Zambia - Legal Draft

CONVENTION

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

REPUBLIC OF ZAMBIA FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF

FISCAL EVASION WITH RESPECT TO TAXES ON INCOME(Notification

F. No. 11/11/65-FTD dt. 18-1-1986)G.S.R.

39(E).--- Whereas the Government of the Republic of India and the Government of

the Republic of Zambia have concluded a Convention as set out in the Annexure

hereto, for the avoidance of double taxation and the prevention of fiscal evasion

with respect to taxes on income;And

whereas all the requirements have been completed in India and Zambia as are

necessary to give the said Convention the force of law in India and Zambia

respectively, as required by paragraph 1 of Article 29 of the said Convention;And

whereas the diplomatic notes to this effective have been exchanged between the

said two Governments, as required by paragraph 2 of Article 29 of the said

Convention;Now,

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

Act. 1961 (43 of 1961) and section 24A of the Companies (Profits) Surtax Act,

1964 (7 of 1964), the Central Government hereby directs that all the provisions

of the said Convention shall be given effect to in the Union of India.CONVENTION

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

REPUBLIC OF ZAMBIA FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF

FISCAL EVASION WITH RESPECT TO TAXES ON INCOMECONVENTIONBETWEENTHE

GOVERNMENT OF THE REPUBLIC OF INDIAANDTHE

GOVERNMENT OF THE REPUBLIC OF ZAMBIAFORTHE

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 Republic of

Zambia.Desiring

to conclude a convention for the avoidance of double taxation and the

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

Agreed as follows:CHAPTER

I SCOPE OF CONVENTIONARTICLE

1Personal

ScopeThis

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

Contracting States.Article

2TAXES

COVERED1. The taxes to which

this Convention shall apply are:a. In the case of India:i.

the

income-tax including any surcharge thereon imposed under the Income-tax Act,

1961 (43 of 1961); andii.

the

surtax imposed under the Companies (Profits) Surtax Act. 1964 (7 of 1964);(hereinafter

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

Zambia:i.

the

income-tax;ii.

the

mineral tax; andiii.

the

personal levy(hereinafter

referred to as " Zambian tax ").1.2. The Convention shall

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

either Contracting State after the date of signature of the present Convention

in addition to, or in place of, the taxes referred to in paragraph 1 of this

Article.3. At the end of each

year, the competent authorities of the Contracting States shall notify each

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

taxation laws which are the subject of this Convention, and furnish copies of

relevant enactments and regulations.CHAPTER

IIDEFINITIONSArticle

3GENERAL

DEFINITIONS1. In this Convention,

unless the context otherwise requires:a. the terms " a

Contracting State " and " the other Contracting State " mean

India or Zambia, as the context requires;b. the term " tax

" means Indian tax or Zambian tax, as the context requires, but shall not

include any amount which is payable in respect of any default or omission in

relation to the taxes to which this Convention applies or which represents a penalty

imposed relating to those taxes;c. the term "

person " includes individuals, companies and all other entities which are

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

Contracting States;d. the term "

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

company under the taxation laws in force in the respective Contracting State;e. the term "

enterprise of a Contracting State " and " enterprise of the other

Contracting State " mean, respectively, an enterprise carried on by a

resident of a Contracting State and an enterprise carried on by a resident of

the other Contracting State;f. the term "

competent authority " means in the case of India, the Central Government

in the Ministry of Finance (Department of Revenue); and in the case of Zambia,

the Commissioner of Taxes or his authorised representative;g. the term "

nationals " means:i.

in

respect of India:all

individuals possessing the nationality of India and all legal persons,

partnerships and associations deriving their status from the law in force in

India;i.ii.

in

respect of Zambia:all

individuals possessing the nationality of Zambia and all legal persons,

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

force in Zambia.2.

In the application of the provisions of this Convention by one of the

Contracting States, any term not defined herein shall, unless the context

otherwise requires, have the meaning which it has under the laws in force in

that State relating to the taxes which are the subject of this Convention.Article-4FISCAL

DOMICILE1. For the purposes of

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

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

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

of similar nature.2. Where by reason of

the provisions of paragraph 1, an iidividual is a resident of both Contracting

States, then his residential status for the purposes of this Convention shall

be determined in accordance with the following rules---a. He shall be deemed to

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

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

Contracting States, he shall be deemed to be a resident of the Contracting

State with which his personal and economic relations are closer (hereinafter

referred to as his " centre of vital interest ");b. If the Contracting

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

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

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

habitual abode;c. If he has an habitual

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

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

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

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

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

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

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

5PERMANENT

ESTABLISHMENT1. For the purposes of

this Convention the term " permanent establishment " means a fixed

place of business in which the business of the enterprise is wholly or partly

carried on.2. The term "

permanent establishment " shall include:a. a place of

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

oil field or other place of extraction of natural resources;g. a farm, plantation or

other place where, agricultural, forestry plantation or related activities are

carried on;h. a building site or

construction or assembly project or supervisory activities in connection

therewith where such site, project or supervisory activity continues for a

period of more than 9 months;i. a warehouse or other

facilities for the maintenance of a stock of goods or merchandise belonging to

the enterprise from which orders are filled.1.2.3. The term "

permanent establishment " shall not be deemed to include:a. the use of facilities

solely for the purpose of storage or display of goods or merchandise belonging

to the enterprise;b. the maintenance of a

stock of goods or merchandise belonging to the enterprise solely for the

purpose of storage or display;c. the maintenance of a

stock of goods or merchandise belonging to the enterprise solely for the

purpose of processing by another enterprise;d. the maintenance of a

fixed place of business solely for he purpose of purchasing goods or

merchandise, for collecting information, for the enterprise;e. the maintenance of a

fixed place of business solely for the purpose of advertising, for the supply

of information or for scientific research, being activities solely of a

preparatory or auxiliary character, in the trade or business of the enterprise.1.2.3.4. A person acting in a

Contracting State for or on behalf of an enterprise of the other Contracting

State----other than an agent of an independent status to whom the provisions of

paragraph 6 apply----shall be deemed to be a permanent establishment of that

enterprise in the first-mentioned State if:i.

he

has, and habitually exercises in that State, an authority to conclude contracts

for or on behalf of the enterprise, unless his activities are limited to the

purchase of goods or merchandise for the enterprise; orii.

he

has no such authority but the habitually maintains in the first-mentioned

Contracting State a stock of goods or merchandise belonging to that enterprise

from which he regularly fulfils orders on behalf of the enterprise.1.2.3.4.5. An insurance

enteprise of a Contracting State shall, except in regard to re-insurance, be

deemed to have a permanent establishment in the other Contracting State if it

collects premiums in the territory of that other State or insures risks

situated therein through an employee or through a representative who is not an

agent of independent status within the meaning of paragraph 6.6. An enterprise of a

Contracting State shall not be deemed to have a permanent establishment in the

other Contracting State merely because it carries on business in that other

State through a broker, general commission agent or any other agent of an

independent status, where such persons are acting in the ordinary course of

their business. However, when the activities of such an agent are devoted

wholly or almost wholly on behalf of that enterprise, he would not be

considered an agent of an independent status within the meaning of this

paragraph.7. The fact that a

company, which is a resident of a Contracting State controls or is controlled

by a company which is a resident of the other Contracting State, or which

carries on business in that other Contracting State (whether through a

permanent establishment or otherwise), shall not, of itself, constitute for

either company a permanent establishment of the other.8. An enterprise of a

Contracting State shall be deemed to have a permanent establishment in the

other Contracting State if it carries on a business which consists of providing

the services of public entertainers (such as theatre, motion picture, radio or

television artistes and musicians) or athletes in that other Contracting State

unless the enterprise is directly or indirectly supported wholly or

substantially, from the public funds of the Government of the first-mentioned

Contracting State in connection with the provision of such services. CHAPTER

III TAXATION OF 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, rights to which the provisions of

general law respecting landed property apply, usufruct of immovable property

and rights to variable or fixed payments as consideration for the working of,

or the right to work, mineral deposits, oilwells, quarries and other places of

extraction of natural resources. Ships, boats and aircraft shall not be

regarded as immovable property.3. The provisions of

paragraph 1 shall apply to income derived from the direct use, letting, or use

in any other form of immovable property.4. The provisions of

paragraphs 1 and 3 shall also apply to the income from immovable property of an

enterprise and to income from immovable property used for the performance of

professional services.Article

7BUSINESS

PROFITS1. The profits of an

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

State unless the enterprise carried on business in the other contracting State

through a permanent establishment situated therein. If the enterprise carries

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

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

permanent establishment.2. If an enterprise of a

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

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

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

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

may be attributed to the permanent establishment unless the enterprise proves

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

permanent establishment.3. Where an enterprise

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

through a permanent establishment situated therein, there shall in each

Contracting State be attributed to the permanent establishment the profits

which it might be expected to make if it were a distinct and separate

enterprise engaged in the same or similar activities under the same or similar

conditions and dealing wholly independently with the enterprise of which it is

a permanent establishment. In any case, where the correct amount of profits

attributable to a permanent establishment is incapable of determination or the

ascertainment thereof presents exceptional difficulties, the profits

attributable to the permanent establishment may be estimated on a reasonable

basis.4. In so far as it has

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

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

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

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

such an apportionment as may be customary, the method of apportionment adopted

shall, however, be such that the result shall be in accordance with the

principles laid down in this Article.5. In the determination

of the profits of a permanent establishment, there shall be allowed as

deductions expenses which are incurred for the purposes of the business of the

permanent establishment including executive and general administrative expenses

so incurred, whether in the State in which the permanent establishment is

situated or elsewhere, but this does not include any expenses which, under the

law of that State, would not be allowed to be deducted by an enterprise of that

State.6. No profits shall be

attributed to a permanent establishment by reason of the mere purchase by that

permanent establishment of goods or merchandise for the purpose of export to

the enterprise of which it is the permanent establishment.7. For the purposes of

the preceding paragraphs, the profits to be attributed to the permanent

establishment shall be determined by the same method year by year unless there

is good and sufficient reason to the contrary.8. The term "

business profits " means income, derived by an enterprise from the

carrying on of trade or business; but does not include income in the form of

rents, royalties (including rents or royalties in respect of cinematographic

films or video tapes for television), fees for technical services, management

charges, or remuneration or fees for providing services of technical or other

personnel, interest, dividends, capital gains, remuneration for labour or

personal (including professional) services or income from the operation of

ships or aircraft.Article

8AIR

TRANSPORT1. Profits dervied by an

enterprise of a Contracting State from the operation of aircraft in international

traffic shall be taxable only in the Contracting State in which the place of

effective management of the enterprise is situated.2. The provisions of

paragraph 1 of this Article shall also apply to a share of profits from the

operation of aircraft in international traffic derived by an enterprise of a

Contracting State through participation in a pooled service, in a joint air

transport operation or in an international operating agency.3. For the purpose of

paragraph 1, interest on funds connected with the operation of aircraft in

international traffic shall be regarded as income from the operation of such

aircraft, and the provisions of Article 11 shall not apply in relation to such

interest.Article

9ASSOCIATED

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, but for

those conditions, have accrued to one of the enterprises, but, by reason of

those conditions, have not so accrued, may be included in the profits of that

enterprise and taxed accordingly.Article

10DIVIDENDS1. Dividends paid, by a

company which is resident of a resident of the other Contracting State may be

taxed in that other Contracting State.2. However, such

dividends may also be taxed in the Contracting State of which the company

paying the dividends is a resident, and according to the law of that State, but

the tax so charged shall not exceed:a. 5 per cent of the

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

25 per cent of the shares of the company paying the dividends during the period

of six months immediately preceding the date of payment of the dividends;b. 15 per cent of the

gross amount of the dividends in all other cases.1.2.3. The term "

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

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

other corporate rights assimilated to income from shares or any other item which

is deemed to be a dividend or distribution of a company by the taxation law of

the Contracting State of which the company making the distribution is a

resident.4. The provisions of

paragraphs 1 and 2 shall not apply if the recipient of the dividends, being a

resident of a Contracting State, has in the other Contracting State, of which

the company paying the dividends is a resident, a permanent establishment with

which the holding by virtue of which the dividends are paid is effectively

connected. In such a case, the provisions of Article 7 shall apply.5. Where a company which

is a resident of a Contracting State derives profits or income from the other

Contracting State, that other State may not impose any tax on the dividends

paid by the company to persons who are not residents of that other State, or

subject the company's undistributed profits to a tax on undistributed profits,

even if the dividends paid or the undistributed profits consist wholly or

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

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 law of that State, but the tax so charged shall not exceed 10

per cent of the gross amount of the interest.3. Notwithstanding the

provisions of paragraph 2 interest arising in a Contracting State and paid to

the Government of the other Contracting State or local Authority thereof, the

Central Bank of that other Contracting State, or any agency wholly owned by

that Government or local authority shall be exempt from tax of the first

mentioned Contracting State. The competent authorities of the Contracting

States may determine by mutual agreement any other governmental institution to

which this paragraph shall apply.4. The term "

interest " as used in this Article means income from Government

securities, bonds or debentures, whether or not secured by mortgage and whether

or not carrying a right to participate in profits, and other debt-claims of

every kind as well as all other income assimilated to income from money lent by

the taxation law of the Contracting State in which the income arises.5. The provisions of

paragraphs 1 and 2 shall not apply if the recipient of the interest, being a

resident of a Contracting State, has in the other Contracting State in which

the interest arises a permanent establishment with which the debt-claim from

which the interest arises is effectively connected. In such a case the

provisions of Article 7 shall apply.6. Interest shall be

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

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

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

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

establishment in connection with which the indebtedness on which the interest

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

establishment, then such interest shall be deemed to arise in the Contracting

State in which the permanent establishment is situated.7. Where, owing to a

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

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

the debt-claim for which it is paid, exceeds the amount which would have been

agreed upon by the payer and the recipient in the absence of such relationship,

the provisions of this Article shall apply only to the last mentioned amount.

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

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

of this Convention.Article

12ROYALTIES1. Royalties arising in

a Contracting State and paid to a resident of the other Contracting State may

be taxed in that other State.2. However, such

royalties may also be taxed in the Contracting State in which they arise, and

according to the law of that State, but the tax so charged shall not exceed 10

per cent of the gross amount of the royalties.3. The term "

royalties " as used in this Article means payments of any kind received as

a consideration for the use of, or the right to use, any copyright of literary,

artistic or scientific work (including cinematograph films and films or tapes

for radio or television broadcasting), any patent, trade mark, design or model,

plan, secret formula or process, or for the use of, or the right to use,

industrial, commercial or scientific equipment, or for information concerning

industrial commercial or scientific experience.4. The provisions of

paragraphs 1 and 2 shall not apply if the recipient of the royalties, being a

resident of a Contracting State, has in the other Contracting State in which

the royalties arises a permanent establishment with which the right or property

giving rise to the royalties is electively connected. In such a case, the

provisions of Article 7 shall apply.5. Royalties shall be

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

the other provisions of this Convention.Article

13CAPITAL

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 business property of a permanent

establishment which an enterprise of a Contracting State has in the other

Contracting State or of movable property pertaining to a fixed base available

to a resident of a Contracting State in the other Contracting State for the

purpose of performing professional services, including such gains from the

alienation of such a permanent establishment (alone or together with the whole

enterprise) or of such a fixed base, may be taxed in that other State.3. Notwithstanding the

provisions of paragraph 2, gains derived by an enterprise of a Contracting

State from the alienation of ships and aircraft which it operates in

international traffic and movable property pertaining to the operation of such

ships and aircraft shall be taxable only in that State.4. Gains derived by a

resident of a Contracting State from the alienation of any property other than

those mentioned in paragraphs 1, 2 and 3 shall be taxable only in that State.5. The term "

alienation " means the sale, exchange, transfer, or relinquishment of the property

or the extinguishment of any rights therein or the compulsory acquisition

thereof under any law in force in the respective Contracting States.Article

14MANAGEMENT

AND CONSULTANCY FEES1. Management and

consultancy fees arising in a Contracting State and paid to a resident of the

other Contracting State may be taxed in that other State.2. However such fees may

be taxed in the Contracting State in which they arise and according to the law

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

amount of the fees.3. The term "

management and consultancy fees " as used in this Article means payments

of any kind to any person, other than to an employee of the person making the

payments, in consideration for any services of a managerial technical or

consultancy nature.4. The provisions of

paragraphs 1 and 2 shall not apply it the recipient of the management and

consultancy fees, being a resident of a Contracting State, has in the other

Contracting State in which the fees arise a permanent establishment with which

the services giving rise to the fees are effectively connected. In such a case,

the provisions of Article 7 shall apply.5. Management and

consultancy fees shall be deemed to rise in a Contracting State when the payer

is that Contracting State itself, a political sub-division, a local authority

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

whether he is a resident of that, State or not. has in a Contracting State a

permanent establishment in connection with which the liability to pay the fees

was incurred and such fees are borne by such permanent establishment then such

fees shall be deemed to arise in the Contracting State in which the permanent

establishment is situated.6. Where, owing to a

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

and some other person, the amount of the management and consultancy fees paid,

having regard to the services for which it is paid, exceeds the amount which

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

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

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

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

the other provisions of this Convention.Article

15INDEPENDENT

PERSONAL SERVICES1. Subject to the

provisions of Article 16, income derived by a resident of a Contracting State

in respect of professional services or other independent activities of a

similar character shall be taxable only in that State unless:a. he has a fixed base

regularly available to him in the other Contracting State for the purposes of

performing his activities in which case so much of the income may be, taxed in

that other State as is attributable to that fixed base; 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 relevant " previous

year " in the case of India and in the relevant " charge year "

in the case of Zambia and in which case so much of the income may be taxed in

that other State as is attributable to the activities performed in that other

State.c. his remuneration for

his services or activities in the other Contracting State derived from

residents of that Contracting State exceeds K 10,000 or its equivalent in

Indian currency in the taxable year (not including travel expenses directly

related to the services or activities in the other Contracting State),

notwithstanding that his stay in that State is for a period or periods

amounting to less than 183 days during the taxable year.1.2. The term "

professional services " includes independant scientific literary,

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

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

accountants.Article

16DEPENDENT

PERSONAL SERVICES1. Subject to the

provisions of Articles 17, 18, 19, 20, 21 and 22, salaries, wages and other

similar remuneration derived by a resident of a Contracting State in respect of

an employment shall be taxable only in that State unless the employment is

exercised in the other Contracting State. If the employment is so exercised such

remuneration as is derived therefrom may be taxed in that other Contracting

State.2. Notwithstanding the

provisions of paragraph 1, remuneration derived by a resident of a Contracting

State in respect of an employment exercised in the other Contracting State

shall be taxable only in the first-mentioned Contracting State if:a. the recipient is

present in the other Contracting State for a period not exceeding in the

aggregate 183 days in the fiscal year concerned; andb. the remuneration is

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

Contracting State; andc. the remuneration is

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

in the other Contracting State.1.2.3. Notwithstanding the

provisions of paragraphs 1 and 2, remuneration in respect of employment

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

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

enterprise is situated.Article

17DIRECTORS'

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

18ARTISTES

AND ATHLETES1.

Notwithstanding

the provisions of Articles 15 and 16, income derived by public entertainers

(such as theatre, motion picture, radio or television artistes and musicians)

or athletes, from their personal activities as such may be taxed in the

Contracting State in which these activities are exercised:Provided

that such income shall not be taxed in the said Contracting State if the visit

of the public entertainers or athletes to that State is supported, wholly or

substantialy, from the public funds of the Government of the other Contracting

State.1.2. For the purposes of

this Article, the term,Government' includes a State Government, a political

Government, a political sub-division, or a local or statutory authority of

either Contracting State.Article

19GOVERNMENTAL

FUNCTIONS1. Remuneration paid by

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

local authority thereof, to a citizen of that State in respect of an employment

shall be taxable only in that State.2. Any person paid by or

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

local authority thereof, to any individual may be taxed in that Contracting

State.3. The provisions of

paragraph 1 of this Article shall not apply to payments in respect of services

rendered in connection with any business carried on by the Government of either

of the Contracting States for the purposes of profit.4. For the purposes of

this Article, the term " Government " shall include any State

Government or local authority of either Contracting State and in particular the

Reserve Bank of India and the Bank of Zambia.Article

20NON-GOVERNMENT

PENSIONS AND ANNUITIES1. Any pension (other

than a pension referred to in Article 19) or annuity derived by a resident of a

Contracting State from sources within the other Contracting State may be taxed

only in the first-mentioned Contracting State.2. The term "

pension " means a periodic payment made in consideration of services

rendered in the past or by way of compensation for injuries received in the

course of performance of services.3. The term "

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

the life or during a specified or ascertainable period of time, under an

obligation to make the payments in return for adequate and full consideration

in money or money's worth.Article

21RESEARCH

PERSONNEL, STUDENTS AND BUSINESS APPRENTICES1.a. An individual who is

a resident of one of the Contracting States at the time he becomes temporarily

present in the other Contracting State for the primary purpose of---i.

studying

at a University or other recognised educational institution in that other

Contracting State, orii.

securing

training required to qualify him to practise a profession or professional

speciality, oriii.

studying

or doing research as a recipient of a grant allowance, or award from a Governmental

religious, charitable, scientific, literary, or educational organisation,shall

be exempt from tax by that other Contracting State with respect to amounts

described in sub-paragraph (b) for a period not exceeding 5 taxable years from

the date of his arrival in that other Contracting State.a.b. The amounts referred

to in sub-paragraph (a) are:i.

gifts

abroad for the purpose of his maintenance, educational, study, research, or

training;ii.

the

grant, allowance, or award: andiii.

income

from personal services performed in that other Contracting State in an amount

not in excess of 1,500 Zambian Kwacha or its equivalent Indian Rupees for any

taxable year.1.2. An individual who is

a resident of one of the Contracting States and who is temporarily present in

that other Contracting State as on employee of, or under contract with, a

resident of the first-mentioned Contracting State, for the primary purpose

of---a. acquiring technical,

professional, or business experience from a person other than that resident of

the first-mentioned Contracting State or other than a person, related to such

resident, orb. studying at a

University or other recognised educational institution in that other

Contracting State, shall by exempt from tax in that other Contracting state for

a period not exceeding 1 year with respect to his income from personal services

in an aggregate amount not in excess of 2,500 Zambian Kwacha or its equivalent

Indian Rupees.1.2.3. An individual who is

a resident of one of the Contracting States and who is temporarily present in

that other Contracting State for a period not exceeding 1 year, as a

participant in a programme sponsored by the Government of that other

Contracting State, for the primary purpose of training, research, or study,

shall be exempt from tax in that other Contracting State with respect to his

income from personal services in respect of such training, research, or study

performed in that other Contracting State in an aggregate amount not in excess

of 3,500 Zambian Kwacha or its equivalent Indian Rupees.Article

22PROFESSORS

AND TEACHERS1. A professor or

teacher who is, or was immediately before visiting a Contracting State, a

resident of the other Contracting State and who is present in the

first-mentioned State for a period not exceeding two years for the purpose of

carrying out advanced study or research or for teaching at a university

college, school or other educational institution shall be exempt from tax in the

first-mentioned State in respect of any remuneration which he receives for such

work, provided that such remuneration is derived by him from outside that

State.2. This Article shall

not apply to income from research if such research is undertaken primarily for

the private benefit of a specific person or persons.3. For the purposes of

this Article 21 an individual shall be deemed to be a resident of a Contracting

State if he is resident in that Contracting State in the " previous year

" or the " charge year ", as the case may be, in which he visits

the other Contracting State or in the immediately preceding " previous

year " or the " charge year ".Article

23INCOME

NOT EXPRESSLY MENTIONEDItems

of income of a resident of a Contracting State, whereever arising, not dealt

with in the foregoing Articles of this Convention shall be taxable only in that

State except that if such income arises in the other Contracting State, it may

also be taxed in that other State.CHAPTER

IVMETHOD

FOR ELIMINATION OF DOUBLE TAXATIONArticle

24AVOIDANCE

OF 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 provisions to the contrary

are made in this Convention.2.a. The amount of Zambian

tax payable, under the laws of Zambia and in accordance with the provisions of

this Convention, whether directly or by deduction by a resident of India, in

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

both in India and Zambia, shall be allowed as a credit against the Indian tax

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

Indian tax (as computed before allowing any such credit), which is appropriate

to the income derived from sources within Zambia; so, however, that where such

resident is a company by which surtax is payable in India, the credit aforesaid

shall be allowed in the first instance against income-tax payable by the

company in India, and as to the balance if any against surtax payable by it in

India;b. For the purpose of

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

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

payable as Zambian tax for any year but for any provisions granting an

exemption or reduction of tax which the competent authorities of the

Contracting States agree to be for the purpose of economic development.1.2.3.a. The amount of Indian

tax payable, under the laws of India and in accordance with the provisions of

this Convention, whether directly or by deduction, by a resident of Zambia in

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

in India and Zambia shall be allowed as a credit against Zambian tax payable in

respect of such income provided that such credit shall not exceed the Zambian

tax (as computed before allowing my such credit), which is appropriate to the

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

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

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

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

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

Section

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

on any security notified by the Government of India.ii.

Section

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

on moneys in a Non-resident (External) Account;iii.

Section

10(15) (iv)----relating to exemption from tax of (a) a non-resident in respect

of moneys lent by him to the Government or local authority in India; (b) an

approved foreign financial institution in respect of interest on moneys lent by

it to an industrial undertaking in India under a loan agreement; and (c) a

non-resident in respect of interest on moneys lent or credit facilities allowed

by him to an industrial undertaking in India for the purchase outside India of

raw materials or capital plant and machinery or for industrial development in

India;iv.

Section

32A----relating to investment allowance in respect of ships, aircrafts,

machinery or plant;v.

Section

33A----relating to development allowance for planting or replanting of tea

bushes;vi.

Section

35C----relating to the agricultural development allowances;vii.

Section

54E----relating to capital gains;viii.

Section

80CC----relating to deduction in respect of investment in certain new shares.ix.

Section

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

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

Section

80J----relating to deduction in respect of profits and gains from eligible

industrial undertakings or ships or hotels;xi.

Section

80K----relating to deduction in respect of dividends attributable to profits

and gains from eligible industrial undertakings or ships or hotels;xii.

any

other provisions which may subsequently be enacted granting an exemption or

reduction of tax which the competent authorities of the contracting States

agree to be for the purposes of economic development.1.2.3.4. Income which, in

accordance with the provisions of this Convention is not to be subjected to tax

in a Contracting State, may be taken into account for calculating the rate of

tax to be imposed in that Contracting State.CHAPTER

VSPECIAL

PROVISIONSArticle

25NON-DISCRIMINATION1. The nationals of a

Contracting State shall not be subjected in the other Contracting State to any

taxation or any requirement connected therewith which is other or more

burdensome than the taxation and connected requirements to which nationals of

that other State in the same circumstances are or may be subjected.2. The taxation on a

permanent establishment which an enterprise of a Contracting State has in the

other Contracting State shall not be less favourably levied in that other State

than the taxation levied on enterprises of that other State carrying on the

same activities in the same circumstances.3. Nothing contained in

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

persons not resident in that State any personal allowances, reliefs and

reductions for taxation purposes which are by law available only to persons who

are so resident.4. Enterprises of a

Contracting State, the capital of which is wholly or partly owned or

controlled, directly or indirectly by one or more residents of the other

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

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

more burdensome than the taxation and connected requirements to which other

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

the same circumstances.5. In this Article, the

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

Convention.Article

26MUTUAL

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

Convention, he may notwithstanding the remedies provided by the national laws

of those States, present his case to the competent authority of the Contracting

State of which he is a resident. This case must be presented within three years

of the date of receipt of notice of the action which gives rise to taxation not

in accordance with the Convention.2. The competent

authority shall endeavour, if the objection appears to it to be justified and

if it is not itself able to arrive at an appropriate solution, to resolve the

case by mutual agreement with the competent authority of the other Contracting

State, with a view to the avoidance of taxation not in accordance with the

Convention. Any agreement reached shall be implemented notwithstanding any time

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

authorities of the Contracting States shall endeavour to resolve by mutual

agreement any difficulties or doubts arising as to the inter-pretation or

application of the Convention. They may also consult each other for the

elimination of double taxation in cases not provided for in the Convention.4. The competent

authorities of the Contracting States may communicate with each other directly

for the purpose of reaching an agreement in the sense of the preceding

paragraphs. When it seems, advisable in order to reach agreement to have an

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

consisting of representatives of the competent authorities of the Contracting

State.Article

27EXCHANGE

OF INFORMATION1. The competent

authorities of the Contracting States shall exchange such information or

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

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

Convention. Any information or document so exchanged shall be treated as secret

but may be disclosed to persons (including a court or other authorities)

concerned with the assessment, collection, enforcement, investigation or

prosecution in respect of the taxes which are the subject of this Convention or

to persons with respect to whom the information or document relates.2. The exchange of

information or documents shall be either on a routine basis or on request with

reference to particular cases. The competent authorities of the Contracting

States shall agree from time to time on the list of the information or

documents which shall be furnished on a routine basis.3. In no case shall the

provisions of paragraph 1 be construed so as to impose on a Contracting State

the obligation:a. to carry out

administrative measures at variance with the laws or administrative practice of

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

or documents which are not obtainable under the laws or in the normal course of

the administration of that or of the other Contracting State;c. to supply information

or documents which would disclose any trade, business, industrial, commercial

or professional secret or trade process or information the disclosure of which

would be contrary to public policy.Article

28DIPLOMATIC

AND CONSULAR ACTIVITIESNothing

in this Convention shall affect the fiscal privileges of diplomatic or consular

officials under the general rules of international law or under the provisions

of special agreements.CHAPTER

VIFINAL

PROVISIONSArticle

29ENTRY

INTO FORCE1. This Convention shall

come into force on the date when the last of all such things shall have been

done in India and Zambia as necessary to give the Convention the force of law

in India and Zambia respectively.2. The Contracting

States shall notify each other of the completion of the requirements mentioned

in paragraph 1 of this Article. The exchange of diplomatic notes certifying

that this requirement has been completed shall take place at Lusaka.3. Upon the exchange of

such diplomatic notes, this Convention shall have effect:a. In India, in respect

of income assessable for any assessment year commencing on or after the 1st day

of April, 1979.b. In Zambia, in respect

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

April. 1979Article

30TERMINATIONThis

Convention shall continue in effect identifinitely but either of the

Contracting States may, on or before the thirtieth day of June in any calendar

year beginning after the expiration of a period of five years from the date of

its entry into force, give the other Contracting State through diplomatic

channels, written notice of termination and in such event this Convention shall

cease to be effective:a. in Zambia, in respect

of income asessable for the assessment year commencing on the 1st day of April

in the second calendar year next following the calendar year in which the

notice is given, and subsequent years;b. in India, in respect

of income arising for the year of income next following the calendar year in

which the notice of termination is given, and subsequent years.In

witness whereof

the