DTAA Between India and Thailand: Objective, Benefits, Tax Rates & Claim Process

The DTAA between India and Thailand is a crucial legal framework that eliminates double taxation on income earned by residents of either country. This agreement ensures that tax is paid effectively in only one jurisdiction, simplifying tax compliance and providing legal certainty for individuals and Non-Resident Indians (NRIs) with earnings in both nations. By providing a clear methodology for allocating taxing rights, this DTAA income tax treaty promotes smoother trade and investment between India and Thailand.

The objective of the DTAA between India and Thailand 

This agreement boosts a favourable economic environment by removing fiscal barriers to cross-border transactions and the movement of people. [1]

• Avoidance of Double Taxation: The core purpose is to prevent an income from being taxed entirely in both India and Thailand.
• Allocation of Taxing Rights: The treaty clearly defines which country has the primary right to tax a specific type of income (e.g., salary, business profits, dividends).
• Prevention of Fiscal Evasion: The DTAA includes provisions that allow tax authorities of both nations to exchange information, thereby helping to restrict tax evasion and improve compliance.

Significance of DTAA for India and Thailand 

From an economic and diplomatic perspective, the India-Thailand tax treaty is essential to both nations, enhancing bilateral relations and promoting capital flow. [1]

• Promotes Bilateral Trade: By eliminating the financial barrier of double taxation, the agreement enhances corporate competitiveness and facilitates higher trade volumes between the two countries.
• Boosts Foreign Direct Investment (FDI): The certainty provided by the DTAA regarding tax liabilities encourages more Thai investors to commit capital to India, and vice versa.
• Facilitates Technology Transfer: The specific provisions covering fees for technical services and royalties simplify the tax treatment of intellectual property, promoting the exchange of technology and knowledge between the two countries.
• Strengthens Diplomatic Ties: The agreement demonstrates mutual trust and provides a robust framework for communication and dispute resolution between the tax authorities of the two nations.

India-Thailand DTAA Tax Rates 

The DTAA establishes maximum tax rates for specific income categories in the country where the income originates (the source country). [1]

Taxation on Capital Gains under the DTAA Between India and Thailand 

The DTAA contains specific rules governing Capital Gains that influence the transfer and sale of assets between the two countries. These rules determine which country has the legal right to impose tax. [1]

• Income from Immovable Property: Capital gains arising from the sale of immovable property (such as land or buildings) are taxed in the country where the property is physically situated. 
• Gains from Shares: Gains from the sale of shares in a company may be taxed in the country of residence of the company that issues the shares. This provision is crucial for investment in business real estate and aims to curb the use of holding companies to avoid taxes.
• Gains from Movable Property: For movable property forming part of the business assets of a permanent establishment, the profits derived from the alienation (sale) of such property may be taxed in the country where the permanent establishment is located.

Taxation on Employment Income Under DTAA 

The provisions governing employment income are critical for individuals temporarily working in another country. [1]

• General Rule (Taxed Where Work is Performed): Income derived from employment is taxable in the country where the employment is physically exercised.
• The '183-Day Rule': Income remains taxable only in the employee's country of residence if three specific conditions are met, including that the employee's presence in the host country does not exceed 183 days during a fiscal year.
• Benefit for Short-Term Assignments: This 183-day rule is highly advantageous for business trips or short-term assignments, as the employee will be exempt from taxation in the host country for that temporary work.

What documents are required to claim DTAA TDS? 

To legally claim the reduced tax rates or tax credit under the India-Thailand double taxation agreement, specific documents must be maintained and submitted to the tax authorities. 

• Tax Residency Certificate (TRC): A certificate issued by the tax authority of the country of residence.
• Form 10F: A self-declaration form providing mandatory details about the taxpayer, often submitted digitally.
• PAN Card: The Permanent Account Number (PAN) is necessary for all financial transactions in India.
• Passport & Visa Copies: Documents proving the taxpayer's status and residency period.
• Form 15CA and 15CB: Mandatory forms required before remitting funds out of India, particularly applicable for NRIs selling property.

How to Claim DTAA Benefits? 

The primary method for claiming relief under the DTAA is by either paying the tax at the reduced treaty rate or claiming a credit for the tax already paid in the host country.

• In India (for Indian residents earning in Thailand): These Indian residents can claim a credit for the tax already paid in Thailand against the tax liability in India. This is the Tax Credit Method.
• In Thailand (for Thai residents earning in India): Thai residents can provide a Tax Residency Certificate (TRC) to the Indian payer. The Indian payer can then deduct TDS at a lower, mutually agreed rate (e.g., 10% on dividends), thereby reducing the tax at source.
• Compliance for NRIs: NRIs receiving rental income or selling property in India must ensure they use the correct forms and declare their status to benefit from the treaty provisions under income tax for NRI.

DTAA Impact on NRIs, Investors, and Businesses 

The DTAA provides crucial clarity that supports investment and minimizes the administrative burden for cross-border entities.

• Legal Certainty: The agreement outlines the precise legal mechanisms for resolving common tax disputes, providing investors with certainty about their tax obligations.
• Streamlined Procedures: It facilitates the exchange of information and mutual assistance in tax matters, increasing administrative effectiveness for both countries.
• Reduced Compliance Burden: Taxpayers benefit from simple compliance procedures and the potential for lower tax rates on certain types of income, such as royalties and interest.
• Facilitating Property Transactions: It provides clear rules on how TDS on the sale of property by NRI should be handled when the seller resides in Thailand, ensuring correct tax liability.

How NoBroker Helps With Tax Documentation for DTAA Claims 

Managing international tax compliance and securing the treaty benefits requires expert guidance and meticulous documentation. NoBroker assists individuals and businesses by simplifying the complexity of the DTAA between India and Thailand claim process. We provide support in obtaining the necessary Tax Residency Certificate (TRC), assist with preparing and filing mandatory forms such as Form 15CA/15CB, and conduct meticulous documentation review to ensure your claims for tax relief are accurate, compliant, and processed swiftly.

Know More How DTAA Works in India with Different Countries: