Article 25 - Avoidance for double taxation - Tanzania (Old - Effective upto 31-3-2012)

CHAPTER IV METHOD FOR ELIMINATION OF DOUBLE TAXATION Article 25 : Avoidance for double taxation 1. The laws in force in either of the Contracting States will continue to govern the taxation of income in the respective ContractingState except where provisions to the contrary are made in this Agreement. 2.(a) The amount of Tanzanian tax payable, under the laws of Tanzania and in accordance with the provisions of this Agreement, whether directly or by deduction, by a resident of India, in respect of income from sources within Tanzania, shall be allowed as a credit against the Indian tax payable in respect of such income provided that such credit shall not exceed Indian tax (as computed before allowing any such credit), which is appropriate to the income derived from sources within Tanzania; so, however, that where such resident is a company by which surtax is payable in India, the credit aforesaid shall be allowed in the first instance against income tax payable by the Company in India and as to the balance, if any, against surtax payable by it in India; (b) For the purposes of the credit referred to in sub-paragraph (a) above, the term "Tanzania tax payable" shall be deemed to include any amount which would have been payable as Tanzania tax for any year but for-- (i) any exemption from tax on interest granted under paragraph 1 of the First Schedule, Part II of the Income Tax, Act, 1973; or (ii) any investment deduction granted under paragraphs 24, 25 and 26 of the Second Schedule to the Income Tax Act, 1973; or (iii) The lower corporation rate of income tax provided by paragraph 4(b) of the Third Schedule to the Income Tax Act, 1973; or (iv) any other provisions which may subsequently be enacted granting an exemption or reduction of tax which the competent authorities of the Contracting State agree to be for the purpose of economic development. 3.(a) The amount of Indian tax payable, under the law of India and in accordance with the provisions of this Agreement, whether directly or by deduction, by a resident of Tanzania in respect of income from sources within India which has been subjected to tax both in India and Tanzania shall be allowed as a credit against Tanzania tax payable in respect of such income provided that such credit shall not exceed the Tanzanian tax (as computed before allowing any such credit), which is appropriate to the income derived from sources within India; (b) For the purposes of the credit referred to in sub-paragraph (a) above, the term "Indian tax payable" shall be deemed to include any amount by which Indian tax has been reduced by the special incentive measure 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(5) (iv) - relating to exemption from tax of (a) non-resident in respect of moneys lent by him to the Government or local authority in India; (b) an approved foreign financial institution in respect of interest on moneys lent by it to an industrial undertaking in India under a loan agreement; and (c) a non-resident in respect of interest on moneys lent or credit facilities allowed by him to an industrial undertaking in India for the purchase outside India of raw materials or capital plant and machinery or for industrial development in India; (iv) Section 32A - relating to investment allowance in respect of ships, aircraft machinery or plant; (v) Section 33A - relating to development allowance for planting or replanting of tea bushes; (vi) Section 35CC - relating to the rural development allowance; (vii) Section 54E - relating to capital gains; (viii) Section 80HH - relating to deduction in respect of profits and gains from newly established industrial undertakings or hotel business in backward areas; (ix) Section 80HHA -relating to deduction in respect of profits and gains from newly established small scale industrial undertakings in certain areas; (x) Section 80J - relating to deduction in respect of profits and gains from eligible industrial undertakings or ships or hotels; (xi) Section 80K - relating to deduction in respect of dividends attributable to profits and gains from eligible industrial undertakings or ships or hotels; (xii) Section 80L - relating to deduction in respect of interest on certain securities, dividends, etc.; and (xiii) 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. 4. Income which, in accordance with the provisions of this Agreement, is not to be subjected to tax in a ContractingState, may be taken into account for calculating the rate of tax to be imposed in that ContractingState.