🇺🇸 India–United States DTAA
India–United States tax treaty
Signed 1989 · notified 1991. A practitioner's reference, not legal advice — confirm positions against current text and protocols before acting.
Highlights
- ·Comprehensive DTAA covering income, capital gains and FTS
- ·Saving clause preserves US right to tax citizens / green-card holders
- ·Mutual Agreement Procedure (MAP) actively used for TP disputes
Withholding rates
| Income | Treaty rate | Domestic rate | Note |
|---|---|---|---|
| Dividends | 15% / 25% | 20% (s.115A) | 15% if ≥10% holding |
| Interest | 10% / 15% | 20% | 10% to banks; 15% otherwise |
| Royalties / FTS | 10% / 15% | 10% | 15% in first 5 years, 10% thereafter |
| Capital gains (shares) | Per domestic law | Per s.111A / 112A | India taxing right preserved |
Treaty rate available only on furnishing TRC, Form 10F and beneficial-owner declaration. PPT / GAAR / LOB tests may further restrict access.
Permanent establishment
Fixed place, services PE (90 days in any 12-month period), agency PE.
Residency tie-breaker
Permanent home → centre of vital interests → habitual abode → nationality → MAP.
FTC mechanism
India: credit for US tax via Form 67 + Rule 128. US: foreign tax credit via Form 1116.
Common use cases
- ✓NRIs returning to India with US RSU / ESPP income
- ✓Indian SaaS firms billing US customers — characterisation of FTS vs business income
- ✓US LLC profits flowing to Indian resident partner
Pitfalls we see
- !FBAR + Form 8938 reporting still applies for US persons in India
- !Mutual fund (PFIC) trap for US persons holding Indian MFs
- !Saving clause means treaty rarely overrides US worldwide taxation of citizens
Have an India–United States fact pattern?
We give a one-page written position with treaty cites and FTC computation, usually within 3 working days.
Request a written position