DTAA Relief in India — Avoid Being Taxed Twice

Treaty relief is governed by Section 90 (agreements with foreign countries) and Section 90A (specified associations). Section 90(2) lets a taxpayer apply whichever is more beneficial — the DTAA rate or the domestic rate. For countries with no treaty, unilateral relief is available under Section 91. Section 90(4) makes a Tax Residency Certificate mandatory to claim treaty benefits.

Yes, in most cases. Section 90(2) provides that where a DTAA applies, the provisions of the Act or the treaty, whichever are more beneficial to the taxpayer, will apply. So an NRI can adopt the lower treaty rate on Indian income — provided a valid TRC (and Form 10F) is furnished. Some anti-abuse provisions (GAAR, MLI/PPT) can still restrict treaty benefits in aggressive cases.

Give your Indian payer, before the payment date, a valid Tax Residency Certificate (TRC) from your country of residence plus a Form 10F filed online on the income tax portal. The bank or company then deducts TDS at the DTAA rate instead of the higher domestic rate. If TDS was already deducted at the higher rate, you reclaim the excess by filing your Indian ITR.

Without a valid TRC (and Form 10F) the payer must deduct TDS at the full domestic rate — for example 30% on NRO interest — because the treaty rate cannot be applied on trust. You can still recover the excess later by filing an Indian return and claiming a refund, but you lose the cash-flow benefit of lower deduction at source. Arrange the TRC early each financial year.

A TRC is an official document issued by the tax authority of the foreign country confirming you are a tax resident there for a specific financial year — for example, US residents get it from the IRS and UK residents from HMRC. It should carry your name, address, taxpayer identification number, period of residence and the relevant treaty. Under Section 90(4) a TRC is mandatory to claim DTAA benefits; Form 10F supplements it if any prescribed detail is missing.

Form 10F is a self-declaration that supplies the treaty and residency particulars a TRC may not contain. It is filed online on incometax.gov.in under e-Filing after registering on the portal, and the acknowledgement is given to the Indian payer along with the TRC. Note that under the Income-tax Act, 2025 (effective AY 2026-27) this online declaration is being reorganised — reportedly to Form 41 — so confirm the live form on the portal before filing.

Form 67 is the form for claiming a Foreign Tax Credit (FTC) — credit for tax paid abroad on income that is also taxable in India. It is filed online under Rule 128 and captures the foreign income, the foreign tax paid and the exchange rate used. Filing Form 67 on or before furnishing your ITR is essential; missing the deadline can lead to the credit being denied.

For lower TDS at source, you give the TRC and Form 10F to your payer and no return is strictly needed for that step. But to claim a refund of excess TDS or a foreign tax credit, you must file an Indian return — usually ITR-2 for NRIs and residents with foreign income — and report foreign assets in Schedule FA where applicable.

Yes. Under Sections 90/90A (treaty countries) and Section 91 (non-treaty countries), a resident can claim a Foreign Tax Credit for tax paid abroad on income also taxable in India. File Form 67 on the portal before filing your ITR, with details of the foreign income, tax paid and exchange rate. For non-treaty countries the credit is limited to the lower of the Indian tax rate or the foreign tax rate on that income.

The credit is generally the lower of the tax paid in the foreign country and the Indian tax payable on that same income, converted at the telegraphic transfer buying rate on the last day of the month before the tax was paid or deducted. It cannot exceed the Indian tax on that income, so any excess foreign tax is not refunded by India. Form 67 documents the computation.

Under the India-USA DTAA, dividends are taxed at 15% (25% if the recipient holds a substantial voting stake), interest from India at 15% against a higher domestic TDS, and royalties/technical services at 10-15%. US residents can also claim a Foreign Tax Credit in their US return for tax paid in India, and US Social Security benefits paid to Indian residents are taxable only in the USA under the treaty. Verify the current rates in the treaty text before applying them.

Yes. The India-UAE DTAA caps Indian TDS on dividends (around 10%), interest (around 12.5%) and royalties (around 10%), and allocates taxing rights based on residence. Because the UAE levies no personal income tax, treaty residency and the TRC become especially important — establishing genuine UAE tax residence is key to claiming the benefit, and Indian anti-abuse rules can apply.

No. NRIs use it mainly to reduce TDS on Indian income, but resident Indians with foreign income — foreign salary, dividends, capital gains or interest — also use DTAA and Section 91 to claim a foreign tax credit for tax paid abroad, via Form 67. The treaty works in both directions depending on where the income arises and where you are resident.

It depends on the treaty. Some treaties (historically Singapore and Mauritius) had special capital-gains provisions that have been amended, so gains on Indian shares are now generally taxed under Indian domestic law. Gains on Indian immovable property are taxable in India regardless of the treaty. Always check the specific DTAA article and the current protocol before assuming a gain is exempt.

Yes. TaxClue's CA-led team helps NRIs and residents obtain and use a TRC, file Form 10F, compare the treaty and domestic rates, prepare Form 67 for the foreign tax credit, and file the correct ITR with foreign-asset reporting — fully online, across India.