Quick answer: A DTAA is a tax treaty between India and another country that decides which of them may tax an income, and at what maximum rate. India has over 90. Since 1 April 2026 they work through section 159 of the Income-tax Act, 2025 (formerly section 90). A non-resident claims relief with a tax residency certificate and Form 41.
- Under section 159(4), the treaty or the Act applies, whichever is more beneficial to the taxpayer.
- Form 41, the old Form 10F, is filed online once for each tax year in which relief is claimed.
- Where no treaty exists, section 160 (formerly 91) gives a resident one-sided relief for foreign tax paid.
- A DTAA covers income tax only. Social security sits under separate agreements.
How does a DTAA work for a non-resident?
It overrides Indian law only where it helps. So a treaty can lower Indian tax on royalties, fees or salary, but never raise it.
Two papers. A tax residency certificate (TRC) from the home tax authority, valid for the year. And Form 41, filed on the e-filing portal with the TRC and a foreign tax identification number.
The Income Tax Department’s section 159 page sets the TRC condition in sub-section (8). Without both papers, the payer applies the domestic rate. India’s Supreme Court has also held that a TRC makes you eligible but is not conclusive proof of treaty entitlement.
PwC counts 94 comprehensive DTAAs, plus eight limited shipping and airline agreements, in its India treaty list. The rates on royalties and technical fees are covered in our entry on withholding tax.
How does the 183-day test protect short visits?
Most treaties carry an employment article, usually Article 15, that keeps a short visitor’s salary taxable only at home. That holds while the visit stays short and the cost never lands on an Indian business. Domestic law offers a 90-day version. Treaties stretch it to 183 days.
Three conditions apply.
| Condition | What it means |
|---|---|
| No more than 183 days in India | Counted over the period the treaty specifies |
| Paid by a foreign employer | Salary comes from an employer not resident in India |
| Not borne by an Indian PE | No Indian branch or permanent establishment carries the cost |
Suppose a Berlin engineer spends 120 days in Pune on a project, paid and costed in Germany. If all three conditions hold, India-Germany treaty relief can keep that salary out of Indian tax.
Put the same engineer on an Indian payroll, and the second condition fails. Indian tax then applies from the first rupee.
So payroll location matters.
How do DTAAs play out when you hire through an EOR?
An employee hired in India through an EOR is usually a resident, taxed in India on Indian salary. The treaty matters for their foreign income and for anyone splitting time between countries.
Tax residency drives the answer. Our guide to EOR tax implications covers the employer side.
Social security is separate. The India-UK agreement took effect on 15 July 2026, while India still has no such agreement with the USA, so check the social security agreement position for every secondee.
How does Remunance handle treaty questions for your India hires?
Remunance employs your India team through its own Indian entity, so salary TDS is applied correctly from day one, whatever the employee’s passport. We work with 150+ international clients from 22 countries through our employer of record services. The treaty claim itself stays with the employee and their adviser. Before you move someone to India, book a cross-border hiring call.
What else do people ask about DTAAs?
How many DTAA countries does India have?
Over 90. PwC lists 94 comprehensive agreements, including the USA, UK, Germany, Singapore and the UAE.
Is Form 10F still required for DTAA benefits?
It has been replaced. From tax year 2026-27, non-residents file Form 41 under Rule 75 of the Income-tax Rules, 2026, along with a valid TRC.
Does a DTAA mean I pay no tax in India?
No. It splits taxing rights and caps rates. Many incomes stay taxable in India at a lower rate, with a credit at home.