DTAA Benefits for Non-Resident Companies in India – Complete Tax Guide
DTAA Benefits for Non-Resident Companies in India help foreign businesses avoid double taxation and significantly reduce Indian tax exposure. DTAA benefits for non-resident companies in India are especially important for overseas entities earning royalty, interest, technical fees, dividend, or business income from India.
Without DTAA benefits for non-resident companies in India, the same income may be taxed both in India and in the country of residence, leading to higher tax costs and cash flow issues.
At Jain Prachi & Company, we help foreign businesses lawfully claim DTAA benefits for non-resident companies in India while ensuring full compliance with Indian tax laws.
What Are DTAA Benefits for Non-Resident Companies in India
DTAA benefits for non-resident companies in India arise from Double Taxation Avoidance Agreements, which are bilateral treaties between India and other countries to prevent double taxation of the same income.
Under DTAA benefits for non-resident companies in India, income is either:
Taxed in only one country, or
Tax paid in India is allowed as credit in the home country
India has DTAA treaties with more than 90 countries, including the USA, UK, Germany, Singapore, UAE, Australia, and Mauritius.
Key DTAA Benefits for Non-Resident Companies in India
Reduced Withholding Tax Under DTAA
DTAA benefits for non-resident companies in India allow reduced tax rates on:
Royalty income
Interest income
Fees for technical services
Dividend income
These DTAA rates are often lower than India’s domestic tax rates.
Avoidance of Double Taxation Through DTAA
DTAA benefits for non-resident companies in India operate through:
Exemption Method, or
Tax Credit Method, allowing adjustment of Indian taxes abroad
Permanent Establishment Protection Under DTAA
DTAA benefits for non-resident companies in India clearly define Permanent Establishment (PE) thresholds, determining when business profits become taxable in India.
Non-Discrimination Protection Under DTAA
DTAA benefits for non-resident companies in India ensure that foreign entities are not subjected to harsher tax treatment compared to Indian companies.
Common DTAA Withholding Rates Applicable in India
| Nature of Income | Domestic Rate | DTAA Rate (Indicative) |
|---|---|---|
| Royalty | 10%–20% | ~10% |
| Technical Fees | 10%–20% | 10%–15% |
| Interest | 20% | 5%–15% |
| Dividend | 20% | 5%–15% |
Actual DTAA rates depend on the specific treaty.
Eligibility Conditions to Claim DTAA Benefits for Non-Resident Companies in India
To claim DTAA benefits for non-resident companies in India, the taxpayer must:
Obtain a Tax Residency Certificate (TRC)
Submit Form 10F
Provide a self-declaration to the Indian payer
These documents must be provided before or at the time of remittance.
📌 Authoritative Reference:
Income Tax Department – DTAA Provisions
👉 https://incometaxindia.gov.in
Practical Example of DTAA Benefits for Non-Resident Companies in India
Scenario:
A UK-based company provides technical consultancy services to an Indian company.
Without DTAA: 20% TDS
With DTAA (India-UK treaty): 10% TDS
Result: 50% tax saving under DTAA benefits for non-resident companies in India.
How Jain Prachi & Company Assists with DTAA Benefits for Non-Resident Companies in India
We provide complete advisory for DTAA benefits for non-resident companies in India, including:
DTAA eligibility analysis
TRC and Form 10F assistance
Structuring contracts for DTAA efficiency
Filing Forms 15CA and 15CB
Representation before tax authorities
FAQs on DTAA Benefits for Non-Resident Companies in India
Q1. Can DTAA benefits be claimed automatically?
No. TRC, Form 10F, and declaration are mandatory.
Q2. What if DTAA rate is higher than Indian tax rate?
The lower rate can be applied as per Section 90.
Q3. Can DTAA help reduce Permanent Establishment risk?
Yes. DTAA clearly defines PE thresholds.
