Double Taxation Avoidance Agreement (DTAA)
Double Taxation Avoidance Agreement (DTAA) – Relief for NRIs
Classic Partner – Chartered Accountants for NRI Taxation
What is DTAA?
Double taxation occurs when a Non-Resident Indian (NRI) is taxed twice—once in India (the source country) and again in their country of residence (e.g., USA, UK)—on the same income.
To avoid this, India has signed Double Taxation Avoidance Agreements (DTAA) with over 90 countries. These treaties ensure that the same income is not taxed twice, making cross-border compliance easier and promoting international trade and investments.
How DTAA Helps NRIs
DTAA provides relief through three key methods:
Exemption Method – Only one country has the right to tax the income.
Tax Credit Method – The resident country grants credit for taxes paid in the source country.
Concessional Tax Rates – Certain incomes (like interest, dividends, or royalties) are taxed at reduced rates under the treaty.
Example: NRO Account Interest Income (India–USA DTAA)
| Description | Rate | Tax (INR) |
|---|---|---|
| Tax in India (source country) | 15% (DTAA) | ₹15,000 |
| Tax in USA (resident country) | 30% | ₹30,000 |
| Credit for Indian tax paid | ₹15,000 | Final US Tax = ₹30,000 |
Key Benefits of DTAA for NRIs
Lower TDS rates on NRO interest, dividends, and royalties
Ability to claim foreign tax credits in the resident country
Avoidance of double taxation on global income
Access to concessional tax rates under treaty rules
Documents Required to Claim DTAA Benefits
To avail DTAA relief in India, NRIs must provide:
Tax Residency Certificate (TRC) from their country of residence
PAN Card (mandatory for lower TDS in India)
Passport, Visa, and OCI Card (if applicable)
Form 10F filed electronically on the Indian Income Tax portal
Mandatory details in TRC:
Full Name, Nationality, and Status
Tax Identification Number (TIN) or Unique ID
Period of validity
Residential address
Where to Submit TRC?
Option 1: Directly to the income payer in India (e.g., banks, companies deducting TDS)
Option 2: Attach with your Indian Income Tax Return (ITR) to claim refund of excess TDS
Validity: TRC is valid only for one financial year.
DTAA and Multilateral Instrument (MLI)
India is a signatory to the OECD’s Multilateral Instrument (MLI) under the BEPS framework. Effective from FY 2020–21, MLI ensures treaties are not misused for tax evasion or aggressive tax planning.
Why Choose Classic Partner for DTAA Advisory?
Our NRI taxation experts assist with:
Evaluating DTAA eligibility for your income sources
Preparing and filing Form 10F & TRC submissions
Claiming foreign tax credits to reduce double taxation
Filing Indian ITRs with DTAA relief and TDS refunds
End-to-end support for NRI tax compliance
Contact Classic Partner – Your trusted Chartered Accountants for NRI DTAA relief, cross-border tax planning, and compliance.
