Tipping Point: What is DTAA?

What is DTAA?

DTAA stands for double taxation avoidance agreement. This is an agreement between two countries that aims to avoid the taxation of the same income in two countries. India has signed DTAA with around 90 countries.

How can an NRI avail of the benefit of it?

A non-resident Indian (NRI) first needs to check whether the income in question is taxable in India. If it is, then he needs to check whether India has signed a comprehensive DTAA with the country in which he resides. Next, he must furnish a tax residency certificate (TRC) obtained from the tax authorities of the country in which he resides, and sometimes also a self-declaration in Form 10F. The income could be entirely exempt, or it may be taxable at a lower rate. If it is taxable under DTAA, the NRI has to pay the tax in India and then claim the credit of such taxes paid against the tax liability in his home country.