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How the India-UK Double Taxation Avoidance Agreement reduces withholding tax on dividends, interest, and royalties for your Indian subsidiary.
The India-UK DTAA (signed 1993, updated by a 2012 Protocol in force since December 2013, with MLI modifications applying from FY 2020-21) caps how much withholding tax India can apply to income flowing from your Indian subsidiary back to the UK — well below India's domestic withholding rates.
| Income Type | Treaty Rate | Domestic Rate (No Treaty) |
|---|---|---|
| Dividends | 10% (general); 15% for certain property-income-derived distributions | 20% |
| Interest | 10% if paid to a bank/financial institution; 15% in other cases | 20% |
| Royalties / Fees for Technical Services | 15% generally; 10% for equipment royalties | 20% |
Rates shown are treaty caps before applicable surcharge and cess under Indian domestic law. Actual withholding uses whichever of the treaty rate or domestic rate is more beneficial to the taxpayer.
Mandatory to access treaty rates. Without a valid TRC from HMRC, the Indian payer must apply domestic withholding rates instead — meaning up to double the tax on dividends and interest.
A self-declaration filed alongside the TRC confirming beneficial ownership and treaty eligibility details not captured on the TRC itself.
Relevant where the UK parent wants to confirm it isn't creating a taxable presence in India beyond the subsidiary itself.
It isn't treaty eligibility — it's paperwork timing. If the TRC isn't in place before a dividend or interest payment is processed, the Indian payer is required to withhold at the higher domestic rate by default, and reclaiming the difference afterward is a slower, separate process. Getting the TRC and Form 10F organized before your first repatriation, not after, is what actually protects the treaty rate.
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