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

Country
Dividend
(not being covered under Section 115-O)
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%[Note1]
20%/10%/5%
10%
10%
10%
10%
Armenia
10%
20%/10%
10%[Note1]
20%/10%/5%
10%
10%
10%
10%
Australia
15%
20%/10%
15%
20%/10%/5%
10%/15%
[Note 2]
10%
10%/15%
[Note 2]
10%
Austria
10%
20%/10%
10%[Note1]
20%/10%/5%
10%
10%
10%
10%
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% [Note1]
20%/10%/5%
10%
10%
No separate provision
10%
Belarus
a) 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%
Belgium
15%
20%/10%
15% (10% loan is if granted by a bank)
20%/10%/5%
10%
10%
10%
10%
Bhutan
10%
20%/10%
10%[Note1]
20%/10%/5%
10%
10%
10%
10%
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%[Note1]
20%/10%/5%
10%
10%
10%
10%
Brazil
15%
20%/10%
15% [Note1]
20%/10%/5%
25% for use of trademark; 15% for others
10%
15%
10%
Bulgaria
15%
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 cases
10%
20%
10%
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% [Note1]
20%/10%/5%
10%-15%
10%
10%-15%
10%
China
10%
20%/10%
10% [Note1]
20%/10%/5%
10%
10%
10%
10%
Columbia
5%
20%/10%
10% [Note1]
20%/10%/5%
10%
10%
10%
10%
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% [Note1]
20%/10%/5%
10%
10%
10%
10%
Cyprus
a) 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%
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 [Note1]
20%/10%/5%
20%
10%
20%
10%
Estonia
10%
20%/10%
10% [Note1]
20%/10%/5%
10%
10%
10%
10%
Ethiopia
7.5%
20%/10%
10% [Note1]
20%/10%/5%
10%
10%
10%
10%
Finland
10%
20%/10%
10% [Note1]
20%/10%/5%
10%
10%
10%
10%
Fiji
5%
20%/10%`
10% [Note1]
20%/10%/5%
10%
10%
10%
10%
France
10%
20%/10%
10% [Note1]
20%/10%/5%
10%
10%
10%
10%
Georgia
10%
20%/10%
10% [Note1]
20%/10%/5%
10%
10%
10%
10%
Germany
10%
20%/10%
10% [Note1]
20%/10%/5%
10%
10%
10%
10%
Hungary
10%
20%/10%
10% [Note1]
20%/10%/5%
10%
10%
10%
10%
Indonesia
10%
20%/10%
10% [Note1]
20%/10%/5%
10%
10%
10%
10%
Iceland
10%
20%/10%
10%[Note1]
20%/10%/5%
10%
10%
10%
10%
Ireland
10%
20%/10%
10% [Note1]
20%/10%/5%
10%
10%
10%
10%
Israel
10%
20%/10%
10% [Note1]
20%/10%/5%
10%
10%
10%
10%
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% [Note1]
20%/10%/5%
20%
10%
20%
10%
Japan
10%
20%/10%
10% [Note1]
20%/10%/5%
10%
10%
10%
10%
Jordan
10%
20%/10%
10% [Note1]
20%/10%/5%
20%
10%
20%
10%
Kazakhstan
10%
20%/10%
10% [Note1]
20%/10%/5%
10%
10%
10%
10%
Kenya
15%
20%/10%
15% [Note1]
20%/10%/5%
20%
10%
17.5%
10%
Korea
a) 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%
Kuwait
10% [Note 1]
20%/10%
10%
20%/10%/5%
10%
10%
10%
10%
Kyrgyz Republic
10%
20%/10%
10% [Note1]
20%/10%/5%
15%
10%
15%
10%
Latvia
10%
20%/10%
10% [Note1]
20%/10%/5%
10%
10%
10%
10%
Lithuania
5%*, 15%
20%/10%
10% [Note1]
20%/10%/5%
10%
10%
10%
10%
Luxembourg
10%
20%/10%
10% [Note1]
20%/10%/5%
10%
10%
10%
10%
Malaysia
5%
20%/10%
10% [Note1]
20%/10%/5%
10%
10%
10%
10%
Malta
10%
20%/10%
10% [Note1]
20%/10%/5%
10%
10%
10%
10%
Mongolia
15%
20%/10%
15% [Note1]
20%/10%/5%
15%
10%
15%
10%
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%
No Rates Specified
20%/10%/5%
15%
10%
No separate provision
10%
Montenegro
5% (in some cases 15%)
20%/10%
10%[Note1]
20%/10%/5%
10%
10%
10%
10%
Myanmar
5%
20%/10%
10%[Note1]
20%/10%/5%
10%
10%
No separate provision
10%
Morocco
10%
20%/10%
10% [Note1]
20%/10%/5%
10%
10%
10%
10%
Mozambique
7.5%
20%/10%
10% [Note1]
20%/10%/5%
10%
10%
No separate provision
10%
Macedonia
10%
20%/10%
10% [Note 1]
20%/10%/5%
10%
10%
10%
10%
Namibia
10%
20%/10%
10% [Note1]
20%/10%/5%
10%
10%
10%
10%
Nepal
5%**, 10%
20%/10%
10% [Note1]
20%/10%/5%
15%
10%
No separate provision
10%
Netherlands
10%
20%/10%
10% [Note1]
20%/10%/5%
10%
10%
10%
10%
New Zealand
15%
20%/10%
10% [Note1]
20%/10%/5%
10%
10%
10%
10%
Norway
10%
20%/10%
10% [Note1]
20%/10%/5%
10%
10%
10%
10%
Oman
a) 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%
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
[Note1]
20%/10%/5%
15% if it is payable in pursuance of any collaboration agreement approved by the Government of India
10%
No separate provision
10%
Poland
10%
20%/10%
10% [Note1]
20%/10%/5%
15%
10%
15%
10%
Portuguese Republic
10%***/15%
20%/10%
10%
20%/10%/5%
10%
10%
10%
10%
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% [Note1]
20%/10%/5%
10%
10%
10%
10%
Romania
10%
20%/10%
10% [Note1]
20%/10%/5%
10%
10%
10%
10%
Russian Federation
10%
20%/10%
10% [Note1]
20%/10%/5%
10%
10%
10%
10%
Saudi Arabia
5%
20%/10%
10% [Note1]
20%/10%/5%
10%
10%
No separate provision
10%
Serbia
a) 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%
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%
10%
10%
10%
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%
10%
10%
10%
South Africa
10%
20%/10%
10% [Note1]
20%/10%/5%
10%
10%
10%
10%
Spain
15%
20%/10%
15% [Note1]
20%/10%/5%
10%/20%
[Note 3]
10%
20%
[Note 3]
10%
Sri Lanka
7.5%
20%/10%
10% [Note1]
20%/10%/5%
10%
10%
10%
10%
Sudan
10%
20%/10%
10% [Note1]
20%/10%/5%
10%
10%
10%
10%
Sweden
10%
20%/10%
10% [Note1]
20%/10%/5%
10%
10%
10%
10%
Swiss
10%
20%/10%
10% [Note1]
20%/10%/5%
10%
10%
10%
10%
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% [Note1]
20%/10%/5%
10%
10%
No separate provision
10%
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% [Note1]
20%/10%/5%
10%
10%
No separate provision
10%
Tanzania
5%****, 10%
20%/10%
10% [Note1]
20%/10%/5%
10%
10%
No separate provision
10%
Thailand
10%
20%/10%
10% [Note1]
20%/10%/5%
10%
10%
No separate provision
10%
Trinidad and Tobago
10%
20%/10%
10% [Note1]
20%/10%/5%
10%
10%
10%
10%
Turkey
15%
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%
Turkmenistan
10%
20%/10%
10% [Note1]
20%/10%/5%
10%
10%
10%
10%
Uganda
10%
20%/10%
10% [Note1]
20%/10%/5%
10%
10%
10%
10%
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% [Note1]
20%/10%/5%
10%
10%
10%
10%
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%
10%
No separate provision
10%
United Mexican States
10%
10% [Note1]
20%/10%/5%
10%
10%
10%
10%
United Kingdom
15%/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 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]
10%
10%/15% [Note 2]
10%
Uruguay
5%
20%/10%
10% [Note1]
20%/10%/5%
10%
10%
10%
10%
Uzbekistan
10%
20%/10%
10% [Note1]
20%/10%/5%
10%
10%
10%
10%
Vietnam
10%
20%/10%
10% [Note1]
20%/10%/5%
10%
10%
10%
10%
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% [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:

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. 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,

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 (other than dividends referred to in section 115-O).

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

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.

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.

e) From Assessment Year 2018-19, dividend in excess of Rs. 10 lakh shall be chargeable to tax in the case of person who is resident in India other than:

i)   a domestic company; or

ii)   a fund or institution or trust or any university or other educational institution or any hospital or other medical institution referred to in section 10(23C)(iv)/(v)/(vi)/(via); or

iii)   a trust or institution registered under section 12AA.

at the rate of 10% as per section 115BBDA.

7. Interest

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.

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

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]

[Republished as amended by Finance Act, 2017]

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