DTAA - Double Taxation Avoidance Agreements with India
India has one of the largest networks of tax treaties for the avoidance of double taxation and prevention of tax evasion. The country has Double Tax Avoidance Agreements (DTAAs) with over 85 countries under Section 90 of the Income Tax Act, 1961.
The purpose of such tax treaties is to develop a fair and equitable system for the allocation of the right to tax different types of income between the ‘source’ and ‘residence’ countries.
A DTAA simply mitigates double imposition of tax when there is a cross national flow of income and ensures tax neutrality. The agreement between the negotiating countries provides specific guidelines on how the income generated in one country and transferred to another is to be taxed by the source and resident country. This ensures protection to taxpayers against double taxation and prevent any deterrence that the double taxation may otherwise promote in the free flow of international trade, investment, and transfer of technology between two countries.
A DTAA between India and other countries covers only residents of India and residents of the negotiating country. Any person or a company that is not resident, either in India or in the other country that has entered into an agreement with India, cannot claim benefits under the signed DTAA.
DTAA eased out with TAXAJ in a Layman's Language!
List of Countries & Withholding Tax Rates under DTAA
Foreign or non-resident companies operating in India are subject to withholding tax on their income – dividend, interest, royalty, or fees for technical services, as prescribed under the IT Act.
However, foreign companies that are resident in the countries that India has a DTAA with, can claim more beneficial provisions and rates between the IT Act and the DTAA.
Below is a comprehensive list of countries that have a DTAA with India and their respective withholding tax rates:
India's Double Taxation Avoidance Agreement (DTAA)
Country | Dividend | Interest | Royalty | Fee for Technical Services |
Albania | 10% | 10%[Note1] | 10% | 10% |
Armenia | 10% | 10% [Note1] | 10% | 10% |
Australia | 15% | 15% | 10%/15% [Note 2] | 10%/15% Advertisement: 0:30 [Note 2] |
Austria | 10% | 10% [Note1] | 10% | 10% |
Bangladesh | a) 10% (if at least 10% of the capital of the company paying the dividend is held by the recipient company); b) 15% in all other cases | 10% [Note1] | 10% | No separate provision |
Belarus | a) 10%, if paid to a company holding 25% shares; b) 15%, in all other cases | 10% [Note1] | 15% | 15% |
Belgium | 15% | 15% (10% if loan is granted by a bank) | 10% | 10% |
Bhutan | 10% | 10% [Note 1] | 10% | 10% |
Botswana | a) 7.5%, if shareholder is a company and holds at least 25% shares in the investee-company; b) 10%, in all other cases | 10% [Note1] | 10% | 10% |
Brazil | 15% | 15% [Note1] | a) 25% for use of trademark; b) 15% for others | No separate provision |
Bulgaria | 15% | 15% [Note1] | a) 15% of royalty relating to literary, artistic, scientific works other than films or tapes used for radio or television broadcasting; b) 20%, in other cases | 20% |
Canada | a) 15%, if at least 10% of the voting powers in the company, paying the dividends, is controlled by the recipient company; b) 25%, in other cases | 15% [Note1] | 15%-20% | 15%-20% |
China | 10% | 10% [Note1] | 10% | 10% |
Columbia | 5% | 10% [Note1] | 10% | 10% |
Croatia | a) 5% (if at least 10% of the capital of the company paying the dividend is held by the recipient company); b) 15% in all other cases | 10% [Note1] | 10% | 10% |
Cyprus | 10% | 10% [Note1] | 10% | 10% |
Czech Republic [Note5] | 10% | 10% [Note1] | 10% | 10% |
Denmark | a) 15%, if at least 25% of the shares of the company paying the dividend is held by the recipient company; b) 25%, in other cases | a) 10% if loan is granted by bank; b) 15% for others [Note1] | 20% | 20% |
Estonia | 10% | 10% [Note1] | 10% | 10% |
Ethiopia | 7.5% | 10% [Note1] | 10% | 10% |
Finland | 10% | 10% [Note1] | 10% | 10% |
Fiji | 5% | 10% [Note 1] | 10% | 10% |
France | 10% | 10% [Note1] | 10% | 10% |
Georgia | 10% | 10% [Note1] | 10% | 10% |
Germany | 10% | 10% [Note1] | 10% | 10% |
Hongkong | 5% | 10% [Note1] | 10% | 10% |
Hungary | 10% | 10% [Note1] | 10% | 10% |
Indonesia | 10% | 10% [Note1] | 10% | 10% |
Iceland | 10% | 10% [Note1] | 10% | 10% |
Iran | 10% | 10% | 10% | 10% |
Ireland | 10% | 10% [Note1] | 10% | 10% |
Israel | 10% | 10% [Note1] | 10% | 10% |
Italy | a) 15% if at least 10% of the shares of the company paying dividend is beneficially owned by the recipient company; b) 25% in other cases | 15% [Note1] | 20% | 20% |
Japan | 10% | 10% [Note1] | 10% | 10% |
Jordan | 10% | 10% [Note1] | 20% | 20% |
Kazakhstan | 10% | 10% [Note1] | 10% | 10% |
Kenya | 10% | 10% | 10% | 10% |
Korea | 15% | 10% | 10% | 10% |
Kuwait | 10% [Note 1] | 10% | 10% | 10% |
Kyrgyz Republic | 10% | 10% [Note1] | 15% | 15% |
Latvia | 10% | 10% [Note1] | 10% | 10% |
Lithuania | 5%*, 15% | 10% [Note1] | 10% | 10% |
Luxembourg | 10% | 10% [Note1] | 10% | 10% |
Malaysia | 5% | 10% [Note1] | 10% | 10% |
Malta | 10% | 10% [Note1] | 10% | 10% |
Mongolia | 15% | 15% [Note1] | 15% | 15% |
Mauritius | a) 5%, if at least 10% of the capital of the company paying the dividend is held by the recipient company; b) 15%, in other cases | 7.5 | 15% | 10% |
Montenegro | 5% (in some cases 15%) | 10% [Note1] | 10% | 10% |
Myanmar | 5% | 10% [Note1] | 10% | No separate provision |
Morocco | 10% | 10% [Note1] | 10% | 10% |
Mozambique | 7.5% | 10% [Note1] | 10% | No separate provision |
Macedonia | 10% | 10% [Note 1] | 10% | 10% |
Namibia | 10% | 10% [Note1] | 10% | 10% |
Nepal | 5%**, 10% | 10% [Note1] | 15% | No separate provision |
Netherlands | 10% | 10% [Note1] | 10% | 10% |
New Zealand | 15% | 10% [Note1] | 10% | 10% |
Norway | 10% | 10% [Note1] | 10% | 10% |
Oman | a) 10%, if at least 10% of shares are held by the recipient company; b) 12.5%, in other cases | 10% [Note1] | 15% | 15% |
Philippines | a) 15%, if at least 10% of the shares of the company paying the dividend is held by the recipient company; b) 20%, in other cases | a) 10%, if interest is received by a financial institution or insurance company; b) 15% in other cases [Note1] | 15% if it is payable in pursuance of any collaboration agreement approved by the Government of India | No separate provision |
Poland | 10% | 10% [Note1] | 15% | 15% |
Portuguese Republic | 10%***/15% | 10% | 10% | 10% |
Qatar | a) 5%, if at least 10% of the shares of the company paying the dividend is held by the recipient company; b) 10%, in other cases | 10% [Note1] | 10% | 10% |
Romania | 10% | 10% [Note1] | 10% | 10% |
Russian Federation | 10% | 10% [Note1] | 10% | 10% |
Saudi Arabia | 5% | 10% [Note1] | 10% | No separate provision |
Serbia | a) 5%, if recipient is company and holds 25% shares; b) 15%, in any other case | 10% [Note1] | 10% | 10% |
Singapore | a) 10%, if at least 25% of the shares of the company paying the dividend is held by the recipient company; b) 15%, in other cases | a) 10%, if loan is granted by a bank or similar institute including an insurance company; b) 15%, in all other cases | 10% | 10% |
Slovenia | a) 5%, if at least 10% of the shares of the company paying the dividend is held by the recipient company; b) 15%, in other cases | 10% | 10% | 10% |
South Africa | 10% | 10% [Note1] | 10% | 10% |
Spain | 15% | 15% [Note1] | 10%/20% [Note 3] | 20% [Note 3] |
Sri Lanka | 7.5% | 10% [Note1] | 10% | 10% |
Sudan | 10% | 10%[Note1] | 10% | 10% |
Sweden | 10% | 10% [Note1] | 10% | 10% |
Swiss Confederation | 10% | 10%[Note1] | 10% | 10% |
Syrian Arab Republic | a) 5%, if at least 10% of the shares of the company paying the dividend is held by the recipient company; b) 10%, in other cases | 10%[Note1] | 10% | No separate provision |
Tajikistan | a) 5%, if at least 25% of the shares of the company paying the dividend is held by the recipient company; b) 10%, in other cases | 10%[Note1] | 10% | No separate provision |
Tanzania | 5%****, 10% | 10% | 10% | No separate provision |
Thailand | 10% | 10% [Note1] | 10% | No separate provision |
Trinidad and Tobago | 10% | 10% [Note1] | 10% | 10% |
Turkey | 15% | a) 10% if loan is granted by a bank, etc.; b) 15% in other cases [Note1] | 15% | 15% |
Turkmenistan | 10% | 10% [Note1] | 10% | 10% |
Uganda | 10% | 10%[Note1] | 10% | 10% |
Ukraine | a) 10%, if at least 25% of the shares of the company paying the dividend is held by the recipient company; b) 15%, in other cases | 10% [Note1] | 10% | 10% |
United Arab Emirates | 10% | a) 5% if loan is granted by a bank/ similar financial institute; b) 12.5%, in other cases | 10% | No separate provision |
United Mexican States | 10% | 10% [Note1] | 10% | 10% |
United Kingdom | 15%/10% (Note 4) | a) 10%, if interest is paid to a bank; b) 15%, in other cases [Note1] | 10%/15%[Note 2] | 10%/15%[Note 2] |
United States | a) 15%, if at least 10% of the voting stock of the company paying the dividend is held by the recipient company; b) 25% in other cases | a) 10% if loan is granted by a bank/similar institute including insurance company; b) 15% for others | 10%/15%[Note 2] | 10%/15%[Note 2] |
Uruguay | 5% | 10% [Note1] | 10% | 10% |
Uzbekistan | 10% | 10% [Note1] | 10% | 10% |
Vietnam | 10% | 10% [Note1] | 10% | 10% |
Zambia | a) 5%, if at least 25% of the shares of the company paying the dividend is held by a recipient company for a period of at least 6 months prior to the date of payment of the dividend; b) 15% in other cases | 10% [Note1] | 10% | 10% |
*If the beneficial owner is a company (other than a partnership) which holds directly at least 10 per cent of the capital of the company paying the dividends.
**5% if beneficial owner of shares is a company and it holds at least 10% of shares of the company paying the dividends.
*** if the beneficial owner is a company that, for an uninterrupted period of two fiscal years prior to the payment of the dividend, owns directly at least 25 per cent of the capital stock of the company paying the dividends.
****5% if recipient company owns at least 25% share in the company paying the dividend.
1. Dividend/interest earned by the Government and certain specified institutions, inter-alia, Reserve Bank of India is exempt from taxation in the country of source (subject to certain condition).
2. Royalties and fees for technical services would be taxable in the country of source at the rates prescribed for different categories of royalties and fees for technical services. These rates shall be subject to various conditions and nature of services/royalty for which payment is made. For detailed conditions refer to relevant Double Taxation Avoidance Agreements.
3. Royalties and fees for technical services would be taxable in the country of source at the following rates:
a. 10 per cent in case of royalties relating to the payments for the use of, or the right to use, industrial, commercial or scientific equipment;
b. 20 per cent in case of fees for technical services and other royalties.
4. (a)15 per cent of the gross amount of the dividends where those dividends are paid out of income (including gains) derived directly or indirectly from immovable property within the meaning of Article 6 by an investment vehicle which distributes most of this income annually and whose income from such immovable property is exempted from tax;
(b) 10 per cent of the gross amount of the dividends, in all other cases
5. The CBDT has clarified that DTAA signed with Government of the Czech Republic on the 27th January 1986 continues to be applicable to the residents of the Slovak Republic.
