DTAA Between India and Belgium

As an NRI, you might have multiple income sources in India, like rent, interest, capital gains, etc. It is normal to stress about being taxed twice on the same income. However, to address the issue of double taxation, the DTAA between India and Belgium was designed. This treaty prevents the same income from being taxed in both countries. It also specifies which country can tax which income and at what rate.

It covers various types of income like salary income, dividends, interest, rental income, etc. You can claim the DTAA stage during the TDS or when filing your ITR. However, do you know the rates at which the India-Belgium DTAA rates are capped? Keep reading further to know more about the DTAA between India and Belgium.

What is the DTAA Between India and Belgium?

The DTAA agreement between India and Belgium was signed in 1993, which ensures that individuals are not taxed twice on the same income. It covers various types of income like capital gains, dividends, royalties, and interest. It specifies which country can tax which income and at what rate. The DTAA agreement helps NRIs, investors, and companies by providing clear guidelines regarding the taxing rights and avoiding fiscal evasion. 

Benefits of the India-Belgium DTAA for NRIs

The DTAA offers various benefits to NRIs, some of which are as follows:

Relief from Double Taxation

It ensures that you don't pay tax on the same income twice. The relief is provided through two methods, which are the exemption method and the credit method. The exemption method is when the income is taxed in only one country, and the credit method is when the taxes paid in one country are credited against the liability in the other.

Foreign Tax Credit Benefits

Subject to Belgian tax laws and treaty provisions, you may be able to claim relief for taxes paid in India on eligible income.

Lower TDS on Indian Income

Under the India-Belgium DTAA, a certain type of income attracts a lower capped rate. Indian banks may deduct TDS at standard NRI rates without DTAA. It can be up to 30% on interest income.

Who Can Claim the DTAA Benefits?

To claim DTAA benefits, you must be a tax resident of Belgium and earn income covered under the India-Belgium DTAA. To avail treaty benefits, you may also need supporting documents such as a Tax Residency Certificate (TRC), Form 10F, and PAN, where applicable.

What is the Income Covered Under the India-Belgium DTAA? 

The DTAA treaty applies to a wide range of income charged by both countries, including:

• Dividends: Dividend income received from India or Belgium may be covered under the DTAA.
• Interest Income: Interest earned from deposits, loans, or other financial instruments may qualify for treaty benefits.
• Salary Income: The DTAA contains rules to determine which country has the right to tax employment income.
• Royalties and Fees for Technical Services (FTS): Royalties and technical service income are covered under specific provisions of the treaty.

What are the India-Belgium DTAA Rates?

The table below lists the TDS rates for both the Indian domestic TDS rate and the India-Belgium DTAA rates based on the type of income:

Before filing, make sure to verify the latest applicable rates always with a qualified CA, as the treaty rates are subject to amendment.

How are Capital Gains Taxed Under the DTAA?

Capital gains arising from the sale of immovable property situated in India are generally taxable in India under the DTAA. The treaty does not exempt this income, hence:

• Property held for 24 months or less is treated as short-term capital gain: taxed at applicable slab rates. 
• Property held for over 24 months is treated as long-term gains: taxed at 20% with indexation. 

Moreover, the shares and mutual fund capital gains from listed Indian shares and equity mutual funds are also taxable in India. It will be taxed as:

• Short-term gains (held for 12 months or less): 20%
• Long-term gains (held over 12 months): 12.5% above for amounts exceeding ₹1.25 lakh

Relief from double taxation may be available under the DTAA and applicable Belgian tax provisions for taxes paid in India. To claim the DTAA treaty, you must submit two key documents. Let's see what these documents are.

What are the Documents Required to Claim the DTAA Benefits?

An NRI must submit the following documents to the payer in India to avail the DTAA benefits:

• Tax Residency Certificate: It is one of the key documents required to claim DTAA. Without a TRC, TDS is deducted at the full domestic rate. Hence, you must submit it to your Indian bank or payer before the income is credited.
• Form 10F: This is another critical document that is filed online on the Indian income tax portal. Submit Form 10F when certain information is missing from your TRC, including PAN, address, period of residence, etc.

PAN and other documents: Apart from these documents, you may need: 

• Valid Indian PAN card
• Property sale documents to claim capital gains
• Form 16A TDS certificate from the Indian payer
• Bank statement reflecting income and deducted TDS
• Mutual fund or broker statements for securities gains

A TRC and Form 10F are the two critical documents required to claim DTAA, but not the only ones. You may need other documents as well, like a valid Indian PAN card. Once you have the documents, it's time to claim the benefits.

How Can NRIs Claim DTAA Benefits While Filing ITR?

Here are the steps to follow to claim DTAA benefits while filing the ITR:

• Step 1: Get a TRC and Form 10F: Get your TRC for the relevant Indian financial year and file Form 10F online through the income tax portal. You can file Form 10F before or at the time of filing your ITR.
• Step 2: Provide Documents to the Indian Payer: Submit TRC and Form 10F to your Indian bank, tenant, or fund house to ensure the TDS is deducted at the lower treaty rate.
• Step 3: File your Indian ITR and Claim the DTAA Exemption: Select the relevant NRI ITR form, typically ITR-2. Declare all Indian income and claim the exemption under DTAA or reduced rate in the relevant schedule.
• Step 4: Claim Foreign Tax Credit: Claim credit for the Indian tax paid by including Indian income in your Belgian tax return. For proof, attach the TDS certificates and ITR acknowledgment.

Follow these steps to claim the DTAA benefits. Moving further, let's check the common mistakes that people make while claiming DTAA and ways to avoid them.

What are the Common DTAA Mistakes that NRIs Should Avoid?

One of the common mistakes that NRIs make is not submitting the TRC to the Indian payer. Here is a list of some other mistakes that NRIs make while claiming DTAA:

The Bottom Line

If used correctly, the India-Belgium DTAA can significantly reduce your tax burden. It avoids double taxation, reduces TDS on key income types, and provides you with a clear framework for managing Indian income from Belgium. However, you don't get the benefits automatically. You need to submit the required documents, file an accurate ITR, and even claim FTC in Belgium.

Moreover, for complex situations like multiple income sources, consider seeking an expert at Savetaxs. At Savetaxs, we have a team of experts who can help you with understanding the benefits you can claim. Our team can help you file the ITR accurately and on time, and also prepare the required documents. Connect with us right away as we are actively working 24/7 across all time zones.