The India-Australia Tax Treaty (DTAA): What Indian Professionals Need to Know

What a double taxation treaty actually does

India and Australia signed a Double Taxation Avoidance Agreement (DTAA) that entered into force on 30 December 1991, later updated by a protocol signed 16 December 2011 that came into effect 2 April 2013. The authenticated full text is published in the Australian Treaty Series as ATS 1991 No. 49 (AustLII, accessed 17 July 2026). The treaty exists to solve one specific problem: without it, a person or company with income touching both countries could, in theory, be taxed in full by both — once because the income arose there, and again because the recipient lives there. The DTAA doesn't abolish either country's right to tax; it allocates taxing rights between the two governments for different types of income, and it gives you a mechanism — a credit or an exemption — so the second country's tax bill only covers the gap, not the whole amount again.

For an Indian professional who has moved to Australia — on a skilled visa, as a permanent resident, or as a citizen — the treaty matters most in three moments: working out which country you're a tax resident of, working out what to do about income still arising in India (rent, bank interest, dividends, capital gains), and, for a narrower group of IT and technical-services professionals and the firms that employ them, a recent fix (legislated 2022, effective from 2023) to how cross-border technical service payments are taxed.

This is general orientation on how the treaty works — not a substitute for advice on your own return. Australian personal tax situations involving foreign income are the kind of work that usually ends up with a registered tax agent, and only practitioners on the Tax Practitioners Board's public register can lawfully charge a fee for tax agent services in Australia.

Income type at a glance: where it's taxed, how relief works

The pattern across almost every row is the same: India taxes income arising in India at source; Australia, if you're an Australian tax resident, taxes your worldwide income including that same Indian-source amount; the treaty and Australia's foreign income tax offset stop that from meaning tax twice on the full amount. It's not automatic — you have to include the foreign income in your Australian return and separately claim the offset for the foreign tax paid.

Step one: work out which country you're a tax resident of

Treaty relief only applies once you know which country's tax residency rules you're dealing with, and it's entirely possible to meet both countries' domestic tests for the same year — this is what the treaty calls dual residency, and it's resolved by a tie-breaker.

On the Australian side, the ATO applies several independent tests, and satisfying any one is enough to make you an Australian tax resident: the resides test (do you live here in the ordinary sense of the word), the domicile test (is Australia your permanent home base, unless the ATO accepts your permanent place of abode is genuinely elsewhere), and the 183-day test (were you physically present for more than half the income year, unless your usual home is abroad and you don't intend to take up residence). Meeting any one test is generally sufficient on its own.

On the India side, residency depends on Indian domestic law's own day-count and prior-residency rules, which sit outside the scope of this guide and are best checked directly with an Indian tax professional if you still have significant ties to India.

If both countries' domestic tests classify you as resident in the same year, the DTAA's residence article (Article 4) breaks the tie — and the India-Australia treaty uses a two-step test, not the longer four-rung cascade found in the OECD model and many other treaties. Step one: you're treated as a resident solely of the country in which a permanent home is available to you. Step two applies only if a permanent home is available in both countries or in neither — then you're treated as a resident solely of the country with which your personal and economic relations are closer, your centre of vital interests (family, main employment, principal bank accounts). Where your habitual abode is, and your nationality, are among the factors weighed in assessing that centre of vital interests; in this treaty they are not separate sequential rungs you fall through to in turn. If it still can't be resolved, the two countries' competent authorities settle it by mutual agreement. In practice, most people relocating to Australia for work with their household resolve this at step one or step two once the family and main income source have shifted here — but where it's genuinely unclear (a property, dependants, or business ties still anchored in India), that's a case for a tax professional on both sides, not a self-assessment.

Salary and short work trips: Article 15 and the 183-day rule

Article 15 of the treaty (dependent personal services) sets the default for employment income: salary, wages and similar remuneration are taxable only in the country where you're a resident, unless the employment is actually exercised in the other country — in which case that other country may tax the part earned there. The exception that matters for short trips is the 183-day rule. If you're an Australian tax resident who travels to India for work (or an Indian resident on a short assignment in Australia), the country you've travelled to generally can't tax that salary as long as all three of these hold: you're present there for no more than 183 days in the relevant year; your pay is met by, or on behalf of, an employer who is not a resident of that country; and the cost isn't borne by a permanent establishment your employer has there. Meet all three and the salary stays taxable only in your home country — the common outcome for short secondments and project trips that would otherwise hand a second country a tax claim on the same pay (Article 15(1)-(2), AustLII ATS 1991 No. 49).

How Australia's foreign income tax offset (FITO) works

If you're an Australian tax resident, you must declare your Indian-source income — rent, interest, dividends, capital gains, salary still paid from India — on your Australian tax return, even though tax has already been paid on it in India. The foreign income tax offset then reduces your Australian tax payable by the amount of foreign tax you actually paid on that same income, so you're not paying full Australian tax on top of what India already collected.

Two mechanics matter:

• Small claims: if your total foreign income tax for the year across all countries and income types is $1,000 or less, you can simply claim that amount as your offset — no further calculation, no need to work out a limit.
• Above $1,000: you need to work out your FITO limit, broadly the difference between the Australian tax payable on your actual income and what you'd have paid if the foreign income and related deductions were left out. The offset is capped at that limit — it can reduce your Australian tax on that income to zero, but it isn't designed to hand back more than Australia would otherwise have charged on it.

The offset is non-refundable: any unused amount first reduces the Medicare levy, then the Medicare levy surcharge, but it doesn't generate a cash refund beyond what you owe. Convert all foreign income and foreign tax paid into Australian dollars, and you can only claim the offset once the foreign tax has actually been paid — if you pay Indian tax in a later year on income already returned in Australia, claim the offset by amending that earlier year's assessment.

For rental income specifically, ordinary running costs on an Indian investment property (rates-equivalent charges, management fees, non-capital repairs) are deductible against the rental income as they would be for an Australian property, but loan interest and borrowing costs generally aren't deductible unless connected to income earned through a permanent establishment overseas — worth raising with your tax agent if you're negatively geared on an Indian property.

TRC and Form 10F: claiming treaty benefit on the Indian side

When you're an Australian tax resident with income still arising in India — rent, interest, dividends — Indian payers (tenants, banks) are required to withhold tax at source under Indian law. To access the treaty's lower withholding rates or other treaty benefits rather than India's higher standard domestic rates, Indian tax law requires two things from the non-resident recipient:

• A Tax Residency Certificate (TRC) issued by the tax authority of your country of residence — for someone who has become an Australian tax resident, this means a Certificate of Residency from the ATO (form NAT 75441), which the ATO says it aims to issue within 50 days of a complete request, longer in peak periods, and only where your Australian tax lodgments are up to date and each covered return states you were an Australian resident for tax purposes for that period.
• Form 10F, a self-declaration filed with the Indian tax authorities confirming details — status, nationality, tax identification number, period of residency, address — that fills any gaps not already covered by the TRC itself. Form 10F has been required to be filed electronically through the Indian income tax portal since July 2022.

A TRC only covers the period stated on it — in practice, that means requesting a fresh certificate for each financial year in which you're drawing treaty-relevant income from India, so this isn't a one-off task. Skipping it doesn't forfeit your underlying treaty rights, but it typically means Indian payers withhold at the higher domestic rate, leaving you to claim any excess back only when you file an Indian return — slower and more paperwork-heavy than getting the TRC and Form 10F in place upfront.

The ECTA fix for cross-border technical services (effective 2023)

This is the newest change covered here — often loosely called the "2024 update" — and it's worth dating precisely, because it resolves a long-contested area of the treaty.

The background: Article 12 of the DTAA defines "royalties" broadly enough to include payments for services (including personnel) that "make available technical knowledge, experience, skill, know-how or processes," or that involve developing and transferring a technical plan or design — Article 12(3)(g). Article 12 does not tax royalties at a single flat rate: withholding is capped at 10% for royalties paid for the use of industrial, commercial or scientific equipment (Article 12(2)(a)) and at 15% for other royalties, including the technical-services category at 12(3)(g) — a higher 20% tier existed only in the treaty's early years (roughly 1991-96). The dispute here, though, was about whether Australia could tax the payment at all, not about the rate. Combined with Article 23 (the treaty's source rule), Australian courts read this as capturing payments Indian IT firms received for work carried out remotely from India for Australian clients — even where no Australian permanent establishment was involved. This was tested and confirmed against an Indian IT firm (then Satyam Computer Services, later amalgamated into Tech Mahindra) in the Full Federal Court in 2016 (Tech Mahindra Limited v Commissioner of Taxation [2016] FCAFC 130) and again on a related point in 2018 (Satyam Computer Services Ltd v Commissioner of Taxation [2018] FCAFC 172); the High Court refused special leave to appeal after each round (2017 and 2019). The practical effect was that Indian IT firms' Australia-related revenue could be taxed by Australia as a deemed-source royalty even for work never physically performed in Australia — on top of whatever India taxed on the same income.

The fix: the Australia-India Economic Cooperation and Trade Agreement (AI-ECTA), signed 2 April 2022, committed to unwind this. That commitment was implemented not by creating a brand-new provision but by amending an existing one. Section 11J of the International Tax Agreements Act 1953 is the pre-existing section that gives the India-Australia treaty the force of law in Australia; the Treasury Laws Amendment (Australia-India ECTA Implementation) Act 2022 (No. 60, 2022) inserted the technical-services exclusion into that framework, taking a payment out of Australian tax where three conditions are all met: the payment is for services covered specifically by Article 12(3)(g); it does not separately qualify as a royalty under Australia's own domestic law (the Income Tax Assessment Act 1936); and it would otherwise only be taxable in Australia because of the combined effect of Articles 12(3)(g) and 23. Where a payment independently meets Australia's domestic royalty definition, the exclusion doesn't apply and Australian tax still bites. The change took effect for income years starting on or after 29 December 2022 — in practice, from 1 April 2023 for Indian companies with a 31 March year-end.

This matters most directly for Indian IT and technical-services companies (and their Australia-facing engineers and consultants) with revenue models built on remote delivery from India to Australian clients. It doesn't change how ordinary salary, rental, interest or dividend income is taxed for an individual who has migrated — those follow the general rules above.

Where the treaty stops and a tax agent starts

Everything above is the shape of the system, not a calculation for your specific return. The treaty interacts with whichever year's Indian and Australian domestic tax rules are in force, your visa and residency history for the year in question, and — for anyone still holding Indian assets, a business, or dual income streams — facts that change the tie-breaker or offset outcome in ways a general guide can't anticipate. For someone with Indian-source income while living in Australia, the practical checklist usually runs: confirm the Australian residency position, request an ATO Certificate of Residency where treaty rates are being claimed in India, keep Form 10F current, and bring both countries' tax documents to a registered tax agent (check the Tax Practitioners Board's public register) who handles cross-border returns — ideally across a full income year rather than only at tax time.

For the accounts side of settling in — NRE/NRO accounts, remitting money to Australia — see our related guides linked below; they cover the banking mechanics that sit alongside, but separately from, the tax questions in this guide.