What is Double Taxation Avoidance Agreement (DTAA)?

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Every individual needs to work and earn a living. However, paying taxes in both the residence country and the country where one works can be pretty challenging.

To remove such issues, the Double Taxation Avoidance Agreement was signed between India and 85 countries.

It allows NRIs with jobs in other countries to avoid double taxation on the income earned in India and resident countries. Keep scrolling to learn more about this agreement.

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What Does DTAA Mean?

DTAA or Double Taxation Avoidance Agreement is an agreement that India signed with 85 other countries to avoid levying taxes twice on the same income.

This provision helps taxpayers accumulate income savings by paying the tax in only one country. DTAAs can be comprehensive in many countries.

The tax structure usually depends on the type of employment or business of a citizen in a specific country. The common categories include salary, services, capital gains, fixed deposit earnings, property, investment, etc.

This DTAA was formed due to the disparity in the collection of tax on a global scale. For instance, an individual who plans to run an enterprise in another country is forced to pay double taxes. He/she has to pay taxes in his home country as well as his country of income.

For a new entrepreneur, this can be straining in terms of funds and savings.

Even if an individual has shifted to another country and has deposits in India, they can incur interest in both countries as global income. Here, DTAA comes to the rescue.

Apart from learning DTAA meaning, individuals should check the benefits for a detailed understanding of the concept.

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What Are the Benefits of Double Taxation Avoidance Agreement (DTAA)?

Individuals can avail multiple benefits against this agreement. Some of the common benefits of double taxation agreement, including non-payment of double taxes, are-

Tax credits
Tax exemption
Lower TDS or withholding tax
It minimises the tax evasion for individuals in both countries who have signed bilateral DTAA agreement

This agreement reduces the withholding tax or lowers DTAA TDS rates on dividend incomes in India.

For instance, capital gains tax is absolved in Cyprus, Egypt, Mauritius, Singapore, etc. This reduces the taxes in general.

Let’s check what are the documents required to gain DTAA benefits without hassle.

List of Documents Required for Claiming DTAA Benefits

NRI’s are obligated to submit the mentioned documents to gain benefits and provisions laid under DTAA.

These papers are-

Indemnity or self-declaration form
Tax Residency Certificate
PAN card copy (self-attested)
Self-attested visa
Passport xerox(self-attested)
PIO proof copy

Apart from the mentioned documents, an individual is obligated to submit the Tax Residency Certificate to a deductor to be eligible to claim benefits under this DTAA agreement.

They have to submit Form 10FA to apply for a Tax Residency Certificate under sections 90A and 90 of the Income Tax Act. After successful verification and processing of the application, the certificate will be issued under Form 10FB.

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What Are the DTAA Rates?

The DTAA rate chart and its rules vary in different countries. This factor usually depends on the agreement signed between the countries.

Here, the TDS rates applicable on interests earnings can range between 10% to 15%. The levied rates can range up to 15%.

In this regard, individuals should check the rates specified against the listed countries under DTAA India.

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List of Countries Who Signed the Double Taxation Avoidance Agreement

There are nearly 85 countries signed under the DTAA agreements with India. These countries have removed the obligations of paying double taxes.

The countries who have signed Double Taxation Avoidance Agreement with India and their applicable rates are as follows -

Country	DTAA Tax Rates
Austria	10%
Australia	10%
Armenia	15%
Bangladesh	10%
Belarus	10%
Belgium	15%
Botswana	10%
Canada	15%
Cyprus	10%
Bulgaria	15%
Brazil	15%
China	15%
Denmark	15%
Czech Republic	10%
Hashemite Kingdom of Jordan	10%
South Korea	15%
Egypt	10%
Ethiopia	10%
Germany	10%
Estonia	10%
Italy	15%
Finland	10%
Georgia	10%
France	10%
Greece	20%
Israel	10%
Hungary	10%
Indonesia	10%
Iceland	10%
Ireland	10%
Kyrgyz Republic	10%
Japan	10%
Kazakhstan	10%
Kenya	10%
Kuwait	10%
Libya	20-25%
Mauritius	7.50-10%
Lithuania	10%
Namibia	10%
Morocco	10%
Montenegro	10%
Myanmar	10%
Mozambique	10%
Netherlands	10%
New Zealand	10%
Oman	10%
Malta	10%
Malaysia	10%
Luxembourg	10%
Mongolia	15%
Norway	15%
Nepal	15%
Uzbekistan	15%
Zambia	10%
Vietnam	10%
Trinidad and Tobago	10%
Tajikistan	10%
Turkmenistan	10%
UAR (Egypt)	10%
Uganda	10%
Ukraine	10%
United Mexican States	10%
UK	15%
USA	15%
Tanzania	12.50%
UAE	12.50%
Thailand	25%
Syrian Arab Republic	7.50%
Turkey	15%
Sweden	10%
Swiss Confederation	10%
Sudan	10%
South Africa	10%
Sri Lanka	10%
Slovenia	10%
Saudi Arabia	10%
Russia	10%
Qatar	10%
Portuguese Republic	10%
Serbia	10%
Philippines	15%
Singapore	15%
Poland	15%
Romania	15%
Spain	15%

This is some essential information on the Double Taxation Avoidance Agreement. An individual can avoid paying double taxes by applying for this benefit.

However, individuals should know that a country may deduct tax at source and show tax paid through the foreign tax credit document.

Thus, the double taxation avoidance rules vary from country to country. It is essential to understand what DTAA means and read the terms between the concerned countries to find the TDS rate.

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Frequently Asked Questions

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Is there a DTAA between Sri Lanka and India?

Yes, a DTAA was signed between Sri Lanka and India in 2013.

When does an NRI need to submit the documents for DTAA?

An NRI has to submit all the necessary documents at the start of every financial year to gain benefits under DTAA.

What is Double Taxation Avoidance Agreement (DTAA)?

What Does DTAA Mean?

What Are the Benefits of Double Taxation Avoidance Agreement (DTAA)?

List of Documents Required for Claiming DTAA Benefits

What Are the DTAA Rates?

List of Countries Who Signed the Double Taxation Avoidance Agreement

Frequently Asked Questions

Is there a DTAA between Sri Lanka and India?

When does an NRI need to submit the documents for DTAA?

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