🇺🇸 United States — 🇮🇳 India

Tax Treaty / Double Tax Avoidance Agreement detail

The US-India Income Tax Convention was signed on 12 September 1989 and has been in force since 18 December 1990. It is widely considered one of the least generous US tax treaties in terms of withholding rate reductions, reflecting India's historically protective capital controls regime and its desire to preserve taxing rights over inbound investment income. Dividends face withholding at 15% for corporate shareholders owning at least 10% of the paying company's voting stock, and 25% for all other dividends. These rates are substantially higher than those found in US treaties with European or East Asian partners. Interest is subject to 10% withholding on bank loans and government bonds and 15% on other interest payments. Royalties and fees for technical services are taxed at 10% where they relate to industrial, commercial, or scientific equipment, and 15% for other royalties—a carve-out reflecting India's concern about technology payment outflows. The treaty lacks a Limitation on Benefits (LOB) article comparable to those in more modern US treaties, relying instead on a narrower anti-abuse provision. This has historically made it somewhat more accessible than treaties with strict LOB tests, though India's domestic General Anti-Avoidance Rules (GAAR), effective from 2017, now serve a similar gatekeeping role. No US-India Totalization Agreement exists, meaning workers moving between the two countries may face dual social security obligations. The treaty does not prevent India from applying its Minimum Alternate Tax (MAT) or the US from applying its branch profits tax. Residency tie-breaking follows the standard OECD cascade through permanent home, vital interests, habitual abode, nationality, and mutual agreement.