The India-Russia tax treaty was signed in Moscow on 25 March 1997 and entered into force on 11 April 1998, replacing the 1988 India-USSR agreement. Read with India as the source state and Russia as the residence state, it caps Indian tax at 10% on dividends, interest, royalties and fees for technical services, taxes business profits in India only through a permanent establishment, taxes gains on shares of an Indian company in India, and gives relief by the credit method. Both countries are parties to the Multilateral Instrument, so the principal purpose test applies to Indian withholding from 1 April 2021. Confirm the current consolidated text before relying on any clause.
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Key facts
| Signed / in force | 25 March 1997 at Moscow / 11 April 1998; replaced the India-USSR agreement of 20 November 1988 |
|---|---|
| Dividends (Article 10) | 10% of the gross amount; beneficial owner must be taxed on it in Russia; no shareholding tiers |
| Interest (Article 11) | 10%; 0% for governments, local authorities and the Central Bank |
| Royalties and fees for technical services (Article 12) | 10% for both, with no make-available requirement |
| Permanent establishment (Article 5) | Building or installation project over 12 months; no separate services PE day-count clause; agency PE |
| Independent personal services (Article 14) | Taxable in the source state if the individual is present more than 183 days in any 12-month period |
| Capital gains (Article 13) | Shares of an Indian company taxable in India |
| Anti-abuse | MLI principal purpose test and simplified limitation on benefits apply; Indian GAAR also applies |
Tax rates table
| Article | Income | Treaty rate on payments from India to Russia | Domestic comparison and notes |
|---|---|---|---|
| Article 10 | Dividends | 10% of the gross amount | Domestic rate on dividends to non-residents is about 20% plus surcharge and cess; beneficial owner must be subject to tax in Russia |
| Article 11 | Interest | 10% of the gross amount | 0% for the Government, political sub-divisions, local authorities and the Central Bank |
| Article 12 | Royalties, including computer software | 10% of the gross amount | Domestic rate about 20% plus surcharge and cess |
| Article 12 | Fees for technical services | 10% of the gross amount | No make-available condition in the treaty text as summarised |
| Article 7 | Business profits | Taxed in India only to the extent attributable to a PE | Net basis for PE income |
| Article 13 | Capital gains on shares of an Indian company | Taxable in India | 12.5% on unlisted shares held more than 24 months under domestic law |
| Article 13 | Ships and aircraft | Taxed only in the seller's residence state | Check the article for scope |
| Article 15 | Salary of a Russian resident | Day-count test; confirm conditions in the treaty text | See the employees guide |
Permanent establishment (Article 5)
- Fixed place: a branch, office, factory, workshop or place of management is a PE.
- Building site or installation: a PE only if it lasts more than 12 months. Under the Protocol, qualifying turnkey projects can be dealt with by agreement between the tax authorities, with supervisory fees taxed at 10% on the gross amount.
- Services: the treaty has no separate services PE clause based on day counts. Services are mainly caught as fees for technical services at 10% where they are technical, managerial or consultancy.
- Dependent agent: an agent who habitually concludes contracts or secures orders can create a PE; the MLI modifies the agency wording.
- Subsidiary: an Indian subsidiary is not by itself a PE of the parent, but it can become one if it acts as a dependent agent.
Share gains and exit
Gains on shares of an Indian company are taxable in India under Article 13, without a shareholding threshold. Under domestic law a long-term gain on unlisted shares held more than 24 months is taxed at 12.5% for a non-resident. See exit and restructuring.
Relief from double tax
Both countries use the credit method. The treaty's tax-sparing clause applied only for the first ten years it was in effect unless extended, so do not assume it applies today. Your Russian adviser should confirm the credit available in Russia against Russian tax on the same income.
Anti-abuse and the MLI
- The treaty has no limitation on benefits article of its own, but the Multilateral Instrument adds a principal purpose test and a simplified limitation on benefits for Indian withholding from 1 April 2021.
- India's General Anti-Avoidance Rule can also apply to arrangements whose main purpose is a tax benefit.
- Real commercial reasons and substance in Russia matter, especially where the Russian company is held through another entity or has little activity.
How to claim treaty rates
- The Russian company obtains a tax residency certificate from the Federal Tax Service.
- It gives the Indian payer Form 41, the certificate and a self-declaration of beneficial ownership and no PE in India.
- The Indian payer deducts Withholding Tax at the treaty rate under Section 393 of the Income-tax Act, 2025, and deposits it by the 7th of the following month.
- The payer issues the certificate, which the Russian company uses to claim credit in Russia.
Disputes
The treaty provides for mutual agreement between the tax authorities; confirm the procedure and time limits in the text. Keep transfer pricing files in both countries aligned. See transfer pricing.
Official sources
Check the rules at the primary sources: Income Tax Department (India), Reserve Bank of India, Ministry of Corporate Affairs, Federal Tax Service (Russia), Bank of Russia and the Ministry of External Affairs (India).
Frequently asked questions
Is there a tax treaty between India and Russia?
Yes. It was signed on 25 March 1997 and entered into force on 11 April 1998.
What is the Indian withholding tax on dividends paid to a Russian parent?
10% of the gross amount under the treaty if the beneficial owner is taxable in Russia and the paperwork is in place. The domestic rate is about 20% plus surcharge and cess.
What are the treaty rates on interest, royalties and technical fees?
10% each, with 0% interest for governments, local authorities and the Central Bank.
When does a Russian company have a permanent establishment in India?
Through a fixed place, a building or installation project over 12 months, or a dependent agent. The treaty has no separate day-count services PE clause.
Are gains on Indian shares taxable in India for a Russian seller?
Yes. Article 13 allows India to tax gains on shares of an Indian company.
Does the MLI affect the treaty?
Yes. Both countries are covered parties, and the principal purpose test applies to Indian withholding from 1 April 2021.
What documents prove treaty eligibility?
A tax residency certificate from the Russian Federal Tax Service, Form 41 and a declaration of beneficial ownership and no PE.
Does the treaty remove sanctions risk?
No. It deals only with tax. Sanctions and banking questions are separate.
Related guides
Getting Money Out of India to a Russian Parent: Dividends at 10%, Service Fees, Royalties, Interest and Loan Repayments
How a Russian parent receives money from an Indian subsidiary: 10% treaty withholding, Section 393, Forms 41, 145 and 146, Russian tax treatment, payment routes acceptable to banks and the documents banks ask for.
Read the guide →Russian Employees in India: Salary Tax, the Treaty Day Count, EPF for International Workers and Russian Social Insurance
What a Russian employer must plan for staff in India: Indian salary tax and the treaty test, EPF for international workers, no social security agreement, Russian insurance contributions and secondment contracts.
Read the guide →Transfer Pricing between India and Russia: Arm's Length Pricing, Goods and Services Flows, Documentation and Safe Harbours
Transfer pricing for a Russian group with an Indian subsidiary: arm's length rules, accountant's report, master file and local file, supply of equipment and components, management fees, royalties, advance pricing agreements and safe harbours.
Read the guide →Exiting an Indian Subsidiary from Russia: Share Sale, Buy-Back, Merger, Voluntary Liquidation and Tax on the Exit
How a Russian parent exits or restructures an Indian business: sale of shares, buyer sanctions checks, FEMA pricing, FC-TRS, capital gains tax, buy-back, merger, voluntary liquidation, strike-off, the treaty position and bringing proceeds home.
Read the guide →Sources
Last updated 26 October 2026. General information only, not legal or tax advice. Indian and Russian rules change often; confirm current requirements before acting.