Claim DTAA Relief explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
DTAA relief lets you avoid being taxed twice on the same income. India grants it under Section 90 (where a treaty exists) or Section 91 (unilateral, no treaty) using two methods — exemption and credit. You need a Tax Residency Certificate, Form 10F, and Form 67 to claim credit under Rule 128.
Overview
When income crosses borders it can be taxed in the source country and again in the residence country. A Double Taxation Avoidance Agreement, or unilateral relief where none exists, removes this overlap. In India the legal basis is Sections 90, 90A and 91 of the Income-tax Act 2025, supported by Rule 128 for foreign tax credit.
The Two Methods of Relief
Exemption method: the income is taxed only in one country and left out of the tax base of the other (sometimes with exemption-with-progression, where the exempt income still influences the slab rate applied to other income).
Credit method: both countries tax the income, but the residence country allows a credit for the tax paid in the source country, restricted to the residence country's own tax on that income. Most Indian treaties use the credit method for the resident state.
Bilateral vs Unilateral Relief
| Situation | Provision | Mechanism |
|---|---|---|
| Treaty country | Section 90 / 90A | Apply the DTAA — beneficial rate, exemption or credit |
| No treaty | Section 91 | Unilateral deduction at the lower of Indian or foreign rate |
Step-by-Step Process
- Establish residence: confirm you are a resident (for FTC) or a non-resident claiming a beneficial source rate.
- Obtain a TRC: secure a Tax Residency Certificate from the other country's tax authority — mandatory under Section 90(4).
- File Form 10F: furnish Form 10F electronically on the income-tax portal, giving the details not contained in the TRC.
- Apply the beneficial provision: under Section 90(2), compare the Act rate with the treaty rate and use the lower for the same income.
- Compute foreign tax credit: under Rule 128, credit the foreign tax against Indian tax on that income, capped at the Indian tax attributable to it.
- File Form 67: submit Form 67 with proof of foreign tax paid on or before filing your return.
Worked Example
An Indian resident earns ₹10,00,000 interest abroad and pays ₹1,50,000 (15%) foreign tax. Indian tax on that income works out to ₹3,00,000 (30%). Under the credit method, India allows FTC of ₹1,50,000 (the lower of foreign tax paid and Indian tax on that income), leaving net Indian tax of ₹1,50,000 — no double taxation. The credit is claimed through Form 67.
Common Pitfalls
Missing the TRC, forgetting Form 10F, filing Form 67 late, or trying to cherry-pick beneficial clauses across the Act and treaty for the same income all lead to denial of relief. Keep contemporaneous proof of foreign tax actually paid, not merely provided for.