The provided data compares India’s domestic Income-tax (I-T) Act withholding rates against the rates stipulated in its Double Taxation Avoidance Agreements (DTAAs) with various countries. The fundamental purpose of these treaties is to ensure that non-residents are subject to the most beneficial rate available, whether under the I-T Act or the relevant treaty. Generally, the I-T Act establishes higher, benchmark rates for passive income streams, such as a 20%/10% rate for dividends (depending on the recipient) and a general 20% rate for interest, royalties, and Fees for Technical Services (FTS), with some specific exceptions allowing for 5% or 10% rates on interest depending on the nature of the debt or payer. The Treaties, in nearly all cases, act to cap and reduce these general domestic rates to encourage international investment and trade.
Treaty rates for dividends and interest consistently show a reduction from the domestic law rates. Dividend rates under DTAAs are frequently conditional, typically falling between 5% and 15%. A lower rate (e.g., 5% or 10%) is usually provided if the recipient company holds a substantial percentage (often 10% or 25%) of the shares in the Indian company paying the dividend (e.g., Botswana, Croatia, Qatar). Interest rates are also significantly reduced, often capped at 10% or 15% across numerous treaties (e.g., Albania, China, Germany), though some treaties mandate an even lower 5% rate for bank loans (e.g., UAE). This preference for lower, fixed treaty rates provides predictability and relief from the higher general rates under the I-T Act.
For Royalty and Fees for Technical Services (FTS), the I-T Act imposes a standard 20% rate. The vast majority of DTAAs reduce this withholding rate to a uniform 10% (e.g., with Canada, Finland, Japan, Netherlands, and Singapore), establishing 10% as the most common treaty benchmark for these knowledge-based payments. However, certain treaties retain higher, variable, or absent provisions. For example, countries like Australia and Brazil may lack a separate FTS provision, requiring the I-T Act rate of 20% to be used unless the income is considered business profit. Other treaties, such as those with Bulgaria and Italy, retain the 20% rate for certain types of royalty or FTS payments. Ultimately, a non-resident assesses the applicable I-T Act rate against the treaty rate for each income category and applies the rate that results in the lower tax liability.
Tax rates as per IT Act vis a vis Tax Treaties
Country |
Dividend |
Interest |
Royalty |
Fee for Technical Services |
||||
Tax Treaty |
I-T Act (Note 1) |
Tax Treaty |
I-T Act(Note 2) |
Tax Treaty |
I-T Act (Note 3) |
Tax Treaty |
I-T Act(Note 3) |
|
Albania |
10% |
20% / 10% |
10% |
20% / 10% / 5% |
10% |
20% |
10% |
20% |
Armenia |
10% |
20% / 10% |
10% |
20% / 10% / 5% |
10% |
20% |
10% |
20% |
Australia |
15% |
20% / 10% |
15% |
20% / 10% / 5% |
10% / 15% |
20% |
No separate provision |
20% |
Austria |
10% |
20% / 10% |
10% |
20% / 10% / 5% |
10% |
20% |
10% |
20% |
Bangladesh |
a) 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% |
20% / 10% / 5% |
10% |
20% |
No separate provision |
20% |
Belarus |
a) 10%, if paid to a company holding 25% shares;b) 15%, in all other cases |
20% / 10% |
10% |
20% / 10% / 5% |
15% |
20% |
15% |
20% |
Belgium |
15% |
20% / 10% |
15% (10% if loan is if granted by a bank) |
20% / 10% / 5% |
10% |
20% |
10% |
20% |
Bhutan |
10% |
20% / 10% |
10% |
20% / 10% / 5% |
10% |
20% |
10% |
20% |
Botswana |
a) 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% |
20% / 10% / 5% |
10% |
20% |
10% |
20% |
Brazil |
15% |
20% / 10% |
15% |
20% / 10% / 5% |
25% for use of trademark; 15% for others |
20% |
No separate provision |
20% |
Bulgaria |
15% |
20% / 10% |
15% |
20% / 10% / 5% |
15% of royalty relating to literary, artistic, scientific works other than films or tapes used for radio or television broad-casting; 20% in other cases |
20% |
20% |
20% |
Canada |
a) 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% |
20% / 10% / 5% |
10%-20% |
20% |
10%-20% |
20% |
China |
10% |
20% / 10% |
10% |
20% / 10% / 5% |
10% |
20% |
10% |
20% |
Colombia |
5% |
20% / 10% |
10% |
20% / 10% / 5% |
10% |
20% |
10% |
20% |
Croatia |
a) 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% |
20% / 10% / 5% |
10% |
20% |
10% |
20% |
Cyprus |
10% |
20% / 10% |
10% |
20% / 10% / 5% |
10% |
20% |
10% |
20% |
Czech Republic [Note8] |
10% |
20% / 10% |
10% |
20% / 10% / 5% |
10% |
20% |
10% |
20% |
Denmark |
a) 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 |
20% / 10% / 5% |
20% |
20% |
20% |
20% |
Estonia |
10% |
20% / 10% |
10% |
20% / 10% / 5% |
10% |
20% |
10% |
20% |
Ethiopia |
7.5% |
20% / 10% |
10% |
20% / 10% / 5% |
10% |
20% |
10% |
20% |
Finland |
10% |
20% / 10% |
10% |
20% / 10% / 5% |
10% |
20% |
10% |
20% |
Fiji |
5% |
20% / 10%` |
10% |
20% / 10% / 5% |
10% |
20% |
10% |
20% |
France |
10% |
20% / 10% |
10% |
20% / 10% / 5% |
10% |
20% |
10% |
20% |
Georgia |
10% |
20% / 10% |
10% |
20% / 10% / 5% |
10% |
20% |
10% |
20% |
Germany |
10% |
20% / 10% |
10% |
20% / 10% / 5% |
10% |
20% |
10% |
20% |
Greece |
20% |
20% / 10% |
20% |
20% / 10% / 5% |
10% |
20% |
No separate provision |
20% |
Hongkong |
5% |
20% / 10% |
10% |
20% / 10% / 5% |
10% |
20% |
10% |
20% |
Hungary |
10% |
20% / 10% |
10% |
20% / 10% / 5% |
10% |
20% |
10% |
20% |
Indonesia |
10% |
20% / 10% |
10% |
20% / 10% / 5% |
10% |
20% |
10% |
20% |
Iceland |
10% |
20% / 10% |
10% |
20% / 10% / 5% |
10% |
20% |
10% |
20% |
Ireland |
10% |
20% / 10% |
10% |
20% / 10% / 5% |
10% |
20% |
10% |
20% |
Iran |
10% |
20% / 10% |
10% |
20% / 10% / 5% |
10% |
20% |
10% |
20% |
Israel |
10% |
20% / 10% |
10% |
20% / 10% / 5% |
10% |
20% |
10% |
20% |
Italy |
a) 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% |
20% / 10% / 5% |
20% |
20% |
20% |
20% |
Japan |
10% |
20% / 10% |
10% |
20% / 10% / 5% |
10% |
20% |
10% |
20% |
Jordan |
10% |
20% / 10% |
10% |
20% / 10% / 5% |
20% |
20% |
20% |
20% |
Kazakhstan |
10% |
20% / 10% |
10% |
20% / 10% / 5% |
10% |
20% |
10% |
20% |
Kenya |
10% |
20% / 10% |
10% |
20% / 10% / 5% |
10% |
20% |
10% |
20% |
Korea |
15% |
20% / 10% |
10% |
20% / 10% / 5% |
10% |
20% |
10% |
20% |
Kuwait |
10% |
20% / 10% |
10% |
20% / 10% / 5% |
10% |
20% |
10% |
20% |
Kyrgyz Republic |
10% |
20% / 10% |
10% |
20% / 10% / 5% |
15% |
10% |
15% |
20% |
Libyan Arab Jamahiriya |
10% 20% |
20% / 10% |
20% |
20% / 10% / 5% |
20% |
20% |
No separate provision |
20% |
Latvia |
10% |
20% / 10% |
10% |
20% / 10% / 5% |
10% |
20% |
10% |
20% |
Lithuania |
a) 5%, 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.b) 15%, in other cases |
20% / 10% |
10% |
20% / 10% / 5% |
10% |
20% |
10% |
20% |
Luxembourg |
10% |
20% / 10% |
10% |
20% / 10% / 5% |
10% |
20% |
10% |
20% |
Malaysia |
5% |
20% / 10% |
10% |
20% / 10% / 5% |
10% |
20% |
10% |
20% |
Malta |
10% |
20% / 10% |
10% |
20% / 10% / 5% |
10% |
20% |
10% |
20% |
Mongolia |
15% |
20% / 10% |
15% |
20% / 10% / 5% |
15% |
20% |
15% |
20% |
Mauritius |
a) 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% |
7.5% |
20% / 10% / 5% |
15% |
20% |
10% |
20% |
Montenegro |
(a ) 5% if the beneficial owner is a company (other than a partnership) which holds directly at least 25 per cent of the capital of the company paying the dividends;(b ) 15% in other cases |
20% / 10% |
10% |
20% / 10% / 5% |
10% |
20% |
10% |
20% |
Myanmar |
5% |
20% / 10% |
10% |
20% / 10% / 5% |
10% |
20% |
No separate provision |
20% |
Morocco |
10% |
20% / 10% |
10% |
20% / 10% / 5% |
10% |
20% |
10% |
20% |
Mozambique |
7.5% |
20% / 10% |
10% |
20% / 10% / 5% |
10% |
20% |
No separate provision |
20% |
Macedonia |
10% |
20% / 10% |
10% |
20% / 10% / 5% |
10% |
20% |
10% |
20% |
Namibia |
10% |
20% / 10% |
10% |
20% / 10% / 5% |
10% |
20% |
10% |
20% |
Nepal |
(a) 5% if the beneficial owner is a company which owns at least 10 per cent of the shares of the company paying the dividends;(b) 15% in all other cases. |
20% / 10% |
10% |
20% / 10% / 5% |
15% |
20% |
No separate provision |
20% |
Netherlands |
10% |
20% / 10% |
10% |
20% / 10% / 5% |
10% |
20% |
10% |
20% |
New Zealand |
15% |
20% / 10% |
10% |
20% / 10% / 5% |
10% |
20% |
10% |
20% |
Norway |
10% |
20% / 10% |
10% |
20% / 10% / 5% |
10% |
20% |
10% |
20% |
Oman |
a) 10%, if at least 10% of shares are held by the recipient company;b) 12.5%, in other cases |
20% / 10% |
10% |
20% / 10% / 5% |
15% |
20% |
15% |
20% |
Philippines |
a) 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 company;b) 15% in other cases |
20% / 10% / 5% |
15% if it is payable in pursuance of any collabo-ration agreement approved by the Government of India |
20% |
No separate provision |
20% |
Poland |
10% |
20% / 10% |
10% |
20% / 10% / 5% |
22.5% |
20% |
22.5% |
10% |
Portuguese Republic |
10%*** / 15% |
20% / 10% |
10% |
20% / 10% / 5% |
10% |
20% |
10% |
20% |
Qatar |
a) 5% if the beneficial owner is a company which owns at least ten per cent of the shares of the company paying the dividend; andb) 10% in all other cases. |
20% / 10% |
10% |
20% / 10% / 5% |
10% |
20% |
10% |
20% |
Romania |
10% |
20% / 10% |
10% |
20% / 10% / 5% |
10% |
20% |
10% |
20% |
Russian Federation |
10% |
20% / 10% |
10% |
20% / 10% / 5% |
10% |
20% |
10% |
20% |
Saudi Arabia |
5% |
20% / 10% |
10% |
20% / 10% / 5% |
10% |
20% |
No separate provision |
20% |
Serbia |
a) 5%, if recipient is company and holds 25% shares;b) 15%, in any other case |
20% / 10% |
10% |
20% / 10% / 5% |
10% |
20% |
10% |
20% |
Singapore |
a) 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% |
20% |
10% |
20% |
Slovenia |
a) 5% if the beneficial owner is a company which owns at least ten per cent of the shares of the company paying the dividend; andb)15% in all other cases |
20% / 10% |
10% |
20% / 10% / 5% |
10% |
20% |
10% |
20% |
South Africa |
10% |
20% / 10% |
10% |
20% / 10% / 5% |
10% |
20% |
10% |
20% |
Spain |
15% |
20% / 10% |
15% |
20% / 10% / 5% |
10% |
20% |
10% |
20% |
Sri Lanka |
7.5% |
20% / 10% |
10% |
20% / 10% / 5% |
10% |
20% |
10% |
20% |
Sudan |
10% |
20% / 10% |
10% |
20% / 10% / 5% |
10% |
20% |
10% |
20% |
Sweden |
10% |
20% / 10% |
10% |
20% / 10% / 5% |
10% |
20% |
10% |
20% |
Swiss |
10% |
20% / 10% |
10% |
20% / 10% / 5% |
10% |
20% |
10% |
20% |
Syrian Arab Republic |
a) 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% |
20% / 10% / 5% |
10% |
20% |
No separate provision |
20% |
Taipei |
12.5% |
20% / 10% |
10% |
20% / 10% / 5% |
10% |
20% |
10% |
20% |
Tajikistan |
a) 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% |
20% / 10% / 5% |
10% |
20% |
No separate provision |
20% |
Tanzania |
10% (5% if shareholder is a company and holds 25% shares) |
20% / 10% |
10% |
20% / 10% / 5% |
10% |
20% |
No separate provision |
20% |
Thailand |
10% |
20% / 10% |
10% |
20% / 10% / 5% |
10% |
20% |
No separate provision |
20% |
Trinidad and Tobago |
10% |
20% / 10% |
10% |
20% / 10% / 5% |
10% |
20% |
10% |
20% |
Turkey |
15% |
20% / 10% |
a) 10% if loan is granted by a bank, etc.;b) 15% in other cases |
20% / 10% / 5% |
15% |
20% |
15% |
20% |
Turkmenistan |
10% |
20% / 10% |
10% |
20% / 10% / 5% |
10% |
20% |
10% |
20% |
Uganda |
10% |
20% / 10% |
10% |
20% / 10% / 5% |
10% |
20% |
10% |
20% |
Ukraine |
a) 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% |
20% / 10% / 5% |
10% |
20% |
10% |
20% |
United Arab Emirates |
10% |
20% / 10% |
a) 5% if loan is granted by a bank / similar financial institute;b) 12.5%, in other cases |
20% / 10% / 5% |
10% |
20% |
No separate provision |
20% |
United Arab Republic (EGPT) |
10% / 20% [Note 4] |
20% / 10% |
20% [Note 4] |
20% / 10% / 5% |
20% [Note 4] |
20% |
No separate provision |
20% |
United Mexican States |
10% |
20% / 10% |
10% |
20% / 10% / 5% |
10% |
20% |
10% |
20% |
United Kingdom |
(a) 15% o where 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% in all other case(Note 5) |
20% / 10% |
a) 10%, if interest is paid to a bank;b) 15%, in other cases |
20% / 10% / 5% |
10% / 15% |
20% |
10% / 15% |
20% |
United States |
a) 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% |
a) 10% if loan is granted by a bank / similar institute including insurance company;b) 15% for others |
20% / 10% / 5% |
10% / 15% |
20% |
10% / 15% |
20% |
Uruguay |
5% |
20% / 10% |
10% |
20% / 10% / 5% |
10% |
20% |
10% |
20% |
Uzbekistan |
10% |
20% / 10% |
10% |
20% / 10% / 5% |
10% |
20% |
10% |
20% |
Vietnam |
10% |
20% / 10% |
10% |
20% / 10% / 5% |
10% |
20% |
10% |
20% |
Zambia |
a) 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% |
20% / 10% / 5% |
10% |
20% |
10% |
20% |
Notes:
1) Dividend:
a) Rate of tax shall be 10% on income from Global Depository Receipts under Section 115AC(1)(b)of Income-tax Act, 1961.
b) Rate of tax shall be 20% under Section 115Aon dividend received by a foreign company or a non-resident non-corporate assessee. However, rate of tax shall be 10% on dividend received from a unit in an IFSC as referred to in section 80LA(1A).
c) Rate of tax shall be 20% under Section 115ADon dividend received by a Foreign institutional investor.
2) Interest
a) Rate of tax shall be 20% under Section 115Aon 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.
b) Rate of tax shall be 10% under Section 115ACon 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
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)
3. 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.
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,
4. Articles 11, 12 and 13 of the India-UAR (Egypt) treaty don’t provide withholding tax rates in respect of dividend, interest and royalty payments. Thus, the tax shall be withheld as per rates applicable under the Income-tax Act 1961.
[As amended by Finance Act, 2025]
Purchased LIC Jeevan Akshay VI policies in November 2016 as an NRI with mandate to credit monthly annuities to NRE account with the expressed condition and understanding that TDS will not be deducted by them. However,w.e.f. 1st April 2018, deducted TDS at 30.9% from the annuity payment referring to Section 195 of IT Act and DTAA with UAE.
Can LIC do this now?
Never informed policy holder about the TDS application.
Section 195 and DTAA are nothing new. Were in existence when policy was sold. LIC concealed. Wanted to cancel policies. LIC not willing to do.
Policy on 100% return of purchase price upon our death to nominee.
LIC is asking to credit annuity to Ordinary acc.
Principal amount lost its repatriabiity status.
I could not find 30.9% TDS in the rates published for DTAA. How can we come out of these problems?.
Suggestions appreciated.