If you live in the UK and earn income in India — rental income, dividends from Indian stocks, a pension from an Indian employer, or a capital gain from selling an Indian property — you potentially face tax in both countries. The India-UK Double Taxation Avoidance Agreement (DTAA), signed in 1993 and updated over subsequent protocols, exists specifically to prevent this double hit.
This guide explains which types of income the treaty covers, which country has the primary taxing right, and exactly how to claim the DTAA benefit when filing returns in both India and the UK.
What Is the India-UK DTAA?
A DTAA is a bilateral treaty that determines which country gets to tax a given type of income when a person has connections to both. Without a DTAA, you could legally be required to pay full tax on the same income in both countries. The India-UK treaty eliminates or reduces that overlap.
The treaty applies to individuals, companies, and other persons who are residents of India or the UK. It covers income tax — not GST, stamp duty, or other indirect taxes.
Key Income Types and Which Country Taxes Them
| Income Type | Primary Taxing Right | Other Country's Role |
|---|---|---|
| UK salary / employment income | UK (where work is performed) | India: not taxable for NRIs |
| Indian rental income | India (where property is located) | UK gives Foreign Tax Credit |
| Capital gains on Indian property | India (Article 13) | UK gives Foreign Tax Credit |
| Dividends from Indian companies | India withholds 10–15%; UK gives credit | Both may tax; credit mechanism applies |
| Interest on Indian bank accounts (NRO) | India (max 15% per treaty) | UK gives Foreign Tax Credit |
| Royalties / fees for technical services | India (max 15%) | UK gives Foreign Tax Credit |
| Capital gains on UK shares (UK co.) | Generally UK (country of residence) | India: typically not taxable |
| Indian pension / annuity | India (for government pensions); UK residence rules for private | Refer to Article 20 |
Capital Gains on Indian Property: A Close Look
This is the area that matters most to most British NRIs. Under Article 13 of the India-UK DTAA, gains from immovable property situated in India are taxable in India. This means:
- When you sell your Indian flat or land, India has the right to levy capital gains tax (20% LTCG or 30% STCG)
- You must also declare this gain on your UK Self Assessment in the Foreign Income section (SA106)
- HMRC will allow a Foreign Tax Credit for the Indian CGT already paid — so you only pay additional UK tax if the UK CGT rate on that gain exceeds what India charged
- In many cases, you pay nothing additional in the UK after the credit
Important: India also deducts TDS at 20–30% at source (via the buyer under Section 195). If you plan to sell Indian property, read our guide to the Section 197 lower TDS certificate — this can prevent excessive cash being withheld before your return is even filed.
How to Claim DTAA Benefit in India
To claim the India-UK DTAA benefit when filing your Indian ITR, you need:
- Tax Residency Certificate (TRC) — issued by HMRC, confirming that you are a UK tax resident. Request it via your Government Gateway account or by writing to HMRC.
- Form 10F — a self-declaration form filed on the Indian income tax portal (incometax.gov.in) that captures your name, PAN, country, TRC validity period, and treaty details. This is a legal requirement under Section 90 of the Income Tax Act.
- Submit both documents with your ITR filing.
Without the TRC and Form 10F, the DTAA benefit cannot be claimed and TDS may be deducted at higher domestic rates rather than the reduced treaty rates.
Reporting Indian Income on UK Self Assessment
If you are a UK tax resident, you must declare your worldwide income to HMRC — including Indian income. Here is how:
- Use SA100 (Self Assessment Tax Return) and attach the SA106 (Foreign Income) supplementary page
- Report Indian rental income, dividends, interest, and any capital gain from Indian property in the relevant sections
- Claim Foreign Tax Credit Relief for Indian taxes already paid — this prevents HMRC from taxing the same income again in full
- UK Self Assessment deadline: January 31 online, October 31 paper (for the previous tax year ending April 5)
Indian ITR deadline: July 31 (or October 31 for audit cases) for the April–March financial year. The two calendars do not align exactly, so coordinate carefully when claiming credits.
Interest on Indian NRO Accounts
Interest on your NRO savings account in India is taxable in India. The India-UK DTAA caps the Indian withholding tax on interest at 15% (Article 11) — lower than the standard 30% TDS rate for NRO interest. To claim this reduced rate, provide your TRC and Form 10F to your Indian bank. The bank will then apply 15% TDS instead of 30%.
Frequently Asked Questions
Do I pay tax in both India and the UK on my Indian rental income?
India taxes the rental income first (as the source country). The UK then requires you to declare it on Self Assessment but gives you a Foreign Tax Credit for the Indian tax paid. In most cases, you pay no additional UK tax if Indian tax rates are similar or higher than the UK rate on that income.
Is my UK salary taxable in India if I am an NRI?
No. As an NRI, only your Indian-sourced income is taxable in India. Your UK salary, earned and received in the UK, is not taxable in India. You only pay UK income tax on your UK earnings.
How do I get a Tax Residency Certificate (TRC) from HMRC?
Contact HMRC directly or request it through your Government Gateway account. You will need to specify the country (India) and the treaty year for which you are claiming benefits. HMRC typically issues the TRC within a few weeks.
Does the DTAA cover capital gains when I sell an Indian property?
Yes — Article 13 gives India the primary taxing right on gains from Indian immovable property. You pay Indian CGT, declare the gain in your UK Self Assessment, and claim a Foreign Tax Credit. You generally do not pay double capital gains tax on the same property sale.
Related reading: DTAA Benefits for NRIs — Full Overview | Cross-Border Tax Planning Guide | NRI Property Sale Tax Guide