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DTAA income tax

DTAA Income Tax (2023 Guide)

NRIs can avoid double taxation under the Double Taxation Agreement (DTAA). Generally, Non-Resident Indians (NRIs) live abroad but earn income in India. In this article, you will get to know more about DTAA income tax (Complete Guide).

 In such cases, income earned in India may be taxable both in India and in NRI’s country of residence. This means that for the same income has to pay taxes twice. The Double Taxation Agreement (DTAA) has been amended to avoid this.

What is DTAA and What Are Its Benefits

A Double Tax Avoidance Agreement or DTAA is a tax treaty concluded between India and another country (or two or more countries) that allows taxpayers to avoid double taxation on their source and residence country income. It allows you to avoid paying India currently has double tax treaties with more than 80 countries around the world.

The need for DTAA stems from the imbalance of tax collections on individuals’ global income. Ultimately, if a person intends to do business in a foreign country, they may pay income tax in either case. The country in which the income is derived and the country in which the person is a citizen or resident. 

For example, if you leave income sources such as interest on deposits and move to a country other than India, you will be charged interest based on your combined global earnings from both India and your current country of residence. In such a scenario, you could end up paying double tax on the same income. This is where her DTAA comes in handy for taxpayers.

There are many benefits associated with DTAA for taxpayers. The basic advantage is that you don’t have to pay double tax on the same income. Aside from this.

  1. Withholding Tax Reduction (Withholding Tax or TDS)
  2. Tax credit
  3. duty-free
  4. The main idea behind DTAA agreements with various countries is to minimize the opportunity for taxpayer tax evasion in one or both countries that have bilateral/multilateral DTAA agreements.
  5. Low withholding tax is a plus for taxpayers as they can pay lower TDS on interest, royalty, or dividend income in India. On the other hand, some contracts provide tax credits in the country of origin or place of business so that the taxpayer does not pay the same tax twice. 
  6. In some cases, such as agreements with Mauritius, Cyprus, Singapore, Egypt, etc. exempt from capital gains tax. This can be a boon as taxpayers can use DTAA contracts to minimize their taxes.

What is Income Chargeable under DTAA

Under the Double Tax Avoidance Agreement, NRIs are not required to pay tax on the following income:

  1. Services offered in India.
  2. Salary received in India
  3. Indian house.
  4. Capital gains from asset transfers in India.
  5. Indian fixed deposit. Indian savings bank account.

If the income from these sources is taxable in his NRI’s country of residence, DTAA allows him to avoid paying tax in India.

What Is DTAA Rates in India

This factor usually depends on the agreements concluded between countries where the TDS rate applied to interest income ranges from 10% to 15%. The rate charged is up to 15%.

In this regard, individuals should compare the rates quoted with the countries listed under DTAA India.

              CountryDTAA TDS rate
United Kingdom15%
United States of America15%
New Zealand10%
South Africa10%
Mauritius7.5% to 10%
Sri Lanka10%

How Do I Claim DTAA in ITR

Individuals should check if their country has a DTAA with India. You must submit Form #10 and present the following documents:

  1. Self-Declaration Form in Disclaimer Format 
  2. Self-Certified Copy of PAN Card 
  3. PIO Evidence Copy (if applicable)
  4. Tax Receipt Certificate (TRC).

Form 10 F:

This form can be obtained from your bank or downloaded from incometaxindia.gov. on the website. Enter the required information such as the applicant’s nationality, tax ID number, address, and period of stay.

Self Declaration:

Self-declaration Self-declaration is information that an individual is required to provide information regarding the country which will be covered under the DTAA with India. 

Residence Certificate for Tax Purposes:

This certificate must be obtained from the taxpayer’s country of residence for a particular financial year. After submitting the required documents and paying the prescribed fee, a certificate of tax payment will be issued.

How Do I Claim DTAA Exemption

The deduction method is another method that does not take into account your home country’s income. You only have to pay taxes on income earned abroad. This way you can pay taxes in either country. You only have to pay taxes on winnings earned in the United States abroad. This way you can pay taxes in either country.

What Are The Tax Documents Required As Per DTAA in India

NRIs are required to submit the above documents in order to receive the benefits and provisions laid under DTAA. These documents are

  1. Tax exemption or self-declaration
  2. Tax payment certificate
  3. Pan card copy (self-notarized)
  4. Self-attested visa
  5. Passport Xerox (self-notarized)
  6. PIO certificate copy

Apart from the above documents, the individual may: Proof of taxpayer residency must be provided to the tax withholding agent in order to be eligible for benefits under this DTAA agreement.

Form 10FA must be submitted to apply for tax residency certification under sections 90A and 90 of the income tax act. After the successful review and processing of your application, a certificate will be issued on Form 10FB.

Frequently Asked Questions (FAQs):-

Who is eligible for DTAA?

DTAA applies when an individual is resident in one country but earns income in another. The DTAA can be comprehensive, covering all sources of income, which means that it will tax income from shipping, inheritance, aviation, etc.

Who can claim DTAA in India?

A DTAA (Double Tax Avoidance Agreement) helps her NRI working abroad to avoid double taxation on income earned in both their residency and India.


Now as you know about DTAA income tax (Complete Guide). For NRIs who are serving in other countries, double taxation avoidance help avoids paying double tax on income earned both in the country of residence and in India. India has this agreement with 80 countries.

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