Understanding Double Tax Avoidance Agreement (DTAA)

Double taxation occurs when the same income is taxed by two different countries: the country where the income originates (the source country) and the country where the taxpayer is considered a resident for tax purposes (the resident country). To help Non-Resident Indians (NRIs) avoid this situation, India has established Double Taxation Avoidance Agreements (DTAAs) with over 94 countries, including Australia, Canada, France, Germany, Hong Kong, Portugal, Singapore, the UAE, the USA, the UK, and many others. These agreements are designed to prevent individuals from being taxed twice on the same income. NRIs may use the following methods at the time of filing ITR to take the benefits of DTAA:

• Foreign Tax Credit.
• Exemption method.
• Reduced rate of tax.