Look up your treaty
Most questions about a tax treaty come down to two things: which country taxes a kind of income first, and how much India can take. Pick the country you live in. The grid shows every common kind of Indian income, with the article of the treaty that decides it.
Who taxes what, where you live
Pick the country you live in. Each row shows whether India taxes that income first, and the most it can deduct once you've given the payer your treaty papers.
The rates are the most India can charge a non-resident individual under the treaty, compared with India’s own rate plus cess. A payer uses the lower rate only once you’ve given it your treaty papers; otherwise you claim it in your return. We cover eight treaties here; the rest are on the Income Tax Department’s treaty pages listed under Sources.
The rules in brief
Everything here applies to tax year 2026-27, and assumes you’re a non-resident of India for the year and a tax resident of the other country. Each part is a summary; the country guides go through each treaty article by article.
What a treaty does, and what it doesn’t
India taxes a non-resident only on income that arises or is received in India: rent from a flat in Pune, interest on an NRO deposit, dividends from Indian shares, a gain when you sell. The country you live in usually taxes your worldwide income, which includes the same rupees. Without anything to stop it, that income would be taxed in full twice.
A Double Taxation Avoidance Agreement, or DTAA, is a treaty between India and another country that settles this. For each kind of income it says which country may tax it, sometimes with a cap on the source country’s rate, and it obliges the country where you live to give relief for tax paid in the other. India gives treaties the force of law through 2025 Act s. 159was s. 90.
Two things surprise people. First, a treaty never makes income tax-free in both places: it decides who taxes first and how the other gives way. Second, it can only reduce your Indian tax, never increase it. If the Act’s own treatment is better for you, you use the Act; the treaty applies only where it’s more beneficial. That’s why an NRI with modest interest often ends up paying India less than the treaty rate, as the worked example below shows.
If India's tax is higher than your country's tax on that income, the credit stops at your country's tax. The rest is a real cost, unless India refunds it.
A country with no personal income tax, such as the UAE, ends up in the same place by default: the Indian tax is the only tax.
Almost every treaty an NRI deals with uses the credit method: India taxes first as the source country, and your country taxes the same income at its own rate, then subtracts the Indian tax. You end up paying about the higher of the two rates. The exemption method, where your country simply leaves the Indian income out, is rare for an individual’s investment income.
Which country taxes first
The treaties India has signed with the countries most NRIs live in follow the same pattern for the income most people have. The article numbers differ from treaty to treaty; the lookup above gives them for your country.
- Rent from Indian property: India taxes first and in full. The immovable-property article gives the country where the property is the right to tax, with no cap. Your tenant deducts TDS at 30% plus surcharge and cess, and renting out a flat in India covers the return that squares it up.
- A gain on selling Indian property: India again, in full. Every treaty here lets India tax gains on immovable property in India. The buyer deducts TDS on the whole price; see our guide to selling a flat in India as an NRI.
- Interest and dividends from India: both countries may tax, but India’s share is capped at the treaty rate. This is where the treaty saves you money in India.
- NRE interest: not taxed in India at all, because of Indian law rather than the treaty, while you hold an NRE account as a non-resident. Your country may still tax it.
- Salary: taxed where the work is done. Pay for work abroad isn’t taxed in India while you’re a non-resident, whoever pays it.
- Pensions: it depends on the pension and the treaty. A private pension is usually taxed only where you live; a pension for Indian government service is usually taxed only in India. The Canada treaty is the odd one out: a pension arising in India is taxed only in India.
Capital gains on Indian shares and mutual funds are where treaties differ. The US, UK and Canada treaties leave them to each country’s own law, so India taxes them in full; the UAE, Australia, Saudi Arabia and Qatar treaties say outright that India may tax gains on shares of an Indian company. The Singapore treaty still protects shares bought before its 2017 change, which only Singapore can tax. That’s a country-by-country question for the treaty guides.
Claiming the treaty rate in India
India won’t give you a treaty rate on your word. Under 2025 Act s. 159was s. 90 you need a tax residency certificate, or TRC, from the country you live in, covering the period the income relates to. With it goes Form 41 (was Form 10F), filed online, which gives the details a certificate may leave out: your status, nationality, tax number abroad, the period and your address.
You can use the treaty at two points. The first is before tax is deducted: give the payer your certificate, a copy of Form 41, your PAN and usually a short declaration that you have no permanent establishment in India and are the beneficial owner of the income. The payer may then deduct at the treaty rate. The second is in your return: whatever the payer did, you claim the treaty rate there and the difference comes back as a refund.
In practice, the first route depends on the payer. Banks and companies apply a treaty rate at their discretion and carry the risk if they get it wrong, so many ask for the papers every year, some only accept them at the start of the tax year, and some won’t apply treaty rates at all. That’s a practice, not a rule; the law lets them apply the treaty rate once they have what they need.
The step-by-step guide to the certificate and Form 41 covers exactly what to send, and to whom, country by country.
Claiming credit where you live
The other half of the relief happens in your country of residence, under its rules and forms. You declare the Indian income there, in its currency, and claim a credit for the Indian tax. Three limits apply almost everywhere:
- The credit is for the Indian tax you finally owe, not the TDS deducted. If your bank took more than your real Indian tax, the extra isn’t a foreign tax your country will credit; you get it back by filing an Indian return.
- The credit is capped at the treaty rate. Tax India took above what the treaty allows is India’s to refund, not your country’s to credit.
- The credit can’t exceed your own country’s tax on that income. If India’s tax is higher, the excess is usually lost, unless your country lets you carry it forward.
You’ll need proof of the Indian tax: the TDS certificate from the payer, Form 168 (was Form 26AS), and your Indian return and assessment if you filed one. Keep them with the certificate; a tax office abroad can ask years later.
Each country does this differently. The US uses a foreign tax credit claimed on its own form, the UK gives foreign tax credit relief in the self-assessment return, Canada and Australia have their own credit or offset. The country treaty guides go through each one.
When the two tax years don’t line up
India’s tax year runs from April to March. The UK’s runs from 6 April, the US and most of Europe use the calendar year, and Australia’s starts in July. So one Indian tax year’s interest can fall into two of your country’s tax years, and the Indian tax on it may not be final until after you’ve filed abroad.
Work it through payment by payment. Your country normally taxes interest when it’s paid or credited to you, and credits the Indian tax on that same payment. The TDS certificates show each deduction with its date, which is what you need to split a year’s interest between two foreign tax years.
If the Indian tax changes later, because India refunds some TDS after you file your Indian return or raises a demand, the credit abroad may need correcting too. Most countries expect you to amend the earlier return rather than adjust the next one. Keep the Indian refund order with your records for that year.
The certificate has the same problem. It usually covers your own country’s tax year, so a US certificate for a calendar year covers only nine months of India’s tax year. Ask for the period you need, or get two.
When India taxes first and your bank deducts
The commonest treaty question is about NRO interest. Your bank must deduct TDS at 30% plus cess on interest paid to a non-resident under 2025 Act s. 393(2) Table Sl. 17was s. 195, whatever your real tax. With a certificate and Form 41 on file, it can deduct at the treaty rate instead, which in most treaties here is well below it.
Even the treaty rate is often more than you owe. Interest on an NRO deposit is taxed at slab rates in your Indian return, and a non-resident gets the new regime’s basic exemption like anyone else. If your Indian income is modest, your real Indian tax can be well below the treaty rate, and you get the rest back only by filing. Our guide to TDS on NRO interest covers the rates, the papers banks ask for and the refund.
Dividends work the same way, at their own rates: the company deducts at 20% plus cess unless you give it treaty papers. In the US and Canada treaties the dividend rate is above India’s own rate plus cess, so the treaty adds nothing there; the lookup shows it country by country.
Resident in both countries
Each country applies its own residence rules, so you can be resident in both, usually in the year you move. When that happens, the treaty’s residence article breaks the tie in a fixed order. In most treaties that’s where you have a permanent home, then where your personal and economic ties are closer, then where you habitually live, then your nationality; the 2025 Qatar treaty leaves out the permanent-home step. If that still doesn’t settle it, the two tax authorities agree it between them.
The tie-breaker only matters once both countries say you’re resident. Start with India’s own day tests; most people who live abroad are non-residents here and never reach the treaty. If you’re leaving or coming back this year, work out your Indian status first with the residency rules for NRIs, then look at the treaty.
The winning country treats you as resident for the treaty; the other taxes you only on income from sources in it. Keep evidence of the tie-breaker facts each year: your lease or home ownership abroad, where your family lives, your travel days, and the certificate. Those papers decide any later dispute.
The Gulf: no income tax, but the treaty still matters
The UAE, Saudi Arabia and Qatar don’t tax an Indian expat’s salary or investment income. You might think that makes the treaty irrelevant. It doesn’t, for two reasons.
First, the treaty still caps India’s rate on interest and dividends, but only if you prove you’re resident there. The UAE treaty counts an individual as a UAE resident only if they’re present in the UAE for at least 183 days in the calendar year, because there’s no tax liability to point to. The Saudi treaty’s Protocol does the same for an Indian national present in Saudi Arabia for at least 183 days in its fiscal year. The 2025 Qatar treaty has no presence test; it relies on the general “liable to tax” definition, which is less clear-cut for someone Qatar doesn’t tax. In the UAE you prove it with a tax residency certificate from the Federal Tax Authority, which you apply for and pay for each year. Without it, your NRO interest is taxed in India at the full domestic rate.
Second, being liable to tax nowhere has its own Indian risk. An Indian citizen whose Indian income is above ₹15 lakh and who isn’t liable to tax in any country can be treated as resident in India. Read who counts as a deemed resident if that’s you; a certificate from your Gulf country is the usual evidence.
With no tax where you live, there’s no credit to claim either: whatever India keeps is your whole tax on that income. That makes getting the treaty rate, and filing for refunds, worth more to you than to someone in London or Toronto.
US citizens and green-card holders
The India–US treaty has a saving clause: the US keeps the right to tax its citizens, and residents including green-card holders, as if the treaty didn’t exist, apart from a few listed articles such as the relief article. So a US citizen living in the US, or anywhere else, is taxed by the US on Indian income in full, and relies on the US foreign tax credit for the Indian tax.
India’s side still works normally. The treaty caps India’s rate on your interest and dividends, you still need a US certificate of residency for it, and India still taxes rent and property gains first. The US-specific traps, such as the treatment of Indian mutual funds, are in the US pages.
Coming back to India: relief the other way round
Once you’re resident in India again, the roles swap. India taxes your worldwide income, unless you’re RNOR, and the foreign country becomes the source. You then claim credit in India for foreign tax, under the treaty, and file Form 44 (was Form 67) by the end of the following tax year, with a return filed on time. Miss it and the credit can be refused.
Where India has no treaty with the other country, the Act gives its own, narrower relief: section 160 of the 2025 Act (old section 91) lets a resident claim relief for foreign tax on income taxed in both, at the lower of the two countries’ average rates.
For most people coming home, RNOR status keeps foreign income out of Indian tax for the first year or two, so the credit question arrives later than they expect.
Anti-abuse rules: the principal purpose test
Treaties aren’t meant to be shopped. Many of India’s treaties are now modified by the multilateral instrument (the US treaty isn’t), which adds a principal purpose test: a treaty benefit can be denied if getting it was one of the main purposes of an arrangement. India’s general anti-avoidance rules can also override a treaty.
For an ordinary NRI earning interest, rent or dividends in the country they actually live in, none of this bites. It matters for structures: moving investments into a company in a treaty country, or routing income through a third country to reach a lower rate.
Key numbers for tax year 2026-27
Figures for tax year 2026-27, checked 27 September 2026.
Treaty rates by country
The most India can tax a non-resident individual on each kind of income, under each treaty. Interest is the general rate for interest from an Indian bank deposit; dividends are the rate for a shareholder who isn’t a company with a large holding.
| You live in | Interest | Dividends | Royalties |
|---|---|---|---|
| United States | 15% | 25% | 15% |
| United Kingdom | 15% | 10% | 15% |
| Canada | 15% | 25% | 15% |
| United Arab Emirates | 12.5% | 10% | 10% |
| Australia | 15% | 15% | 15% |
| Singapore | 15% | 15% | 10% |
| Saudi Arabia | 10% | 5% | 10% |
| Qatar | 10% | 10% | 10% |
India’s own TDS rate, plus cess, applies instead wherever it’s lower. Whether cess is added on top of a treaty rate isn’t settled, and payers differ.
Forms and deadlines
| Form or paper | What it’s for | Who | When |
|---|---|---|---|
| Tax residency certificate | Proves you’re resident in the other country for the period | Your country’s tax office | Each year, before you claim |
| Form 41 (was Form 10F) | The details India needs alongside the certificate | You, on the e-filing portal | Before the payer deducts, and before you file |
| Form 131 (was Form 16A) | Proof of the TDS the bank or company deducted: you need it for the credit abroad | The payer | After each quarter |
| Your Indian return | Claims the treaty rate and the refund of extra TDS; see which return form an NRI uses | You | 31 July 2027 |
| Form 44 (was Form 67) | Claims credit in India for foreign tax, once you’re resident in India again | You | By the end of the following tax year, with a return filed on time |
| Form 42 (was Form 10FA) | Applies for an Indian certificate, if you’re resident in India and need to prove it abroad | You | Before the foreign payer deducts |
The return is where it all comes together: if you file, your treaty claim and your refund are made there. Whether you must file at all depends on your Indian income; see whether an NRI must file a return.
Worked example: NRO interest for someone in the UK
Kavya lives in Leeds and pays UK tax at the higher rate. She kept the money from selling her flat in an NRO fixed deposit, which earns ₹9,00,000 of interest this tax year. She has no other Indian income. We ignore the UK's personal savings allowance to keep it simple.
| Step | Amount |
|---|---|
| NRO interest for the year | ₹9,00,000 |
| 1. Bank deducts TDS without treaty papers (30% + 4% cess = 31.2%) | ₹2,80,800 |
| 2. Bank deducts at the treaty rate once it has the TRC and information form (15%, Article 12) | ₹1,35,000 |
| 3a. Tax under the Act, at new-regime slab rates plus cess | ₹31,200 |
| 3b. Tax under the treaty (15% of the interest) | ₹1,35,000 |
| Indian tax actually owed: the lower of 3a and 3b | ₹31,200 |
| 4. Refund in the return, if the bank used the treaty rate | ₹1,03,800 |
| …or if it deducted without the papers | ₹2,49,600 |
| 5. Tax in the UK on the same interest (the UK higher rate, 40%) | ₹3,60,000 |
| 6. Less credit for the Indian tax actually owed | −₹31,200 |
| Left to pay in the UK | ₹3,28,800 |
Three things stand out. The treaty papers change what the bank holds back, not what Kavya owes: her Indian tax is set by the slab rates in her return, which here come in under the treaty rate because the Act’s treatment is the more beneficial one. Either way, the extra comes back only if she files.
And the UK credits only the tax India finally keeps. If Kavya didn’t file in India, the UK would still credit only her real Indian tax, not the TDS, and the rest would be lost. Overall she pays the UK rate on the interest, part of it to India.
Common mistakes
- Waiting for the bank to apply the treaty. It won’t unless you send the certificate and Form 41, often before the first interest payment of the tax year.
- Claiming credit abroad for the TDS instead of the tax. Your country credits the Indian tax you finally owe. File in India to get the rest back.
- Not declaring NRE interest where you live. It’s tax-free in India, not in the US, UK, Canada or Australia.
- Assuming the Gulf means no paperwork. Without a certificate from your Gulf country, India deducts at the full domestic rate.
- Using an old certificate. It must cover the period of the income; a certificate for last year doesn’t cover this year’s interest.
When to get professional help
Get a chartered accountant in India if you’re resident in both countries this year, since the tie-breaker decides everything else. Get one too if the payer refuses the treaty rate on a large payment, if you have capital gains on Indian shares or funds, where treaties differ, or if you’ve had a notice about a treaty claim. For the credit side, a tax adviser in your country is the right person, especially if Indian tax is higher than your own country’s tax on the income.
DTAA relief is one of eight areas covered on VideshTax. Before you claim a refund of extra TDS, the guides to filing your Indian return cover the return itself.