Double Taxation Avoidance Agreements (DTAA)
Double Taxation Avoidance Agreement (DTAA) – Relief for NRIs | Casela Advisors
At Casela Advisors, our expert Chartered Accountants for NRIs help clients navigate complex cross-border tax issues, including relief under the Double Taxation Avoidance Agreement (DTAA).
What is DTAA?
Double taxation arises when a Non-Resident Indian (NRI) is taxed twice—once in India (source country) and again in their country of residence (e.g., USA, UK)—on the same income. A Double Taxation Avoidance Agreement is a bilateral treaty signed between countries to ensure that such income is not taxed twice and to promote international trade and investment.
How DTAA Helps NRIs
DTAA provides relief using the following methods:
- Exemption Method: Only one country has the right to tax.
- Tax Credit Method: The resident country gives credit for tax paid in the source country.
- Concessional Tax Rates: Certain incomes (like interest or dividends) are taxed at reduced rates.
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 taxes paid | ₹15,000 | Final tax: ₹30,000 |
Key DTAA Benefits for NRIs
- Reduced TDS (Tax Deducted at Source) on NRO interest, dividends, etc.
- Claim foreign tax credits when filing tax returns abroad.
- Avoid double taxation on global income.
- Avail professional support from NRI tax consultants at Casela Advisors.
Documents Required for DTAA Benefits
To claim DTAA benefits, NRIs must submit:
- Tax Residency Certificate (TRC) from their country of residence
- PAN Card (if available)
- Passport, Visa, and OCI (if applicable)
- Form 10F filed electronically through the Indian Income Tax portal
Mandatory Details in TRC:
- Name, Status, and Nationality
- Tax ID or Unique Identifier
- Validity Period & Address
Where to Submit TRC?
- Option 1: Submit to the income payer in India (e.g., banks, companies)
- Option 2: Submit with the Indian Income Tax Return (ITR) to claim refund of excess TDS
TRC Validity & Application Process
- TRC is valid for one financial year only.
- NRIs must apply through their country’s tax authority.
- Indian residents must file Form 10FA and receive Form 10FB from the Indian tax department.
Multilateral Instrument (MLI) and DTAA
India is a signatory to the Multilateral Instrument (MLI) under OECD’s BEPS framework. Effective from FY 2020-21, MLI curbs treaty abuse and ensures that DTAAs are not misused for aggressive tax planning.
Why Choose Casela Advisors?
As leading Chartered Accountants in India for NRIs, we assist clients with:
- DTAA documentation and filing
- Claiming refunds and tax credits
- Lower TDS certifications
- Filing of Form 10F, Form 67, and support on TRC-related queries