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A US-NRI's Guide to Avoiding Double Taxation in India

  • arjunveersingh
  • Jul 31
  • 2 min read

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For NRIs living in the US, managing taxes in two countries can be tricky. Without the right steps, you risk paying tax twice on the same income. Fortunately, the India–US Double Taxation Avoidance Agreement (DTAA) helps you avoid this—if you know how to use it.


What Is Double Taxation?


Double taxation happens when the same income—like rent, interest, or capital gains from India—is taxed by both India and the US.


Commonly impacted income:

  • Indian salary

  • Rent from Indian property

  • Interest on NRO accounts

  • Capital gains (mutual funds/stocks)

  • Dividends from Indian companies


How the DTAA Helps NRIs


The DTAA ensures income isn’t taxed twice. It allows:

  • Tax credits: Tax paid in one country is offset in the other

  • Exclusive taxation: Some income is taxed in only one country

  • Relief process: File TRC, Form 10F, and a self-declaration in India


Tax Residency Rules


🇮🇳 India:

  • NRI: <120 days in India + income ≤ ₹15 lakh

  • RNOR: 120–181 days + income > ₹15 lakh

  • Resident: ≥182 days or not taxed elsewhere

🇺🇸 US:

  • Taxed on worldwide income regardless of residency


Smart Tax Strategies for NRIs


  1. Claim DTAA Relief

    • Get TRC from IRS

    • File Form 10F + self-declaration in India

    • Declare income in both returns

  2. Use Foreign Tax Credit

    • Form 1116 (US) for Indian tax paid

    • Form 67 (India) for US tax paid

  3. Manage Offshore Income

    • Use NRE/NRO accounts

    • Disclose in FBAR/FATCA (US filings)

    • Time repatriation smartly

  4. Always File in Both Countries

    • Even if no tax is due—stay compliant


Conclusion


Double taxation is avoidable—with smart planning. The India-US DTAA offers valuable relief, but it’s up to you to use it right. File on time, follow the rules, and consult a cross-border tax expert when needed.


FAQs


1. What is DTAA?

A tax treaty that prevents your income from being taxed twice.


2. How do I claim DTAA benefits?

File TRC, Form 10F, and declare income in both countries.


3. What is Form 10F?

A required declaration to claim DTAA relief in India.


4. What’s the Foreign Tax Credit?

A credit for taxes paid abroad—claimed via Form 1116 (US) or Form 67 (India).


5. Am I an Indian tax resident?

Depends on your stay in India and Indian income—check the latest rules.

 
 
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