DTAA Between India And Italy: Benefits, Tax Rates & Claim Process in 2025

Facilitating smoother tax compliance for cross-border earners, the DTAA between India and Italy ensures that the same income is not taxed twice. This agreement is crucial for NRIs residing in Italy, Italian businesses with operations in India, and investors engaged in bilateral trade. Covering income types such as dividends, interest, royalties, and capital gains, it provides reduced TDS rates and clear taxation rules. By preventing double taxation, promoting transparency, and encouraging investments, the DTAA strengthens economic ties between the two nations while creating a fair and predictable tax framework for individuals and enterprises alike. [1][2]

DTAA Between India and Italy - Quick Information

For a quick reference, the table below summarises the core details of the tax treaty established between the governments of India and Italy.

Objective of the DTAA Between India and Italy

The primary purpose of the DTAA between Italy and India is to establish a fair system for taxing cross-border income, ensuring that taxpayers are not subject to double taxation. The treaty aims to foster a stronger economic partnership by making trade and investment more attractive and predictable. It also includes provisions to prevent tax evasion and avoidance through cooperation and the exchange of information between the two nations.

Key Features of India-Italy DTAA

The agreement contains several defining features that outline its application and benefits. Here are the most critical aspects of this tax treaty.

Scope of the agreement

This treaty applies to taxes on income levied by both nations. For India, this includes income tax and any surcharge. For Italy, it covers personal income tax, corporate income tax, and the local income tax, ensuring comprehensive coverage.

Who can claim DTAA benefits (residents, companies, trusts, etc.)?

The benefits of this DTAA are available to any person or entity considered a 'resident' of India or Italy for tax purposes. This includes individuals, companies, partnerships, and any other body liable to tax in either country.

What are the Tax Relief Methods Used in India-Italy DTAA

The agreement primarily uses the tax credit method to eliminate double taxation. This means that if an Indian resident pays tax on income in Italy, India will allow that tax amount as a credit against the tax payable in India on the same income.

DTAA Rates Between India and Italy

A key aspect of this treaty is the specified withholding tax rates on certain incomes. The DTAA rate between India and Italy for passive income is notably different from many other treaties.

What are the Documents required to claim DTAA TDS

To avail the withholding tax rates specified in the treaty, a non-resident must furnish the following key documents to the payer in the source country:

• A valid Tax Residency Certificate (TRC) from their home country's tax authority.
• A self-attested copy of their Permanent Account Number (PAN) Card.
• A duly filled and signed Form 10F.
• A declaration stating they are the beneficial owner of the income.

How to Claim DTAA Benefits?

The procedure for claiming DTAA benefits varies depending on whether you are an Indian resident earning income in Italy or an Italian resident earning income in India.

In India (for Indian residents earning in Italy)

• Step 1- Report Global Income: NRI filing income tax return in India, you must declare your total income, including any earnings sourced from Italy.
• Step 2- Furnish Proof of Tax Paid: You need to provide official proof, such as tax payment receipts from Italian authorities, confirming the amount of tax paid in Italy.
• Step 3- File Form 67: It is mandatory to file Form 67 on the income tax portal before submitting your return. This form is a declaration of foreign income and the taxes paid on it.
• Step 4- Claim Foreign Tax Credit (FTC): In your tax return, you can then claim the FTC for the taxes paid in Italy. This credit reduces your Indian tax liability, effectively preventing double taxation. Managing your finances is easier when you know the difference between NRE and NRO accounts.

In Italy (for NRIs earning in India)

• Step 1- Submit Documents in India: To benefit from the DTAA rates, you must provide your TRC from Italy, along with Form 10F and your PAN, to the Indian entity making the payment.
• Step 2- Ensure Appropriate TDS Deduction: The Indian payer will then deduct TDS at the rate specified in the treaty (e.g., 15% on interest) instead of the standard domestic rate. Applying for a lower TDS certificate for NRIs can further simplify this process.
• Step 3- Report Indian Income in Italy: You must declare the income earned from India when filing your tax return in Italy.
• Step 4- Claim Credit in Italy: As per Italian tax laws and the DTAA, you can claim a credit for the tax paid in India against your Italian tax liability. A clear NRI power of attorney guide can be essential for managing these affairs from abroad.

DTAA TDS Rate Chart (2025) – India-Italy

When a payment is made from India to an Italian resident, the DTAA rates between India and Italy apply. This ensures the tax withheld at source is limited to the percentages agreed upon in the convention.

DTAA Impact on NRIs and Investors

The DTAA between India and Italy has specific implications for NRIs and investors, primarily shaped by its unique tax rates and rules governing certain types of income.

• Higher Withholding Rates: Compared to many of India's other tax treaties, the rates for dividends (15%/25%), interest (15%), and royalties (20%) are relatively high. This can impact the net returns for investors and requires careful financial planning.
• Clarity on Capital Gains: Article 13 of the DTAA between India and Italy provides clear rules for taxing capital gains. Gains from the sale of immovable property are taxed where the property is located. For shares, the taxing rights depend on factors like whether the company's assets are primarily real estate.
• Rules for Employment Income: The treaty provides specific guidance for the taxation of salaries and income from independent professional services, which gives clarity to individuals working across both countries.
• Encourages Compliance: By providing a clear, albeit sometimes less concessional, tax framework, the treaty encourages compliance and reduces the likelihood of tax disputes for those engaged in legitimate cross-border business.
• Foundation for Trade: Despite higher rates on some incomes, the treaty provides the stability and legal certainty needed for businesses to engage in trade, knowing that a system is in place to prevent double taxation. This is crucial for NRIs considering how to buy property in India.

How NoBroker Can Help with NRI Services?

NoBroker offers a complete range of solutions tailored for NRIs navigating property, taxation, and compliance matters in India. From managing real estate transactions and tenant handling to guiding the DTAA between India and Italy, NoBroker ensures transparency and legal compliance at every step. Expert teams provide guidance on understanding reduced TDS rates, tax credits, and documentation requirements under the treaty. With secure online processes, regular updates, and personalised support, NRIs can seamlessly manage investments, maximise tax benefits, and maintain complete control over assets without the need for physical presence in India.

Know More How DTAA Works in India with Different Countries: