How NRIs can claim tax benefits under DTAA

By | 28 July 2015

The Tax filing season is on it full swing. With Globalization, more Indians are staydouble_taxing abroad, yet many keep their roots in India alive while some come back in few years. At the same time, many MNC keep mobilizing their employees to several tax territories in line with their job descriptions. All-in-all becoming or being an NRI is no more an uncommon task.

Every year, especially during Tax filing season, we are contacted by many NRI’s regarding their Tax return. A common query is regarding dual taxation of their Income. So in our today’s article, we shall discuss with you how an NRI can take benefit of Double Taxation Avoidance Agreements.

Double Taxation Avoidance Agreement or DTAA is an agreement between two countries which aims to avoid taxation of the same income in both countries. India has signed the DTAA with several countries. NRIs can claim tax benefits under DTAA

At the time of making a self assessment of Income, an assesee can take benefit of provisions of DTAA if they are more beneficial to the Assesee than the Income Tax Act. Provisions of the DTAA prevail over the Indian Income Tax Act provisions.

To avail the benefit of the DTAA, NRIs residing in any of the DTAA countries need to file the following documents:

Tax residency certificate
The Tax Residency Certificate (TRC) can be obtained from the Tax department of the country in which the NRI resides. Certain information in the TRC is mandatory. They have to be furnished to make a valid submission of TRC to the Indian tax deductor.

Name, status (individual , company, firm etc), address, nationality, country, tax identification number of the person in that country, tax status, period for which the tax certificate is issued should all be mentioned in the TRC. The TRC containing details mentioned above should be duly verified by the government of the country or the specified territory of which the NRI claims to be a resident for the purposes of tax.

Self declaration-cum indemnity form
This form is to be submitted in the format prescribed by the particular bank. Information such as account number, country of residence, period for which TRC is submitted, tax rate applicable under DTAA needs to be mentioned in the form.

Other documents
The NRI is required to submit a self attested copy of PAN card and a self attested copy of his passport and visa. If the passport has been renewed during the financial year, a copy of PIO card will also have to be submitted. NRIs can claim tax benefits under DTAA

Points to note
The documents listed above must be furnished on an annual basis for claiming DTAA tax benefits each year.

If the TRC is not submitted within the timelines required by the deductor, the deductor (eg. Bank) will deduct tax on NRO deposits at the presently applicable rate of 30.9%.