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South Africa 42. Agreement for Avoidance of double taxation
and fiscal evasion with foreign countries Whereas
the annexed agreement between the Government of the Republic of India and the
Government of the Republic of South Africa for the avoidance of double
taxation and the prevention of fiscal evasion with respect to taxes on income,
has entered into force on the twenty-eighth day of November, 1997, in
accordance with Article 28 of the said Agreement, after the notification by
both the contracting States to each other of the completion of the procedures
required under their laws for the bringing into force of the said agreement; Now,
therefore, in exercise of the powers conferred by section 90 of the Income-tax
Act, 1961 (43 of 1961), the Central Government hereby directs that all the
provisions of the said agreement shall
be given effect to in the Union of India. Notification :
No.
GSR 198(E), dated 21-4-1998. Annexure Agreement Between the Government of the Republic of
India Preamble The
Government of the Republic of India and the Government of the Republic of South
Africa desiring to conclude an Agreement for the avoidance of double taxation
and the prevention of fiscal evasion with respect to taxes on income, Have
agreed as follows : Article 1 : Personal
scope - This Agreement shall apply to persons who are residents of one or
both of the Contracting States. Article 2 : Taxes
covered - 1. The existing taxes to which this Agreement shall apply
are : (a) in
India, the income-tax (including any surcharge thereon); (hereinafter referred to as Indian
tax); (b) in
South Africa : (i) the
income-tax (the normal tax); and (ii) the
secondary tax on companies; (hereinafter
referred to as South African tax). 2.. The Agreement shall apply also to any
identical or substantially similar taxes which are imposed by either
Contracting State after the date of signature of the Agreement in addition to,
or in place of, the existing taxes. The competent authorities of the Contracting
States shall notify each other of any significant changes which have been made
in their respective taxation laws. Article 3 : General
definitions - 1. For the purposes of this Agreement, unless the
context otherwise requires : (a) the
term India means the territory of the Republic of India and includes the
territorial sea and air space above it. For the purposes of this Agreement, the
term shall cover any other maritime zone in which the Republic of India has
sovereign rights, other rights and jurisdictions, according to the Indian law
and in accordance with international law in particular as laid down in the UN
Convention of the Law of the Sea, 1982;
and (b) the
term South Africa means the Republic of South Africa and, when used in a
geographical sense, includes the territorial sea thereof as well as any area
outside the territorial sea, including the continental shelf, which has been or
may hereafter be designated, under the laws of South Africa and in accordance
with international law, as an area within which South Africa may exercise
sovereign rights or jurisdiction; (c) the
terms a Contracting State and the other Contracting State mean India or
South Africa, as the context requires; (d) the
term company means any body corporate or any entity which is treated as a
company or body corporate for tax purposes; (e) the
term competent authority means : (i) in
India, the Central Government in the Ministry of Finance (Department of
Revenue) or their authorised representative; and (ii) in
South Africa, the Commissioner for Inland Revenue or his authorised
representative; (f) the
terms enterprise of a Contracting State and enterprise of the other
Contracting State mean respectively an enterprise carried on by a resident of
a Contracting State and an enterprise carried on by a resident of the other
Contracting State; (g) the
term fiscal year means : (i) in
India, the twelve-month period beginning on 1st April; (ii) in
South Africa, the year of assessment as defined in the Income-tax Act, 1962; (h) the
term international traffic means any transport by a ship or aircraft operated
by an enterprise of a Contracting State, except when the ship or aircraft is operated
solely between places in the other Contracting State; (i) the
term national means : (i) any
individual possessing the nationality of a Contracting State; (ii) any
legal person or association deriving its status as such from the laws in force in
a Contracting State; (j) the
term person includes an individual, a company and any other body of persons
which is treated as an entity for tax purposes under the taxation laws in force
in the respective Contracting States; and (k) the
term tax means Indian tax or South African tax, as the context requires, but
shall not include any amount which is payable in respect of any default or
omission in relation to the taxes to which this Agreement applies or which
represents a penalty imposed relating to those taxes. 2. As
regards the application of the provisions of the Agreement at any time by a
Contracting State, any term not defined therein shall, unless the context
otherwise requires, have the meaning which it has at that time under the law of
that State for the purposes of the taxes to which the Agreement applies, any
meaning under the applicable tax laws of that State prevailing over a meaning
given to the term under other laws of that State. Article 4 : Resident - 1.
For the purposes of this Agreement, the term resident of a Contracting State
means : (a) in
India, any person who, under the laws of India, is liable to tax therein by
reason of his domicile, residence,
place of management or any other criterion of a similar nature, but this term
does not include any person who is liable to tax in India in respect only of
income from sources in India; (b) in
South Africa, any individual who is ordinarily resident in South Africa and any
other person which has its place of effective management in South Africa. 2. Where
by reason of the provisions of paragraph 1, an individual is a resident of both
Contracting States, then his status shall be determined as follows : (a) he
shall be deemed to be a resident only of the State in which he has a permanent
home available to him; if he has a permanent home available to him in both
States, he shall be deemed to be a resident of the State with which his
personal and economic relations are closer (centre of vital interests); (b) if
the State in which he has his centre of vital interests cannot be determined,
or if he has not a permanent home available to him in either State, he shall be
deemed to be a resident only of the State in which he has an habitual abode; (c) if
he has an habitual abode in both States or in neither of them, he shall be
deemed to be a resident only of the State of which he is a national; (d) if
he is a national of both States or of neither of them, the competent
authorities of the Contracting States shall settle the question by mutual
agreement. 3.
Where by reason of the provisions of paragraph 1, a person other than an
individual is a resident of both Contracting States, then it shall be deemed to
be a resident only of the State in which its place of effective management is
situated. If the State in which its place of effective management is situated
cannot be determined, then the competent authorities of the Contracting States
shall settle the question by mutual agreement. Article 5 : Permanent
establishment - 1. For the purposes of this Agreement, the term
permanent establishment means a fixed place of business through which the
business of an enterprise is wholly or partly carried on. 2. The
term permanent establishment includes especially : (a) a
place of management; (b) a
branch; (c) an
office; (d) a
factory; (e) a
workshop; (f) a
mine, an oil or gas well, a quarry or any other place of extraction of natural
resources, including an installation or structure used for the exploration or
exploitation of natural resources; and (g) a
warehouse, in relation to a person providing storage facilities for others. 3. A
building site, a construction, installation or assembly project or any
supervisory activity in connection with such site or project constitutes a
permanent establishment only if it lasts more than six months. 4.
Notwithstanding the preceding provisions of this Article, the term permanent
establishment shall be deemed not to include : (a) the
use of facilities solely for the purpose of storage, display or delivery of
goods or merchandise belonging to the enterprise; (b) the
maintenance of a stock of goods or merchandise belonging to the enterprise
solely for the purpose of storage, display or delivery; (c) the
maintenance of a stock of goods or
merchandise belonging to the enterprise solely for the purpose of processing by
another enterprise; (d) the
maintenance of a fixed place of business solely for the purpose of purchasing
goods or merchandise, or for collecting information, for the enterprise; (e) the
maintenance of a fixed place of business solely for the purpose of carrying on,
for the enterprise, any other activity of a preparatory or auxiliary
character; and (f) the
maintenance of a fixed place of business solely for any combination of
activities mentioned in sub-paragraphs (a) to (e), provided that
the overall activity of the fixed place of business resulting from this
combination is of a preparatory or auxiliary character. 5.
Notwithstanding the provisions of paragraphs 1 and 2, where a person - other
than an agent of an independent status to whom paragraph 6 applies - is acting
on behalf of an enterprise and has, and habitually exercises, in a Contracting
State an authority to conclude contracts in the name of the enterprise, that
enterprise shall be deemed to have a permanent establishment in that State in
respect of any activities which that person undertakes for the enterprise,
unless the activities of such person are limited to those mentioned in
paragraph 4 which, if exercised through a fixed place of business, would not
make this fixed place of business a permanent establishment under the
provisions of that paragraph. 6. An
enterprise shall not be deemed to have a permanent establishment in a
Contracting State merely because it carries on business in that State through a
broker, general commission agent or any other agent of an independent status,
provided that such persons are acting in the ordinary course of their business. 7. The
fact that a company which is a resident of a Contracting State controls or is
controlled by a company which is a resident of the other Contracting State, or
which carries on business in that other State (whether through a permanent
establishment or otherwise), shall not of itself constitute either company a
permanent establishment of the other. Article 6 : Income
from immovable property - 1. Income derived by a resident of a
Contracting State from immovable property, including income from agriculture or
forestry, situated in the other Contracting State may be taxed in that other
State. 2. The
term immovable property shall have the meaning which it has under the law of
the Contracting State in which the property in question is situated. The term
shall in any case include property accessory to immovable property, livestock
and equipment used in agriculture and forestry, rights to which the provisions
of general law respecting landed property apply, usufruct of immovable property
and rights to variable or fixed payments as consideration for the working of,
or the right to work, mineral deposits, sources and other natural resources.
Ships, boats and aircraft shall not be regarded as immovable property. 3. The
provisions of paragraphs 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 independent personal services. Article 7 : Business
profits - 1. The profits of an enterprise of a Contracting State
shall be taxable only in that State unless the enterprise carries on business
in the other Contracting State through a permanent establishment situated
therein. If the enterprise carries on business as aforesaid, the profits of the
enterprise may be taxed in the other State but only so much of them as is
attributable to that permanent establishment. 2.
Subject to the provisions of paragraph 3, where an enterprise of a Contracting
State carries on business in the other Contracting State through a permanent
establishment situated therein, there shall in each Contracting State be
attributed to that permanent establishment the profits which it might be
expected to make if it were a distinct and separate enterprise engaged in the
same or similar activities under the same or similar conditions and dealing wholly
independently with the enterprise of which it is a permanent establishment. 3. In
determining the profits of a permanent establishment, there shall be allowed as
deductions expenses which are incurred for the purposes of the permanent
establishment, including executive and general administrative expenses so
incurred, whether in the Contracting State in which the permanent establishment
is situated or elsewhere, in accordance with and subject to the limitations
prescribed in the taxation laws in that Contracting State. 4.
Insofar as it has been customary in a Contracting State to determine the
profits to be attributed to a permanent establishment on the basis of an
apportionment of the total profits of the enterprise to its various parts,
nothing in paragraph 2 shall preclude that Contracting State from determining
the profits to be taxed by such an apportionment as may be customary. The
method of apportionment adopted shall, however, be such that the result shall
be in accordance with the principles contained in this Article. 5. No
profits shall be attributed to a permanent establishment by reason of the mere
purchase by that permanent establishment of goods or merchandise for the
enterprise. 6. For
the purposes of the preceding paragraphs, the profits to be attributed to the
permanent establishment shall be determined by the same method year by year
unless there is good and sufficient reason to the contrary. 7. Where
profits include items of income which are dealt with separately in other
Articles of this Agreement, then the provisions of those Articles shall not be
affected by the provisions of this Article. Article 8 : Shipping
and air transport - 1. Profits of an enterprise of a Contracting
State from the operation of ships or aircraft in international traffic shall be
taxable only in that State. 2. For the purposes of this Article, profits
from the operation of ships or aircraft in international traffic shall include
: (a) profits
derived from the rental on a bare boat basis of ships or aircraft used in
international traffic, (b) profits
derived from the use or rental of containers, if such
profits are incidental to the profits to which the provisions of paragraph 1
apply. 3. For
the purposes of this Article, interest on funds connected with the operation of
ships or aircraft in international traffic shall be regarded as profits derived
from the operation of such ships or aircraft and the provisions of Article 11
shall not apply in relation to such interest. 4. The
provisions of paragraph 1 shall also apply to profits from the participation in
a pool, a joint business or an international operating agency. Article 9 : Associated enterprises -
1. Where : (a) an
enterprise of a Contracting State participates directly or indirectly in the
management, control or capital of an enterprise of the other Contracting State;
or (b) the
same persons participate directly or indirectly in the management, control or
capital of an enterprise of a Contracting State and an enterprise of the other
Contracting State, and in
either case conditions are made or imposed between the two enterprises in their
commercial or financial relations which differ from those which would be made
between independent enterprises, then any profits which would, but for those
conditions, have accrued to one of the enterprises, but, by reason of those
conditions, have not so accrued, may be included in the profits of that
enterprise and taxed accordingly. 2. Where
a Contracting State includes in the profits of an enterprise of that State -
and taxes accordingly - profits on which an enterprise of the other Contracting
State has been charged to tax in that other State and the profits so included
are profits which would have accrued to the enterprise of the first-mentioned
State if the conditions made between the two enterprises had been those which
would have been made between independent enterprises, then that other State
shall make an appropriate adjustment to the amount of the tax charged therein
on those profits if that other State considers the adjustment justified. In
determining such adjustment, due regard shall be had to the other provisions of
this Agreement and the competent authorities of the Contracting States shall if
necessary consult each other. Article 10 : Dividends
- 1. Dividends paid by a company which is a resident of a Contracting
State to a resident of the other Contracting State may be taxed in that other
State. 2.
However, such dividends may also be taxed in the Contracting State of which the
company paying the dividends is a resident and according to the laws of that
State, but if the beneficial owner of the dividends is a resident of the other
Contracting State, the tax so charged shall not exceed 10 per cent of the gross
amount of the dividends. The
competent authorities of the Contracting States shall settle the mode of
application of these limitations by mutual agreement. This
paragraph shall not affect the taxation of the company in respect of the
profits out of which the dividends are paid. 3. The
term dividends as used in this Article means income from shares or other
rights participating in profits (not being debt-claims), as well as income from
other corporate rights which is subjected to the same taxation treatment as
income from shares by the laws of the Contracting State of which the company
making the distribution is a resident. 4. The
provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the
dividends, being a resident of a Contracting State, carries on business in the
other Contracting State of which the company paying the dividends is a
resident, through a permanent establishment situated therein, or performs in
that other State independent personal services from a fixed base situated
therein, and the holding in respect of which the dividends are paid is
effectively connected with such permanent establishment or fixed base. In such
case, the provisions of Article 7 or Article 14, as the case may be, shall
apply. 5. Where
a company which is a resident of a Contracting State derives profits or income
from the other Contracting State, that other State may not impose any tax on
the dividends paid by the company, except insofar as such dividends are paid to
a resident of that other State or insofar as the holding in respect of which
the dividends are paid is effectively connected with a permanent establishment
or a fixed base situated in that other State, nor subject the companys
undistributed profits to a tax on undistributed profits, even if the dividends
paid or the undistributed profits consist wholly or partly of profits or income
arising in such other State. Article 11 : Interest
- 1. Interest arising in a Contracting State and paid to a resident
of the other Contracting State may be taxed in that other State. 2. However,
such interest may also be taxed in the Contracting State in which it arises and
according to the laws of that State, but if the recipient is the beneficial
owner of the interest the tax so charged shall not exceed 10 per cent of the
gross amount of the interest. 3.
Notwithstanding the provisions of paragraphs 1 and 2, interest arising in a
Contracting State shall be exempt from tax in that State if it is derived and
beneficially owned by : (a) the
Government, a political sub-division or a local authority of the other
Contracting State; (b) the
Reserve Bank of India or the South African Reserve Bank; or (c) any
agency or instrumentally which is wholly owned by the Government of a
Contracting State and which has been approved in writing by the competent
authorities of the Contracting States for the purposes of this paragraph. 4. The
term interest as used in this Article means income from debt-claims of every
kind, whether or not secured by mortgage and whether or not carrying a right to
participate in the debtors profits, and in particular, income from Government
securities and income from bonds or debentures, including premiums and prizes
attaching to such securities, bonds or debentures. Penalty charges for late
payment shall not be regarded as interest for the purposes of this Article. 5. The
provisions of paragraph 1 shall not apply if the beneficial owner of the
interest, being a resident of a Contracting State, carries on business in the
other Contracting State in which the interest arises, through a permanent
establishment situated therein, or performs in that other State independent
personal services from a fixed base situated therein, and the debt-claim in
respect of which the interest is paid is effectively connected with such
permanent establishment or fixed base. In such case, the provisions of Article
7 or Article 14, as the case may be, shall apply. 6.
Interest shall be deemed to arise in a Contracting State when the payer is that
State itself, a political sub-division, a local authority or a resident of that
State. Where, however, the person paying the interest, whether he is a resident
of a Contracting State or not, has in a Contracting State a permanent establishment
or a fixed base in connection with which the indebtedness on which the interest
is paid was incurred, and such interest is borne by such permanent
establishment or fixed base, then such interest shall be deemed to arise in the
State in which the permanent establishment or fixed base is situated. 7. Where,
by reason of a special relationship between the payer and the beneficial owner
or between both of them and some other person, the amount of the interest,
having regard to the debt-claim for which it is paid, exceeds the amount which
would have been agreed upon by the payer and the beneficial owner in the
absence of such relationship, the provisions of this Article shall apply only
to the last-mentioned amount. In such case, the excess part of the payments
shall remain taxable according to the laws of each Contracting State, due
regard being had to the other provisions of this Agreement. Article 12 : Royalties
and fees for technical services - 1. Royalties or fees for technical
services arising in a Contracting State and paid to a resident of the other
Contracting State may be taxed in that other State. 2.
However, such royalties or fees for technical services may also be taxed in the
Contracting State in which they arise, and according to the laws of that State,
but if the recipient is the beneficial owner of the royalties or fees for
technical services, the tax so charged shall not exceed 10 per cent of the
gross amount of the royalties or fees for technical services. 3. The
term royalties as used in this Article means payments of any kind received as
a consideration for the use of, or the right to use, any copyright of literary,
artistic or scientific work (including cinematograph films and films, tapes or
discs for radio or television broadcasting), any patent, trade mark, design or
model, plan, secret formula or process, or for the use of, or the right to use,
industrial, commercial or scientific equipment, or for information concerning
industrial, commercial or scientific experience. 4. The
term fees for technical services as used in this Article means payments of any
kind received as a consideration for services of a managerial, technical or
consultancy nature, including the provision of services by technical or other
personnel, but does not include payments for services mentioned in Article 15. 5. The
provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the
royalties or fees for technical services, being a resident of a Contracting
State, carries on business in the other Contracting State in which the
royalties or fees for technical services arise, through a permanent
establishment situated therein, or performs in that other State independent
personal services from a fixed base situated therein, and the right, property
or contract in respect of which the royalties or fees for technical services
are paid is effectively connected with such permanent establishment or fixed
base. In such case, the provisions of Article 7 or Article 14, as the case may
be, shall apply. 6.
Royalties or fees for technical services shall be deemed to arise in a Contracting
State when the payer is that State itself, a political sub-division, a local
authority or a resident of that State. Where, however, the person paying the
royalties or fees for technical services, whether he is a resident of a
Contracting State or not, has in a Contracting State a permanent establishment
or a fixed base with which the right, property or contract in respect of which
the royalties or fees for technical services are paid is effectively connected,
and such royalties or fees for technical services are borne by such permanent
establishment or fixed base, then such royalties or fees for technical services
shall be deemed to arise in the State in which the permanent establishment or
fixed base is situated. 7. Where,
by reason of a special relationship between the payer and the beneficial owner
or between both of them and some other person, the amount of the royalties or
fees for technical services exceeds the amount which would have been agreed
upon by the payer and the beneficial owner in the absence of such relationship,
the provisions of this Article shall apply only to the last-mentioned amount.
In such case, the excess part of the payments shall remain taxable according to
the laws of each Contracting State, due regard being had to the other
provisions of this Agreement. Article 13 : Capital
gains - 1. Gains derived by a resident of a Contracting State from
the alienation of immovable property referred to in Article 6 and situated in
the other Contracting State may be taxed in that other State. 2. Gains
from the alienation of movable property forming part of the business property
of a permanent establishment which an enterprise of a Contracting State has in
the other Contracting State or of movable property pertaining to a fixed base
available to a resident of a Contracting State in the other Contracting State
for the purpose of performing independent personal services, including such
gains from the alienation of such a permanent establishment (alone or with the
whole enterprise) or of such fixed base, may be taxed in that other State. 3. Gains
of an enterprise of a Contracting State from the alienation of a ship or
aircraft operated in international traffic or movable property pertaining to
the operation of such ships or aircraft, shall be taxable only in that State. 4. Gains
from the alienation of shares or similar rights in a company, or of an interest
in a partnership, trust or estate, the assets of which consist principally of
immovable property situated in a Contracting State, may be taxed in that
State. 5. Gains
derived by a resident of a Contracting State from the sale, exchange or other
disposition, directly or indirectly, of shares or similar rights in a company,
other than those mentioned in paragraph 4, which is a resident of the other
Contracting State, may be taxed in that other State. 6. Gains
from the alienation of any property other than that referred to in the
preceding paragraphs, shall be taxable only in the Contracting State of which
the alienator is a resident. Article 14 : Independent
personal services - 1. Income derived by an individual who is a
resident of a Contracting State in respect of professional services or other
activities of an independent character shall be taxable only in that State
unless he has a fixed base regularly available to him in other Contracting
State for the purpose of performing his activities. If he has such a fixed
base, the income may be taxed in the other State but only so much of it as is
attributable to that fixed base. For the purposes of this Agreement, where an
individual who is a resident of a Contracting State stays in the other
Contracting State for a period or periods exceeding in the aggregate 183 days
in any twelve months period commencing or ending in the fiscal year concerned,
he shall be deemed to have a fixed base regularly available to him in that
other State and the income that is derived from his activities that are
performed in that other State shall be attributable to that fixed base. 2. The
term professional services includes especially independent scientific,
literary, artistic, educational or teaching activities as well as the
independent activities of physicians, lawyers, engineers, architects, dentists
and accountants. Article 15 : Dependent
personal services - 1. Subject to the provisions of Articles 16, 18
and 19, salaries, wages and other similar remuneration derived by a resident of
a Contracting State in respect of an employment shall be taxable only in that
State unless the employment is exercised in the other Contracting State. If the
employment is so exercised, such remuneration as is derived therefrom may be
taxed in that other State. 2.
Notwithstanding the provisions of paragraph 1, remuneration derived by a
resident of a Contracting State in respect of an employment exercised in the
other Contracting State shall be taxable only in the first-mentioned State if : (a) the
recipient is present in the other State for a period or periods not exceeding
in the aggregate 183 days in any twelve months period commencing or ending in
the fiscal year concerned; (b) the
remuneration is paid by or on behalf of an employer who is not a resident of
the other State; and (c) the
remuneration is not borne by a permanent establishment or a fixed base which
the employer has in the other State. 3.
Notwithstanding the preceding provisions of this Article, remuneration derived
in respect of an employment exercised aboard a ship or aircraft operated in
international traffic by an enterprise of a Contracting State may be taxed in
that State. Article 16 : Directors
fees - Directors fees and similar payments derived by a resident of a
Contracting State in his capacity as a member of the board of directors of a
company which is a resident of the other Contracting State may be taxed in
that other State. Article 17 : Entertainers
and sportspersons - 1. Notwithstanding the provisions of Articles 7,
14 and 15, income derived by a resident of a Contracting State as an entertainer
such as a theatre, motion picture, radio or television artiste, or a musician,
or as a sportsperson, from his personal activities as such exercised in the
other Contracting State, may be taxed in that other State. 2. Where
income in respect of personal activities exercised by an entertainer or a
sportsperson in his capacity as such accrues not to the entertainer or
sportsperson himself but to another person, that income may, notwithstanding
the provisions of Articles 7, 14 and
15, be taxed in the Contracting State in which the activities of the
entertainer or sportsperson are exercised. 3.
Notwithstanding the provisions of paragraph 1, income derived by an entertainer
or sportsperson from his personal activities as such shall be exempt from tax
in the Contracting State in which these activities are exercised if the
activities are exercised within the framework of a visit which is wholly or
mainly supported by the other Contracting State, political sub-division, a
local authority or public institution thereof. Article 18 : Pensions
and annuities - 1. Subject to the provisions of paragraph 2 of
Article 19, pensions and other similar remuneration and annuities arising in a
Contracting State and paid to a resident of the other Contracting State, may be
taxed in the first-mentioned State. 2. The
term annuity means a stated sum payable periodically at stated times during
life or during a specified or ascertainable period of time under an obligation
to make the payments in return for adequate and full consideration in money or
moneys worth. Article 19 : Government
services - 1. (a) Salaries, wages and similar remuneration,
other than a pension, paid by a Contracting State or a political sub-division
or a local authority thereof to an individual in respect of services rendered
to that State or sub-division or authority shall be taxable only in that State. (b)
However, such salaries, wages and similar remuneration shall be taxable only in
the other Contracting State if the services are rendered in that State and the
individual is a resident of that State who : (i) is
a national of that State; or (ii) did
not become a resident of that State solely for the purpose of rendering the
services. 2. (a)
Any pension paid by, or out of funds created by, a Contracting State or a
political sub-division or a local authority thereof to an individual in respect
of services rendered to that State or sub-division or authority shall be
taxable only in that State. (b)
However, such pension shall be taxable only in the other Contracting State if
the individual is a resident of, and a national of, that State. 3. The
provisions of Article 15, 16, 17 or 18 shall apply to salaries, wages and
similar remuneration, and to pensions, in respect of services rendered in
connection with a business carried on by a Contracting State or a political
sub-division or a local authority thereof. Article 20 : Students,
apprentices and business trainees - 1. A student, apprentice or
business trainee who is present in a Contracting State solely for the purpose
of his education or training and who is, or immediately before being so present
was, a resident of the other Contracting State, shall be exempt from tax in the
first-mentioned State on payments received from outside that first-mentioned
State for the purposes of his maintenance, education or training. 2.
Payments which a student or business apprentice receives as remuneration from
employment in the first-mentioned State, in an amount not exceeding a sum
equivalent to 3000 US dollars in the currency of the first-mentioned State
during any fiscal year shall be exempt from tax in the first-mentioned State
during the period ending five years after the date of his first arrival in the
first-mentioned Contracting State. Article 21 : Other
income - Items of income arising in a Contracting State which are not dealt
with in the foregoing Articles of this Agreement may be taxed in that State. Article 22 : Elimination
of double taxation - Double taxation shall be eliminated as follows : (a) In
India, where a resident of India derives income which, in accordance with the
provisions of this Agreement, may be taxed in South Africa, India shall allow
as a deduction from the tax on the income of that resident an amount equal to
the South African tax paid, whether directly or by deduction. Such deduction
shall not, however, exceed that part of the income-tax (as computed before the
deduction is given) which is attributable to the income which may be taxed in
South Africa. (b) In
South Africa, Indian tax paid by residents of South Africa in respect of income
taxable in India, in accordance with the provisions of the Agreement, shall be
deducted from the taxes due according
to South African fiscal law. Such deduction shall not, however, exceed an
amount which bears to the total South African tax payable the same ratio as the
income concerned bears to the total income. Article 23 : Non-discrimination
- 1. Nationals of a Contracting State shall not be subjected in the
other Contracting State to any taxation or any requirement connected therewith
which is other or more burdensome than the taxation and connected requirements
to which nationals of that other State in the same circumstances are or may be
subjected. This provision shall notwithstanding the provisions of Article 1,
also apply to persons who are not residents of one or both of the Contracting
States. 2. The
taxation on a permanent establishment which an enterprise of a Contracting
State has in the other Contracting State shall not be less favourably levied in
that other State than the taxation levied on enterprises of that other State
carrying on the same activities. This provision shall not be construed as preventing
a Contracting State from charging the profits of a permanent establishment
which a company of the other Contracting State has in the first-mentioned State
at a rate of tax which is not more than 10 percentage points higher than that
imposed on the profits of a similar company of the first-mentioned Contracting
State, nor as being in conflict with the provisions of paragraph 3 of Article 7
of this Agreement. 3.
Nothing contained in this Article shall be construed as obliging a Contracting
State to grant to residents of the other Contracting State any personal
allowances, reliefs and reductions for taxation purposes on account of civil
status or family responsibilities which it grants to its own residents. 4.
Enterprises of a Contracting State, the capital of which is wholly or partly
owned or controlled, directly or indirectly, by one or more residents of the
other Contracting State, shall not be subjected in the first-mentioned State to
any taxation or any requirement connected therewith which is other or more
burdensome than the taxation and connected requirements to which other similar
enterprises of that first-mentioned State are or may be subjected. 5. Except
where the provisions of paragraph 1 of Article 9, paragraph 5 of Article 11 or
paragraph 6 of Article 12 apply, interest, royalties, fees for technical
services and other disbursements paid by an enterprise of a Contracting State
to a resident of the other Contracting State shall, for the purpose of
determining the taxable profits of such enterprise, be deductible under the same
conditions as if they had been paid to a resident of the first-mentioned State. 6. In
this Article, the term taxation means taxes which are the subject of the
Agreement. Article 24 : Mutual
agreement procedure - 1. Where a person considers that the actions
of one or both of the Contracting States result or will result for him in
taxation not in accordance with this Agreement, he may, irrespective of the
remedies provided by the domestic law of those States, present his case to the
competent authority of the Contracting State of which he is a resident or, if
his case comes under paragraph 1 of Article 23, to that of the Contracting
State of which he is a national. The case must be presented within three years
from the first notification of the action resulting in taxation not in
accordance with the Agreement. 2. The
competent authority shall endeavour, if the objection appears to it to be
justified and if it is not itself able to arrive at a satisfactory solution, to
resolve the case by mutual agreement with the competent authority of the other
Contracting State, with a view to the avoidance of taxation which is not in
accordance with the Agreement. Any agreement reached shall be implemented
notwithstanding any time-limits in the domestic law of the Contracting States. 3. The
competent authorities of the Contracting States shall endeavour to resolve by
mutual agreement any difficulties or doubts arising as to the interpretation or
application of the Agreement. They may also consult together for the elimination
of double taxation in cases not provided for in the Agreement. 4. The
competent authorities of the Contracting States may communicate with each
other directly for the purpose of reaching an agreement in the sense of the
preceding paragraphs. When it seems advisable in order to reach agreement to
have an oral exchange of opinions, such exchange may take place through a joint
commission consisting of representatives of the competent authorities of the
Contracting States. Article 25 : Exchange
of information - 1. The competent authorities of the Contracting
States shall exchange such information, including documents, as is necessary
for carrying out the provisions of this Agreement or of the domestic laws of
the Contracting States concerning taxes covered by the Agreement insofar as the
taxation thereunder is not contrary to the Agreement. The exchange of
information is not restricted by Article 1. Any information received by a
Contracting State shall be treated as secret in the same manner as information
obtained under the domestic law of that State and shall be disclosed only to
persons or authorities (including courts and administrative bodies) concerned
with the assessment or collection of, the enforcement or prosecution in respect
of, or the determination of appeals in relation to, the taxes covered by the
Agreement. Such persons or authorities shall use the information only for such
purposes. They may disclose the information in public court proceedings or in
judicial decisions. 2. In no
case shall the provisions of paragraph 1 be construed so as to impose on a
Contracting State the obligation : (a) to
carry out administrative measures at variance with the laws or the
administrative practice of that or of the other Contracting State; (b) to
supply information which is not obtainable under the laws or in the normal
course of the administration of that or of the other Contracting State; (c) to
supply information which would disclose any trade, business, industrial,
commercial or professional secret or trade process, or information, the
disclosure of which would be contrary to public policy (ordre public). Article 26 : Assistance
in recovery - 1. The Contracting States shall, to the extent
permitted by their respective domestic law, lend assistance to each other in
order to recover the taxes referred to in Article 2 as well as interest and
penalties with regard to such taxes, provided that reasonable steps to recover
such taxes have been taken by the Contracting State requesting such assistance. 2. Claims
which are the subject of requests for assistance shall not have priority over
taxes owing in the Contracting State rendering assistance and the provisions of
paragraph 1 of Article 25 shall also apply to any information which, by virtue
of this Article, is supplied to the competent authority of a Contracting State. 3. The
competent authorities of the Contracting States shall by mutual agreement
settle the mode of application of the provisions of this Article. Article 27 : Members
of diplomatic missions and consular posts - Nothing in this Agreement shall
affect the fiscal privileges of members of diplomatic missions or consular
posts under the general rules of international law or under the provisions of
special agreements. Article 28 : Entry
into force - 1. Each of the Contracting States shall notify to the
other the completion of the procedures required by its law for the bringing
into force of this Agreement. The Agreement shall enter into force on the date
of receipt of the later of these notifications. 2. The
provisions of the Agreement shall apply : (a) in
India : (i) in
respect of taxes withheld at source, for amounts paid or credited in the fiscal
year beginning in the calendar year next following that in which the Agreement
enters into force; and (ii) in
respect of other taxes, for any fiscal year beginning in the calendar year
next following that in which the Agreement enters into force; (b) in
South Africa, in respect of fiscal years beginning on or after the first day of
January next following the date upon which the Agreement enters into force. Article 29 : Termination
- 1. This Agreement shall remain in force indefinitely but either of
the Contracting States may terminate the Agreement through the diplomatic
channel, by giving to the other Contracting State written notice of termination
not later than 30th June of any calendar year starting five years after the
year in which the Agreement entered into force : 2. In
such event, the Agreement shall cease to apply : (a) in
India : (i) in
respect of taxes withheld at source, for amounts paid or credited in the fiscal
year beginning in the calendar year next following that in which notice is
given; and (ii) in
respect of other taxes, for any fiscal year beginning in the calendar year
next following that in which such notice is given; (b) in
South Africa, in respect of fiscal years beginning after the end of the
calendar year in which such notice is given. IN
WITNESS WHEREOF the undersigned, being duly authorised thereto, have
signed this Agreement. DONE at New
Delhi in duplicate, this Fourth day of December, 1996, in the English and Hindi
languages, both texts being equally authentic. In case of divergence in
interpretation, the English text shall prevail.
PROTOCOL At
the signing of the Agreement concluded today between the Government of the
Republic of India and the Government of the Republic of South Africa for the
avoidance of double taxation and the prevention of fiscal evasion with respect
to taxes on income, the undersigned have agreed that the following provisions
shall form an integral part of the said Agreement : 1. With
reference to any provision of the Agreement in terms of which income derived by
a resident of a Contracting State may be taxed in the other Contracting State,
it is understood that such income may, subject to the provisions of Article 22,
also be taxed in the first-mentioned Contracting State. 2. With
reference to paragraph 1 of Article 7, it is understood that where a permanent
establishment which an enterprise of a Contracting State has in the other
Contracting State, participates, itself or together with other parts of that
enterprise or with an associated enterprise, in the negotiation, conclusion or
fulfilment of a contract entered into by that enterprise or associated
enterprise, there shall be attributed to the permanent establishment that
portion of the profits of the contract arising in the other State as relates to
the contribution by the permanent establishment to the negotiation, conclusion
or fulfilment of the contract. 3. With
reference to paragraph 3 of Article 7, it is agreed that the limitations
referred to therein shall in no event be less than those prevailing on the day
of the signing of the Agreement. IN
WITNESS WHEREOF the undersigned, being duly authorised thereto, have
signed this Protocol. DONE at New
Delhi in duplicate, this Fourth day of December, 1996, in the English and Hindi
languages, both texts being equally authentic. In case of any divergence in
interpretation, the English text shall prevail.
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