Double Taxation Avoidance Agreement (DTAA)

Double Taxation Avoidance Agreement (DTAA) is an agreement that India has signed with other countries to ensure that the resident of India working outside do not have to pay taxes twice.

Earlier the system of taxation was such that the NRI working in some other country will have to pay income taxes on the resident country as well as India.

This puts pressure on the individual working and leads to a lot of tax theft. So, to resolve this issue India along with 88 other countries signed a treaty that governs how a person residing outside a country will be taxed by the home country as well as the resident country.

This article will cover what is Double Taxation Avoidance Agreement, a list of countries with whom India signed this treaty, and much more.

Double Taxation Avoidance Agreement (DTAA)

What is Double Taxation Avoidance Agreement (DTAA)?

Double Taxation Avoidance Agreement is a taxation agreement or Treaty which is between two or more countries for the taxation of an individual who has income from both of these countries.

Promotion of international trade is very important to ensure a free and fair development across the world and to do that a system of taxation with a mutual benefit system is required.  

United National Tax committee modeled a comprehensive convention called the UN model tax convention which all the DTAA is based on.

This is done to promote cross-border economic activity and a seamless transfer of technology to increase trade and commerce.

When there was no DTAA, the income earned by the individual would be calculated as a whole which leads to double taxation.

This double taxation would lead to the individual being the loss due to which organizations like UN Tax Committee and various subcommunities engage in treaties.

Types of DTAA

There are several types of DTAA that India has signed with other countries, which are as follows-

Comprehensive Agreement

A comprehensive Agreement is an agreement that governs the entirety of the structure of taxation between two countries.

Limited Multilateral Agreement

Limited Multilateral Agreement is a type of DTAA that only covers certain sectors and incomes earned by individuals in certain sectors of both countries.

Tax Information Exchange Agreement

It is an agreement where both the signatories will exchange tax information filed by the individual in their resident country and home country. This ensures that no tax evasion can be done by the individual.

List of Countries with India signed DTAA Treaty (DTAA Rates)

The following are list of countries with whom India has signed the DTAA Treaty is as follows-

COUNTRYDTAA TYPEDTAA TDS RATES
AfghanistanLimited Agreement–
AlbaniaComprehensive Agreement10%
ArgentinaTax Information Exchange Agreement–
Armenia Comprehensive Agreement10%
AustraliaComprehensive Agreement15%
AustriaComprehensive Agreement10%
BahamasTax Information Exchange Agreement–
BahrainTax Information Exchange Agreement–
BangladeshComprehensive Agreement Limited Multilateral Agreement10%
BelarusComprehensive Agreement10%
BelgiumComprehensive Agreement15%
BelizeTax Information Exchange Agreement–
BermudaTax Information Exchange Agreement–
BhutanComprehensive Agreement Limited Multilateral Agreement10%
BotswanaComprehensive Agreement10%
BrazilComprehensive Agreement15%
British Virgin IslandsTax Information Exchange Agreement–
BulgariaComprehensive Agreement15%
CanadaComprehensive Agreement15%
Cayman IslandsTax Information Exchange Agreement–
ChinaComprehensive Agreement15%
ColumbiaComprehensive Agreement–
CroatiaComprehensive Agreement5%
CyprusComprehensive Agreement10%
Czech RepublicComprehensive Agreement10%
DenmarkComprehensive Agreement15%
EgyptComprehensive Agreement10%
EstoniaComprehensive Agreement10%
EthiopiaLimited AgreementComprehensive Agreement10%
FijiComprehensive Agreement5%
FinlandComprehensive Agreement10%
FranceComprehensive Agreement10%
GeorgiaComprehensive Agreement10%
GermanyComprehensive Agreement10%
GreeceComprehensive Agreement20%
GuernseyTax Information Exchange Agreement–
Hashemite Kingdom of Jordan Comprehensive Agreement10%
Hong KongComprehensive Agreement–
HungaryComprehensive Agreement10%
IcelandComprehensive Agreement10%
IndonesiaComprehensive Agreement10%
IranLimited Agreement10%
IrelandComprehensive Agreement10%
Isle of ManTax Information Exchange Agreement–
IsraelComprehensive Agreement10%
ItalyComprehensive Agreement15%
JapanComprehensive Agreement10%
KazakhstanComprehensive Agreement10%
KenyaComprehensive Agreement15%
KuwaitComprehensive Agreement10%
Kyrgyz RepublicComprehensive Agreement10%
LatviaComprehensive Agreement10%
LebanonLimited Agreement–
LiberiaTax Information Exchange Agreement–
LibyaComprehensive Agreement20%
LithuaniaComprehensive Agreement10%
Luxembourg Comprehensive Agreement10%
MacedoniaComprehensive Agreement10%
MalaysiaComprehensive Agreement10%
MaldivesTax Information Exchange Agreement Limited Multilateral Agreement–
MaltaComprehensive Agreement10%
MauritiusComprehensive Agreement7.50-10%
MongoliaComprehensive Agreement15%
MontenegroComprehensive Agreement10%
MoroccoComprehensive Agreement10%
MozambiqueComprehensive Agreement10%
MyanmarComprehensive Agreement10%
NamibiaComprehensive Agreement10%
NepalComprehensive Agreement Limited Multilateral Agreement15%
NetherlandComprehensive Agreement10%
New ZealandComprehensive Agreement10%
NorwayComprehensive Agreement15%
OmanComprehensive Agreement10%
PakistanLimited Multilateral Agreement–
People’s Democratic Republic of Yemen Limited Agreement–
PhilippinesComprehensive Agreement15%
PolandComprehensive Agreement15%
Portuguese RepublicComprehensive Agreement10%
Principality of LiechtensteinTax Information Exchange Agreement–
Principality of MonacoTax Information Exchange Agreement–
QatarComprehensive Agreement10%
RomaniaComprehensive Agreement15%
RussiaComprehensive Agreement10%
Saint Kitts and NevisTax Information Exchange Agreement
Saudi ArabiaComprehensive Agreement10%
SerbiaComprehensive Agreement5%
SeychellesTax Information Exchange Agreement–
SingaporeComprehensive Agreement15%
Slovak RepublicComprehensive Agreement–
SloveniaComprehensive Agreement5%
South AfricaComprehensive Agreement10%
South KoreaComprehensive Agreement15%
SpainComprehensive Agreement15%
Sri LankaComprehensive Agreement Limited Multilateral Agreement7.50%
SudanComprehensive Agreement10%
SwedenComprehensive Agreement10%
Swiss ConfederationComprehensive Agreement10%
Syrian Arab RepublicComprehensive Agreement7.50%
TaipeiSpecified Associations Agreement12.50%
TajikistanComprehensive Agreement10%
TanzaniaComprehensive Agreement12.50%
ThailandComprehensive Agreement25%
Trinidad and TobagoComprehensive Agreement10%
TurkeyComprehensive Agreement15%
TurkmenistanComprehensive Agreement10%
United Arab EmiratesComprehensive Agreement12.50%
UgandaComprehensive Agreement10%
UkraineComprehensive Agreement10%
United KingdomComprehensive Agreement15%
United Mexican StatesComprehensive Agreement10%
United States of AmericaComprehensive Agreement15%
UzbekistanComprehensive Agreement15%
VietnamComprehensive Agreement10%
ZambiaComprehensive Agreement10%

Benefits of Double Taxation Avoidance Agreement (DTAA)

There are several benefits that both countries get out of a well-structured and mutually beneficial DTAA agreement. The following are the benefits that Double Taxation Avoidance Agreement (DTAA) has-

  • The individual working in the country with citizenship of India will be benefitted from a concession on the tax that he/she has to pay
  • Both countries will have an attractive foreign investment opportunity amongst each other
  • A certainty for the individuals in question about their international income and the tax imposed on it
  • The agreement also ensures that the tax benefit is only offered to the genuine candidate by mandating an anti-abusive provision

Documents required to avail of the benefits under DTAA

To avail benefit from the provision under the DTAA, an individual must provide the following document to the Income Tax authorities-s

  • Self-declaration cum indemnity format
  • Self-attested PAN card copy
  • Self-attested visa and passport copy
  • PIO proof copy (if applicable)
  • Tax Residency Certificate (TRC)

The Finance Act 2013, mandates the individual in question to produce his/her Tax Residency Certificate.

FAQ

What does Article 12 of DTAA say?

Article 12 of DTAA between the US and India talks about the Royalties and Fees and the tax to be charged to the individuals with the royalty fee as their income. The taxation of the royalty & fee will be 15-20% charged by the other state where the tax is applicable.

What does Article 25 of DTAA between India and the USA say?

Article 25 of the DTAA extensively talks about the relief that the DTAA provides against Double Taxation. This article, clearly mentions areas where both states will share the tax revenue and where one of them will get their share.

What is the full form of DTAA?

DTAA Stands for Double Taxation Avoidance Agreement which is a tax agreement where the individuals living outside country A and earning some revenue from country A will be taxed in country B where they are living.

What if there is no DTAA Between the two countries?

In case there is no DTAA between the two countries then the individual will have to pay taxes even on the income earned from his/her resident country to his home county and vice versa is also true which makes his/her pay double tax.

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