Double taxation for NRI is an issue, where the same income is taxed in two countries. To prevent this, India has signed the Double Taxation Avoidance Agreement (DTAA) with over 90 countries. Under DTAA, NRIs can avoid or minimise being taxed twice on the same income. There are two main methods for claiming relief: the exemption method, where income is taxed in only one country, and the tax credit method, where tax paid in one country is credited against tax payable in the other.
What is NRI Double Taxation & How to Avoid it?
For instance, if an NRI pays tax on rental income earned in India and is also taxed on the same income in their resident country, they can claim a credit or exemption as per DTAA provisions.
To avail DTAA benefits, NRIs must submit certain documents such as
The Tax Residency Certificate (TRC) from the foreign country
Form 10F
A self-declaration.
These need to be furnished to the Indian income payer (like a bank or tenant) to avoid Tax Deducted at Source (TDS) at higher rates.
The type of income covered under DTAA includes interest, dividends, royalties, fees for technical services, and capital gains. For example, under DTAA with the U.S., interest income may be taxed at a reduced rate of 15% instead of the standard rate.
Proper planning and documentation ensure NRIs are taxed fairly and not subjected to double taxation. NRI filing income tax returns in India and claiming the foreign tax credit (FTC) in their country of residence is crucial.
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How to Avoid Double Taxation for NRI?
anita
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2025-07-11T07:24:49+00:00 2025-07-11T07:24:52+00:00Comment
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