Avoidance of Double Taxation Agreements

Double Taxation Avoidance Agreement (DTAA) also referred as Tax Treaty is a bilateral economic agreement between two nations that aims to avoid or eliminate double taxation of the same income in two countries.

Example citing the working of DTAA:

An NRI individual living in X country maintains an NRO account with a bank based in India. The interest income on the balance amount in the NRO account is deemed as income that originates in India and hence is taxable in India.

Entitlement to benefits under DTAA requires submission of certain documents: To be entitled to the benefits laid down under the provisions of the DTAA, NRI individual needs to submit below listed documents in a timely manner to the concerned deductor. Self-declaration or indemnity format. The format for the same is available on the website of the bank. Self-attested PAN card copy Self-attested visa and passport copy PIO proof copy in case renewal of the passport is made during the course of the current financial year Tax Residency Certificate (TRC): TRC is a crucial document that is to be submitted with the deductor for availing the benefits of the DTAA agreement. The same can be obtained from the government or tax authorities of the foreign nation where the NRI is residing.

List of countries with whom India has DTAA arrangements Scenario of DTAA in India: As of now, India has DTAA with 84 nations, including Armenia, Bangladesh, Finland, Ireland,Japan, Kazakhstan, Greece, Italy and several others. Further, India is constantly gearing to establish DTAA with other nations as such agreements work towards promoting trade and investments among contracted nations.

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