What is DTAA Between India and UK?

The Double Taxation Avoidance Agreement (DTAA) between India and the United Kingdom is a treaty that ensures individuals and businesses are not taxed twice on the same income in both countries. It outlines which country has the right to tax specific types of income, helping reduce the tax burden and promote cross-border trade and investment. For NRIs and businesses with financial links in both nations, this guide explains the key provisions of the DTAA, its impact on your earnings, and how to make the most of its benefits.

DTAA Between India and the UK – Quick Info

Here is a brief overview of the essential details concerning the tax treaty that governs financial relations between India and the UK.

Aspect	Details
Official Name	Convention for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion for Taxes on Income and Capital Gains
Participating Nations	The Republic of India and the United Kingdom of Great Britain and Northern Ireland
Date Signed	January 25, 1993
Income Types Covered	Income from employment (salary), business profits, property income, capital gains, dividends, interest, royalties, technical fees, and pensions.
Key Documentation	Tax Residency Certificate (TRC), Form 10F, Permanent Account Number (PAN).
Primary Relief Method	Tax Credit Method.
Governing Authorities	In India, it is the Central Board of Direct Taxes (CBDT); in the UK, it is His Majesty’s Revenue and Customs (HMRC).

Objective of the DTAA Between India and the UK

The fundamental objective of the tax treaty between India and the UK is to eliminate the burden of double taxation and foster a stable, predictable tax environment. By clearly allocating the right to tax different types of income, the agreement encourages and simplifies cross-border trade, technology transfer, and investment flows. Furthermore, it establishes a robust framework for cooperation and the exchange of information between the tax authorities of both nations to prevent tax evasion and ensure the fair application of domestic tax laws.

Key Features of India-UK DTAA

The India-UK DTAA is characterised by several key features that determine its application and benefits for eligible taxpayers.

Scope of the agreement

The treaty’s scope is comprehensive, applying to residents of both India and the UK. The provisions of the DTAA between India and the UK on income tax cover taxes on income and capital gains imposed by each country. This ensures that a wide spectrum of earnings, from corporate profits to an individual’s investment gains, falls under the treaty’s protective measures.

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

To claim benefits, an individual or entity must qualify as a ‘resident’ of one or both contracting states. This status is determined by the domestic laws of each country, based on factors like domicile, residence, or place of management. Individuals, companies, partnerships, and trusts can all be eligible, provided they meet the residency criteria and are subject to tax in their home country.

What are the Tax Relief Methods Used in India-UK DTAA?

The credit method is the primary method employed by the double tax treaty between India and the UK to provide relief. This mechanism allows taxpayers to offset the tax they owe in their country of residence by the tax they have already paid on the same income in the source country. This effectively ensures the income is not taxed twice.

DTAA Rates Between India and the UK

A significant benefit of the DTAA is the establishment of concessional tax rates for certain incomes, often lower than the standard domestic rates. The specific DTAA rates between India and the UK are detailed below.

Income Type	DTAA Tax Rate	Article Reference
Dividends	10% / 15% (based on the level of shareholding)	Article 11
Interest	10% / 15% (based on the type of payer, e.g., government, bank)	Article 12
Royalties & Fees for Technical Services	10% / 15% (based on the specific nature of the service/royalty)	Article 13
Capital Gains	Generally taxed in the country of residence (with major exceptions)	Article 14

Important DTAA Articles to Know

Understanding the treaty’s key articles, which address common types of cross-border income, is essential to fully utilising it.

DTAA between India and the UK for Salary Income

Article 16 of the treaty is dedicated to the DTAA between India and the UK for salary income. It stipulates that salaries are generally taxable in the country where the employment is physically carried out. However, an exception exists: a UK resident working in India for a short period (less than 183 days) will not be taxed in India, provided their employer is not an Indian resident and a permanent establishment of the employer in India does not bear the salary.

Article 13 of the DTAA between India and the UK: Royalties and Fees for Technical Services

In the India-UK treaty, Article 13 covers Royalties and Fees for Technical Services, not Capital Gains. This article is crucial for the service and technology sectors. It limits the tax that can be charged in the source country on payments for royalties and technical services to either 10% or 15%, depending on the category. This is often more favourable than the rates under the Indian DTAA between India and the UK Income Tax Act.

Taxation of Pensions (Article 19)

Article 19 is highly relevant for retired individuals. It specifies that pensions and other similar remuneration paid to a resident of one country in consideration of past employment shall be taxable only in that country of residence. This means a UK pension received by a person who is a resident of India is generally taxable only in India.

What are the Documents required to claim DTAA TDS?

To avail the beneficial DTAA between India and the UK, the recipient of the income must provide the following documents to the payer in India:

• A valid Tax Residency Certificate (TRC) issued by HMRC in the UK.
• A self-declaration in Form 10F, filed electronically on the Indian tax portal.
• A copy of the Permanent Account Number (PAN) card.
• A declaration stating that the recipient does not have a Permanent Establishment (PE) in India.

How to Claim DTAA Benefits?

Claiming treaty benefits is a proactive process that requires careful compliance.

• In India (for UK residents): To benefit from lower TDS rates on income like interest or royalties, you must furnish the required documents (TRC, Form 10F) to the Indian payer. If tax is deducted at a higher rate, a refund can be claimed by filing an Indian tax return. Understanding the rules for TDS on selling property by an NRI is essential for property transactions.
• In the UK (for Indian residents): You must report your global income on your UK tax return. You can then claim a foreign tax credit for the taxes paid in India to reduce your UK tax liability.

DTAA TDS Rate Chart (2025) – India-UK

When an Indian resident makes a payment to a UK resident, they must deduct TDS. The DTAA offers beneficial rates compared to standard domestic law.

Nature of Payment	Standard TDS Rate (Income Tax Act)	Preferential TDS Rate (India-UK DTAA)
Interest	20% (+ surcharge/cess)	10% or 15%
Dividends	20% (+ surcharge/cess)	10% or 15%
Royalties	10% (+ surcharge/cess)	10% or 15%
Fees for Technical Services	10% (+ surcharge/cess)	10% or 15%

Form 15CA/15CB requirement for remittance from India

Any remittance from India to a non-resident in the UK is subject to reporting requirements. This process, which involves a clear understanding of Form 15CA and 15CB for NRIs, declares to the Indian Tax Department that all tax obligations have been met.

DTAA Impact on NRIs and Investors

For the large Indian diaspora in the UK and for British investors, the DTAA has a significant and positive impact.

• Prevents Tax Leakage: It ensures that profits and incomes are not eroded by being taxed twice, making cross-border business more viable.
• Encourages Investment: The treaty provides tax certainty, a critical factor in long-term investments. This confidence is vital for anyone considering how NRIs can buy property in India.
• Simplifies Financial Management: Clear rules on income sources, such as interest from NRO accounts, help NRIs manage their finances more effectively.

How NoBroker Can Help with NRI Services?

Navigating the complexities of international tax treaties and Indian property laws from the UK can be challenging. NoBroker’s Exclusive services for NRI property owners are designed to bridge this gap. We provide expert assistance with everything from property search and transaction support to comprehensive legal due diligence for Non-Resident Indians (NRIs) investing in Indian real estate. We aim to make managing your Indian assets a seamless and stress-free experience.

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