Double Taxation Avoidance Agreement
The DTAA, or Double Taxation Avoidance Agreement is a tax treaty signed between India and another country ( or any two/multiple countries) so that taxpayers can avoid paying double taxes on their income earned from the source country as well as the residence country. At present, India has double tax avoidance treaties with more than 80 countries around the world.
The need for DTAA arises out of the imbalance in tax collection on global income of individuals. If a person aims to do business in a foreign country, he/she may end up paying income taxes in both cases, i.e. the country where the income is earned and the country where the individual holds his/her citizenship or residence. For instance, if you are moving to a different country from India while leaving income sources such as interest from deposits in here, you will be charged interest by both India and the country of your current residence as per your consolidated global earnings. Such a scenario can have you pay twice the tax over the same income. This is where the DTAA becomes useful for taxpayers.
Benefits of DTAA:
There are lots of benefits associated with DTAA for taxpayers. The basic benefit includes not having to pay double taxes on the same income. Apart from this,
- Lower Withholding Tax (Tax Deduction at Source or TDS)
- Tax credits
- Exemption from taxes
The primary idea behind DTAA agreements with various countries is to minimize the opportunity for tax evasion for tax payers in either or both of the countries between which the bilateral/multilateral DTAA agreement have been signed.
Lower withholding tax is a plus for taxpayers as they can pay lower TDS on their interest, royalty or dividend incomes in India, while some agreements provide for tax credits in the source or country of operations so that taxpayers don’t pay the same tax twice. In some cases, such as agreements with Mauritius, Cyprus, Singapore, Egypt etc. capital gains tax is exempted which can be a boon to taxpayers as they can use the DTAA agreement to minimize taxes.
DTAA Rates:
The rates and rules of DTAA vary from country to country depending on the particular signed between both parties. TDS rates on interests earned for most countries is either 10% or 15%, though rates range from 7.50% to 15%. List of DTAA rates for particular countries is given in the next section.
Double Taxation Avoidance Agreement (DTAA) Country List:
A total of 85 countries currently have DTAA agreements with India. The following countries having Double Taxation Avoidance Agreement with India. TDS rates on interests are listed below. (Listed alphabetically)
| Sl No. | Country | TDS Rate |
| 1 | Armenia | 10% |
| 2 | Australia | 15% |
| 3 | Austria | 10% |
| 4 | Bangladesh | 10% |
| 5 | Belarus | 10% |
| 6 | Belgium | 15% |
| 7 | Botswana | 10% |
| 8 | Brazil | 15% |
| 9 | Bulgaria | 15% |
| 10 | Canada | 15% |
| 11 | China | 15% |
| 12 | Cyprus | 10% |
| 13 | Czech Republic | 10% |
| 14 | Denmark | 15% |
| 15 | Egypt | 10% |
| 16 | Estonia | 10% |
| 17 | Ethiopia | 10% |
| 18 | Finland | 10% |
| 19 | France | 10% |
| 20 | Georgia | 10% |
| 21 | Germany | 10% |
| 22 | Greece | As per agreement |
| 23 | Hashemite kingdom of Jordan | 10% |
| 24 | Hungary | 10% |
| 25 | Iceland | 10% |
| 26 | Indonesia | 10% |
| 27 | Ireland | 10% |
| 28 | Israel | 10% |
| 29 | Italy | 15% |
| 30 | Japan | 10% |
| 31 | Kazakhstan | 10% |
| 32 | Kenya | 15% |
| 33 | South Korea | 15% |
| 34 | Kuwait | 10% |
| 35 | Kyrgyz Republic | 10% |
| 36 | Libya | As per agreement |
| 37 | Lithuania | 10% |
| 38 | Luxembourg | 10% |
| 39 | Malaysia | 10% |
| 40 | Malta | 10% |
| 41 | Mauritius | 7.50-10% |
| 42 | Mongolia | 15% |
| 43 | Montenegro | 10% |
| 44 | Morocco | 10% |
| 45 | Mozambique | 10% |
| 46 | Myanmar | 10% |
| 47 | Namibia | 10% |
| 48 | Nepal | 15% |
| 49 | Netherlands | 10% |
| 50 | New Zealand | 10% |
| 51 | Norway | 15% |
| 52 | Oman | 10% |
| 53 | Philippines | 15% |
| 54 | Poland | 15% |
| 55 | Portuguese Republic | 10% |
| 56 | Qatar | 10% |
| 57 | Romania | 15% |
| 58 | Russia | 10% |
| 59 | Saudi Arabia | 10% |
| 60 | Serbia | 10% |
| 61 | Singapore | 15% |
| 62 | Slovenia | 10% |
| 63 | South Africa | 10% |
| 64 | Spain | 15% |
| 65 | Sri Lanka | 10% |
| 66 | Sudan | 10% |
| 67 | Sweden | 10% |
| 68 | Swiss Confederation | 10% |
| 69 | Syrian Arab Republic | 7.50% |
| 70 | Tajikistan | 10% |
| 71 | Tanzania | 12.50% |
| 72 | Thailand | 25% |
| 73 | Trinidad and Tobago | 10% |
| 74 | Turkey | 15% |
| 75 | Turkmenistan | 10% |
| 76 | UAE | 12.50% |
| 77 | UAR (Egypt) | 10% |
| 78 | Uganda | 10% |
| 79 | UK | 15% |
| 80 | Ukraine | 10% |
| 81 | United Mexican States | 10% |
| 82 | USA | 15% |
| 83 | Uzbekistan | 15% |
| 84 | Vietnam | 10% |
| 85 | Zambia | 10% |
DTAA is an effective financial agreement that is beneficial to both the taxpayer as well as the respective tax collection authorities in various countries.
