Navigating Taxes Abroad: A Useful Guide for Global Indians

It feels like just yesterday you were prepping for your TOEFL, GMAT, or GRE, bags packed with dreams, boarding flights to foreign shores. Now, you’re a professional living your best life in Boston, Berlin, Sydney, or Singapore. But with success abroad comes an old friend that keeps following you—taxation.

This post is for all of you Indians working overseas, managing your lives in two countries—your new home and your motherland. Let’s decode your tax liabilities in India and abroad and how Double Taxation Avoidance Agreements (DTAA) can protect your earnings.

Tax Liabilities in India for NRIs

If you’re a Non-Resident Indian (NRI):

• Only Indian-sourced income is taxed in India. This includes salary received in India, rental income, capital gains from Indian investments, and dividends.
• Foreign income is not taxed in India.
• Use ITR-2, not ITR-1. Link PAN with Aadhaar and verify bank details on the IT portal.
• Form 67 and a Tax Residency Certificate (TRC) are needed to claim foreign tax credits under DTAA.
• NRE/FCNR interest is exempt, but must still be reported.
• Dividend income from Indian companies is taxed at 20% (Section 115A). The Section 87A rebate does not apply to NRIs.

Tax Liabilities in Host Countries + DTAA Benefits

Here’s what you need to know about tax responsibilities in your host country and how treaties help:

How DTAA Saves You From Paying Twice

What is DTAA?

A Double Taxation Avoidance Agreement (DTAA) ensures you’re not taxed twice on the same income in two countries.

How it works:

• Tax Credit Method: You pay tax abroad, then claim credit in India by filing Form 67.
• Exemption Method: Less common. Income is taxed in only one country.

Required Documents:

• Tax Residency Certificate (TRC) from the host country
• Form 67 on India’s IT portal
• The host country returns as evidence

US-India Specifics:

• Claim foreign tax credit using Form 1116 or exclusion via Form 2555
• Form 8843 exempts F-1/J-1 students from the Substantial Presence Test for 5 years
• Form 8833 is used when claiming treaty benefits

New UK Tax Rules (2025 Onward)

• From April 2025, the UK is moving to a 4-year residence-based system, replacing the old 15-year non-domicile rule
• Remittance basis still available for now, but personal allowances may be lost

Your NRI Tax Flow (Simplified)

Earn Abroad → Pay Local Tax → File Host Country Return

                ↓

            Claim DTAA via TRC + Form 67

                ↓

         File Indian ITR-2 (India-sourced income only)

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Sameer

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