🌏 International Tax

International Tax Knowledge Guide

DTAA Transfer Pricing NRI Taxation Withholding Tax

Double Tax Avoidance

DTAA Framework

India has signed DTAA with 90+ countries to prevent double taxation of the same income. DTAA provides either exemption or reduced tax rates on specific income types.

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Key DTAA Benefits

Reduced withholding tax on dividends, royalties, interest, and fees for technical services. Capital gains exemption in certain treaties (e.g., Mauritius, Singapore, now restricted).

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Tax Residency Certificate

TRC from the home country is mandatory to claim DTAA benefits. India also requires Form 10F and additional information per Section 90(5).

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Permanent Establishment

PE risk arises when a foreign company has a fixed place of business in India. PE triggers Indian tax liability on attributable profits.

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Principal Purpose Test

MLI provisions now apply PPT to India’s tax treaties. Arrangements designed primarily for tax benefits may be denied treaty protection.

“DTAA planning requires careful analysis of residency, PE risk, beneficial ownership, and the Principal Purpose Test, treaty shopping is no longer a viable strategy.”

V J Desai & Co. LLP, International Tax

Transfer Pricing

Transfer Pricing Compliance

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Arm’s Length Price

All transactions between associated enterprises must be at arm’s length. Methods include CUP, RPM, CPM, TNMM, and Profit Split Method.

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Form 3CEB

Mandatory CA certification in Form 3CEB for all international transactions with associated enterprises. Due date: 31st October of the assessment year.

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Master File & CbCR

MNEs with consolidated revenue > ₹500 crore must maintain Master File. CbCR applies to Indian parent MNEs with consolidated revenue > ₹5,500 crore.

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TP Penalties

100-300% penalty on tax determined on TP adjustments. 2% penalty on transaction value for non-maintenance of documentation.

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Advance Pricing Agreement

APA provides certainty on TP methodology for 5 years (unilateral) or bilaterally with treaty partner countries to avoid future disputes.

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Safe Harbour Rules

Safe harbour rates available for specified transactions like software development, IT-enabled services, and intra-group loans to reduce TP litigation risk.

NRI Taxation

NRI Tax Obligations

Income Type	NRI Tax Treatment	TDS
Salary earned in India	Taxable as per slabs	As per slab (Sec 192)
Interest on NRO account	Taxable in India	30% + surcharge + cess
Interest on NRE/FCNR account	Exempt	Nil
Property sale (India)	Capital gains taxable	20% LTCG / 30% STCG
Dividends from Indian companies	Taxable (DTAA may reduce)	20% or DTAA rate
Rental income (India property)	Taxable	30% (Sec 195)

Withholding Tax

Withholding Tax on Payments to Non-Residents

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Royalties & FTS (Section 115A)

10% WHT on royalties and fees for technical services to non-residents (plus surcharge and cess). DTAA may reduce to 10%, 15%, or as agreed.

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Dividends (Section 115O)

20% WHT on dividends paid to non-resident shareholders. DTAA can reduce to 5%-15% depending on the treaty.

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Interest (Section 115A)

20% WHT on interest paid to non-residents. Infrastructure bonds may qualify for 5% rate. ECB interest subject to specific provisions.

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Form 15CA/15CB

Online filing of Form 15CA (remitter) and CA certificate in Form 15CB required before remitting taxable amounts outside India under Section 195.

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