Understanding withholding tax rates is crucial for businesses operating internationally. This article delves into the countrywise withholding tax rates as per the Indian Income Tax Act (IT Act) in comparison to Tax Treaties (Double Taxation Avoidance Agreements – DTAA). We’ll analyze the differences in tax rates for dividends, interest, royalties, and technical services, and explore the implications for businesses and investors.
The content provides a comprehensive list of countries and their respective withholding tax rates under both the IT Act and Tax Treaties. It highlights varying rates for dividends, interest, royalties, and technical services, emphasizing specific conditions for each category. The analysis indicates that Tax Treaties often offer preferential rates, benefiting foreign investors and promoting cross-border investments.
The article also addresses recent amendments, such as changes in royalty and fees for technical services taxation, and clarifications on DTAA applicability to certain countries. Furthermore, it outlines exemptions for specific entities like the government and designated institutions.
Knowing withholding tax rates is essential for businesses engaged in international transactions. Withholding Tax rate chart sheds light on the discrepancies between tax rates as per the IT Act and Tax Treaties, providing valuable insights for investors, businesses, and tax professionals. Understanding these variations can lead to better tax planning and optimization of cross-border operations.
Countrywise Withholding Tax rates as per IT Act vis a vis Tax Treaties/DTAA
| Country | Dividend | Interest | Royalty | Fee for Technical Services | ||||
| Tax Treaty | I-T Act (Note 6) | Tax Treaty | I-T Act
(Note 7) |
Tax Treaty | I-T Act (Note 4) | Tax Treaty | I-T Act
(Note 4) |
|
| Albania | 10% | 20% /10% | 10% [Note 1] | 20% /10% /5% | 10% | 20% | 10% | 20% |
| Armenia | 10% | 20% /10% | 10% [Note 1] | 20% /10% /5% | 10% | 20% | 10% | 20% |
| Australia | 15% | 20% /10% | 15% | 20% /10% /5% | 10% /15%
[Note 2] |
20% | 10% /15%
[Note 2] |
20% |
| Austria | 10% | 20% /10% | 10% [Note 1] | 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% [Note 1] | 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% [Note 1] | 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% [Note 1] | 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% [Note 1] | 20% /10% /5% | 10% | 20% | 10% | 20% |
| Brazil | 15% | 20% /10% | 15% [Note 1] | 20% /10% /5% | 25% for use of trade-mark; 15% for others | 20% | No separate provision | 20% |
| Bulgaria | 15% | 20% /10% | 15% [Note 1] | 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% [Note 1] | 20% /10% /5% | 10% -20% | 20% | 10% -20% | 20% |
| China | 10% | 20% /10% | 10% [Note 1] | 20% /10% /5% | 10% | 20% | 10% | 20% |
| Colombia | 5% | 20% /10% | 10% [Note 1] | 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% [Note 1] | 20% /10% /5% | 10% | 20% | 10% | 20% |
| Cyprus | 10% | 20% /10% | 10% [Note 1] | 20% /10% /5% | 10% | 20% | 10% | 20% |
| Czech Republic [Note8] | 10% | 20% /10% | 10% [Note 1] | 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 [Note 1] |
20% /10% /5% | 20% | 20% | 20% | 20% |
| Estonia | 10% | 20% /10% | 10% [Note 1] | 20% /10% /5% | 10% | 20% | 10% | 20% |
| Ethiopia | 7.5% | 20% /10% | 10% [Note 1] | 20% /10% /5% | 10% | 20% | 10% | 20% |
| Finland | 10% | 20% /10% | 10% [Note 1] | 20% /10% /5% | 10% | 20% | 10% | 20% |
| Fiji | 5% | 20% /10% ` | 10% [Note 1] | 20% /10% /5% | 10% | 20% | 10% | 20% |
| France | 10% | 20% /10% | 10% [Note 1] | 20% /10% /5% | 10% | 20% | 10% | 20% |
| Georgia | 10% | 20% /10% | 10% [Note 1] | 20% /10% /5% | 10% | 20% | 10% | 20% |
| Germany | 10% | 20% /10% | 10% [Note 1] | 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% [Note 1] | 20% /10% /5% | 10% | 20% | 10% | 20% |
| Hungary | 10% | 20% /10% | 10% [Note 1] | 20% /10% /5% | 10% | 20% | 10% | 20% |
| Indonesia | 10% | 20% /10% | 10% [Note 1] | 20% /10% /5% | 10% | 20% | 10% | 20% |
| Iceland | 10% | 20% /10% | 10% [Note 1] | 20% /10% /5% | 10% | 20% | 10% | 20% |
| Ireland | 10% | 20% /10% | 10% [Note 1] | 20% /10% /5% | 10% | 20% | 10% | 20% |
| Iran | 10% | 20% /10% | 10% | 20% /10% /5% | 10% | 20% | 10% | 20% |
| Israel | 10% | 20% /10% | 10% [Note 1] | 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% [Note 1] | 20% /10% /5% | 20% | 20% | 20% | 20% |
| Japan | 10% | 20% /10% | 10% [Note 1] | 20% /10% /5% | 10% | 20% | 10% | 20% |
| Jordan | 10% | 20% /10% | 10% [Note 1] | 20% /10% /5% | 20% | 20% | 20% | 20% |
| Kazakhstan | 10% | 20% /10% | 10% [Note 1] | 20% /10% /5% | 10% | 20% | 10% | 20% |
| Kenya | 10% | 20% /10% | 10% [Note 1] | 20% /10% /5% | 10% | 20% | 10% | 20% |
| Korea | 15% | 20% /10% | 10% | 20% /10% /5% | 10% | 20% | 10% | 20% |
| Kuwait | 10% [Note 1] | 20% /10% | 10% | 20% /10% /5% | 10% | 20% | 10% | 20% |
| Kyrgyz Republic | 10% | 20% /10% | 10% [Note 1] | 20% /10% /5% | 15% | 10% | 15% | 20% |
| Libyan Arab Jamahiriya | 20% | 20% /10% | 20% | 20% /10% /5% | 30% | 20% | No separate provision | 20% |
| Latvia | 10% | 20% /10% | 10% [Note 1] | 20% /10% /5% | 10% | 20% | 10% | 20% |
| Lithuania | 5% *, 15% | 20% /10% | 10% [Note 1] | 20% /10% /5% | 10% | 20% | 10% | 20% |
| Luxembourg | 10% | 20% /10% | 10% [Note 1] | 20% /10% /5% | 10% | 20% | 10% | 20% |
| Malaysia | 5% | 20% /10% | 10% [Note 1] | 20% /10% /5% | 10% | 20% | 10% | 20% |
| Malta | 10% | 20% /10% | 10% [Note 1] | 20% /10% /5% | 10% | 20% | 10% | 20% |
| Mongolia | 15% | 20% /10% | 15% [Note 1] | 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 | 5% (in some cases 15% ) | 20% /10% | 10% [Note 1] | 20% /10% /5% | 10% | 20% | 10% | 20% |
| Myanmar | 5% | 20% /10% | 10% [Note 1] | 20% /10% /5% | 10% | 20% | No separate provision | 20% |
| Morocco | 10% | 20% /10% | 10% [Note 1] | 20% /10% /5% | 10% | 20% | 10% | 20% |
| Mozambique | 7.5% | 20% /10% | 10% [Note 1] | 20% /10% /5% | 10% | 20% | No separate provision | 20% |
| Macedonia | 10% | 20% /10% | 10% [Note 1] | 20% /10% /5% | 10% | 20% | 10% | 20% |
| Namibia | 10% | 20% /10% | 10% [Note 1] | 20% /10% /5% | 10% | 20% | 10% | 20% |
| Nepal | 5% **, 10% | 20% /10% | 10% [Note 1] | 20% /10% /5% | 15% | 20% | No separate provision | 20% |
| Netherlands | 10% | 20% /10% | 10% [Note 1] | 20% /10% /5% | 10% | 20% | 10% | 20% |
| New Zealand | 15% | 20% /10% | 10% [Note 1] | 20% /10% /5% | 10% | 20% | 10% | 20% |
| Norway | 10% | 20% /10% | 10% [Note 1] | 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% [Note 1] | 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 [Note 1] |
20% /10% /5% | 15% if it is payable in pursuance of any collabo-ration agreement approved by the Indian Govt | 20% | No separate provision | 20% |
| Poland | 10% | 20% /10% | 10% [Note 1] | 20% /10% /5% | 15% | 20% | 15% | 10% |
| Portuguese Republic | 10% ***/15% | 20% /10% | 10% | 20% /10% /5% | 10% | 20% | 10% | 20% |
| Qatar | 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% [Note 1] | 20% /10% /5% | 10% | 20% | 10% | 20% |
| Romania | 10% | 20% /10% | 10% [Note 1] | 20% /10% /5% | 10% | 20% | 10% | 20% |
| Russian Federation | 10% | 20% /10% | 10% [Note 1] | 20% /10% /5% | 10% | 20% | 10% | 20% |
| Saudi Arabia | 5% | 20% /10% | 10% [Note 1] | 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% [Note 1] | 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 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% | 20% | 10% | 20% |
| South Africa | 10% | 20% /10% | 10% [Note 1] | 20% /10% /5% | 10% | 20% | 10% | 20% |
| Spain | 15% | 20% /10% | 15% [Note 1] | 20% /10% /5% | 10% /20%
[Note 3] |
20% | 20%
[Note 3] |
20% |
| Sri Lanka | 7.5% | 20% /10% | 10% [Note 1] | 20% /10% /5% | 10% | 20% | 10% | 20% |
| Sudan | 10% | 20% /10% | 10% [Note 1] | 20% /10% /5% | 10% | 20% | 10% | 20% |
| Sweden | 10% | 20% /10% | 10% [Note 1] | 20% /10% /5% | 10% | 20% | 10% | 20% |
| Swiss | 10% | 20% /10% | 10% [Note 1] | 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% [Note 1] | 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% [Note 1] | 20% /10% /5% | 10% | 20% | No separate provision | 20% |
| Tanzania | 5% ****, 10% | 20% /10% | 10% [Note 1] | 20% /10% /5% | 10% | 20% | No separate provision | 20% |
| Thailand | 10% | 20% /10% | 10% [Note 1] | 20% /10% /5% | 10% | 20% | No separate provision | 20% |
| Trinidad and Tobago | 10% | 20% /10% | 10% [Note 1] | 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 [Note 1] |
20% /10% /5% | 15% | 20% | 15% | 20% |
Turkmenistan |
10% | 20% /10% | 10% [Note 1] | 20% /10% /5% | 10% | 20% | 10% | 20% |
| Uganda | 10% | 20% /10% | 10% [Note 1] | 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% [Note 1] | 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 Mexican States | 10% | 10% [Note 1] | 20% /10% /5% | 10% | 20% | 10% | 20% | |
| United Kingdom | 15% /10%
(Note 5) |
20% /10% | a) 10% , if interest is paid to a bank;
b) 15% , in other cases [Note 1] |
20% /10% /5% | 10% /15% [Note 2] | 20% | 10% /15% [Note 2] | 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% [Note 2] | 20% | 10% /15% [Note 2] | 20% |
| Uruguay | 5% | 20% /10% | 10% [Note 1] | 20% /10% /5% | 10% | 20% | 10% | 20% |
| Uzbekistan | 10% | 20% /10% | 10% [Note 1] | 20% /10% /5% | 10% | 20% | 10% | 20% |
| Vietnam | 10% | 20% /10% | 10% [Note 1] | 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% [Note 1] | 20% /10% /5% | 10% | 20% | 10% | 20% |
*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:
a. 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;
b. 20 per cent in case of fees for technical services and other royalties.
4. With effect from Assessment Year 2024-25, 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,
5. (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
6. 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
c) Rate of tax shall be 20% under Section 115ADon dividend received by a Foreign institutional investor.
7. 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)
8. 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]
[As amended by Finance Act, 2023]
(Republished with Amendment, Source -Income Tax Website)
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.