What Is DTAA and Why It Matters for NRIs
DTAA stands for Double Taxation Avoidance Agreement.
It is a tax treaty between India and other countries to ensure that NRIs do not pay tax twice on the same income.
For 2026, all DTAA claims must be made in the ITR for AY 2025 26 using Schedule TR and Schedule FSI.
DTAA applies when:
- You pay tax abroad on salary
- You pay tax abroad on investments
- You pay tax in India due to TDS
- You have foreign income but are taxed as resident or RNOR
- You have property income in India
- You sell assets in India while living abroad
DTAA benefits are one of the most powerful tools to reduce unnecessary tax.
Countries Where NRIs Commonly Use DTAA
India has DTAA agreements with more than 85 countries including:
United States | Canada | United Kingdom | Singapore | Australia | UAE | Saudi Arabia | Qatar | Kuwait | Germany | France
NRIs in these countries often have salary income abroad and passive income in India, making DTAA necessary.
Documents Required for NRI TDS Refund
You must prepare the following before filing:
PAN card | Passport details for residency calculation | Form 26AS | AIS (Annual Information Statement) | TDS certificates | NRO bank statement | Rent receipts (if applicable) | Property sale deed (if applicable) | Form 16A from tenants or banks | Capital gains statements
Types of DTAA Benefits Available to NRIs
DTAA provides three major benefits:
Tax Credit Method
If income is taxed in both India and the foreign country, you can claim a tax credit for the tax paid abroad.
Example:
If your Indian TDS is 30 percent but your tax abroad is 10 percent, you can adjust the difference.
Exemption Method
If a certain income is taxed in one country, the other country grants a full exemption.
Example:
Some countries exempt foreign passive income.
Reduced TDS Rate
Many treaties allow NRIs to enjoy lower TDS rates on:
- Dividends
- Interest
- Royalties
- Fees for technical services
The reduced rate usually ranges from 5 percent to 15 percent.
Income Types Covered Under DTAA for NRIs
DTAA benefits apply to various income sources including:
Salary Income
If you earn salary abroad and India taxes the same income.
Capital Gains
On sale of shares, mutual funds, or property.
Interest Income
From NRO accounts or Indian bonds.
Rental Income
Rent received from property in India.
Dividend Income
Dividends paid to NRIs from Indian companies.
Business or Professional Income
If services are rendered in India or abroad depending on treaty terms.
Documents Required to Claim DTAA Benefits
NRIs must prepare the following documents:
Valid Tax Residency Certificate (TRC) | Form 10F | PAN card | Proof of tax paid abroad | Salary slips | Payslips | NRO statements | Capital gains statements | TDS certificates | Proof of residential status
Many refunds are blocked because NRIs fail to upload TRC or Form 10F. Always keep these documents ready.
How to Claim DTAA Benefits in Your ITR for 2026
Step 1: Determine Residential Status
NRIs and RNORs must compute residency under Section 6.
Step 2: Identify Double Taxed Income
Match your income with:
- Salary earned abroad
- Interest
- Royalties
- Capital gains
- Dividends
- Rental income
Step 3: Calculate Tax Paid Abroad
Use your foreign tax documents to compute how much tax was paid outside India.
Step 4: Fill Schedule FSI and Schedule TR
Schedule FSI:
Declare foreign sourced income.
Schedule TR:
Claim tax relief under DTAA.
Step 5: Upload TRC and Form 10F
This is mandatory for most treaties.
Step 6: File ITR 2 or ITR 3
Depending on your income type.
Step 7: E Verify Your ITR
Refund processing will not begin unless ITR is verified.
Common DTAA Mistakes NRIs Must Avoid
- Claiming DTAA without TRC
- Filling incorrect Schedule FSI
- Misreporting foreign income
- Not declaring foreign assets when RNOR
- Claiming US foreign tax credit wrongly
- Incorrect double taxation calculation
How NRIHelpLine Helps NRIs Apply DTAA Correctly
Our NRI DTAA Experts help with:
- Eligibility assessment
- Determining residential status
- Lower withholding tax computation
- Preparing TRC and Form 10F
- Preparing DTAA schedules
- Avoiding double taxation
- Getting refunds faster
- Filing ITR 2 or ITR 3
- Handling capital gains under DTAA rules
FAQs
Q. Can NRIs avoid paying tax twice?
Q. What documents are needed for DTAA?
Q. Is TRC mandatory?
Q. Which ITR form should I use for DTAA?
Q. Does DTAA reduce TDS for NRIs?
Q. What if I do not claim DTAA correctly
Talk to our experts now
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Expert’s Note
Many NRIs lose thousands because they do not reconcile Form 26AS and AIS before filing. Refunds get delayed if TDS entries do not match.
Sanjeev Sharma (Advocate – NRI HelpLine Tax & Property Law Specialist)
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