Understanding the India-USA DTAA: Relief from Double Taxation

DTAA Overview: India and the USA have a Double Taxation Avoidance Agreement (DTAA) to prevent double taxation of income earned in both countries. Example Scenario: Rahul, an Indian resident working in the USA, pays Federal Income Tax there. DTAA helps avoid double taxation on his income.

Applicability: DTAA covers individuals, trusts, firms, and entities with income in both countries, addressing Federal Income Tax in the USA and Income Tax in India. Determining Residential Status: Permanent home, habitual abode, and nationality considerations determine residential status for tax purposes.

Taxation of Various Incomes: Immovable property, dividends, interest, and income of professors have specific taxation rules under the DTAA. Relief Provisions: Residents can claim relief in India or the USA for taxes paid in the other country, reducing double taxation.

Reporting in ITR: Non-residents must report foreign income, while residents report foreign income and assets in their Income Tax Return (ITR) using specific schedules and forms. Form 67: Essential for claiming foreign tax credit, filed online before submitting the ITR. Understanding and leveraging the DTAA provisions can help individuals avoid double taxation and ensure tax compliance.