Global investors often find themselves in an unfavorable position of having to face being double taxed – taxed by two different countries on the same income – unless there is a Double Tax Avoidance Agreement in place between the two countries. For example, a company might be subject to taxes in its native or tax resident country and also in another foreign country where it has raised income by providing labor or via a foreign-invested company that provides goods or services.

Double Tax Avoidance Agreements (DTAA) treaties effectively eliminate double taxation in specific cases by identifying exemptions or reducing the amount of taxes payable. It is, therefore important for foreign investors or expatriates working in India to be aware of any DTAAs that may exist between India and the their tax resident countries that apply to them and to understand how these agreements are applied in practice between their tax resident countries and India.