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These are the questions Japanese companies and expats ask about the India-Japan tax treaty and the Japan-India Social Security Agreement, grouped by topic. Each answer is short; the complete guide explains each topic in depth.
Indian tax law changed on 1 April 2026: the Income-tax Act, 2025 and Income-tax Rules, 2026 replace the 1961 Act. Where a form or section has a new name, we give the new name with the earlier one in brackets. General information only; confirm current requirements before acting.
Tax treaty basics
1.Does India have a tax treaty with Japan?
Yes. The India-Japan double taxation avoidance agreement (DTAA) covers income tax and caps Withholding Tax on dividends, interest, royalties and fees for technical services.
2.Who can use the India-Japan tax treaty?
Residents of India or Japan as defined in the treaty, including companies and individuals.
3.Does the treaty apply automatically?
No. The recipient must prove residence and meet the conditions of each article.
4.Which Indian provision gives effect to tax treaties?
Section 159 of the Income-tax Act, 2025 (previously Sections 90 and 90A of the 1961 Act). The treaty applies to the extent it is more beneficial.
5.What taxes does the treaty cover?
Income taxes. Social security contributions are covered by a separate agreement.
6.What is the mutual agreement procedure?
A route by which the two tax authorities resolve cases of taxation not in line with the treaty.
7.Does the treaty remove the need to file in Japan?
No. Japanese companies and residents still file in Japan and claim relief under Japanese rules.
8.How does Japan relieve double tax on dividends?
Generally through a 95% exemption for qualifying foreign subsidiaries (25% holding for six months). Confirm with a Japanese adviser.
9.Is the Indian subsidiary a permanent establishment of the Japanese parent?
Not by itself. A permanent establishment arises only if the subsidiary acts as a dependent agent or the parent has a fixed place or other presence in India.
Withholding rates and claiming relief
11.What is the treaty rate on dividends to a Japanese parent?
10%.
12.What is the treaty rate on interest?
10%. Some interest owed to certain Japanese government and public financial bodies is exempt in India.
13.What is the treaty rate on royalties and fees for technical services?
10% for both.
14.What is the Indian domestic rate on these payments?
Generally 20% before surcharge and cess, so the 10% treaty rate is usually lower.
15.Are treaty rates caps or fixed rates?
Caps. The rate applied is the lower of the treaty and domestic rate.
16.Do surcharge and cess apply on top of the treaty rate?
This has been litigated. Confirm the position for the tax year before remitting.
17.Which Indian section covers Withholding Tax on payments to non-residents?
Section 393 of the Income-tax Act, 2025 (previously Section 195).
18.What document proves Japanese residence?
A certificate of residence issued by the Japanese tax office.
19.What is Form 41?
A statement a non-resident gives to claim treaty benefits in India. It was previously Form 10F.
20.Do we need a no-PE declaration?
Often. Payers and tax officers commonly ask the recipient to confirm it has no permanent establishment in India.
21.What is beneficial ownership?
It means the recipient is the real owner of the income and not a conduit.
22.Which forms go with the remittance?
Form 145 (previously Form 15CA) and, where required, a Chartered Accountant's Form 146 (previously Form 15CB).
23.What if the payer deducts tax at the higher rate?
You may claim a refund in India, but it takes time. Provide documents before payment to avoid this.
24.Is a Japanese-language certificate accepted?
Keep an English translation with the original, because Indian payers and officers usually need it.
Expat tax residency and double tax relief
25.When is a foreign national resident in India for tax?
Generally with 182 days or more in India in the tax year, or 60 days or more plus 365 days or more in the four preceding years, with exceptions.
26.What is the Indian tax year?
1 April to 31 March. The Income-tax Act, 2025 uses the term tax year.
27.Can a Japanese employee on assignment remain a Japanese tax resident?
Yes, depending on Japanese rules and where the person's home and family are. Confirm each case with a Japanese adviser.
28.How is double tax relieved for a Japanese employee in India?
Mainly through the treaty and the foreign tax credit in Japan.
29.What is the treaty tie-breaker?
Tests that decide which country is the treaty residence when a person is resident in both.
30.Does the 183-day rule exempt a visiting employee?
It can, if the employee is in India for 183 days or fewer, the employer is not an Indian resident and an Indian permanent establishment does not bear the cost.
31.Why does a secondment to the Indian subsidiary matter?
If the Indian subsidiary bears the cost, the short-stay exemption can fail and the salary is taxable in India.
32.Can a short trip create PE risk for the Japanese parent?
Yes, if the visitor negotiates or concludes contracts or works from a fixed place in India.
33.Do expats need to file an Indian return?
Generally yes if resident or with Indian-source income above the filing limits, even if tax was withheld.
34.Who handles the Japanese return?
A Japanese tax adviser. AU Corporate handles Indian filings and coordinates with them.
Social security for Japanese expats
36.What does the agreement cover?
Pension systems: in Japan the National Pension and Employees' Pension Insurance, in India the EPS and EPF. It covers employees, not the self-employed.
37.What does the agreement do?
It lets a detached worker stay in the home pension system and allows pension periods in both countries to be combined.
38.How long is the detached worker period?
Initially five years. Extensions are possible if the institutions of both countries agree.
39.What is a Certificate of Coverage?
A certificate proving the employee remains covered by the home system, so the host country does not require contributions.
40.Who applies for the certificate?
The Japanese employer, through the Japan Pension Service route, before the employee leaves.
41.Does a local hire by the Indian subsidiary qualify?
No. The detached worker rule is for employees sent by an employer with a place of business in Japan.
42.Does an international worker in India contribute to EPF?
Generally yes on full salary, unless excluded under an agreement with a Certificate of Coverage.
43.Is there a wage ceiling for international workers?
No. They contribute on full salary.
44.Does the agreement cover health insurance?
No. It covers pensions only.
45.Is Indian ESI relevant for expats?
ESI applies only below its wage ceiling and is outside the agreement. Most expats arrange private cover.
46.Can periods in both countries be added together?
Yes, for pension benefits. The EPS pension needs 10 years of coverage and Japanese periods can be added to reach it. EPF periods are not totalized.
47.What did the High Courts decide on international workers?
The Karnataka High Court struck the provisions down in 2024. The Delhi High Court upheld them on 4 November 2025. We are not aware of a final Supreme Court ruling.
48.Does an Employer of Record avoid Indian provident fund?
No. The EOR is the employer and provident fund rules apply, subject to any exclusion.
49.What if the employee moves onto Indian payroll?
The detached worker rule may no longer apply and Indian provident fund can apply. Take advice before changing the employer.
50.Who decides the structure?
HR, finance and tax together, with Indian and Japanese advisers, before the assignment begins.
← Back to the complete guide: Tax and Social Security Treaties
Read the full guides
The India-Japan Tax Treaty (DTAA) Explained: Scope, Residency and Relief from Double Tax
How the India-Japan tax treaty works: who qualifies, taxes covered, treaty versus domestic law, residency, relief from double tax and disputes.
Read the guide →India-Japan DTAA Withholding Tax Rates: Dividends, Interest, Royalties and Fees for Technical Services
Treaty rates for payments from India to Japan: 10% on dividends, interest, royalties and fees for technical services, against 20% domestic rates.
Read the guide →How to Claim India-Japan Treaty Benefits: Certificate of Residence, Form 41 and Beneficial Ownership
Documents a Japanese company needs to claim India-Japan treaty rates: certificate of residence, Form 41 (previously Form 10F) and no-PE declaration.
Read the guide →Tax Residency for Japanese Expats in India: Residency Tests, Treaty Rules and Double Tax Relief
Which country taxes a Japanese expat in India: Indian residency tests, Japanese residency, treaty tie-breaker, the 183-day rule and foreign tax credit.
Read the guide →The Japan-India Social Security Agreement: Detached Workers, Certificate of Coverage and Totalization
How the Japan-India Social Security Agreement works: detached workers, five-year coverage, Certificate of Coverage, pension systems covered and totalization.
Read the guide →EPF for International Workers in India: What Japanese Expats and Their Employers Must Know
How Indian provident fund applies to foreign nationals: international worker rules, no wage ceiling, the Japan agreement exclusion and the 2026 EPF Scheme.
Read the guide →Japanese Social Insurance for Employees Sent to India: Pension, Health and Employment Insurance
What happens to Japanese pension, health and employment insurance when an employee is sent to India: the Certificate of Coverage and who pays what.
Read the guide →← Back to India-Japan tax treaty and social security: the complete guide
← Back to the complete guide: How to Set Up a Subsidiary in India from Japan
Last updated 20 October 2026. General information only, not legal or tax advice. Indian rules change often; confirm current requirements before acting.