By S&S Co. Advocates & Solicitors · Published 30 September 2026 · Informational content, not legal advice: see our disclaimer
Why the Same Income Can Be Taxed Twice, and How DTAA Fixes That
An NRI earning income connected to India, rental income from a property, interest on an NRO account, capital gains on Indian investments, or dividends from Indian shares, can find that income taxed both by India (as the source country) and by their country of residence (which often taxes its residents on worldwide income). India has entered into Double Taxation Avoidance Agreements (DTAAs) with a large number of countries specifically to prevent this double taxation, generally either by allocating primary taxing rights to one country with the other giving credit or exemption, or by capping the source country's tax rate on specific categories of income (such as dividends, interest or royalties) below what domestic law alone would otherwise permit.
You Can't Just Claim the Treaty Rate: You Have to Prove Eligibility
An NRI wanting to claim the benefit of a lower DTAA rate, or an exemption, rather than the higher rate that would otherwise apply under Indian domestic tax law, cannot simply assert entitlement: Indian tax law requires the taxpayer to establish their residency in the treaty partner country through specific documentation before an Indian payer (a bank, a tenant, a company paying dividends) or the tax department will apply the treaty rate rather than the higher domestic withholding rate.
The Tax Residency Certificate (TRC)
The primary document required is a Tax Residency Certificate, issued by the tax authority of the country where the NRI claims to be resident, certifying that the person is indeed a tax resident of that country for the relevant period. Without a valid TRC, an NRI generally cannot claim DTAA benefits at all: Section 90(4) of the Income Tax Act specifically makes production of a TRC a precondition to claiming treaty relief. A recurring, avoidable dispute arises where the tax officer rejects a TRC over a formatting issue: the certificate not following a specific prescribed layout, even though it substantively establishes residency and contains the required particulars; a High Court in 2026 set aside exactly this kind of denial, holding that treaty benefit cannot be refused for a non-prescribed formatting variance in the foreign authority's own certificate template where the substance of residency is otherwise established.
Form 10F: The Supplementary Declaration
Alongside the TRC, Indian tax rules require the taxpayer to furnish specified additional particulars not always captured in a foreign TRC, details such as the taxpayer's status (individual, company, etc.), nationality, tax identification number in the country of residence, and the period for which residency is claimed, via Form 10F, a self-declaration by the taxpayer. Form 10F must generally be filed electronically through the income tax e-filing portal, which itself requires the taxpayer to have a PAN, creating a practical step NRIs sometimes overlook until they need to file it. Together, the TRC and Form 10F form the documentary basis on which an Indian payer or the tax department can properly apply DTAA relief instead of the higher domestic rate.
What Happens Without These Documents
Absent a valid TRC and Form 10F on file, Indian payers making payments to NRIs, a tenant paying rent, a company paying dividends, will generally apply tax deduction at source at the higher domestic rate rather than the lower treaty rate, since they have no documentary basis to justify applying the treaty rate instead. This does not mean the NRI loses the DTAA benefit permanently: it can generally still be claimed by filing an Indian income tax return and claiming a refund of the excess tax withheld, supported by the TRC and Form 10F filed at that stage, but this means the NRI's funds are tied up until the refund is processed, rather than the correct, lower rate having been applied at source from the outset. Obtaining and providing the TRC and filing Form 10F proactively, before payments are made, avoids this unnecessary cash-flow drag.
Practical Steps
NRIs expecting India-sourced income in a given financial year should obtain a current TRC from their country of tax residence early in the year, file Form 10F online well before the income is actually paid, and provide both documents to the relevant Indian payer (bank, tenant, company) so the correct, lower DTAA rate can be applied at source from the start rather than only recovered later through a refund claim.
Frequently Asked Questions
What is a Tax Residency Certificate and why does an NRI need one?
A TRC is a certificate issued by the tax authority of an NRI's country of residence, certifying their tax residency there. Under Section 90(4) of the Income Tax Act, producing a valid TRC is a precondition to claiming DTAA treaty benefits in India.
What is Form 10F and is it different from a TRC?
Form 10F is a separate self-declaration an NRI must file, providing specified particulars (such as status, nationality and foreign tax identification number) not always captured in the TRC itself. Both the TRC and Form 10F are generally required together to claim DTAA relief.
Can DTAA benefits be denied just because a TRC's format doesn't match what Indian authorities expect?
Courts have held no: a 2026 High Court ruling set aside denial of DTAA benefit where a TRC was rejected purely for not following a specific prescribed format, holding that treaty benefit cannot be refused for a formatting variance where residency is otherwise substantively established.
What happens if an NRI doesn't provide a TRC and Form 10F before receiving India-sourced income?
The Indian payer will generally withhold tax at the higher domestic rate rather than the lower treaty rate. The NRI can still claim the DTAA benefit by filing an Indian tax return and claiming a refund, but this delays access to the funds compared to having the correct rate applied at source.
Where is Form 10F filed?
Generally electronically through the income tax e-filing portal, which requires the taxpayer to have a PAN: a step NRIs should arrange in advance rather than discovering the requirement only when they need to file.
References & Further Reading
This guide provides a general overview of DTAA relief procedure for NRIs. Specific treaty terms vary by country, and the documentation and filing process should be confirmed against the current rules and the relevant DTAA in force.
- Income Tax Act, 1961, Section 90 and Section 90(4): DTAA relief and the Tax Residency Certificate precondition.
- Income Tax Rules, 1962, Rule 21AB: Form 10F and prescribed particulars for claiming treaty relief.