How NRIs can claim tax benefit under DTAA(Double Taxation Avoidance Agreement)?

DTAA (Double Taxation Avoidance Agreement) is a tax treaty signed between India and any other country, with this agreement investors are saved from paying double taxes in two different countries. It has the following benefits:

1.       Helps in lowering taxes of NRIs

2.       Makes a country attractive for NRIs and calls for more investment from NRIs

3.       Helps in avoiding to pay dual taxes

4.       It helps in curbing tax evasion by citizens of India residing in other countries.

NRIs earn various types of income from India such as interest income, dividend income, rental income, capital on sale of assets. With the help of DTAA, the NRIs could be saved from paying double taxes on the same income.

The benefit of DTAA works on a year-to-year basis and one has to submit documents every year with the tax authorities to take advantage of this agreement every year. In case you missed submitting documents in any year, you will not be given the advantage that particular year.

Types of income that are included under the scope of DTAA are:

·         Salary received in India

·         House property situated in India

·         Capital Gains from the transfer of assets in India

·         Income from services, provided in India

·         Fixed deposits and saving bank account held in India

·         NRIs investment in mutual funds in India.

Presently, India has DTAA with more than 89 countries out of total of 195 countries around the world, which includes all the major countries such as Australia, Bangladesh, Belgium, Canada, China, France, Germany, Hongkong, Italy, Japan, Morocco, New Zealand, Qatar, Saudi Arabia, Singapore, South Africa, Sri Lanka, USA, and others. The DTAA relief is provided under section 90, 90A, and 91 of the Income-tax Act 1961, India.