FAQ on DTAA for NRIs
1. What is a Double Tax Avoidance Agreement (DTAA)?
A DTAA is an agreement signed between two countries to avoid double taxation of income or capital gains that may arise in both countries when a resident of one country earns income in the other country.
2. Who can benefit from DTAA?
Non-resident Indians (NRIs) who earn income in India and other countries can benefit from DTAA. The agreement ensures that both countries do not tax the same income twice.
3. How many DTAA agreements has India signed with other countries?
India has signed DTAA agreements with more than 90 countries to avoid double taxation of income and capital gains.
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4. How can an NRI claim benefit under DTAA?
An NRI can claim benefits under DTAA by obtaining a Tax Residency Certificate (TRC) from the country where they are resident. To claim benefits under the DTAA, individuals need to provide the TRC as proof of their residence in a particular country.
Read more about What is DTAA for NRIs
5. What are the benefits that an NRI can avail under DTAA?
An NRI can avail of several benefits under DTAA such as lower withholding tax rates on interest, dividends, royalties, capital gains, and other income. The agreement also provides for the exemption of income earned in one country from tax in the other country, subject to certain conditions.
6. Can an NRI avail of the benefits of DTAA for all types of income?
No, DTAA benefits may vary for different types of income. The benefits may also vary depending on the country in which the income is earned.
7. Is it mandatory for an NRI to claim benefits under DTAA?
No, it is not mandatory for an NRI to claim benefits under DTAA. However, it is advisable to do so as it can help in reducing the tax liability in both countries.
8. What is the duration of a DTAA agreement?
The duration of a DTAA agreement varies between countries and can range from 5 to 20 years. However, most agreements are automatically extended unless one of the countries decides to terminate the agreement.
9. Can an NRI be taxed in both countries under DTAA?
No, the purpose of DTAA is to avoid double taxation of income or capital gains. Thus, DTAA cannot tax an NRI in both countries on the same income or capital gains.
10. What is the role of the competent authority in DTAA?
The competent authority is responsible for resolving any disputes that may arise under DTAA between the two countries. Each country appoints a competent authority, which is responsible for ensuring the proper implementation of the agreement.