India has tax treaties with most countries NRIs live in. Yet treaty relief is not automatic — it has to be claimed, with two specific documents, in the right sequence, before the Indian payer deducts tax. This guide covers the mechanics: the Tax Residency Certificate, Form 42 (earlier Form 10F), the relief methods, and what to know if you are in the US, UAE or UK.
What double taxation actually is
The same income can be taxed twice for a simple reason: India taxes income that arises in India, and your home country taxes you as its resident on worldwide income. Indian rent, dividends, interest or capital gains earned by a US resident are squarely in both nets.
A Double Taxation Avoidance Agreement (DTAA) resolves the overlap. It either caps the tax India can charge on a given income type, assigns taxing rights to one country, or obliges your home country to give credit for the Indian tax. The relief provisions sit in Section 159 of the Income-tax Act, 2025 (earlier Sections 90/90A). Treaties themselves did not change with the new Act — only the machinery sections and form numbers were renumbered.
Which treaty applies depends on where you are tax-resident — which in turn depends on your Indian day count. If that is unsettled, start with NRI residential status and RNOR explained.
The two documents that unlock relief
1. The Tax Residency Certificate (TRC)
The TRC is the anchor. It is issued by your home-country tax authority and certifies you are its tax resident for the period. Without a TRC, an Indian payer cannot apply a treaty rate, and the tax department will not accept a treaty position in assessment. Get it for the correct period (it must cover the date the income arises) and renew it annually if your Indian income recurs.
2. Form 42 (earlier Form 10F)
Form 10F supplements the TRC with the particulars Indian law requires — status, nationality, tax identification number, period of residency, address. From 1 April 2026 it is Form 42 under the Income-tax Act, 2025; searches for "Form 10F" lead to the same requirement. Two practical points:
- It is filed electronically on the income-tax portal — mandatory since 2023. A signed paper form alone no longer works.
- No PAN? You can still file. The portal lets non-residents register without a PAN specifically for this purpose — though holding a PAN remains the practical choice for anyone with recurring Indian income.
In practice, payers also ask for a no-PE declaration — a statement that you have no permanent establishment in India — before applying treaty rates to business-type payments.
The short version
TRC from your home tax authority + Form 42 (earlier 10F) e-filed on the Indian portal, both delivered to the Indian payer before payment. That is what turns a treaty on paper into a lower deduction in your bank account.
The three relief methods
- Exemption: the treaty assigns the income to one country only; the other does not tax it at all.
- Credit: both countries tax, but your residence country credits the Indian tax against its own — the most common method for NRIs. You pay, overall, the higher of the two rates rather than the sum.
- Lower treaty rate at source: the treaty caps Indian TDS on specific income — dividends, interest, royalties — below the domestic rate. Indian dividends to non-residents otherwise suffer TDS at 20% plus surcharge and cess; treaties commonly cap the rate in the 5–15% range.
What this looks like in rupees
Take a simple dividend case. An NRI holds Indian listed shares paying ₹10 lakh of dividends in the year. With no treaty documents on file, the company withholds at the domestic rate — 20% plus surcharge and cess — upwards of ₹2 lakh gone at source. With a valid TRC and Form 42 delivered before the record date, the company withholds at the treaty cap instead; with most treaties in the 5–15% band, the at-source saving runs from roughly ₹50,000 to ₹1.5 lakh on the same income. The law was identical in both scenarios. The paperwork was the entire difference — and it had to exist before the payment, not at return time.
Country focus: US, UAE, UK
United States
The India–US treaty works mainly through the credit method: India taxes your Indian income, and you claim a foreign tax credit in your US return for the Indian tax paid. Your TRC is IRS Form 6166, obtained by filing Form 8802 — allow several weeks. Note that the US taxes citizens and green-card holders on worldwide income regardless of where they live, so the credit mechanics matter every single year. Indian capital gains on property remain taxable in India; the US then taxes the same gain under its own rules with credit for Indian tax — the two computations rarely match, so the credit needs careful working.
United Arab Emirates
The UAE has no personal income tax, which raises two recurring questions. First, can a UAE resident even get a TRC? Yes — the Federal Tax Authority issues TRCs to individuals who meet its residency criteria, and Indian payers accept them. Second, UAE-based NRIs should keep India's deemed residency rule in view: an Indian citizen with India-sourced income above ₹15 lakh who is not liable to tax anywhere can be deemed an Indian resident (as RNOR). The India–UAE treaty also contains favourable allocations for certain categories of capital gains — a position worth professional confirmation on your specific asset before you rely on it, because it does not extend to immovable property in India.
United Kingdom
The India–UK treaty likewise runs on the credit method for most NRI income, with capped source-country rates on dividends, interest and royalties. Your TRC comes from HMRC. UK-resident NRIs should align the claim with the UK's own residence rules and filing positions — the UK tax year (6 April to 5 April) does not match the Indian tax year, so the TRC and the credit claim must be mapped across mismatched periods.
Treaty relief fails far more often on paperwork than on law — a TRC for the wrong period, a 10F never e-filed, a payer who was handed the documents after the TDS was already deducted.
How to claim, step by step
1. Fix your residency and find the treaty article
Confirm you are tax-resident in the other country, and identify the article covering your income type — dividends, interest, capital gains, pensions each have their own.
2. Obtain the TRC
Apply to your home tax authority early; issuance takes weeks in most countries, and the certificate must cover the period of the income.
3. E-file Form 42 (earlier 10F)
File on the Indian income-tax portal and keep the acknowledgement.
4. Deliver the pack to the payer before payment
TRC + Form 42 + no-PE declaration (where relevant) go to the company, tenant or bank before the payment date, so TDS is deducted at the treaty rate. After the fact, your only route is a refund through the return.
5. Close the loop in the returns
Report the treaty position in the Indian return, and claim the corresponding credit or exemption in your home-country return. Where the Indian income is being remitted abroad, the treaty position also feeds the Form 145/146 remittance certification. And note that treaties rarely help with property-sale TDS — for that the practical tools are the certificate and refund routes in our guide to TDS on sale of property by an NRI.
Common mistakes that void treaty claims
- TRC for the wrong period. The certificate must cover the date the income arises. A TRC for the prior calendar year does not support this year's dividend.
- Paper 10F. A signed PDF emailed to the payer is not a filing. The form must be e-filed on the portal; payers increasingly verify the acknowledgement number.
- Documents delivered after deduction. Once TDS is deducted at the domestic rate, the payer cannot retrospectively apply the treaty. Your remedy shifts to a refund claim in the return — months of delay for the same outcome.
- Assuming the treaty covers everything. Each income type has its own article. A treaty that caps your dividend rate says nothing about your property gain.
- Forgetting the home-country leg. Relief by credit only works if the Indian tax is actually claimed in the other return, with the Indian TDS certificates as evidence. An unclaimed credit is double tax, voluntarily paid.
S. K. Lahoti Associates prepares treaty claims end to end — TRC coordination, Form 42 filing, payer documentation and the return positions on both sides — as part of our NRI services and international tax practice. To discuss a treaty position, you can reach the firm here.
Frequently asked questions
Form 10F is the declaration of treaty-relief particulars a non-resident files alongside the Tax Residency Certificate. From 1 April 2026 it is renumbered as Form 42 under the Income-tax Act, 2025 — the requirement itself continues, and it must be filed electronically on the income-tax portal.
From the tax authority of the country you are resident in — for example the IRS in the US (Form 6166 issued against Form 8802), HMRC in the UK, or the Federal Tax Authority in the UAE. Apply early: issuance can take weeks, and the TRC must cover the period of the income.
The portal allows non-residents without a PAN to register and e-file the treaty form. In practice, anyone with recurring Indian income — rent, dividends, a property sale — is far better served holding a PAN, since TDS credits and refunds run on it.
Usually not for property — treaties generally leave gains on immovable property taxable in the country where the property sits, so Indian property gains stay taxable in India. The treatment of other assets varies by treaty and must be checked article by article before any position is taken.
The domestic rate is 20% plus surcharge and cess. Most Indian treaties cap dividend tax at lower rates, typically in the 5% to 15% range — but the lower rate applies only if the payer has your TRC and Form 42 (earlier 10F) on file before paying.