DTAA Decoded: 5-Step Blueprint to Claim Double Tax Relief Between India and Your Country
Complete country-specific guide on claiming DTAA benefits, required documentation (TRC, Form 10F, Form 67), timeline for applications, common rejection reasons, and how to claim foreign tax credits
Written by
CA Ashama Rajawat
What is DTAA and Why Does It Matter to NRIs?
Double Taxation Avoidance Agreement (DTAA) is a bilateral treaty between two countries to prevent the same income from being taxed twice. For NRIs, this is crucial because you might earn income that's taxable in both India and your country of residence.
Without DTAA: The Double Tax Problem
Scenario: You live in the USA and earn ₹20 lakh rental income from property in Mumbai.
Without DTAA Protection:
- • Tax in India @ 30%: ₹6,00,000
- • Tax in USA (converted to USD): Additional $2,000-3,000
- • Total Tax: Over 40% of your income!
With DTAA Relief:
- • Tax in India @ 30%: ₹6,00,000
- • Claim Foreign Tax Credit in USA for ₹6,00,000 paid in India
- • No additional tax in USA!
India's DTAA Network: Key Countries
India has signed DTAA with over 90 countries. Here are the most relevant for NRIs:
Major DTAA Countries
- United States (USA)
- United Kingdom (UK)
- United Arab Emirates (UAE)
- Canada
- Australia
- Singapore
Other Important Countries
- Germany, France, Netherlands
- Japan, South Korea, China
- Saudi Arabia, Qatar, Oman
- New Zealand
- South Africa
5-Step Blueprint to Claim DTAA Benefits
Determine Tax Residency Status
First, establish where you're a tax resident. This determines which country has primary taxing rights.
Tie-Breaker Rules (when you're resident in both):
- Permanent Home: Where you have a permanent home available
- Center of Vital Interests: Where your personal and economic ties are strongest
- Habitual Abode: Where you habitually live
- Nationality: Country of citizenship (last resort)
Example: If you work in USA, have a green card, family there, and visit India only for vacations, you're likely a USA tax resident even if you're Indian citizen.
Obtain Tax Residency Certificate (TRC)
TRC is official proof from your country's tax authority that you're a tax resident there.
How to Get TRC:
USA:
- • File Form 8802 with IRS
- • IRS issues Form 6166 (US TRC)
- • Processing time: 4-6 weeks
- • Fee: $85 per year
UK:
- • Apply through HMRC online
- • Form: "Certificate of Residence"
- • Processing time: 2-3 weeks
- • Fee: Free
UAE:
- • Apply through Federal Tax Authority (FTA)
- • Requires Emirates ID, visa, UAE tax registration
- • Processing time: 1-2 weeks
- • Fee: AED 50
Singapore:
- • Apply through IRAS (Inland Revenue Authority)
- • Online application available
- • Processing time: 1-2 weeks
- • Fee: Free
Important: TRC is valid for the specific financial year mentioned. You need to obtain fresh TRC for each year you claim DTAA benefits.
Submit Form 10F to Indian Payers
Form 10F provides your tax residency details to Indian entities paying you (employer, tenant, bank, buyer of property).
What Form 10F Contains:
- • Your name, PAN, address
- • Country of residence
- • TRC details and period
- • Tax Identification Number (TIN/SSN) in your country
When to Submit Form 10F:
- • Before receiving income: Submit to payer to ensure lower TDS
- • With TRC: Attach copy of TRC
- • Annually: Fresh Form 10F for each financial year
Impact of Submitting Form 10F:
TDS will be deducted at lower DTAA rate instead of normal rate. For example, rental income TDS drops from 30% to 10-15% (depending on DTAA).
File Indian ITR with DTAA Relief
Even if TDS was deducted at DTAA rates, you must file ITR in India to claim final benefits.
Steps in ITR Filing:
- Select appropriate ITR form (usually ITR-2 for NRIs)
- Report all Indian income in respective schedules
- In Schedule TR (Tax Relief), claim relief under DTAA
- - Country name
- - Article number of DTAA applicable
- - Nature of income
- - Amount eligible for relief
- Attach TRC copy while filing
- Upload Form 10F details
Common DTAA Articles:
- • Article 13: Capital gains from property
- • Article 11: Interest income
- • Article 6: Income from immovable property (rent)
- • Article 15: Employment income/salary
- • Article 10: Dividend income
Claim Foreign Tax Credit (FTC) in Your Country
Finally, claim credit in your country of residence for taxes paid in India.
Documents Needed for FTC:
- • Form 16A (TDS certificate from India)
- • ITR Acknowledgement from India
- • Form 26AS (Tax credit statement)
- • Proof of tax payment in India
USA (Form 1116):
- • File Form 1116 with your US tax return
- • Claim foreign tax credit for Indian taxes paid
- • Limited to US tax on same income
UK (SA106):
- • Use SA106 supplementary pages
- • Report foreign income and taxes paid
- • HMRC calculates relief automatically
Australia:
- • Claim on tax return under "Foreign income tax offsets"
- • Provide foreign income and tax paid details
- • Maximum offset = Australian tax on that income
Country-Specific TDS Rates Under DTAA
DTAA specifies maximum tax rates that can be charged by the source country (India in this case).
| Country | Interest | Dividend | Royalty | Fees for Technical Services |
|---|---|---|---|---|
USA | 10%/15% | 15%/25% | 10%/15% | 10%/15% |
UK | 10%/15% | 10%/15% | 10%/15% | 10%/15% |
UAE | 5%/12.5% | 10% | 10% | 10% |
Singapore | 10%/15% | 10%/15% | 10% | 10% |
Canada | 15%/25% | 15%/25% | 10%/15% | 10%/15% |
Australia | 15% | 15% | 10%/15% | 10%/15% |
Note: These are maximum rates under DTAA. Indian domestic law may have lower rates. The benefit goes to taxpayer—whichever is lower applies.
Common DTAA Claim Rejections and How to Avoid
❌Expired or Invalid TRC
TRC must be valid for the specific financial year you're claiming benefits.
✓ Solution: Obtain fresh TRC for each FY before filing ITR
❌Form 10F Not Submitted
Payer deducted TDS at normal rate because Form 10F wasn't provided.
✓ Solution: Submit Form 10F with TRC to payer at beginning of FY
❌Wrong DTAA Article Cited
Claimed relief under wrong article (e.g., Article 11 for rent instead of Article 6).
✓ Solution: Read the specific India-[Country] DTAA text carefully or consult CA
❌Inconsistent Details in TRC and Form 10F
Name spelling, address, or period mismatch between TRC and Form 10F.
✓ Solution: Ensure exact match in all details before submission
❌Not a Tax Resident Anywhere (POEM Issue)
Working in tax-free country (UAE) without establishing tax residency.
✓ Solution: Obtain UAE tax residency and TRC from Federal Tax Authority
DTAA Relief vs Lower TDS Certificate (Section 197)
Two methods to reduce tax burden—understand when to use which:
DTAA Relief
When: You're tax resident in another country with DTAA
Advantage: Automatic lower rate if Form 10F submitted
Documentation: TRC + Form 10F
Best for: Regular income like rent, interest, dividends
Section 197 Certificate
When: Your actual tax is lower than TDS rate
Advantage: Can reduce TDS to even 0% if no tax liability
Documentation: Application to Assessing Officer
Best for: One-time income like property sale
Pro Strategy
Use both! Submit Form 10F for DTAA rate, then apply for Section 197 certificate to reduce TDS further based on actual tax calculation considering deductions and exemptions.
Timeline for DTAA Benefit Claims
Start of Financial Year
Apply for TRC from your country's tax authority. Submit Form 10F to Indian payers for the new FY.
Income Receipt
TDS deducted at DTAA rates (if Form 10F submitted). Maintain records of all income and TDS certificates.
ITR Filing in India
File ITR-2 claiming DTAA relief in Schedule TR. Attach TRC copy and Form 10F details.
Tax Return in Your Country
File tax return claiming Foreign Tax Credit for taxes paid in India. Attach Indian ITR and tax payment proof.
Conclusion
DTAA is one of the most powerful tools for NRIs to avoid double taxation and optimize their tax liability across countries. While the process involves multiple steps—obtaining TRC, submitting Form 10F, filing ITR in India, and claiming FTC abroad—the tax savings can be substantial, often running into lakhs.
The key is to be proactive: obtain TRC at the start of the financial year, submit Form 10F to all Indian payers immediately, and maintain meticulous documentation. Given the complexity and country-specific variations, consulting a CA specializing in international taxation is highly recommended.