← Back to the complete guide: Tax and Social Security Treaties
These are the questions US companies and expats ask about the India-US tax treaty and social security, 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. We are not aware of a US-India totalization agreement in force as of October 2026. General information only; confirm current requirements before acting.
Tax treaty basics
1.Does India have a tax treaty with the US?
Yes. The India-US double taxation avoidance agreement (DTAA) covers income tax and can reduce Withholding Tax and relieve double taxation.
2.Who can use the India-US tax treaty?
Residents of India or the US 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. US social security taxes are excluded under Article 2.
6.What is the US saving clause?
A clause that lets the US tax its own citizens and residents as if the treaty did not exist, with listed exceptions.
7.What is the mutual agreement procedure?
A route under Article 27 by which the two tax authorities resolve cases of taxation not in line with the treaty.
8.Is a US LLC a treaty resident?
It depends on how the LLC is taxed in the US and on its owners. Take advice before claiming.
9.Does the treaty remove the need to file in the US?
No. US citizens and residents still file in the US and use the foreign tax credit or exclusions.
10.Are there treaty rules on permanent establishment?
Yes. Business profits of a US company are taxable in India only if it has a permanent establishment there. See the PE guide.
Withholding rates and claiming relief
11.What is the treaty rate on dividends to a US parent?
15% if the US company holds at least 10% of the voting stock of the payer, otherwise 25%.
12.What is the treaty rate on interest?
10% for loans from banks and similar institutions, 15% in other cases.
13.What is the treaty rate on royalties?
10% for equipment royalties and related services, 15% for other covered payments.
14.What are fees for included services?
Fees for services that make available technical knowledge, experience, skill, know-how or processes, or transfer a technical plan or design.
15.Are treaty rates caps or fixed rates?
Caps. The rate applied is the lower of the treaty and domestic rate.
16.Which Indian section covers Withholding Tax on payments to non-residents?
Section 393 of the Income-tax Act, 2025 (previously Section 195).
17.What is Form 6166?
An IRS letter certifying US tax residency, requested with Form 8802.
18.What is Form 41?
A statement a non-resident gives to claim treaty benefits in India. It was previously Form 10F.
19.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.
20.How long is Form 6166 valid?
It generally covers one calendar year.
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.Do treaty rates apply to capital gains?
No treaty rate cap applies to capital gains. Domestic rules generally apply.
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.Are US citizens taxed in the US while working in India?
Yes. The US taxes citizens and residents on worldwide income.
28.How is double tax relieved for a US citizen in India?
Mainly through the foreign tax credit (Form 1116) or the foreign earned income exclusion (Form 2555).
29.What is the treaty tie-breaker?
Tests in Article 4: permanent home, centre of vital interests, habitual abode, nationality, then agreement of the authorities.
30.Can a short business trip create Indian tax for an employee?
It can be exempt under the treaty if its conditions are met, but check the days test and who bears the cost.
31.Can a short trip create PE risk for the US parent?
Yes, if the visitor negotiates or concludes contracts or works from a fixed place in India.
32.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.
33.Is salary paid from the US taxable in India?
It can be if the work is performed in India, subject to the treaty rule for short stays. Take advice.
34.Who handles the US return?
A US CPA. AU Corporate handles Indian filings and coordinates with them.
Social security for US expats
35.Is there a US-India totalization agreement?
We are not aware of one in force as of October 2026. Check the Social Security Administration's list.
36.What does a totalization agreement do?
It stops double social security contributions for the same work and combines coverage periods for benefits.
37.Can a US expat get an Indian certificate of coverage?
Not from a US-India agreement, because none is in force.
39.Does an American in India have to contribute to Indian provident fund?
Generally yes as an international worker of a covered establishment, unless an exclusion applies.
40.Is there a wage ceiling for international workers?
No. They contribute on full salary.
41.Can an international worker withdraw EPF when leaving India?
Generally not. Withdrawal is tied to retirement or permanent total incapacity, subject to current rules.
42.What did the High Courts decide on this?
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.
43.What is the Employees' Provident Funds Scheme, 2026?
The current provident fund scheme, reported to have taken effect on 1 July 2026, with a framework for international workers.
44.Does a US citizen working for a US employer in India pay FICA?
Generally yes, as FICA applies to US citizens and residents working abroad for an American employer.
45.Does an American employed by an Indian subsidiary pay FICA?
Generally no, unless the parent has a Section 3121(l) agreement covering the subsidiary.
46.What is a Section 3121(l) agreement?
An agreement between an American employer and the Treasury that extends Social Security coverage to US citizens and residents working for foreign affiliates.
47.Do self-employed Americans in India pay self-employment tax?
Generally yes.
48.Does Medicare cover care in India?
Generally no.
49.Does an Employer of Record avoid Indian provident fund?
No. The EOR is the employer and the provident fund rules apply to the worker.
50.Who should decide the structure?
Your HR, finance and tax teams together, with Indian and US advisers, before the assignment begins.
← Back to the complete guide: Tax and Social Security Treaties
Read the full guides
The India-US Tax Treaty (DTAA) Explained: Scope, Residency and Relief from Double Tax
How the India-US tax treaty works: who qualifies, which taxes it covers, how treaty and domestic law interact, residency, relief from double tax and disputes.
Read the guide →India-US DTAA Withholding Tax Rates: Dividends, Interest, Royalties and Fees for Included Services
Treaty rates for payments from India to the US: dividends 15% or 25%, interest 10% or 15%, royalties and fees 10% or 15%. Conditions and how to apply them.
Read the guide →How to Claim India-US Treaty Benefits: Form 6166, Form 41 and Beneficial Ownership
Documents needed to claim India-US treaty rates: IRS Form 6166, Form 41 (previously Form 10F), no-PE declaration and beneficial ownership.
Read the guide →Tax Residency for US Expats in India: Residency Tests, Treaty Tie-Breaker and Double Tax Relief
Which country taxes a US expat in India: Indian residency tests, US worldwide tax, the treaty tie-breaker, foreign tax credit and exclusion.
Read the guide →Social Security for US Expats in India: Is There a US-India Totalization Agreement?
Is there a US-India social security agreement? What applies to a US expat in India: provident fund, US FICA, double coverage and planning.
Read the guide →EPF for International Workers in India: What US Expats and Their Employers Must Know
How Indian provident fund applies to foreign nationals: international worker rules, no wage ceiling, withdrawal, court rulings and the 2026 EPF Scheme.
Read the guide →US Social Security and FICA for Americans Working in India: Who Pays and When
When Social Security and Medicare tax apply to Americans working in India: US employer, Indian subsidiary, Section 3121(l) agreements and self-employment.
Read the guide →← Back to India-US tax treaty and social security: the complete guide
← Back to the complete guide: How to Set Up a Subsidiary in India from the USA
Last updated 14 October 2026. General information only, not legal or tax advice. Indian rules change often; confirm current requirements before acting.