Question 1

What is DTAA and how does it help NRIs avoid double taxation?

Accepted Answer

**DTAA (Double Taxation Avoidance Agreement)** is a treaty between two countries that prevents the same income from being taxed twice. For NRIs earning income in India (like interest on NRO FDs or rental income), DTAA allows you to: (1) Pay tax at the **lower of Indian rate or DTAA rate**, (2) Claim **Foreign Tax Credit** in your country of residence for taxes paid in India, ensuring you don't pay tax twice on the same income.

Question 2

What documents do I need to claim DTAA benefits?

Accepted Answer

You need: (1) **Tax Residency Certificate (TRC)** - Obtained from your country of residence's tax authority, (2) **Form 10F** - Self-declaration filed with your Indian ITR, (3) **Form 67** - Required if claiming Foreign Tax Credit, (4) **Proof of foreign taxes paid** - Tax return copy, payment receipts. TRC is **mandatory** - without it, you cannot claim DTAA benefits.

Question 3

What is Foreign Tax Credit and how do I claim it?

Accepted Answer

**Foreign Tax Credit (FTC)** allows you to claim credit in India for taxes already paid abroad (or vice versa), preventing double taxation. In India, file **Form 67** before submitting your ITR to claim FTC. The credit is limited to the **lower of foreign tax paid or Indian tax liability** on that income. FTC cannot create a refund - it only reduces tax to zero.

Question 4

Why is Tax Residency Certificate (TRC) important?

Accepted Answer

TRC is **proof of your tax residency** in a country and is **mandatory** to claim DTAA benefits. Without TRC, Indian tax authorities will apply **full Indian tax rates** (not the lower DTAA rates). Apply for TRC from your resident country's tax authority - processing time varies (2-8 weeks). TRC is usually valid for one financial year and must be renewed annually.

Question 5

Which income types are covered under DTAA?

Accepted Answer

DTAA covers: **Interest income** (NRO FD, bonds - typically 10-15% under DTAA), **Dividends** (10-15% under DTAA), **Capital gains** (often taxable only in resident country), **Royalties and FTS** (10-15% under DTAA), **Salary/employment income** (taxable where services rendered). Each DTAA has specific rates - check your country's treaty with India for exact rates.

DTAA Tax Relief & Foreign Tax Credit

Related Calculators

NRI Tax Calculator

NRI Total Tax Liability Calculator

Lower TDS Certificate (Section 197)

NRI Rental Income Tax Calculator

Related Articles

NRI DTAA Double Tax Relief: Complete Guide with Country-wise Rates

NRI Lower TDS Certificate: Form 13 Guide to Reduce Property TDS

NRI Rental Income: Tax Planning, TDS & Deductions

Related Tax Hacks

TRC Multi-Year Strategy

Frequently Asked Questions