India DTAA Guide: How to Use Tax Treaty Rates, TRC Requirements, and Form 10F

India has Double Taxation Avoidance Agreements (DTAAs) in force with over 90 countries. For NRIs and foreign professionals receiving Indian-source income — dividends from an Indian company, interest from an NRO account, royalty from licensing IP to an Indian entity, or fees for technical services — these treaties routinely cut the withholding tax rate to half or less of what the domestic law would impose. The catch: you need to claim the benefit correctly, or the payer will default to the domestic rate.

This article covers the mechanics of treaty claims: the governing provision in the Income Tax Act, the Tax Residency Certificate requirement, Form 10F, and specific rates across four major DTAAs.

The Governing Provision: s.90(2) ITA 1961

Section 90 of the Income Tax Act, 1961 authorises the Central Government to enter into DTAAs with foreign governments. The operative sub-section for taxpayers is s.90(2), which provides that a taxpayer may claim the benefit of whichever is more beneficial — the provisions of the DTAA or the provisions of the Act.

This is the "most-favourable rule." In practice: if the DTAA rate on royalty income is 10% and the domestic rate under s.115A is 20%, the taxpayer claims the DTAA rate. If the domestic rate is lower (which happens less often but can occur after the 2020 dividend taxation change), the taxpayer sticks with domestic law. The choice is the taxpayer's to make for each income type.

The DTAA applies from the date it enters into force and to income of the relevant assessment year in which the income arises or is received, depending on the type. Amendments and protocols to DTAAs (such as the 2017 protocol to the India-Singapore DTAA) take effect from the date specified in the protocol.

The Four Income Types That DTAA Addresses

Most NRI and cross-border income disputes revolve around four categories. Each has its own article in a DTAA and its own domestic law counterpart.

Dividends: Indian companies distributing dividends to NRIs are now subject to TDS at the domestic rate of 20% under s.115A ITA 1961 (plus surcharge and cess). DTAAs typically cap this at 10–15%, but the rate varies by treaty and by the percentage shareholding the NRI holds.

Interest: Typically interest on NRO fixed deposits, FEMA-compliant debentures, or corporate bonds. Domestic rate is 20% under s.115A. DTAAs generally provide for 10–15%.

Royalties: Payments for use of patents, copyrights, trade marks, or know-how. Domestic rate is 20% under s.115A. DTAA rates are typically 10–15%, with some older treaties at 10%.

Fees for Technical Services (FTS): Payments for managerial, technical, or consultancy services where make-available conditions apply (in many treaties). Domestic rate is 20% under s.115A. DTAA rates mirror royalties in most treaties, at 10–15%.

Treaty Rates Compared: Four Key DTAAs

The following rates are source-country (India) withholding rates under the relevant DTAA article, applicable where the recipient is a tax resident of the treaty country and produces the required documentation. All rates are percentages of the gross amount.

India-US DTAA (1990, as amended)

Article 10 (Dividends): 15% where the beneficial owner is a company holding at least 10% of the voting stock of the Indian company; 25% in all other cases. Against a domestic rate of 20%, the 25% general rate under the India-US DTAA offers no relief for small or portfolio shareholders — the domestic rate under s.115A is more beneficial for them.

Article 11 (Interest): 10% of the gross amount in most cases; 15% applies to certain categories of interest income.

Article 12 (Royalties) and Article 12 (Fees for Included Services): 10% or 15% depending on whether the income meets the "included services" definition (a higher standard than India's broad FTS definition). Services must involve making technical knowledge available.

India-UK DTAA (1993, as amended)

Article 10 (Dividends): 15% where the beneficial owner holds at least 25% of the capital; 15% in other cases as well (the treaty effectively provides a uniform 15%).

Article 11 (Interest): 10% of the gross amount, with a carve-out for certain government debt.

Article 13 (Royalties, FTS): 10% where the payer is an Indian resident. This makes the India-UK DTAA one of the more favourable treaties for royalty and FTS income.

India-UAE DTAA (1993)

The UAE levies no personal income tax and no withholding tax at source. The DTAA's practical function, from the perspective of an Indian payer remitting to a UAE-resident recipient, is to restrict India's source-country withholding.

Article 11 (Interest): 12.5% of the gross amount.

Article 13 (Royalties): 10% of the gross amount.

Dividends: the DTAA does not provide a specific reduced rate on dividends in the same manner as other treaties, because the UAE counterpart imposes no domestic dividend tax. Indian payers default to the s.115A domestic rate of 20% for dividend remittances to UAE residents unless a more specific treaty analysis applies.

India-Singapore DTAA (1994, revised protocol 2017)

The 2017 protocol eliminated the capital gains exemption that had made the India-Singapore corridor a major structuring route. The withholding provisions remain in force.

Article 10 (Dividends): 10% where the beneficial owner is a company holding at least 25% of the capital; 15% in other cases.

Article 11 (Interest): 10% of the gross amount.

Article 12 (Royalties): 10% of the gross amount. The definition of royalties follows the OECD model closely.

The TRC Requirement: s.90(4) ITA 1961

The most-favourable rule in s.90(2) is not unconditional. Section 90(4) ITA 1961 makes it explicit: a non-resident cannot claim DTAA benefits in a particular assessment year unless they furnish a Tax Residency Certificate (TRC) from the government of the country in which they are resident.

The TRC must:

• Be obtained from the tax authority or relevant government body of the foreign country


• Cover the relevant financial year or assessment year for which the claim is being made


• Contain the taxpayer's name, status (individual/company), nationality/incorporation country, tax identification number, period of residency, and address in the foreign country

The TRC requirement was introduced by the Finance Act 2012 following widespread misuse of treaty benefits. There is no exemption from the TRC requirement — if the taxpayer cannot produce one, the domestic rate applies by default.

Form 10F: The Additional Declaration

In cases where the TRC does not contain all the particulars required under Rule 21AB of the Income Tax Rules, 1962, the non-resident must also file Form 10F. This form captures the information that a TRC may omit: the taxpayer's address in the foreign country during the relevant period, tax identification number, and residential status.

CBDT has moved Form 10F to online filing. Non-residents must now file Form 10F on the Income Tax e-filing portal (incometax.gov.in) rather than submitting a paper declaration to the payer. Foreign nationals without a PAN were granted a conditional exemption from mandatory e-filing for certain transitional periods, but the general requirement for online Form 10F is now the operative standard. Payers processing s.195 deductions should obtain a filed Form 10F (with acknowledgement) from the recipient, not just a signed paper copy.

The s.195 TDS Interaction

When an Indian resident pays any sum to a non-resident that is chargeable to tax, s.195 ITA 1961 requires the payer to deduct TDS at the time of payment or credit, whichever is earlier. The default rate is the rate in force, which is the domestic statutory rate plus applicable surcharge and cess.

If the payee is a tax resident of a treaty country and produces a valid TRC and Form 10F, the payer may deduct TDS at the treaty rate instead of the domestic rate. The payer is not required to apply the treaty rate unilaterally — it is the payee's obligation to furnish the documentation and assert the treaty claim.

The payer who deducts at a higher domestic rate (perhaps because documentation was not furnished in time) is not penalised for it. The NRI can subsequently claim the TRC-and-10F-backed treaty relief in their ITR and seek a refund of excess TDS. However, this delays the receipt of funds and triggers an ITR-filing requirement.

Where the payee has reason to believe that no tax (or a lower tax) is payable on a particular payment, they can also approach the Assessing Officer under s.195(2) or s.195(3) for a nil-deduction or lower-deduction certificate. This is distinct from the DTAA route but can be used in conjunction with it.

What Happens Without a TRC

Failure to produce a TRC means the payer must deduct at the domestic rate. There is no appeal or grace period at the time of TDS deduction — once the payment is made without a valid TRC in hand, the payer has no basis to apply the treaty rate, and attempting to do so exposes them to disallowance under s.40(a)(i) (disallowance of business expenditure where TDS is short-deducted).

From the recipient's perspective, the excess TDS can be recouped only through an ITR refund claim, which requires filing an ITR in India and going through the refund processing cycle. For non-residents with only passive income (dividends, interest) and no Indian filing history, this creates an administrative burden that could have been avoided with a timely TRC.

Where a TRC is not obtainable — for example, because the foreign jurisdiction does not issue such certificates — the taxpayer should approach the Indian tax authority with documentary evidence of residence (tax returns filed in the foreign country, foreign tax identification documentation, and residence records). These will be evaluated on a facts-and-circumstances basis, but they do not automatically substitute for a TRC.

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Key Takeaways

• s.90(2) ITA 1961 gives the taxpayer the right to choose the more favourable of DTAA or domestic law — but only if the DTAA rate is actually lower.
• s.90(4) ITA 1961 makes the TRC non-negotiable: no TRC means no treaty benefit, regardless of actual residency.
• Form 10F must now be filed online on the income tax portal; paper declarations are no longer sufficient for the payer to defend the treaty rate.
• Without documentation, the payer defaults to the domestic rate (typically 20% under s.115A), and recovery requires filing an Indian ITR and waiting for a refund.
• Rates differ materially across treaties: the India-US DTAA at 25% general dividend rate is often worse than the domestic rate, while the India-UK and India-Singapore treaties at 10–15% routinely beat s.115A.

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