DTAA (Double Taxation Avoidance Agreement)
A bilateral treaty between India and another country that prevents the same income from being taxed twice, through mechanisms like tax credits or exemptions.
A DTAA is a treaty India has signed with another country to prevent someone, typically an NRI or a business with cross-border income, from paying full tax on the same income in both countries. It works through mechanisms like allowing a tax credit in the country of residence for tax already paid in the source country, or exempting certain income entirely in one of the two countries, depending on the specific treaty's terms.
India has DTAAs with a large number of countries, but the exact provisions, rates, and relief mechanisms differ treaty by treaty, so the practical benefit available depends entirely on which specific country is involved and what type of income, salary, business profits, dividends, capital gains, is being taxed. Claiming DTAA relief usually requires specific documentation, like a Tax Residency Certificate from the other country.
This glossary entry is for general informational purposes only and does not constitute professional tax, legal, or financial advice. Rules and rates change, so consult a qualified Chartered Accountant for advice specific to your situation.