DTAA Between India And the Philippines: Benefits, Rates and Tax Savings in 2025

Managing taxes across two countries can often feel overwhelming for individuals and businesses. The DTAA between India and the Philippines plays a crucial role in avoiding double taxation and creating a balanced tax framework. Defining which country has the right to tax specific types of income ensures fairness and reduces financial uncertainty. The agreement benefits NRIs, investors, and professionals by simplifying compliance, preventing fiscal disputes, and encouraging bilateral trade and investment.

DTAA Between India and the Philippines - Quick Info

This table provides a consolidated overview of the key features of the India-Philippines DTAA, offering a quick reference for taxpayers.

Objective of the DTAA Between India and the Philippines

The primary objective of the DTAA between India and the Philippines is to establish a clear and equitable tax system that supports the flow of capital, technology, and services between the two nations.

• Prevention of Double Taxation: The fundamental purpose is to ensure that income earned by a resident of one country in the other is not subject to taxation in both jurisdictions.
• Promotion of Bilateral Investment: By providing tax certainty and reducing the overall tax burden, the agreement encourages businesses from each country to invest in the other.
• Prevention of Tax Evasion: The treaty includes provisions for the exchange of information between tax authorities, which is critical for preventing fiscal evasion and ensuring compliance.
• Clear Allocation of Taxing Rights: It clearly defines which country has the right to tax specific types of income, thereby reducing ambiguity and the potential for disputes.
• Fostering Economic Cooperation: The DTAA strengthens the economic relationship between India and the Philippines, facilitating smoother trade, technology transfer, and business operations.

Significance of DTAA for India and the Philippines

The significance of this long-standing agreement lies in the stable foundation it provides for the growing economic partnership between India and the Philippines.

• Benefits for Investors and Businesses: The treaty reduces risk for companies, making cross-border investments more attractive with its explicit rules and norms. 
• Encouragement of Foreign Direct Investment [FDI]: DTAA makes the investment conditions more attractive for investors from both countries to participate in each other's markets.
• Clarity for NRIs and Professionals: For the increasing number of Indian professionals working in the Philippines and vice versa, the agreement provides clear rules on the taxation of employment income. This ensures they are taxed fairly and is a crucial part of the income tax rules for NRIs.
• Facilitation of Technology Transfer: The provisions on royalties and fees for technical services encourage the transfer of technology and knowledge between Indian and Philippine enterprises, supporting growth in key sectors.

Taxes Covered under DTAA Between India and the Philippines

This agreement applies to taxes on income imposed on behalf of each country. It is essential to know which specific taxes are included to understand the scope of the treaty. –[1]

• In India, the DTAA covers: Income Tax, including any surcharge thereon.
• In the Philippines, the DTAA covers: The income taxes imposed on citizens and resident corporations.

The agreement also includes a clause stating that it will apply to any identical or substantially similar taxes that are imposed after the date of signing, ensuring its relevance over time.

India-Philippines DTAA Tax Rates

A key feature of the DTAA is the provision for capped withholding tax rates on certain types of cross-border income. –[1]

Taxation on Capital Gains under DTAA Between India and the Philippines

The agreement outlines specific rules for taxing capital gains from the sale of assets, a key concern for property investors.

• Gains from Immovable Property: Gains from the sale of immovable property [such as land or buildings] are taxed in the country where the property is physically located. This is a vital point for NRIs who can buy property in India.
• Gains from Shares:
  • If the shares derive more than 50% of their value from immovable property, the gains may be taxed in the country where that property is located.
  • In other cases, gains from the sale of shares are generally taxed in the country where the company is resident.
• Gains from Business Assets: Gains from the sale of movable property that is part of a "permanent establishment" [a fixed place of business] are taxed in the country where this establishment is situated.
• Gains from Ships and Aircraft: Gains from the sale of ships or aircraft operated in international traffic are taxable only in the country of effective management of the enterprise.
• Gains from Other Assets: For any other type of asset, the capital gains are taxable only in the country where the seller is a resident.

Taxation on Employment Income Under DTAA

The rules for employment income provide clarity for the growing number of cross-border employees between India and the Philippines.

• General Rule: Salary, wages, and other similar payments are generally taxable in the country where the employment is exercised [i.e., where the work is physically performed].
• The 183-Day Rule [Short-term Employment]: An individual's salary is taxed only in their country of residence if all three of the following conditions are met:
  • The individual is present in the other country for a period not exceeding 183 days in any 12 months.
  • The salary is paid by an employer who is not a resident of the other country.
  • The salary is not borne by a permanent establishment of the employer in the other country.
• Directors' Fees: Fees paid to a member of the board of directors of a company are taxable in the country where the company is a resident.

What are the Documents required to claim DTAA TDS?

To claim the benefits of the lower TDS rates under the DTAA, certain documents must be provided to the tax authorities or the payer. – [2]

• Tax Residency Certificate [TRC] from the tax authorities of the country of residence.
• Self-attested copy of the PAN Card [for transactions in India].
• Self-attested Form 10F [for transactions in India].
• A declaration stating that the individual or company has no Permanent Establishment [PE] in the source country.
• For certain property transactions, a Lower TDS certificate for NRIs may also be required.

How to Claim DTAA Benefits?

Claiming the benefits of the DTAA between India and the Philippines involves a specific procedure during the tax filing process. The method for relief is primarily the tax credit method, as outlined in Article 23 India-Philippine DTAA.

In India [for Indian residents earning in the Philippines]:

• Declare your global income, including the income earned in the Philippines, when filing your Indian income tax return.
• Pay tax on this global income in India according to the applicable tax slabs.
• Claim a Foreign Tax Credit [FTC] for the taxes already paid in the Philippines by electronically filing Form 67 before the due date of filing your return.

In the Philippines [for NRIs/Filipino residents earning in India]:

• Provide the necessary documents [TRC, PAN, Form 10F] to the entity in India that is paying the income.
• The payer in India will then deduct TDS at the DTAA rate. This process often involves filing Form 15CA and 15CB for NRIs.
• When filing their tax return in the Philippines, they can typically claim a credit for the taxes paid in India to avoid double taxation.

DTAA Impact on NRIs, Investors, and Businesses

The agreement has a significant positive impact on all stakeholders involved in cross-border activities between the two nations.

• For NRIs: It simplifies tax obligations on income from India, such as from property investments, fixed deposits, or NRO accounts, which have specific taxation rules.
• For Investors: It provides clarity and certainty on the taxation of capital gains and dividends, which is crucial for making informed investment decisions, especially for those considering the top cities in India for NRI property investment.
• For Businesses: It creates a stable and predictable tax environment, which reduces risk and encourages companies in the technology and service sectors to expand their operations in the other country.

How NoBroker Can Help with NRI Services?

For Non-Resident Indians, handling property-related responsibilities and taxation from abroad is often a challenge. NoBroker provides end-to-end solutions for NRI property owners, including rental management, property monitoring, and legal due diligence. With expert guidance on the DTAA between India and the Philippines, our team helps navigate tax implications, claim DTAA benefits, and manage TDS on property transactions. By simplifying compliance and offering trusted property services, NoBroker ensures that NRIs enjoy a smooth, transparent, and stress-free experience when managing their investments in India.

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