What is the Double Tax Avoidance Agreement (DTAA) between India and the U.S.?

The Double Tax Avoidance Agreement (DTAA) is a treaty signed between two countries. It is used to make a country an attractive investment destination and to help taxpayers (NRIs) from paying double taxes on the same income.

DTAA between India and the US:
The DTAA is applicable to an individual, trust, partnership firm, company, or other entity having income in both countries. 

When an income is earned outside India, it is taxable in India and must be reported in the taxpayer's Income Tax Return (ITR). In most cases, the foreign country also imposes tax on such foreign income. To avoid the same income from getting taxed twice (in both countries), the taxpayer can avail of the benefits of the DTAA. 

The DTAA covers the following taxes:
  • Federal Income Tax imposed by the Internal Revenue Code i.e. the U.S. Income Tax.
  • Income Tax in India including surcharge and surtax.

For more information, refer to the official India U.S. DTAA Treaty.

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