To claim DTAA benefits in India, a foreign company must submit a Tax Residency Certificate (TRC), Form 10F (now renamed Form 41), and a No PE Declaration to the Indian payer before any payment is made. The Indian payer then deducts TDS at the lower DTAA rate instead of the default 20% under Section 115A. This process applies to royalties, fees for technical services (FTS), interest, and dividends paid to non-residents.

• Default TDS rate under Section 115A: 20% + Surcharge + Cess
• DTAA rates vary by treaty (e.g., UAE, Sweden, Russia, China, South Korea: 10%; Italy, Denmark: 20%)
• If DTAA benefit is claimed, the foreign company must file an ITR in India
• A DSC of the foreign authorised signatory is mandatory to file ITR

What is DTAA?

The Double Taxation Avoidance Agreement (DTAA) is a bilateral tax treaty between India and another country that prevents a foreign entity from paying tax on the same income twice — once in India and once in its home country. India has active DTAAs with more than 90 countries, including the UAE, the USA, the UK, Germany, Singapore, and Japan.

Under the DTAA framework, the income of a foreign company earned from India (such as royalties, FTS, interest, or dividends) may be taxed at a concessional rate specified in the relevant treaty, rather than the standard domestic rate under Section 115A of the Direct Tax Code 2025 (erstwhile Income Tax Act, 1961).

When Can You Claim DTAA Benefits?

A foreign company can claim DTAA benefits when it receives income from India and the applicable treaty offers a lower tax rate than the domestic rate. The most common income types where DTAA relief is sought include royalties, fees for technical services, interest payments, and dividends.

However, if a foreign company wishes to claim DTAA benefits, it is legally required to file an Income Tax Return (ITR) in India. Simply relying on lower TDS deduction without filing an ITR is not sufficient to remain compliant.

Income Type	Default Rate (Sec. 115A)	Typical DTAA Rate
Royalty / FTS	20% + Surcharge + Cess	10% – 20% (treaty-dependent)
Interest	20% + Surcharge + Cess	10% – 15% (treaty-dependent)
Dividends	20% + Surcharge + Cess	10% – 15% (treaty-dependent)

DTAA Rates for Key Countries

Below are the concessional rates available under specific India DTAA treaties for royalties and FTS:

Country	DTAA Rate (Royalty/FTS)	Taxocity Guide
UAE	10%	UAE-India DTAA Guide
Sweden	10%	Sweden-India DTAA Guide
Switzerland	10%	Switzerland-India DTAA Guide
Russia	10%	Russia-India DTAA Guide
China	10%	China-India DTAA Guide
South Korea	10%	South Korea-India DTAA Guide
Italy	20%	Italy-India DTAA Guide
Denmark	20%	Denmark-India DTAA Guide

What Documents Are Needed to Claim DTAA Benefits?

Before a foreign company can claim DTAA benefits in India, it must furnish the following documents to the Indian payer. Missing even one of these can result in TDS being deducted at the full domestic rate of 20% + Surcharge + Cess under Section 115A.

• Tax Residency Certificate (TRC): Issued by the tax authority of the foreign company's home country, confirming its tax residency status there.
• Form 10F (now Form 41): A self-declaration filed by the foreign company on India's Income Tax e-filing portal, providing details such as nationality, tax identification number, and the period of TRC validity. See our detailed guide on Form 10F / Form 41.
• No PE Declaration: A declaration stating that the foreign company does not have a Permanent Establishment (PE) in India. Read more about No PE Declaration requirements.
• PAN Card: The foreign company must obtain a PAN from the Indian Income Tax Department. This is required to create an income tax login and for ITR filing. See our guide on PAN card for foreign companies in India.
• Income Tax Login: The foreign company must register on India's Income Tax e-filing portal using its PAN.
• DSC of Authorised Signatory: A Digital Signature Certificate (DSC) of the foreign authorised signatory is mandatory for filing ITR and Form 10F/41 online.

Getting DSC for a Foreign Signatory

Obtaining a DSC for a foreign director or authorised signatory requires specific documentation. A regular DSC of an Indian director or partner will not work for DTAA filings by a foreign entity.

The following is required for DSC of a foreign signatory:

• Email OTP and phone OTP from the foreign individual
• Video verification of the foreign individual
• Address proof (e.g., Driving Licence or equivalent)
• Photograph
• Copy of passport

How to Claim DTAA Benefits: Step-by-Step

Here is the complete process a foreign company must follow to legally claim DTAA benefits in India as of 2026:

1. Apply for PAN: File an application for a Permanent Account Number with the Indian Income Tax Department. The PAN is the foundation for all subsequent steps.
2. Create Income Tax Login: Using the PAN, register the foreign company on the Income Tax e-filing portal (incometax.gov.in).
3. Obtain DSC of Foreign Authorised Signatory: Arrange for a valid DSC for the foreign individual authorised to sign on behalf of the company. This is needed to file forms and returns digitally.
4. Obtain TRC from Home Country: Request a Tax Residency Certificate from the tax authority of the foreign company's country of residence, valid for the relevant financial year.
5. File Form 10F / Form 41: Log in to the Indian income tax portal and submit Form 10F (recently renamed Form 41) using the DSC of the authorised signatory. This must be done before receiving any payment from India.
6. Submit No PE Declaration: Provide a signed declaration to the Indian payer confirming that the foreign company does not have a PE in India.
7. Submit Documents to Indian Payer: Share the TRC, Form 10F/41 acknowledgement, and No PE Declaration with the Indian entity making the payment. The payer will then deduct TDS at the applicable DTAA rate.
8. File ITR in India: If DTAA benefit has been claimed, the foreign company is obligated to file an Income Tax Return in India for that financial year using its DSC.

Note on Royalty and FTS under Section 115A: For royalty or FTS payments, a foreign company may choose to pay tax at the flat rate of 20% under Section 115A without filing an ITR. However, if it wishes to claim the lower DTAA rate, filing an ITR in India becomes mandatory.

What Are Common Mistakes When Claiming DTAA Benefits?

Many foreign companies lose the benefit of the DTAA due to procedural lapses. The following mistakes can result in higher TDS deduction or penalties:

• Submitting documents after the payment has already been made (TRC and Form 10F must be submitted before payment).
• Using an expired TRC — always ensure the TRC covers the year of the payment.
• Not obtaining a PAN before trying to file Form 10F/41 online.
• Using a regular Indian DSC for forms that require the DSC of a foreign signatory.
• Claiming DTAA benefit but not filing an ITR in India, which is a non-compliance risk.
• Failing to obtain a No PE Declaration, which is a mandatory document for the Indian payer to justify the lower TDS rate.

How Can Taxocity Help?

Taxocity, with over three decades of experience in Indian taxation and compliance, offers end-to-end support for foreign companies seeking to claim DTAA benefits in India. Our team of real human experts handles every step — from PAN application and income tax portal registration to DSC procurement for foreign signatories, Form 10F/41 filing, and ITR submission.

We provide a 100% compliance guarantee and work with companies across the UAE, UK, USA, Europe, and Asia Pacific. Whether you are a first-time recipient of India-sourced income or an established multinational managing ongoing TDS compliance, our experts ensure you claim the maximum treaty benefit without any procedural delays.

Talk to a DTAA Compliance Expert at Taxocity

Key Takeaways

• DTAA benefits reduce TDS on India-sourced income from the default 20% (Section 115A) to the lower treaty rate.
• Mandatory documents: TRC, Form 10F/Form 41, No PE Declaration, PAN, and DSC of the foreign authorised signatory.
• All documents must be submitted to the Indian payer before the payment is made.
• Claiming DTAA benefit makes ITR filing in India compulsory for the foreign company.
• A DSC of the foreign signatory (not a regular Indian DSC) is required for online filing.
• Treaty rates for royalty/FTS: UAE, Sweden, Switzerland, Russia, China, South Korea = 10%; Italy, Denmark = 20%.

Disclaimer

This article is for general informational purposes only and does not constitute tax advice. DTAA provisions, treaty rates, and procedural requirements are subject to change. Please consult a qualified tax advisor or speak to a Taxocity expert before making any decisions based on the information provided here.