government of one of the Contracting States to any individual may be taxed

in that Contracting State.3. The provisions of

paragraphs 1 and 2 shall not apply to remuneration and pensions 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 or statutory authority of either Contracting State and in

particular the Reserve Bank of India and the Bank of Tanzania.Article

21Non-Government

Pensions and Annuities1. Any pension (other

than a pension referred to in Article 20) 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

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

22Students

and Apprentices1. A student or business

apprentice 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 Contracting State solely for the purpose of his education or

training, shall be exempt from tax in the first-mentioned Contracting State on:a. payments made to him

by persons residing outside that first-mentioned Contracting State for the

purpose of his maintenance, education or training; andb. remuneration from

employment in that first-mentioned Contracting State, in an amount not in

excess of Rs. 10,000 of its equivalent in Tanzania currency during any "

previous year " or the " year of income ", as the case may be,

provided that such employment is directly related to his studies or is

undertaken for the purpose of his maintenance.1.2. The benefits of this

Article shall extend only for such period of time as may be reasonably or

customarily required to complete the education or training undertaken, but in

no event shall any individual have the benefits of this Article for more than

three consecutive years from the date of his first arrival in the

first-mentioned Contracting State.Article

23Professors

and Teachers1. A professor or

teacher who visits a Contracting State for the purpose of teaching or engaging

in research, or both, at a university, or other approved educational

institution in that Contracting State and who is, or was immediately before

such visits, a resident of the other Contracting State, shall be exempt from

tax in the first-mentioned Contracting State on any remuneration for such

teaching or research for a period not exceeding 24 months from the date of his

arrival in that Contracting 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 and Article 22, an individual shall be deemed to be a resident of

a Contracting State if he is resident:i.

in

the case of India, in the " previous years ", andii.

in

the case of Tanzania, in the " year of income " in which he visits

the other Contracting State or in the immediately preceding " previous

year " or " year of income ", as the case may be.1.2.3.4. For the purposes of

paragraph 1, " approved educational institution " means an

institution which has been approved in this regard by the competent authority

of the concerned Contracting State.Article

24Income

not Expressly MentionedItems

of income of a resident of a Contracting State are not expressly mentioned in

the foregoing Articles of this Agreement in respect of which he is subject to

tax in that State shall be taxable only in that State.CHAPTER

IVMETHOD

FOR ELIMINATION OF DOUBLE TAXATIONArticle

25Avoidance

for double Taxation1. 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 provisons to the contrary are

made in this Agreement.2.a. The amount of

Tanzanian tax payable, under the laws of Tanzania and in accordance with the

provisions of this Agreement, whether directly or by deduction, by a resident

of India, in respect of income from sources within Tanzania which has been

subjected to tax both in India and Tanzania, 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

Tanzania; 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 purposes of

the credit referred to in sub-paragraph (a) above, the term " Tanzania tax

payable " shall be deemed to include any amount which would have been

payable as Tanzania tax for any year but for-i.

any

exemption from tax on interest granted under paragraph 1 of the First Schedule,

Part II of the Income-Tax Act, 1973; orii.

any

investment deduction granted under paragraphs 24, 25 and 26 of the Second

Schedule to the Income-Tax Act, 1973; oriii.

the

lower corporation rate of income-tax provided by paragraph 4(b) of the Third

Schedule to the Income-Tax Act, 1973; oriv.

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 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 Agreement, whether directly or by deduction, by a resident of Tanzania in

respect of income from sources within India which has been subjected to tax

both in India and Tanzania shall be allowed as a credit against Tanzania tax

payable in respect of such income provided that such credit shall not exceed

the Tanzanian tax (as compared before allowing any such credit), which is

appropriate to the income derived from sources within India;b. For the purposes of

the credit referred to in sub-paragraph (a) above, the term " Indian tax

payable " shall be deemed to include any amount by which Indian tax has

been reduced by the special incentive measures set forth in the following

sections of the Income-tax Act, 1961:i.

Section

10(4)-relating to exemption from tax on interest payable to a non-resident on

any security notified by the Government of India;ii.

(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) 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

35CC-relating to the rural development allowance;vii.

Section

54E-relating to capital gains;viii.

Section

80HH-relating to deduction in respect of profits and gains from newly

established industrial undertakings or hotel business in backward areas;ix.

Section

80HHA-relating to deduction in respect of profits and gains from newly

established small scale industrial undertakings in certain 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.

Section

80L-relating to deduction in respect of interest on certain securities,

dividends, etc; andxiii.

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 Agreement, 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

VSPECIAL

PROVISIONSArticle

26Non-Discrimination1. The national 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 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 resident of the other

Contracting State, shall not be subjected in the first-mentioned Contracting

State to any taxation or any requirement connected therewith which is other or

more burdensome than the taxation and connected requirements to which other

similar enterprises of that first-mentioned State are or may be subjected in

the same circumstances.5. In this Article the

term " taxation " means taxes which are the subject of this

Agreement.Article

27Mutual

Agreement Procedure1. 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

Agreement, 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 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 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

Agreement. Any agreement reached shall be implemented notwithstanding any time

limits in the national laws of the Contracting States.3. The competent

authorities of the Contracting States shall endeavour to resolve by mutual

agreement any difficulties or doubts arising as to the interpretation or

application of the 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 each agreement to have an oral

exchange of opinions, such exchange may take place through a Commission consisting

of representatives of the competent authorities of the Contracting States.Article

28Exchange

of Information1. The competent

authorities of the Contracting States shall exchange such information of

document as is necessary for carrying out the provisions of this Agreement or

for the prevention of evasion of taxes which are the subject of this Agreement.

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 Agreement, 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 case or both. 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. (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

29Diplomatic

and Consular ActivitiesNothing

in this Agreement 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

VIFINAL

PROVISIONSArticle

30Entry

into Force1. The present Agreement

shall be ratified by the Contracting States according to their own internal

legislation.2. The instruments of

ratification shall be exchanged at Dar-es-Salam as soon as possible.3. Upon exchange of the

instruments of ratification, the present Agreement shall have effect: -a. in India, in respect

of income arising in any year of account commencing on or after the 1st day of

January following the calendar year in which the instruments are exchanged;b. in Tanzania, in

respect of income arising for any year of income commencing on or after the 1st

day of January following the calendar year in which the instruments of

ratification are exchanged;Article

31TerminationThis

Agreement shall continue in effect indefinitely but either of the Contracting

States may on or before the 30th of June in the sixth or any subsequent

calendar year following the calendar year in which the exchange of instruments

of ratification takes place, give to the other Contracting State notice of

termination and in such event this Agreement shall cease to have effect:a. in India, in respect

of income assessable for any year of assessment commencing on or after the

first day of April in the second calendar year next following the calendar year

in which the notice of termination is given;b. in Tanzania, in

respect of income arising for any year of income commencing on or after the

first day of January in the calendar year next following the calendar year in

which the notice of termination is given.IN

WITNESS WHEREOF

the undersigned, being duly authorised thereto, have signed the present

Agreement.DONE in duplicate at

Dar-es-Salam this Fifth day of September one thousand nine hundred and seventy

nine in English language.(A.

S. Gonsalves) (Ndugu E.I.M. Mtai)For

the Government of IndiaFor

the Government of Tanzania.(Agreement

signed on 5-9-1979 as amended by Government of India's letter No.

DAR/COM/204/3/69 dated 15-2-1980 and the Government of Tanzania's letter No.

TYC/40/19/56 dated 3-7-1980)[F.

No. 501/18/73-FTD]