Tax Rates DTAA v. Income-tax Act

Certain income of non-resident, inter-alia, dividend, interest, royalty or fees for technical services shall be taxable as per the rates prescribed under the Income-tax Act or as per the rates prescribed under the DTAAs, whichever is more beneficial to such non-resident. This write up provides all such rates as prescribed under the Act and under various DTAAs entered into between Indian and various foreign countries.

Tax rates as per IT Act vis a vis Tax Treaties

CountryDividend

(not being covered under Section 115-O)

 

Interest

 

Royalty

 

Fee for Technical Services

 

Tax TreatyI-T Act (Note 6)Tax TreatyI-T Act

(Note 7)

Tax TreatyI-T Act (Note 4)Tax

Treaty

I-T Act

(Note 4)

Albania10%20%/10%10%

[Note1]

20%/10%/5%10%10%10%10%
Armenia10%20%/10%10%

[Note1]

20%/10%/5%10%10%10%10%
Australia15%20%/10%15%20%/10%/5%10%/15%

[Note 2]

10%10%/15%

[Note 2]

10%
Austria10%20%/10%10%

[Note1]

20%/10%/5%10%10%10%10%
Bangladesha) 10% (if at least 10% of the capital of the company paying the dividend is held by the recipient company);

b) 15% in all other cases

20%/10%10% [Note1]20%/10%/5%10%10%No separate provision10%
Belarusa) 10%, if paid to a company holding 25% shares;

b) 15%, in all other cases

20%/10%10% [Note1]20%/10%/5%15%10%15%10%
Belgium15%20%/10%15% (10% loan is if granted by a bank)20%/10%/5%10%10%10%10%
Bhutan10%20%/10%10%

[Note1]

20%/10%/5%10%10%10%10%
Botswanaa)7.5%,if shareholder is a company and holds at least 25% shares in the investee-company;

b) 10%, in all other cases

20%/10%10%

[Note1]

20%/10%/5%10%10%10%10%
Brazil15%20%/10%15% [Note1]20%/10%/5%25% for use of trademark; 15% for others10%15%10%
Bulgaria15%20%/10%15% [Note1]20%/10%/5%15% of royalty relating to literary, artistic, scientific works other than films or tapes used for radio or television broadcasting; 20% in other cases10%20%10%
Canadaa) 15%, if at least 10% of the voting powers in the company, paying the dividends, is controlled by the recipient company;

b) 25%, in other cases

20%/10%15% [Note1]20%/10%/5%10%-15%10%10%-15%10%
China10%20%/10%10% [Note1]20%/10%/5%10%10%10%10%
Columbia5%20%/10%10% [Note1]20%/10%/5%10%10%10%10%
Croatiaa) 5% (if at least 10% of the capital of the company paying the dividend is held by the recipient company);

b) 15% in all other cases

20%/10%10% [Note1]20%/10%/5%10%10%10%10%
Cyprusa) 10%, if at least 10% of the capital of the company paying dividend is held by the recipient company;

b) 15%, in all other cases

20%/10%10% [Note1]20%/10%/5%15%10%15%/10%10%
Czech Republic [Note8]10%20%/10%10% [Note1]20%/10%/5%10%10%10%10%
Denmarka) 15%, if at least 25% of the shares of the company paying the dividend is held by the recipient company;

b) 25%, in other cases

20%/10%a) 10% if loan is granted by bank;

b) 15% for others [Note1]

20%/10%/5%20%10%20%10%
Estonia10%20%/10%10% [Note1]20%/10%/5%10%10%10%10%
Ethiopia7.5%20%/10%10% [Note1]20%/10%/5%10%10%10%10%
Finland10%20%/10%10% [Note1]20%/10%/5%10%10%10%10%
Fiji5%20%/10%`10% [Note1]20%/10%/5%10%10%10%10%
France10%20%/10%10% [Note1]20%/10%/5%10%10%10%10%
Georgia10%20%/10%10% [Note1]20%/10%/5%10%10%10%10%
Germany10%20%/10%10% [Note1]20%/10%/5%10%10%10%10%
Hungary10%20%/10%10% [Note1]20%/10%/5%10%10%10%10%
Indonesia10%20%/10%10% [Note1]20%/10%/5%10%10%10%10%
Iceland10%20%/10%10%[Note1]20%/10%/5%10%10%10%10%
Ireland10%20%/10%10% [Note1]20%/10%/5%10%10%10%10%
Israel10%20%/10%10% [Note1]20%/10%/5%10%10%10%10%
Italya) 15% if at least 10% of the shares of the company paying dividend is beneficially owned by the recipient company;

b) 25% in other cases

20%/10%15% [Note1]20%/10%/5%20%10%20%10%
Japan10%20%/10%10% [Note1]20%/10%/5%10%10%10%10%
Jordan10%20%/10%10% [Note1]20%/10%/5%20%10%20%10%
Kazakhstan10%20%/10%10% [Note1]20%/10%/5%10%10%10%10%
Kenya15%20%/10%15% [Note1]20%/10%/5%20%10%17.5%10%
Koreaa) 15%, if at least 20% of the capital of the company paying dividend is held by the recipient company;

b) 20%, in other cases

20%/10%a) 10%, if interest is paid to a bank;

b)15%, for others

[Note1]

20%/10%/5%15%10%15%10%
Kuwait10% [Note 1]20%/10%10%20%/10%/5%10%10%10%10%
Kyrgyz Republic10%20%/10%10% [Note1]20%/10%/5%15%10%15%10%
Latvia10%20%/10%10% [Note1]20%/10%/5%10%10%10%10%
Lithuania5%*, 15%20%/10%10% [Note1]20%/10%/5%10%10%10%10%
Luxembourg10%20%/10%10% [Note1]20%/10%/5%10%10%10%10%
Malaysia5%20%/10%10% [Note1]20%/10%/5%10%10%10%10%
Malta10%20%/10%10% [Note1]20%/10%/5%10%10%10%10%
Mongolia15%20%/10%15% [Note1]20%/10%/5%15%10%15%10%
Mauritiusa) 5%, if at least 10% of the capital of the company paying the dividend is held by the recipient company;

b) 15%, in other cases

20%/10%No Rates Specified20%/10%/5%15%10%No separate provision10%
Montenegro5% (in some cases 15%)20%/10%10%

[Note1]

20%/10%/5%10%10%10%10%
Myanmar5%20%/10%10%

[Note1]

20%/10%/5%10%10%No separate provision10%
Morocco10%20%/10%10% [Note1]20%/10%/5%10%10%10%10%
Mozambique7.5%20%/10%10% [Note1]20%/10%/5%10%10%No separate provision10%
Macedonia10%20%/10%10% [Note 1]20%/10%/5%10%10%10%10%
Namibia10%20%/10%10% [Note1]20%/10%/5%10%10%10%10%
Nepal5%**, 10%20%/10%10% [Note1]20%/10%/5%15%10%No separate provision10%
Netherlands10%20%/10%10% [Note1]20%/10%/5%10%10%10%10%
New Zealand15%20%/10%10% [Note1]20%/10%/5%10%10%10%10%
Norway10%20%/10%10% [Note1]20%/10%/5%10%10%10%10%
Omana) 10%, if at least 10% of shares are held by the recipient company;

b) 12.5%, in other cases

20%/10%10% [Note1]20%/10%/5%15%10%15%10%
Philippinesa) 15%, if at least 10% of the shares of the company paying the dividend is held by the recipient company;

b) 20%, in other cases

20%/10%a) 10%,, if interest is received by a financial institution or insurance comany;

b)15% in other cases

[Note1]

20%/10%/5%15% if it is payable in pursuance of any collaboration agreement approved by the Government of India10%No separate provision10%
Poland10%20%/10%10% [Note1]20%/10%/5%15%10%15%10%
Portuguese Republic10%***/15%20%/10%10%20%/10%/5%10%10%10%10%
Qatara) 5%, if at least 10% of the shares of the company paying the dividend is held by the recipient company;

b) 10%, in other cases

20%/10%10% [Note1]20%/10%/5%10%10%10%10%
Romania10%20%/10%10% [Note1]20%/10%/5%10%10%10%10%
Russian Federation10%20%/10%10% [Note1]20%/10%/5%10%10%10%10%
Saudi Arabia5%20%/10%10% [Note1]20%/10%/5%10%10%No separate provision10%
Serbiaa)5%, if recipient is company and holds 25% shares;

b)15%, in any other case

20%/10%10% [Note1]20%/10%/5%10%10%10%10%
Singaporea) 10%, if at least 25% of the shares of the company paying the dividend is held by the recipient company;

b) 15%, in other cases

20%/10%a) 10%, if loan is granted by a bank or similar institute including an insurance company;

b)15%, in all other cases

20%/10%/5%10%10%10%10%
Sloveniaa) 5%, if at least 10% of the shares of the company paying the dividend is held by the recipient company;

b)15%, in other cases

20%/10%10%20%/10%/5%10%10%10%10%
South Africa10%20%/10%10% [Note1]20%/10%/5%10%10%10%10%
Spain15%20%/10%15% [Note1]20%/10%/5%10%/20%

[Note 3]

10%20%

[Note 3]

10%
Sri Lanka7.5%20%/10%10% [Note1]20%/10%/5%10%10%10%10%
Sudan10%20%/10%10% [Note1]20%/10%/5%10%10%10%10%
Sweden10%20%/10%10% [Note1]20%/10%/5%10%10%10%10%
Swiss10%20%/10%10% [Note1]20%/10%/5%10%10%10%10%
Syrian Arab Republica) 5%, if at least 10% of the shares of the company paying the dividend is held by the recipient company;

b)10%, in other cases

20%/10%10% [Note1]20%/10%/5%10%10%No separate provision10%
Tajikistana) 5%, if at least 25% of the shares of the company paying the dividend is held by the recipient company;

b)10%, in other cases

20%/10%10% [Note1]20%/10%/5%10%10%No separate provision10%
Tanzania5%****, 10%20%/10%10% [Note1]20%/10%/5%10%10%No separate provision10%
Thailand10%20%/10%10% [Note1]20%/10%/5%10%10%No separate provision10%
Trinidad and Tobago10%20%/10%10% [Note1]20%/10%/5%10%10%10%10%
Turkey15%20%/10%a)10% if loan is granted by a bank, etc.;

b)15% in other cases

[Note1]

20%/10%/5%15%10%15%10%
Turkmenistan10%20%/10%10% [Note1]20%/10%/5%10%10%10%10%
Uganda10%20%/10%10% [Note1]20%/10%/5%10%10%10%10%
Ukrainea) 10%, if at least 25% of the shares of the company paying the dividend is held by the recipient company;

b) 15%, in other cases

20%/10%10% [Note1]20%/10%/5%10%10%10%10%
United Arab Emirates10%20%/10%a)5% if loan is granted by a bank/similar financial institute;

b) 12.5%, in other cases

20%/10%/5%10%10%No separate provision10%
United Mexican States10%10% [Note1]20%/10%/5%10%10%10%10%
United Kingdom15%/10%

(Note 5)

20%/10%a)10%, if interest is paid to a bank;

b)15%, in other cases

[Note1]

20%/10%/5%10%/15% [Note 2]10%10%/15% [Note 2]10%
United Statesa) 15%, if at least 10% of the voting stock of the company paying the dividend is held by the recipient company;

b)25% in other cases

20%/10%a10% if loan is granted by a bank/similar institute including insurance company;

b)15% for others

20%/10%/5%10%/15%[Note 2]10%10%/15% [Note 2]10%
Uruguay5%20%/10%10% [Note1]20%/10%/5%10%10%10%10%
Uzbekistan10%20%/10%10% [Note1]20%/10%/5%10%10%10%10%
Vietnam10%20%/10%10% [Note1]20%/10%/5%10%10%10%10%
Zambiaa) 5%, if at least 25% of the shares of the company paying the dividend is held by a recipient company for a period of at least 6 months prior to the date of payment of the dividend;

b) 15% in other cases

20%/10%10% [Note1]20%/10%/5%10%10%10%10%

*If the beneficial owner is a company (other than a partnership) which holds directly at least 10 per cent of the capital of the company paying the dividends.

**5% if beneficial owner of shares is a company and it holds at least 10% of shares of the company paying the dividends.

*** if the beneficial owner is a company that, for an uninterrupted period of two fiscal years prior to the payment of the dividend, owns directly at least 25 per cent of the capital stock of the company paying the dividends.

****5% if recipient company owns at least 25% share in the company paying the dividend.

  1. Dividend/Interest earned by the Government and certain specified institutions, inter-alia, Reserve Bank of India is exempt from taxation in the country of source.
  2. Royalties and fees for technical services would be taxable in the country of source at the rates prescribed for different categories of royalties and fees for technical services. These rates shall be subject to various conditions and nature of services/royalty for which payment is made. For detailed conditions refer to relevant Double Taxation Avoidance Agreements.
  3. Royalties and fees for technical services would be taxable in the country of source at the following rates:
  4. 10 per cent in case of royalties relating to the payments for the use of, or the right to use, industrial, commercial or scientific equipment;
  5. 20 per cent in case of fees for technical services and other royalties.
  6. From Assessment Year 2016-17, Royalty and fees for technical service received by a foreign company or a non-resident non-corporate assessee from government or an Indian concern shall be taxed at the rate of 10% if agreement is made at any time after 31 March 1976.

From Assessment Year 2017-18, any income of a person resident in India by way of royalty in respect of a patent developed and registered in India shall be taxable at the rate of 10% as per section 115BBF,

  1. (a)15 per cent of the gross amount of the dividends where those dividends are paid out of income (including gains) derived directly or indirectly from immovable property within the meaning of Article 6 by an investment vehicle which distributes most of this income annually and whose income from such immovable property is exempted from tax;

(b) 10 per cent of the gross amount of the dividends, in all other cases

  1. Dividend:
  2. a) Rate of tax shall be 10% on income from Global Depository Receipts under Section 115AC(1)(b) of Income-tax Act, 1961 (other than dividends referred to in section 115-O).
  3. b) Rate of tax shall be 20% under Section 115A on dividend (other than dividends referred to in section 115-O) received by a foreign company or a non-resident non-corporate assessee
  4. c) Rate of tax shall be 20% under Section 115AD on dividend (other than dividends referred to in section 115-O) received by a Foreign institutional investor.
  5. d) From Assessment Year 2017-18, dividend in excess of Rs. 10 lakh shall be chargeable to tax in the case of an individual, Hindu undivided family (HUF) or a firm who is resident in India, at the rate of 10% as per section 115BBDA.
  6. Interest
  7. a) Rate of tax shall be 20% under Section 115A on interest received by a foreign company or a non-resident non-corporate assessee from Government or an Indian concern on moneys borrowed or debt incurred by Government or the Indian concern in foreign currency.
  8. b) Rate of tax shall be 10% under Section 115AC on income from bonds of an Indian company issued in accordance with such scheme as the Central Government may, by notification in the Official Gazette, specify in this behalf, or on bonds of a public sector company sold by the Government, and purchased by non-resident in foreign currency
  9. c) Rate of tax shall be 5% in following cases:

  (i) Interest received from an infrastructure debt fund as referred to in section 10(47)

 (ii) Interest received from an Indian company specified in section 194LC.

(iii) Interest of the nature and extent referred to in section 194LD (applicable from the assessment year 2014-15).

(iv) Distributed income being interest referred to in section 194LBA(2) (section 194LBA is inserted by the Finance (No. 2) Act, 2014 w.e.f. 01-10-2014)

  1. The CBDT has clarified that DTAA signed with Government of the Czech Republic on the 27th January 1986 continues to be applicable to the residents of the Slovak Republic. [Notification No. 25, dated 23-03-2015]
[Republished as amended by Finance Act, 2016]

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