DTAA Between India and Japan - Quick Information
For a quick reference, the table below summarises the essential details of the tax treaty established between the governments of India and Japan.
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| Feature | Details |
|---|---|
| Agreement Name | Convention between India and Japan to avoid double taxation and prevent tax evasion. |
| Countries Involved | The Republic of India and Japan. |
| Last Updated | This agreement has been in force since 2006, replacing an earlier one aligned with modern international tax standards. |
| Year Signed | |
| Income Types Covered | Income from business, shipping, air transport, dividends, interest, royalties, technical service fees, capital gains, personal services, and salaries. |
| Key Forms | Form 15CA and 15CB for NRIs is also essential. |
| Tax Relief Methods | Primarily uses the Credit Method, where the residence country credits taxes paid in the source country. |
| Common TDS Rate | 10% on dividends, interest, royalties, and fees for technical services. |
| Authority Handling DTAA | |
| Applies To | Residents [individuals, companies, partnerships, etc.] of India and/or Japan. |
| Governing Bodies | The respective tax departments of the national governments. |
Objective of the DTAA Between India and Japan
Key Features of India-Japan DTAA
The agreement contains several important provisions that define its application and the benefits it offers. Below are the key features of this significant tax treaty.
Scope of the agreement
Who can claim DTAA benefits [residents, companies, trusts, etc.]?
What are the Tax Relief Methods Used in India-Japan DTAA?
This means that if an Indian resident pays tax on income earned in Japan, India will allow that tax amount as a credit against the tax payable in India on that same income, ensuring a fair outcome. Japan offers a reciprocal benefit to its residents. Basic income tax rules for NRIs
DTAA Rates Between India and Japan
| Income Type | DTAA Tax Rate | Article Reference |
|---|---|---|
| Dividends | 10% of the gross amount | Article 10 |
| Interest | 10% of the gross amount | Article 11 |
| Royalties and Fees for Technical Services | 10% of the gross amount | Article 12 |
| Business Profits [if no Permanent Establishment] | Taxable only in the country of residence | Article 7 |
What are the Documents required to claim DTAA TDS
- A duly filled and signed Form 10F.
How to Claim DTAA Benefits?
The process for claiming DTAA benefits varies depending on where you reside and where your income originates.
In India [for Indian residents earning in Japan]
- Declare Global Income: NRI filing ITR in India, you are obligated to report your entire global income, which includes any earnings from sources in Japan.
- Provide Proof of Tax Paid in Japan: You must have official documentation, such as tax payment receipts from Japanese tax authorities, to prove that tax has already been paid on that income in Japan.
- File Form 67: Before submitting your Indian tax return, you must file Form 67 online. This form details your foreign-sourced income and the foreign tax paid on it.
- difference between NRE and NRO accounts.
In Japan [for NRIs earning in India]
- Submit Documents to Indian Payer: To ensure the lower TDS rate is applied in India, you must provide your TRC from Japan, a PAN copy, and a completed Form 10F to the Indian entity paying you [e.g., a company paying dividends or a tenant paying rent].
- Ensure Lower TDS Deduction: Once these documents are verified, the Indian payer will deduct TDS at the concessional treaty rate of 10%, instead of a potentially higher domestic rate. Applying for a lower TDS certificate for NRIs can also facilitate this process.
- Report Indian Income in Japan: You must declare the income earned from India when filing your tax return in Japan.
- Claim Tax Credit in Japan: Under Japanese tax laws and the DTAA, you can claim a credit for the taxes paid in India, which will be offset against your tax liability in Japan. For managing your affairs, a reliable NRI power of attorney guide can be incredibly useful.
| Nature of Payment | Recipient [Resident of Japan] | TDS Rate under DTAA |
|---|---|---|
| Dividends | Company or Individual | 10% |
| Interest | Company or Individual | 10% |
| Royalties | Company or Individual | 10% |
| Company or Individual | 10% | |
| Sale of Immovable Property by an NRI | Company or Individual | Governed by Capital Gains article. Specific rules like TDS on sale of property by an NRI are applicable. |
DTAA Impact on NRIs and Investors
The DTAA applicable between Japan and India has a profoundly positive impact on NRIs and investors by creating a stable and efficient financial corridor between the two nations.
- Financial Predictability:
- Reduced Tax on Royalties and Fees:
- Encourages Technology and Capital Flow:
- Protection for Property Investors: The treaty offers clear rules on the taxation of capital gains from property. This helps NRIs who are considering buying a resale home from an NRI or investing in new real estate by providing certainty on how gains from a future sale will be taxed.
- Enhanced Cooperation:
How NoBroker Can Help with NRI Services?
Navigating the nuances of the DTAA between India and Japan can be a complex task, especially for NRIs managing investments from afar. NoBroker offers exclusive services for NRI property owners designed to handle these challenges. Our experts can assist with property management, legal formalities like conducting legal due diligence for NRIs investing in Indian real estate, and guidance on tax compliance, ensuring your affairs are managed efficiently and in line with all legal requirements.
Know More How DTAA Works in India with Different Countries:
