The India-UAE Tax Treaty (DTAA): Withholding Rates and How Relief Works
The 1993 India-UAE Double Taxation Avoidance Agreement (DTAA) caps source-country withholding tax at 10% on dividends, 12.5% on interest and 10% on royalties, and lets a resident credit tax paid in one country against tax owed in the other. For groups operating across both jurisdictions, it is the single most important document in the structure.
What the treaty covers
The DTAA allocates taxing rights over dividends, interest, royalties, business profits and capital gains between India and the UAE, and provides a mechanism — the foreign tax credit — to eliminate the double taxation that would otherwise arise when the same income is taxable in both countries.
Residency is the gatekeeper
Treaty benefits depend on valid tax residency. Following amendments, an individual must be present in the UAE for at least 183 days in the relevant calendar year to be treated as a UAE resident for treaty purposes, and a Tax Residency Certificate is generally required to claim relief. Substance and beneficial-ownership tests increasingly determine whether the reduced rates actually apply.
Key figures
- Dividends: withholding capped at 10%; interest at 12.5%; royalties at 10% (India-UAE DTAA summary)
- Individual UAE residency for treaty purposes: at least 183 days in the calendar year
- Treaty in force since 1993; relief via foreign tax credit
Frequently asked questions
How does the India-UAE tax treaty reduce double taxation?
The 1993 India-UAE Double Taxation Avoidance Agreement caps source-country withholding at 10% on dividends, 12.5% on interest and 10% on royalties, and lets residents credit tax paid in one country against tax owed in the other.
What do I need to claim treaty benefits?
You generally need valid tax residency in the relevant country and a Tax Residency Certificate. For an individual to be UAE-resident for treaty purposes, presence of at least 183 days in the calendar year is required, alongside beneficial-ownership and substance considerations.
By Vijay Dhawan, Managing Partner, LexVerge LLP. Last updated 2 July 2026. This article is general information, not tax advice; confirm the current position for your facts before acting.
