Claiming DTAA Relief as an NRI: Section 90, the Tax Residency Certificate and Form 10F

Every year thousands of non-resident Indians pay tax twice on the same rupee of income — once when it is earned in India and again when it is declared in the country they now call home. The remedy is a statute: Section 90 of the Income Tax Act 1961, which lets the Central Government sign Double Taxation Avoidance Agreements (DTAAs) and lets you, the assessee, pick whichever of the two rules — the Act or the treaty — is more beneficial. Since Section 90(4) took effect on 1 April 2013, that relief is conditional: you must hold a Tax Residency Certificate (TRC) and file Form 10F electronically before the deductor will apply a treaty rate. This guide covers the statute, the numbers and the paperwork, using the India-USA, India-UK, India-UAE, India-Canada, India-Singapore and India-Australia treaties as worked examples.

If your first question is whether you even count as a non-resident this year, start with Section 6 and the 182-day rule; everything below assumes non-resident status for the relevant previous year.

FEMA / DTAA Position

Section 90(1) of the Income Tax Act 1961 empowers the Central Government to enter into an agreement with the government of any country for the granting of relief from double taxation. India has notified more than 90 such comprehensive treaties, the oldest of the six covered here being the India-Australia DTAA in force since 1 July 1991 and the India-USA treaty effective from 12 September 1991. The full text of Section 90 is on indiacode.nic.in, the official statute repository maintained by the Government of India.

The operative relief sits in Section 90(2): where the Central Government has entered into a DTAA, the provisions of the Act apply to that assessee "only to the extent they are more beneficial" than the treaty. In plain terms, you compare the domestic rate and the treaty rate line by line and keep the lower one for each income stream. Across separate income heads the more-beneficial test applies independently.

Two later sub-sections turned this into a documented right. Section 90(4), effective 1 April 2013, provides that a non-resident is not entitled to treaty relief "unless a certificate of his being a resident" — the TRC — is obtained from the home government. Section 90(5) requires further prescribed particulars, and Rule 21AB of the Income Tax Rules prescribes them in Form 10F, which since a CBDT notification effective 2022-23 must be furnished electronically through the e-filing portal rather than on paper.

On the foreign-exchange side, the Foreign Exchange Management Act 1999 governs whether the money can leave India at all. Section 6 of FEMA 1999 treats capital-account transactions as needing Reserve Bank of India permission "unless specifically permitted", while resident individuals separately enjoy a Liberalised Remittance Scheme allowance of USD 250,000 per financial year. For NRIs the relevant carve-out is the USD 1 million per financial year ceiling from an NRO account, covered in our note on repatriating money under the FEMA Remittance of Assets rules. A DTAA settles how much tax you owe; FEMA settles how the after-tax balance moves abroad.

One warning the briefing on Section 90 makes explicit: a DTAA never renders capital gains automatically exempt for any country. India retains a taxing right on long-term capital gains at 12.5 per cent, and relief depends on the specific treaty article and its conditions — a point the tables below make concrete.

Tax Treatment in India

For a non-resident, India taxes income that is received or accrues in India, and the rate the payer must withhold is fixed by Section 195 of the Income Tax Act 1961. The rule is symmetrical with Section 90: the deductor applies the DTAA rate or the rate in the Act, "whichever is lower". Get the TRC and Form 10F to the deductor before payment and the treaty rate applies at source; miss the deadline and tax is withheld at the higher domestic rate, leaving you to claim the difference as a refund after year-end. The withholding mechanics for property, rent and interest payments are set out in our explainer on Section 195 TDS on payments to NRIs.

The domestic rates that a treaty is measured against, for the six treaty partners in this guide, are as follows. Every figure below is the treaty-capped withholding rate, expressed as a percentage.

Read the dividend column carefully. The India-USA treaty caps portfolio dividends at 25 per cent under Article 10, dropping to 15 per cent only where the recipient holds at least 10 per cent of the voting stock in a direct parent-subsidiary relationship; the India-Canada treaty works identically. The India-UAE treaty is the most generous on dividends at 10 per cent, but its TRC additionally requires proof of a UAE establishment.

Capital gains deserve their own row because the treaties do not surrender India's taxing right. Under the India-Singapore treaty's 2017 Protocol, gains on shares of an Indian company acquired on or after 1 April 2017 are taxable in India, ending the earlier exemption. The India-UAE and India-Canada treaties expressly preserve India's right to tax gains on Indian-company shares — Article 13 in the Canadian treaty. So the domestic long-term capital gains rate of 12.5 per cent, set by Budget 2024 with effect from 23 July 2024 and carrying an annual equity exemption of Rs 1,25,000, is the number that actually applies. Short-term equity gains under Section 111A are taxed at 20 per cent. You can model your own liability with our NRI capital-gains and income-tax calculator and, for a side-by-side treaty comparison, the DTAA benefit calculator.

On top of the base rate, India levies a surcharge and cess. Surcharge runs at 10 per cent of tax for total income above Rs 50 lakh, 15 per cent above Rs 1 crore and 25 per cent above Rs 2 crore; crucially, the maximum surcharge in the new tax regime is capped at 25 per cent, so the old 37 per cent top rate does not apply to income taxed under the default regime. A health and education cess of 4 per cent is then applied to the tax-plus-surcharge figure. For NRIs, note that the Section 87A rebate — Rs 60,000 in the new regime for FY 2025-26 up to a total income of Rs 12 lakh — is available to residents only, so it does not reduce a non-resident's liability. The surcharge glossary entry and the TDS glossary entry explain how these loadings stack.

Tax Treatment Abroad

Relief under a DTAA takes one of two forms. The exemption method removes the Indian income from the foreign tax base entirely; the credit method taxes it abroad but offsets the Indian tax already paid. Most of India's treaties with major economies use the credit method, so the tax you pay in India is not lost — it becomes a foreign tax credit against your home-country liability.

The India-Australia treaty spells this out in Article 23: both countries may tax the income, and the residence country then grants a credit for the tax paid in the source country. The India-USA treaty grants the same relief through Article 24, and Canada allows the corresponding credit under Section 126 of its Income Tax Act. The table below summarises the mechanism each treaty partner uses for Indian-source income.

The credit is almost always limited to the lower of the Indian tax paid and the home-country tax due on the same income, so a higher Indian rate does not generate a refundable surplus abroad — it washes out the foreign liability on that income. To claim it you file the foreign return with proof of Indian tax paid, typically Form 26AS or the TDS certificate the deductor issues. Our foreign tax credit calculator models this offset for a given pair of rates.

Two anti-abuse features are worth flagging. The India-Singapore treaty carries a Limitation of Benefits clause that denies relief to a claimant without substantial economic presence in Singapore, so a shell arrangement cannot access the lower rates. Both the India-USA and India-UK treaties apply a "make available" test in their Article 12 fees-for-technical-services provisions, so the lower royalty/FTS rate applies only where the service genuinely transfers technical knowledge. Where an individual is resident in both countries in the same year, the Article 4 tie-breaker — permanent home, then centre of vital interests, then habitual abode, then nationality — decides residence; the UK treaty in force since 26 October 1993 sets this order out explicitly.

Repatriation Mechanics

Tax relief and money movement are separate steps. Once the DTAA has fixed the Indian tax and it has been paid, the account architecture under FEMA 1999 decides how the balance travels. Three account types matter, and the differences are not cosmetic.

The NRE and FCNR(B) accounts hold money that originated abroad, so both principal and interest are freely repatriable and the interest is exempt from Indian tax. The NRO account is where Indian-source income lands — rent, dividends, the sale proceeds of inherited property — and it is the one governed by the ceiling. Under the FEMA Remittance of Assets rules an NRI may repatriate up to USD 1 million per financial year from the NRO balance, after the applicable tax has been paid and certified. Rental income specifically flows through the NRO route; you can estimate the withholding on it with our NRI rental-income tax calculator.

The paperwork for an NRO remittance is a Chartered Accountant's certificate in Form 15CB confirming the tax position, followed by the remitter's declaration in Form 15CA on the e-filing portal, both required by RBI and CBDT before the authorised dealer bank releases funds. The bank checks that TDS under Section 195 has been deducted at the treaty or Act rate — whichever is lower — before processing. For a full walk-through of the ceiling and the forms, see our guide to the USD 1 million NRO limit under FEMA, and to size a transfer use the NRO repatriation calculator.

A practical sequencing point: because NRE interest is exempt and the balance freely repatriable, salary or savings earned abroad should be routed there rather than into an NRO account, where the same money would attract Indian TDS. The NRE-account and NRO-account glossary entries set out the distinction, and the DTAA and TRC entries cover the treaty documents referenced throughout.

FAQ

Do I need a fresh TRC every year to claim DTAA relief?

Yes. Section 90(4) of the Income Tax Act 1961 makes the Tax Residency Certificate a condition of treaty relief, and a TRC certifies residence for a specific period — typically one financial or calendar year of the home country. You obtain it from your home tax authority and furnish it, together with Form 10F, before each year's Indian income is paid or by the time you file your Indian return.

Is Form 10F still filed on paper?

No. Since a CBDT notification effective for 2022-23, Form 10F must be furnished electronically through the income-tax e-filing portal under Rule 21AB. Non-residents without a PAN were given a phased facility to register on the portal for this purpose; the paper form is no longer accepted for claiming Section 90(2) relief.

Are my capital gains on Indian shares exempt under my country's treaty?

No treaty makes them automatically exempt. India retains the right to tax long-term capital gains at 12.5 per cent under the Budget 2024 regime effective 23 July 2024, and treaties such as India-Singapore (2017 Protocol, shares acquired on or after 1 April 2017), India-UAE and India-Canada (Article 13) expressly preserve that right. Any relief comes as a foreign tax credit in your country of residence, not an Indian exemption.

What dividend withholding rate applies to me as a US-resident NRI?

Under Article 10 of the India-USA treaty the portfolio-dividend cap is 25 per cent, reduced to 15 per cent only where you hold at least 10 per cent of the voting stock in a direct parent-subsidiary relationship. Because India's domestic dividend withholding under Section 195 can be lower for individuals, the Section 90(2) more-beneficial test lets you apply whichever rate is lower once your TRC and Form 10F are on file.

Can I move sale proceeds of inherited property straight out of India?

The proceeds must first pass through an NRO account and are subject to the USD 1 million per financial year repatriation ceiling under the FEMA Remittance of Assets rules. You will need a Form 15CB certificate from a Chartered Accountant and a Form 15CA declaration before the bank releases funds, and any capital gains tax at 12.5 per cent must be settled first.

Does the Section 87A rebate reduce my NRI tax bill?

No. The Section 87A rebate — Rs 60,000 in the new regime for FY 2025-26 on total income up to Rs 12 lakh — is available to resident individuals only. As a non-resident you compute tax on the slab rates plus any surcharge (capped at 25 per cent in the new regime) and 4 per cent cess without the benefit of that rebate.

Which account keeps my foreign salary out of Indian tax?

An NRE rupee account or an FCNR(B) foreign-currency account. Interest on both is exempt from Indian tax — the NRE exemption sits in Section 10(4)(ii) of the Income Tax Act 1961 — and both are fully repatriable. Routing foreign earnings into an NRO account instead would expose the interest to TDS under Section 195.