Claiming DTAA Relief as an NRI: TRC, Form 10F and Foreign Tax Credit Under Sections 90 and 91

When the same rupee of income is taxed once in India and again in your country of residence, the remedy is not a plea for mercy but a documented, statute-backed claim. India's Double Taxation Avoidance Agreements (DTAAs) exist precisely so that a Non-Resident Indian (NRI) is not taxed twice on one income stream. Yet relief is never automatic. It hinges on three instruments the Income Tax Department has made mandatory since Rule 21AB was tightened: a Tax Residency Certificate (TRC), Form 10F filed electronically, and, where a credit is claimed, Form 67. Miss any one and the assessing officer can deny the treaty rate and apply the full domestic rate instead. With treaties spanning more than 90 countries and rates ranging from 10% to 25% depending on the income type, getting the paperwork right is what separates a 12.5% treaty bill from a 20%-plus domestic one. This guide walks through how DTAA relief actually works under Sections 90, 90A and 91 of the Income-tax Act, 1961.

FEMA / DTAA Position

Sections 90 and 90A of the Income-tax Act, 1961 empower the Central Government to enter into bilateral DTAAs, and India has signed comprehensive treaties with more than 90 countries. Where a treaty exists, Section 90(2) contains the single most important protection for an NRI: the provisions of the Act apply only to the extent they are more beneficial to the assessee. In other words, if the domestic rate is 20% and the treaty rate is 15%, the 15% treaty rate prevails; but if the Act happens to be kinder, the Act wins.

Section 91 covers the residual case. Where India has no DTAA with the country in which income was taxed, Section 91 grants unilateral relief, allowing a resident to set off Indian tax against the foreign tax paid on the doubly-taxed income at the lower of the two effective rates. Because Section 91 relief is available only to residents, most NRIs will rely on the bilateral route under Section 90, which is why treaty documentation matters so much.

The gateway condition sits in Section 90(4): a non-resident cannot claim any DTAA benefit unless he obtains a TRC from the tax authority of his country of residence. Section 90(5), read with Rule 21AB, then requires the taxpayer to furnish Form 10F carrying particulars — status, nationality, tax identification number, period of residential status and address — that the TRC may not itself contain. Since the Central Board of Direct Taxes mandated electronic filing of Form 10F on the income-tax e-filing portal, even non-residents without a Permanent Account Number (PAN) can register and file it online. To confirm whether you are a non-resident for the year in the first place, read our explainer on residential status under Section 6 and the 120-day rule.

Tax Treatment in India

India taxes an NRI only on income that accrues, arises or is received in India, but where it does tax, the treaty caps the rate. The table below sets out the ceiling rates under three of India's most-used treaties, drawn from the operative articles of each agreement. Note the recurring 12.5% figure for long-term capital gains: India retains its taxing right over capital gains and a DTAA never renders them exempt.

A subtlety in the India-US treaty deserves emphasis: under Article 10, the 15% dividend rate applies only where the recipient company holds at least 10% of the voting stock of the payer; for an individual NRI holding shares as a portfolio investor, the rate is 25%. Compare that with the India-UAE treaty, where portfolio dividends are capped at just 10%, and you see why the residence country changes the arithmetic materially.

Tax is collected at source before the money ever reaches you. Under Section 195, the Indian payer must deduct TDS on payments to a non-resident, and unless you have furnished a valid TRC and Form 10F the deductor will apply the domestic rate rather than the treaty rate. On top of the base rate sit surcharge and the 4% health and education cess. Surcharge on personal income runs in slabs, but under the new tax regime the maximum surcharge is capped at 25%, not the 37% that once applied to the highest bracket. You can model the combined effect of rate, surcharge and cess on your Indian income using our NRI income tax calculator.

Tax Treatment Abroad

The treaty rate India levies is only half the story; the other half is whether your country of residence gives you credit for that Indian tax. India follows the ordinary credit method under Rule 128 of the Income-tax Rules, 1962. The Foreign Tax Credit is the lower of the Indian tax payable on the doubly-taxed income and the foreign tax actually paid, and it is claimed by filing Form 67 on or before the due date for the return under Section 139(1). Form 67 is formally titled the "Statement of Income from a country or specified territory outside India and Foreign Tax Credit" on the income-tax portal.

The mechanics run in the opposite direction for a US-resident NRI: the United States taxes its residents on worldwide income, but Article 24 of the India-US treaty obliges the US to allow a foreign tax credit for Indian tax paid, so the Indian TDS on your dividend or capital gain is not simply lost. The same relieving principle appears in Article 24 of most Indian treaties. Critically, relief always operates through a credit or a reduced rate — never a blanket exemption — so an NRI who assumes "the treaty makes it tax-free" will be wrong every time.

For residents of zero-tax jurisdictions the calculus differs again. The UAE levied no personal income tax until 2023 and still imposes none on individual salary or investment income, so a UAE-resident NRI generally pays only India's treaty-rate tax with no foreign tax to credit. The UAE treaty's own notes flag that claiming its benefit requires proof of a UAE establishment behind the TRC, a reminder that a TRC issued to a purely non-resident individual can be scrutinised.

Repatriation Mechanics

Documentation gets you the right tax rate; the account structure gets your money out of India. The three non-resident accounts operate under distinct Foreign Exchange Management Act, 1999 (FEMA) rules, and choosing the wrong one can trap otherwise repatriable funds. Balances in a Non-Resident External (NRE) account and a Foreign Currency Non-Resident (FCNR) deposit are fully and freely repatriable, principal and interest, and the interest is exempt from Indian tax under Section 10(4)(ii) so long as you remain a non-resident under FEMA.

The Non-Resident Ordinary (NRO) account is where India-source income — rent, dividends, pension — is credited, and it is the one with a ceiling. Under FEMA regulations an NRI may repatriate up to USD 1 million per financial year out of NRO balances, over and above current income, subject to payment of applicable taxes. The remittance requires a chartered accountant's certificate in Form 15CB and an online declaration in Form 15CA, confirming that tax has been deducted before the funds leave India. If your NRO income is chiefly rental, our NRI rental income tax calculator shows the 30% Section 194-IB / 195 deduction and the net repatriable figure.

Repatriation of your own foreign funds into India, and back out, sits under a separate FEMA window. The Liberalised Remittance Scheme permits resident individuals to remit up to USD 250,000 per financial year, though NRIs operate chiefly through the NRE/NRO/FCNR structure rather than the LRS; our guide to the USD 250,000 LRS limit sets out what that scheme does and does not cover. The distinction matters because mixing LRS and NRO remittances in the same year is a common compliance error.

Because the USD 1 million window resets each financial year on 1 April, families sometimes stagger large NRO remittances across two years to move funds without breaching the cap. To estimate how much you can move this year and the tax withheld along the way, use the NRI repatriation calculator. If you also hold an Overseas Citizen of India card, our note on OCI cardholder rights and limits explains how property and investment rules interact with these accounts.

FAQ

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

Yes. Section 90(4) requires a valid TRC for the relevant period, and because residential status can change year to year, the TRC and the accompanying Form 10F are furnished for each financial year in which you claim the treaty rate. A 2021 TRC cannot support a claim for income earned in 2025-26.

Can Form 10F still be filed on paper?

No, in the general case. Since the CBDT notification mandating electronic filing, Form 10F must be submitted through the income-tax e-filing portal, and the portal now allows non-residents without a PAN to register specifically for this purpose. Retaining a scanned TRC and the e-filed Form 10F acknowledgement is essential if the assessing officer queries the claim.

Is my capital gain on Indian shares exempt under any DTAA?

No. India retains the right to tax capital gains, and the long-term rate on listed equity is 12.5% under current law; no DTAA converts an Indian-source capital gain into an exempt receipt. The treaty may reduce the rate or hand a credit to your country of residence, but the gain remains taxable in India.

What if my country has no DTAA with India?

Then bilateral relief under Section 90 is unavailable, but a resident can still claim unilateral relief under Section 91, setting off Indian tax against foreign tax on the same income at the lower effective rate. Most NRIs, being non-residents, will instead rely on the domestic exemptions and the Form 67 credit route where applicable.

How is the Foreign Tax Credit calculated?

Under Rule 128 the credit equals the lower of the Indian tax on the doubly-taxed income and the foreign tax actually paid on it, claimed via Form 67 filed on or before the due date under Section 139(1). Credit is given source-by-source and cannot exceed the Indian tax attributable to that income.

Does the UAE's TRC give automatic treaty benefit?

Not automatically. The India-UAE treaty in force since 22 September 1993 caps portfolio dividends at 10% and interest at 12.5%, but the treaty notes require proof of a UAE establishment behind the TRC, and Indian authorities may examine whether an individual genuinely qualifies as a UAE resident for treaty purposes.

When must Form 67 be filed to keep the credit?

Form 67 must be furnished on or before the due date for filing the return under Section 139(1) for the relevant assessment year. Filing the credit statement late can jeopardise the claim, so it should accompany the original return rather than a belated one.