[DTAA Explained] Double Taxation Avoidance Agreement for NRIs; DTAA country list with TDS rate
Double Taxation Avoidance Agreement (DTAA) is a treaty between two or more countries to avoid levying taxes twice on the same income. This agreement is crucial for Non-Resident Indians (NRIs) who earn income in India and are subject to taxation in both India and their country of residence. In this article, we will delve into the details of DTAA, its benefits, and the procedures for NRIs to utilize this agreement.
What is DTAA?
DTAA is a treaty between two or more countries to avoid double taxation on the same income. India has DTAA agreements with 88 countries, but currently, 85 have been in force. The primary objective of DTAA is to make a country an attractive destination for investment and to enable NRIs to take relief from paying taxes multiple times.
Benefits of DTAA for NRIs
NRIs can benefit from DTAA in several ways:
- Reduced Tax Burden: DTAA reduces the tax burden on NRIs by avoiding double taxation on the same income. This means that NRIs only pay taxes in one country, either in India or in their country of residence, depending on the tax rate.
- Tax Credit Method: NRIs can claim tax credit in their country of residence for taxes paid in India. This method is beneficial for NRIs who earn income in India and are subject to taxation in both countries.
- Tax Exemption Method: NRIs can claim tax exemption in their country of residence for income earned in India. This method is beneficial for NRIs who earn income in India but are not subject to taxation in their country of residence.
Procedure for NRIs to Utilize DTAA
To utilize DTAA, NRIs must follow these steps:
- Obtain Tax Residency Certificate (TRC): NRIs must obtain a TRC from the Government of their country of residence. The TRC must contain specific details such as the NRI’s name, status, nationality, tax identification number, period of stay, and address.
- Submit Documents: NRIs must submit the TRC and any other required documents to the payer of the income in India. These documents include a self-attested copy of the passport and visa, indemnity-cum-declaration (in case of banks), and a self-attested copy of the PAN card (if available).
- Fill Form 10F: NRIs must fill Form 10F, which is provided by the Income Tax Department, to claim tax exemption or credit. This form must be signed and verified by the NRI.
- Verify Documents: The payer of the income in India must verify the documents submitted by the NRI to ensure compliance with DTAA regulations.
DTAA Rates for Various Countries
The rates of TDS under DTAA for various countries are as follows:
- Armenia: 10%
- Italy: 15%
- Russia: 2%
- USA: 30%
Double Taxation Avoidance Agreement Country List
A total of 85 countries currently have DTAA agreements with India. The following countries having Double Taxation Avoidance Agreement with India. TDS rates on interests are listed below. (Listed alphabetically)
| Sl No. | Country | TDS Rate |
|---|---|---|
| 1 | Armenia | 10% |
| 2 | Australia | 15% |
| 3 | Austria | 10% |
| 4 | Bangladesh | 10% |
| 5 | Belarus | 10% |
| 6 | Belgium | 15% |
| 7 | Botswana | 10% |
| 8 | Brazil | 15% |
| 9 | Bulgaria | 15% |
| 10 | Canada | 15% |
| 11 | China | 15% |
| 12 | Cyprus | 10% |
| 13 | Czech Republic | 10% |
| 14 | Denmark | 15% |
| 15 | Egypt | 10% |
| 16 | Estonia | 10% |
| 17 | Ethiopia | 10% |
| 18 | Finland | 10% |
| 19 | France | 10% |
| 20 | Georgia | 10% |
| 21 | Germany | 10% |
| 22 | Greece | As per agreement |
| 23 | Hashemite kingdom of Jordan | 10% |
| 24 | Hungary | 10% |
| 25 | Iceland | 10% |
| 26 | Indonesia | 10% |
| 27 | Ireland | 10% |
| 28 | Israel | 10% |
| 29 | Italy | 15% |
| 30 | Japan | 10% |
| 31 | Kazakhstan | 10% |
| 32 | Kenya | 15% |
| 33 | South Korea | 15% |
| 34 | Kuwait | 10% |
| 35 | Kyrgyz Republic | 10% |
| 36 | Libya | As per agreement |
| 37 | Lithuania | 10% |
| 38 | Luxembourg | 10% |
| 39 | Malaysia | 10% |
| 40 | Malta | 10% |
| 41 | Mauritius | 7.50-10% |
| 42 | Mongolia | 15% |
| 43 | Montenegro | 10% |
| 44 | Morocco | 10% |
| 45 | Mozambique | 10% |
| 46 | Myanmar | 10% |
| 47 | Namibia | 10% |
| 48 | Nepal | 15% |
| 49 | Netherlands | 10% |
| 50 | New Zealand | 10% |
| 51 | Norway | 15% |
| 52 | Oman | 10% |
| 53 | Philippines | 15% |
| 54 | Poland | 15% |
| 55 | Portuguese Republic | 10% |
| 56 | Qatar | 10% |
| 57 | Romania | 15% |
| 58 | Russia | 10% |
| 59 | Saudi Arabia | 10% |
| 60 | Serbia | 10% |
| 61 | Singapore | 15% |
| 62 | Slovenia | 10% |
| 63 | South Africa | 10% |
| 64 | Spain | 15% |
| 65 | Sri Lanka | 10% |
| 66 | Sudan | 10% |
| 67 | Sweden | 10% |
| 68 | Swiss Confederation | 10% |
| 69 | Syrian Arab Republic | 7.50% |
| 70 | Tajikistan | 10% |
| 71 | Tanzania | 12.50% |
| 72 | Thailand | 25% |
| 73 | Trinidad and Tobago | 10% |
| 74 | Turkey | 15% |
| 75 | Turkmenistan | 10% |
| 76 | UAE | 12.50% |
| 77 | UAR (Egypt) | 10% |
| 78 | Uganda | 10% |
| 79 | UK | 15% |
| 80 | Ukraine | 10% |
| 81 | United Mexican States | 10% |
| 82 | USA | 15% |
| 83 | Uzbekistan | 15% |
| 84 | Vietnam | 10% |
| 85 | Zambia | 10% |
Source: BankBazaar
DTAA is an effective financial agreement that is beneficial to both the taxpayer as well as the respective tax collection authorities in various countries.
DTAA is a crucial agreement for NRIs who earn income in India and are subject to taxation in both India and their country of residence. By understanding the benefits and procedures of DTAA, NRIs can reduce their tax burden and avoid double taxation. It is essential for NRIs to obtain a TRC and submit the required documents to the payer of the income in India to utilize DTAA.