India and Japan have both a tax treaty (DTAA) and a social security agreement. The treaty caps Indian Withholding Tax at 10% on dividends, interest, royalties and fees for technical services paid to a Japanese parent, and relieves double tax on expats. The social security agreement lets a Japanese employee sent to India stay in the Japanese pension system for an initial five years and avoid Indian provident fund contributions, if the right certificate is in place.
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Key facts
| Tax treaty | Convention between India and Japan for the avoidance of double taxation; covers income taxes, not social security contributions |
|---|---|
| Treaty rate caps | 10% on dividends, interest, and royalties and fees for technical services (Articles 10, 11 and 12) |
| Indian law behind it | Section 159 of the Income-tax Act, 2025 (previously Sections 90 and 90A of the 1961 Act): treaty applies where more beneficial |
| Social security agreement | Agreement between Japan and India on Social Security, in force since 1 October 2016; covers pensions (Japan: National Pension and Employees' Pension Insurance; India: EPS and EPF) |
| Detached worker period | Initially five years, with extensions possible by agreement of both countries' institutions |
| Proof needed | Japanese certificate of residence (tax) and a Certificate of Coverage (social security) |
What this guide covers
| Question | Guide |
|---|---|
| How does the India-Japan tax treaty work? | India-Japan tax treaty (DTAA) explained |
| What Withholding Tax rate applies to payments to Japan? | Treaty withholding rates |
| What documents do we need to claim treaty rates? | Claiming treaty benefits: certificate of residence and Form 41 |
| Which country taxes our expat and how is double tax relieved? | Tax residency for Japanese expats in India |
| How does the Japan-India social security agreement work? | Japan-India Social Security Agreement |
| Does a Japanese expat have to contribute to Indian provident fund? | EPF for international workers |
| What happens to Japanese social insurance when someone is sent to India? | Japanese social insurance for expats in India |
| Where are the quick answers? | Treaty and social security FAQs |
Two instruments, two sets of conditions
The tax treaty and the social security agreement are separate. The tax treaty reduces income tax at source and relieves double taxation. The social security agreement covers pension contributions and benefits only. Neither replaces the other, and each has its own paperwork: a certificate of residence from the Japanese tax office for the treaty, and a Certificate of Coverage for the social security agreement.
A practical path for a Japanese company
- Payments to the parent. Obtain the Japanese certificate of residence and prepare Form 41 (previously Form 10F) before the first dividend, fee or royalty. See claiming treaty benefits.
- Rates. Confirm the 10% treaty rate and the category of each payment before remitting. See withholding rates.
- People. Decide who employs each expat. A secondment that keeps the employment relationship with the Japanese parent is what the detached worker rule is built for.
- Social security. Apply for the Certificate of Coverage before departure and give a copy to the Indian payroll. See the agreement.
- Permanent establishment. Review whether expats or local staff create a taxable presence for the parent. See treaty and PE risk.
Who this is for
- Japanese companies with an Indian subsidiary that pay dividends, service fees, royalties or interest back to Japan.
- HR and finance teams sending Japanese employees to India on assignment (haken or shukko).
- Japanese founders and managers relocating to India to run the subsidiary.
The guides in this series
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 →What this means for a Japanese parent
- Treat treaty paperwork and expat structuring as two workstreams with two owners. The first sits with finance, the second with HR and tax together.
- Ask your Japanese tax adviser (zeirishi) to confirm the Japanese side of every point here. Japanese tax and social insurance are outside AU Corporate's practice.
Mistakes to avoid
- Sending an expat without a Certificate of Coverage and then discovering Indian provident fund applies.
- Remitting to the parent before treaty documents are in place.
- Assuming the agreement covers health insurance.
- Moving the employee onto the Indian subsidiary's payroll and losing the detached worker position.
How AU Corporate handles this
We handle Withholding Tax and treaty claims on remittances, and we structure and run expat payroll, provident fund and tax filings in India.
Related services: Taxation and regulatory services · HR and payroll
Official sources
Rules on this page can be verified at the primary sources: the Income Tax Department, Japan's National Tax Agency, the Japan Pension Service and the Employees' Provident Fund Organisation.
Frequently asked questions
Does India have a tax treaty with Japan?
Yes. The India-Japan double taxation avoidance agreement (DTAA) covers income tax and caps Indian Withholding Tax at 10% on dividends, interest, royalties and fees for technical services.
Is there a social security agreement between India and Japan?
Yes. The Agreement between Japan and India on Social Security has been in force since 1 October 2016. It covers pension systems and allows detached workers to stay in their home system.
Does the tax treaty cover social security contributions?
No. The treaty covers income taxes. Social security contributions are handled by the separate social security agreement.
Can a Japanese expat avoid Indian provident fund?
Yes, if the person is a detached worker covered by the Japan-India agreement and holds a valid Certificate of Coverage. Without it, the Indian international worker rules can apply.
How long can a Japanese employee stay in the Japanese pension system while in India?
The initial detachment period is five years. Longer periods are possible if the institutions of both countries agree.
Does the agreement cover Japanese health insurance?
No. It covers pensions. Health insurance is outside the agreement, so confirm the position separately.
Which Indian section gives effect to tax treaties now?
Section 159 of the Income-tax Act, 2025 (previously Sections 90 and 90A of the 1961 Act). A treaty applies where it is more beneficial to the taxpayer.
Where should a Japanese company start?
With the payments to the parent: obtain the Japanese certificate of residence and Form 41 before the first remittance. Then plan expat employment and the Certificate of Coverage.
Do these rules change often?
Yes. Rates, forms and provident fund rules change, and the Income-tax Act, 2025 has renamed many sections and forms. Confirm current rules before acting.
Are there more answers on this topic?
Yes. See the dedicated treaty and social security FAQ page, which answers 50 questions.
Related guides
The India-Japan Tax Treaty and Permanent Establishment Risk for Japanese Companies
How the India-Japan tax treaty applies to payments to your Japanese parent: 10% Withholding Tax rates, residence certificate, Form 41 and permanent establishment risk.
Read the guide →Repatriating Profits to Japan: Dividends, Fees, Royalties, Loans and the Paperwork
How a Japanese parent receives money from its Indian subsidiary: dividends, service fees, royalties, loans. Forms 145 and 146, Withholding Tax and DTAA relief.
Read the guide →Sending a Japanese Executive to India: Visa, Housing, Banking and Tax
How to relocate a Japanese executive to India: employment visa, FRRO registration, housing, banking, tax residency and permanent establishment risk for the parent.
Read the guide →Japanese Parent Obligations When You Own an Indian Subsidiary
Japanese reporting that follows when you own an Indian subsidiary: CFC rules, dividend exemption, transfer pricing documentation, J-SOX and overseas reporting.
Read the guide →Sources
Last updated 20 October 2026. General information only, not legal or tax advice. Indian rules change often; confirm current requirements before acting.