India UK DTAA for Companies in 2026 with Rates and Article Guide

Written by CA Nandini, Krystal7 Consultants. Last updated 2 October 2026.

The India UK DTAA caps Indian tax on dividends paid to a UK company at 10 percent under Article 11. Interest is capped at 15 percent, or 10 percent for a bank, under Article 12. Royalties and fees for technical services are capped at 15 percent under Article 13. A service fee counts only if it makes technical knowledge available. Article 14 leaves capital gains to Indian law. Each claim needs an HMRC certificate of residence and Form 41 under section 159(8) of the Income Tax Act, 2025.

This page covers the treaty rates, technical fees, permanent establishment, capital gains, the MLI changes, documents and the Indian return. It ends with a worked example for a UK parent's Indian subsidiary, common mistakes, a checklist and 16 FAQs. Rupee amounts use Indian grouping: INR 1,00,00,000 is one crore.

What does the India UK DTAA cover?

The India UK Double Taxation Avoidance Agreement (DTAA) is the income tax convention signed in New Delhi on 25 Jan 1993. It entered into force on 26 Oct 1993, and India notified it by GSR 91(E) of 11 Feb 1994. It decides which country may tax a UK company's Indian income. It also caps India's rate on dividends, interest, royalties and technical fees.

The UK treaty numbers its articles differently from most of India's treaties. Dividends sit in Article 11, interest in Article 12, royalties and technical fees in Article 13 and capital gains in Article 14. Article 10 deals with associated enterprises. A Form 146 or board note that cites "Article 10" for a UK dividend cites the wrong article.

Article 2 covers Indian income tax "including any surcharge thereon". On the UK side it covers income tax, corporation tax, capital gains tax and petroleum revenue tax. One protocol and the Multilateral Instrument (MLI) have amended the convention since 1993.

Instrument	Dates	What it did
Convention, GSR 91(E)	Signed 25 Jan 1993 in New Delhi; in force 26 Oct 1993; notified 11 Feb 1994	Original treaty; in India it has effect for income of fiscal years from 1 Apr 1994 (Article 30)
Protocol, S.O. 372(E) of 10 Feb 2014	Signed 30 Oct 2012 in London; in force 27 Dec 2013	New Article 11 (10% dividend cap); new residence wording in Article 4(1); Article 25 on partnerships deleted; new Articles 28, 28A, 28B and 28C
MLI	Signed 7 Jun 2017; in force for the UK 1 Oct 2018 and India 1 Oct 2019	New preamble, principal purpose test, dual resident entity rule, anti fragmentation PE rule, three year MAP window; effective for Indian withholding from 1 Apr 2020
India UK CETA and Double Contribution Convention	CETA signed 24 Jul 2025; DCC signed 10 Feb 2026; both in force from 15 Jul 2026	Trade and social security agreements; they do not amend the tax treaty

Sources: India UK DTAA on incometaxindia.gov.in; 2013 Protocol and the synthesised text on gov.uk; PIB releases of 17 Jun 2026 and 15 Jul 2026.

The protocol has effect in India for fiscal years beginning on or after 27 Dec 2013, so from 1 Apr 2014. In the UK it has effect for corporation tax from the financial year beginning 1 Apr 2014.

From 1 Apr 2026, section 159 of the Income Tax Act, 2025 gives effect to the treaty. It replaced section 90 of the 1961 Act. Under section 159(4), the Act applies only where it is more beneficial to the taxpayer. Section 159(6) still applies the General Anti Avoidance Rule (GAAR) in Chapter XI.

Article 23(3) lets India tax income arising in India that no other article deals with. So a payment outside the named articles keeps the domestic rate. We test unusual payments, such as a guarantee commission, against Article 23 before assuming a cap.

If the Indian company is not yet set up, start with our guide for a UK company setting up a subsidiary in India.

What withholding rates apply under the India UK DTAA?

India may tax dividends paid to a UK resident beneficial owner at up to 10 percent. The cap is 15 percent where a property investment vehicle pays them. Interest is capped at 15 percent, or 10 percent for a bank. Royalties and technical fees are capped at 15 percent, and equipment rentals at 10 percent. Each cap needs the UK company to be the beneficial owner.

Income from India	UK treaty article	Treaty cap	Condition	Domestic rate for a foreign company, tax year 2026-27 (before surcharge and cess)
Dividends	11(2)(b)	10%	Beneficial owner resident in the UK; any size of holding	20%, section 207(1)
Dividends paid out of property income by an investment vehicle	11(2)(a)	15%	Vehicle distributes most of that income yearly and its property income is exempt	20%, section 207(1)
Interest from most lenders, such as a parent	12(2)	15%	Beneficial owner	20% on foreign currency loans; 35% on rupee loans
Interest to a bank carrying on a bona fide banking business	12(3)(a)	10%	Bank is resident in the UK and the beneficial owner	20% on foreign currency loans; 35% on rupee loans
Interest to the Government, a local authority or the Reserve Bank of India	12(3)(b)	Exempt	Paid to the listed body	Not applicable
Royalties for copyright, patents, trade marks, designs, formulas or know how	13(2)(a), 13(3)(a)	15%	Beneficial owner	20%, section 207(2)
Royalties for the use of industrial, commercial or scientific equipment	13(2)(b), 13(3)(b)	10%	Beneficial owner; ship and aircraft income excluded	20%, section 207(2)
Fees for technical services under 13(4)(a) or 13(4)(c)	13(2)(a)	15%	Ancillary to a 3(a) royalty, or makes technology available	20%, section 207(2)
Fees for technical services under 13(4)(b)	13(2)(b)	10%	Ancillary to an equipment rental under 3(b)	20%, section 207(2)
Other service fees, including purely managerial fees	7	Nil without a PE	No permanent establishment in India	Depends on section 9
Capital gains on shares of an Indian company	14	No cap	Indian domestic law applies	12.5% long term, 35% short term (unlisted)
Income not dealt with elsewhere	23(3)	No cap	Arises in India	Rate in force

Sources: India UK DTAA as amended by the 2013 Protocol; sections 197 and 207 of the Income Tax Act, 2025; Finance Act, 2026, First Schedule.

The Indian payer deducts under section 393(2), Table serial 17, at the "rates in force". That is the Finance Act rate or the treaty rate, as applicable. A payer holding the treaty documents deducts at the lower treaty rate. Our guide to TDS on payments to non residents covers the mechanics.

Why the royalty rate shows as 20 percent on some sites

Article 13(2)(a) set two rates for royalties and technical fees. During the first five years for which the convention had effect, the cap was 20 percent, or 15 percent where a government paid. After those five years the cap is 15 percent for every payer. In India the convention had effect from the fiscal year beginning 1 Apr 1994. So the five years ended on 31 Mar 1999, and 15 percent has applied since 1 Apr 1999.

Older summaries still print "15 or 20 percent". For any payment in tax year 2026-27, the cap is 15 percent, or 10 percent in the Article 13(2)(b) cases.

Domestic rate against treaty rate

Domestic rates carry surcharge and 4 percent Health and Education Cess. A foreign company's surcharge is 2 percent above INR 1,00,00,000 of income paid or likely to be paid in the year. It is 5 percent above INR 10,00,00,000. Add up dividends, interest, royalties and fees to one payee before you pick the slab.

Payment to a UK company	Domestic base rate	Effective rate in the 2% surcharge slab	Treaty rate we apply
Dividend	20%	21.216%	10%
Interest on a foreign currency loan from the parent	20%	21.216%	15%
Interest on a rupee loan from the parent	35%	37.128%	15%
Royalty for a trade mark or software licence	20%	21.216%	15%
Fee for technical services that makes technology available	20%	21.216%	15%
Equipment rental	20%	21.216%	10%
Long term gain on unlisted shares	12.5%	13.26%	No treaty cap

We apply the treaty rate flat, without surcharge or cess. Article 2 names Indian income tax "including any surcharge thereon" as a covered tax. Tribunal rulings treat cess the same way, but no CBDT circular settles the point. So Form 146 should state the article and the flat rate.

Rupee interest shows the widest gap: 35 percent at home against a 15 percent treaty cap. The 5 percent rate in serial 2 of section 393(2) covers only foreign currency borrowings from 1 Jul 2012 to 30 Jun 2023.

Each cap has a permanent establishment carve out. Articles 11(4), 12(6) and 13(6) remove the cap where the income is effectively connected with an Indian PE. The income is then business profit under Article 7. Our dividend guide covers the company law side of paying a UK parent.

Special relationship and excess payments

Article 12(8) and Article 13(8) limit the cap to an arm's length amount. Where a special relationship inflates interest, royalties or fees, the excess keeps the domestic rate. That links the treaty to Indian transfer pricing. Our guide to transfer pricing between a UK parent and an Indian subsidiary covers the benchmarking.

Does the India UK treaty have a make available clause for technical services?

Yes. Article 13(4)(c) needs the service to make available technical knowledge, experience, skill, know how or processes. Developing and transferring a technical plan or design also qualifies. Services ancillary to a royalty or an equipment rental are covered by 13(4)(a) and 13(4)(b).

Article 13(4) opens with "payments of any kind to any person in consideration for the rendering of any technical or consultancy services". The words include "the provision of services of technical or other personnel". The word "managerial" does not appear.

Indian domestic law is wider. Section 9(7) of the Income Tax Act, 2025 covers "managerial, technical or consultancy services". Section 159(4) lets the UK company use the narrower treaty test. On our reading, a purely managerial fee falls outside Article 13 and is business profit under Article 7.

Type of fee	Article 13(4) limb	Treaty cap	What decides it
Support ancillary to a licence of software, a trade mark or know how	13(4)(a)	15%	Link to a royalty within 13(3)(a)
Support ancillary to the rental of equipment	13(4)(b)	10%	Link to an equipment payment within 13(3)(b)
Training or consultancy that leaves Indian staff able to apply the technology alone	13(4)(c)	15%	Knowledge made available
Development and handover of a technical plan or technical design	13(4)(c)	15%	A transferred deliverable
Management, strategy or routine support with nothing transferred	None	Nil without a PE, Article 7	No technology made available

Article 13(5) takes five kinds of payment out of the definition:

1. Sales support. Services ancillary to a sale of property, other than a sale of property covered by 13(3)(a).
2. Ship, aircraft and container rental. Services ancillary to renting ships, aircraft, containers or other equipment used in international traffic.
3. Teaching. Teaching in or by educational institutions.
4. Personal use. Services for the private use of the individuals who pay for them.
5. Employees and professionals. Payments to employees, or to an individual or firm for professional services under Article 15.

Service from a UK parent to its Indian company	Article 13 result, on our reading	Indian tax without a PE	What we keep on file
Group finance, HR and legal advice calls	Usually not a fee for technical services	Nil under Article 7	Service logs; staff days in India
Board level strategy and management oversight	Not a fee for technical services, as "managerial" is absent	Nil	Board papers; scope of services
Group IT helpdesk run from the UK	Usually not a fee for technical services	Nil	Tickets and service levels
Training that lets Indian engineers run a system alone	Fee for technical services, 13(4)(c)	15%	Training plan and sign off
Design and handover of a technical plan	Fee for technical services, 13(4)(c)	15%	The deliverable
Support bundled with a software licence	Fee for technical services, 13(4)(a)	15%	Licence and support agreement

We ask the parent's team one question. What can the Indian staff do alone after the service that they could not do before? That answer usually decides the rate.

A fee outside Article 13 still goes on Form 145. Section 9(7) charges it under the Act, so we obtain Form 146 and file Part C showing nil tax under Article 7. Rule 220 keeps Part D for sums not chargeable under the Act. We keep a written treaty analysis on file. Our Form 15CA and 15CB guide explains the parts, now in Forms 145 and 146.

The test has a second effect. Article 5(2)(k), the service PE rule, covers "the furnishing of services including managerial services, other than those taxable under Article 13". So a fee for technical services cannot create a service PE. A management fee that falls outside Article 13 can.

Software and royalties

Article 13(3)(a) covers payments for using a copyright, patent, trade mark, design, secret formula or process. It also covers information about industrial, commercial or scientific experience. The Supreme Court decided Engineering Analysis Centre of Excellence Private Limited on 2 Mar 2021. It held that end user software licences are not royalty under India's treaties. Section 9(6) of the Income Tax Act, 2025 still counts software as royalty at home. So the certificate of residence and Form 41 decide the result for a UK software vendor.

When does a UK company have a PE in India?

A UK company has a permanent establishment (PE) in India if it has a fixed place of business here. A building or installation project lasting more than six months also counts. Staff furnishing services, other than those taxable under Article 13, create a PE after 90 days within any twelve month period. For services to an associated enterprise, such as its Indian subsidiary, the limit is 30 days.

PE trigger	Article	Threshold	Typical risk for a UK parent
Fixed place of business: place of management, branch, office, factory, workshop, sales outlet, warehouse	5(1), 5(2)(a) to (g)	No day count in the text	Parent staff using a room in the Indian office as their own
Building site, construction, installation or assembly project, or supervising one	5(2)(j)	More than six months	Plant set up or a build supervised in India
Supervision incidental to a sale of machinery or equipment	5(2)(j)	Six months or less, where the charges exceed 10% of the sale price	Installation of imported equipment
Service PE through employees or other personnel	5(2)(k)(i)	More than 90 days within any twelve month period	Consultants on site for an Indian customer
Service PE for an associated enterprise	5(2)(k)(ii)	More than 30 days within any twelve month period	Parent staff working in India for the Indian subsidiary
Services or plant for mineral oil work	Proviso to 5(2)(k)	No day count	Oilfield services in India
Dependent agent	5(4)	Habitually negotiates and concludes contracts, keeps and delivers stock, or habitually secures orders wholly or almost wholly for the group	Indian staff negotiating and closing deals for the parent
Agent working wholly or almost wholly for the group	5(5)	Not an agent of independent status	Indian distributor tied to the group
Preparatory or auxiliary place	5(3), as modified by MLI Article 13(4)	Not a PE, unless the group splits one business across places	Purchasing or information work only
Subsidiary	5(6)	Control alone does not make it a PE	Holds while the subsidiary acts for itself

Source: India UK DTAA, Article 5, read with the synthesised text.

The UK treaty counts service days "within any twelve month period". It does not use the fiscal year. So the window rolls across tax years. Days in February and March 2027 count with days in April and May 2027.

"Associated enterprise" in Article 5(2)(k)(ii) points to Article 10(1). That covers an enterprise that participates directly or indirectly in the management, control or capital of the other. A UK parent and its Indian subsidiary fall inside it.

The 30 day rule is the PE rule we see missed most often. A finance controller visiting for a week each quarter, plus a two week project, crosses it within twelve months. If that work is not a fee for technical services, the parent may have a service PE.

A PE changes the regime. Article 7 attributes profit to the PE as if it were a separate enterprise dealing independently. Article 7 also lets India deduct expenses for the PE, subject to the limits in Indian law. India taxes the profit at the foreign company rate of 35 percent, plus surcharge and cess, through a return. Royalties and fees connected with the PE move to section 59 of the 2025 Act (old section 44DA), with an audit report in Form 24.

Residence is a related risk. Section 6(10) of the Income Tax Act, 2025 makes a company resident in India if its place of effective management is in India. The UK treaty no longer breaks that tie by itself, as the MLI section below explains. Our guide on how to avoid permanent establishment risk covers the controls.

How are capital gains on Indian shares taxed for a UK company?

Article 14 lets each country tax capital gains under its own domestic law, apart from ship and aircraft gains. So India taxes a UK company's gain on Indian shares at the full Indian rate, whenever the shares were bought. The UK treaty has no grandfathering for shares bought before 1 Apr 2017 and no holding based exemption.

The whole of Article 14 reads: "Except as provided in Article 8 (Air Transport) and 9 (Shipping) of this Convention, each Contracting State may tax capital gains in accordance with the provisions of its domestic law." That leaves India's rules in place.

Asset sold by a UK company	Who may tax under Article 14	Indian rate (before surcharge and cess)	Notes
Unlisted shares of an Indian company, held more than 24 months	India and the UK	12.5% long term, section 197	No foreign currency method for a foreign company on unlisted securities, section 197(4)
Unlisted shares held 24 months or less	India and the UK	35% short term	Taxed as a foreign company's income
Listed equity shares	India and the UK	Domestic listed share rates	Check the rate in force on the date of transfer
Shares of a foreign company deriving value substantially from Indian assets	India and the UK	Domestic rates	Section 9(10): Indian assets above INR 10 crore and at least 50% of all assets
Buy back of shares by the Indian company, from 1 Apr 2026	India and the UK	Capital gain; extra tax for promoters under section 69	Finance Act, 2026
Ships and aircraft in international traffic	Under Articles 8 and 9	Not covered here	Rare for a holding company

Sources: India UK DTAA, Article 14; sections 9, 69 and 197 of the Income Tax Act, 2025.

Where both countries tax the same gain, Article 24 gives relief in the country of residence. Article 24(1) makes the UK credit Indian tax against UK tax on the same income, under UK law. Whether a UK parent pays any UK tax on the gain is a UK question for its own adviser.

The buy back rule matters for UK parents. The Finance Act, 2026 taxes buy back consideration as a capital gain from 1 Apr 2026, not as a deemed dividend. Section 69 adds tax for promoters, and the Budget FAQ puts the total for a promoter that is not a domestic company at 30 percent. A holder above 10 percent of an unlisted company counts as a promoter. Under the UK treaty, Article 14 then leaves the whole charge to Indian law.

A resident buyer withholds under section 393(2), serial 17, on the sum chargeable. The buyer may want a lower deduction certificate in Form 128 before paying. Under FEMA, the sale is reported in Form FC-TRS within 60 days of the transfer or the receipt of funds, whichever is earlier.

GAAR has one carve out here. Rule 128(2) of the Income Tax Rules, 2026, as substituted by Notification No. 55/2026, keeps GAAR away from income on the transfer of investments made before 1 Apr 2017. Rule 128(1)(d) carries the same carve out. For a UK seller that removes one review, but the gain is still taxed in India under Article 14.

How did the MLI change the India UK treaty?

The MLI added a preamble against treaty shopping and a principal purpose test (PPT) to the India UK treaty. The PPT replaced Article 28C and the main purpose clauses in Articles 11, 12 and 13. The MLI also changed the residence tie breaker for companies and tightened the auxiliary activity PE exemption. It set a three year limit for mutual agreement cases.

The PPT text in the synthesised text denies a benefit where "obtaining that benefit was one of the principal purposes of any arrangement or transaction". The officer must find this "reasonable to conclude, having regard to all relevant facts and circumstances". The benefit stays if granting it fits the object and purpose of the treaty provision.

MLI provision	In the India UK synthesised text?	Effect on the treaty
Article 6, preamble	Yes	Treaty reads against non taxation and treaty shopping
Article 7(1), principal purpose test	Yes	Replaces Article 28C; supersedes Articles 11(6), 12(11) and 13(9)
Article 4(1), dual resident entities	Yes	Replaces the place of effective management tie breaker in Article 4(3) with a mutual agreement rule
Article 11(1), saving clause	Yes	Each country keeps the right to tax its own residents
Article 13(4), anti fragmentation	Yes	Auxiliary exemptions in Article 5(3) fail where closely related enterprises split one business
Article 15, closely related person	Yes	Defines the group link used by Article 13(4)
Article 16, mutual agreement procedure	Yes	Case must be presented within three years of the first notification of the action
Article 12, commissionnaire arrangements	No	Article 5(4) agent wording stays as signed in 1993
Article 14, splitting up of contracts	No	Six month project test in Article 5(2)(j) stays
Article 17, corresponding adjustments	No	Article 10(2) of the treaty already provides one

Sources: synthesised text of the MLI and the India UK convention on gov.uk (published 12 Oct 2022) and on incometaxindia.gov.in.

For India, the MLI applies to tax withheld at source on amounts paid or credited from 1 Apr 2020. It applies to other Indian taxes for taxable periods beginning on or after 1 Apr 2020. For the UK, withholding taxes follow from 1 Jan 2020, and corporation tax from 1 Apr 2020.

What Article 28C used to say

The 2013 Protocol added Article 28C, headed limitation of benefits. It looked at the creation of the resident and at the transaction. It denied benefits where "the main purpose or one of the main purposes" was to obtain them. The MLI test now does that job. It looks at "any arrangement or transaction" and allows the object and purpose defence. Articles 11(6), 12(11) and 13(9) had similar clauses, which the PPT now supersedes.

The new residence tie breaker

Before the MLI, Article 4(3) sent a dual resident company to the country of its place of effective management. MLI Article 4(1) replaces that rule. The competent authorities "shall endeavour to determine by mutual agreement" where the company is resident. They have regard to its place of effective management, its place of incorporation and other factors. Without agreement, the company gets no treaty relief or exemption except as the authorities agree.

This is a sharp risk for a UK company run from India. If India treats it as resident under section 6(10), it may lose treaty relief until the two authorities agree. Board meetings and key decisions belong in the UK.

How Indian officers apply the PPT

CBDT Circular No. 01/2025 of 21 Jan 2025 guides officers on the PPT. It asks for "an objective assessment of the relevant facts and circumstances", case by case. It names grandfathering in only three treaties: Cyprus, Mauritius and Singapore. The UK treaty has no such clause, so the PPT reaches every UK benefit claimed from 1 Apr 2020. Section 536 of the Income Tax Act, 2025 keeps such circulars alive where they are consistent with the new Act.

Benefit claimed by a UK company	Beneficial ownership test	MLI principal purpose test	GAAR, section 159(6)
Dividend at 10%	Yes, Article 11(2)	Yes	Yes
Interest at 15% or 10%	Yes, Articles 12(2) and 12(3)(a)	Yes	Yes
Royalty or technical fee at 15% or 10%	Yes, Article 13(2)	Yes	Yes
No tax on a service fee without a PE	No	Yes	Yes
Treaty relief for a dual resident company	No	Yes	Yes, subject to mutual agreement under MLI Article 4(1)
Capital gains	No treaty relief to claim under Article 14	Not relevant	Rule 128(2) carve out for investments made before 1 Apr 2017

On our reading, a UK holding company that only passes money on to another country is the main PPT target. A UK trading parent with staff, customers and a board in the UK is not. Our guide to GAAR in India for foreign companies covers Chapter XI.

Which documents does a UK company need?

Section 159(8) of the Income Tax Act, 2025 needs two things. One is a tax residency certificate from the UK government, which HMRC issues as a certificate of residence (CoR). The other is the prescribed information in Form 41, filed online under rule 75. The Indian payer also wants a PAN or rule 217 details, declarations and a chartered accountant's Form 146.

Document	Issued or filed by	What it supports	Timing
Certificate of residence (CoR)	HMRC, requested through the RES1 online service or by an agent	Section 159(8)(a); Article 4	Must cover the date of credit or payment
Form 41 (old Form 10F)	UK company, online, verified by EVC, DSC or OTP	Section 159(8)(b); rule 75	Once per tax year, before the first payment
PAN, or the six rule 217 details	UK company	Avoids the higher rate under section 397(2)	Before tax is deducted
Beneficial ownership declaration	UK company	Articles 11(2), 12(2) and 13(2)	Each year, and on each dividend date
No PE declaration, with a log of staff days in India	UK company	Articles 5, 7, 11(4), 12(6) and 13(6)	Each year, updated on any change
Service agreement and evidence of what was made available	Both companies	Article 13(4)	Before the first invoice
Transfer pricing study for interest, royalties and fees	Indian company	Articles 12(8) and 13(8); section 172	Before the Form 48 due date
Form 146 (old 15CB), then Form 145 (old 15CA)	Chartered accountant, then Indian company	Rate and article examined; remittance information	Before the money leaves India
Form 131 (old 16A)	Indian company, from TRACES	Credit for Indian tax	Within 15 days of the Form 144 due date

HMRC's guidance asks the applicant to state the period the CoR must cover, if it differs from the date of issue. For a company with a December year end, HMRC's Large Business Service accepts requests before the accounting period ends. India's tax year runs April to March, so check that the certificate covers every Indian payment date.

The Form 41 guidance note says the form is filed "only once in a tax year" and PAN is optional. It also says: "Benefit of DTAA is available only with filing of Form 41." A filer without a PAN verifies by OTP. Still, the UK company needs a PAN for the Indian return a treaty rate triggers, and for a downloadable Form 131. Our guide to Form 10F and the tax residency certificate covers Form 41 in detail.

Rule 217 lists six details that stop the higher rate under section 397(2). They are name, email, phone number, address in the UK, the CoR and the UK tax identification number.

If the CoR is late, deduct at the domestic rate, and the UK company claims the excess through its Indian return. The alternative is a lower deduction certificate in Form 128 under section 395(1). With it, the payer files Form 145 in Part B and needs no Form 146.

Does a UK company have to file an Indian tax return?

Yes, whenever it takes a treaty rate below the domestic rate. Section 207(8) of the Income Tax Act, 2025 excuses a foreign company only on two conditions. Its Indian income must consist of section 207 items, and tax must be deducted at the section 207 rate or more. A 10 or 15 percent treaty rate fails the second condition.

So a UK parent paid a 10 percent dividend files an Indian return for that tax year. It needs a PAN, and section 263 sets the due date for companies. The return is also where it recovers tax deducted at the domestic rate before its CoR arrived.

Capital gains and PE profits also need a return. On our reading, section 207(8) covers dividends, interest, royalties and technical fees, not capital gains. We file the parent's return on the same engagement as the Form 146, so the Form 131 credit matches.

How does the UK give credit for Indian tax under Article 24?

Article 24(1) requires the UK to credit Indian tax on Indian income against UK tax on that income, under UK law. A UK company may control at least 10 percent of the voting power. Its dividend credit then also takes into account Indian tax on the underlying profits. Article 24(2) gives Indian residents a credit for UK tax, capped at the share of Indian tax that the income bears.

Whether a UK parent pays any UK corporation tax on an Indian dividend, fee or gain is a UK law question. Ask the UK adviser before choosing between a dividend, a fee and a royalty.

An Indian company that earns UK income claims credit for UK tax in Form 44 (old Form 67) with its return.

Can a UK parent use mutual agreement or an APA?

Yes. Article 27 lets a company present a case to the competent authority of its country of residence. Under MLI Article 16 the case must be presented within three years of the first notification of the action. Article 10(2) allows a corresponding adjustment after a transfer pricing adjustment in the other country.

Route	Indian form (old form)	When it fits	Treaty basis
Mutual agreement procedure (MAP)	Form 55 (34F)	Indian assessment taxes income against the treaty, such as a service PE or a royalty rate	Article 27, with MLI Article 16
Bilateral advance pricing agreement (APA)	Form 51 (3CED, 3CEDA)	Recurring royalties, fees or interest with a UK parent	Articles 10 and 27
Pre filing consultation for an APA	Form 50 (3CEC)	Before applying for an APA	Section 168
Safe harbour	Form 49 (3CEFA, 3CEFB, 3CEFC)	IT services and other eligible transactions	Rules 88, 89 and 91

Sources: India UK DTAA, Articles 10 and 27; synthesised text; form map in the Income Tax Rules, 2026.

On our reading, Article 27 in the UK treaty states no time limit of its own. The three year window came only with the MLI. A UK parent that missed it may still have Indian appeal routes, but not MAP.

Does the India UK CETA change the tax treaty?

No. The India UK Comprehensive Economic and Trade Agreement (CETA) is a trade agreement, signed in London on 24 Jul 2025. It does not change the DTAA rates or articles. On 17 Jun 2026 the Ministry of Commerce and Industry announced a 15 Jul 2026 start for CETA and the Double Contribution Convention. PIB releases of 15 Jul 2026 record that both entered into force that day.

The Double Contribution Convention (DCC) is a separate social security agreement, signed on 10 Feb 2026. The PIB release of 17 Jun 2026 says the exemption period for posted workers was increased from three years to five years. The 15 Jul 2026 release puts it at assignments of up to 60 months. It deals with social security contributions, not income tax.

For a UK parent sending staff to India, the DCC matters for provident fund, not for the PE count. A secondee who avoids Indian PF under the DCC can still create a service PE under Article 5(2)(k). Read the DCC text and EPFO guidance before treating a UK secondee as exempt.

What changed in 2026

The treaty text did not change in 2026. The treaty page on incometaxindia.gov.in lists no notification after S.O. 372(E) of 10 Feb 2014, when we checked it on 2 Oct 2026. The Indian law around it changed, with a new Act, new rules, a GAAR rule amendment and a new buy back rule. Two India UK agreements outside tax also arrived.

Item	Until 31 Mar 2026	From 1 Apr 2026 or later	Instrument
Treaty relief and the more beneficial rule	Section 90(1) and 90(2)	Section 159(4)	Income Tax Act, 2025
GAAR override of treaties	Section 90(2A)	Section 159(6)	Income Tax Act, 2025
Tax residency certificate and other documents	Section 90(4) and 90(5)	Section 159(8)(a) and 159(8)(b)	Income Tax Act, 2025
Treaty information form	Form 10F, rule 21AB	Form 41, rule 75	Income Tax Rules, 2026
Withholding on payments to non residents	Section 195	Section 393(2), Table serial 17	Income Tax Act, 2025
Rates on dividends, interest, royalties and technical fees	Section 115A	Section 207	Income Tax Act, 2025
Return filing exemption	Section 115A(5)	Section 207(8)	Income Tax Act, 2025
Fees for technical services and royalty at home	Section 9(1)(vii) and 9(1)(vi)	Section 9(7) and 9(6)	Income Tax Act, 2025
Remittance, statement and certificate forms	Forms 15CA, 15CB, 27Q and 16A	Forms 145, 146, 144 and 131	Income Tax Rules, 2026
MAP and APA forms	Forms 34F and 3CED	Forms 55 and 51	Income Tax Rules, 2026
GAAR carve out for investments made before 1 Apr 2017	Rule 10U(1)(d), read with rule 10U(2)	Rule 128(1)(d) and rule 128(2) as substituted	Notification No. 55/2026, 31 Mar 2026
Buy back by an Indian company	Deemed dividend from 1 Oct 2024, so Article 11	Capital gain, so Article 14	Finance Act, 2026
Trade agreement and social security agreement	Not in force	CETA and DCC in force from 15 Jul 2026	PIB releases of 17 Jun 2026 and 15 Jul 2026

Board packs, Forms 146 and bank letters should now cite sections 159 and 393, not sections 90 and 195. The other changes are mapped in our note on the Income Tax Act, 2025.

Worked example

A UK parent receiving a dividend, fees and interest

UKCo Limited is resident in the UK and owns 100 percent of IndiaCo Private Limited. A nominee holds one share for UKCo. In tax year 2026-27 IndiaCo pays UKCo four amounts:

1. A technical fee of INR 1,50,00,000. UKCo's engineers built a testing process and trained IndiaCo's team to run it alone.
2. A management fee of INR 80,00,000. UKCo's leadership gives strategy and oversight, with nothing technical transferred.
3. Interest of INR 60,00,000 on a foreign currency ECB from UKCo, priced at arm's length.
4. An interim dividend of INR 4,00,00,000, declared by IndiaCo's Board on 10 Nov 2026 under section 123(3) of the Companies Act, 2013.

UKCo filed Form 41 for tax year 2026-27 in May 2026 and holds an HMRC CoR covering every payment date. It has a PAN and has given beneficial ownership and no PE declarations. Its leadership team spent 18 days in India for IndiaCo in the twelve months to 31 Mar 2027.

The technical fee makes knowledge available, so Article 13(4)(c) applies at 15 percent. The management fee is not a fee for technical services, because the treaty leaves out "managerial" and nothing is made available. It is business profit under Article 7, and UKCo has no PE, so India taxes none of it. Interest bears 15 percent under Article 12(2), and the dividend 10 percent under Article 11(2)(b).

Without the treaty papers, every payment bears the domestic 20 percent under section 207. Domestic law also treats the management fee as a fee for technical services, as section 9(7) includes managerial services. The year's total to UKCo is INR 6,90,00,000, in the 2 percent surcharge slab.

Line (INR)	Treaty route	Domestic route
Technical fee, 1,50,00,000	22,50,000 (15%)	31,82,400 (21.216%)
Management fee, 80,00,000	Nil (Article 7, no PE)	16,97,280 (21.216%)
Interest, 60,00,000	9,00,000 (15%)	12,72,960 (21.216%)
Dividend, 4,00,00,000	40,00,000 (10%)	84,86,400 (21.216%)
Total tax withheld	71,50,000	1,46,39,040
Net amount remitted from 6,90,00,000	6,18,50,000	5,43,60,960

The domestic figures build up the same way for each line. On the dividend, 20 percent of INR 4,00,00,000 is INR 80,00,000. Surcharge at 2 percent adds INR 1,60,000. Cess at 4 percent on INR 81,60,000 adds INR 3,26,400, for INR 84,86,400.

On the treaty route IndiaCo withholds INR 71,50,000 in total. UKCo receives INR 74,89,040 more than on the domestic route.

Date	Step	Rule
May 2026	UKCo files Form 41 and sends the CoR, PAN and declarations	Section 159(8); rule 75
On each booking of the fees and interest	Deduct at 15 percent, or nil for the management fee	Section 393(2), serial 17
Before each remittance	Obtain Form 146 citing the article; file Form 145 in Part C, showing nil tax for the management fee	Rule 220
7th of the next month	Deposit the tax deducted	Rule 218(2)
10 Nov 2026	Declare the dividend, book it and deduct INR 40,00,000	Companies Act s.123(3); section 393(2)
By 15 Nov 2026	Deposit the dividend in a separate bank account	Companies Act s.123(4)
7 Dec 2026	Deposit the tax on the dividend	Rule 218(2)
By 10 Dec 2026	Pay the dividend to UKCo after Forms 146 and 145	Companies Act s.127; rule 220
By 31 Jan 2027	File Form 144 for October to December 2026 at the treaty rates	Rule 219
By 15 Feb 2027	Issue Form 131 for the quarter	Rule 215
Section 263 due date	UKCo files its Indian return for tax year 2026-27	Section 207(8)

IndiaCo also pays IGST on the imported fees under reverse charge and usually claims it back as input tax credit. It reports the fees and interest in its transfer pricing report in Form 48 under section 172.

The same management fee with a service PE

Now suppose UKCo's leadership worked in India for IndiaCo for 20 days from February to March 2027. They then spent 14 more days from April to May 2027. That is 34 days within one twelve month period, above the 30 day limit for an associated enterprise in Article 5(2)(k)(ii).

UKCo has a service PE, even though no single tax year passed 30 days. India taxes the profit attributable to the PE at 35 percent plus surcharge and cess, through a return. The Article 5 window rolls; a count by tax year misses it.

A later sale of shares

In 2027 UKCo sells IndiaCo shares bought in 2015 to an Indian buyer, with a long term gain of INR 3,00,00,000. Article 14 leaves the gain to Indian law. The UK treaty has no exemption for shares bought before 1 Apr 2017.

Line	Amount (INR)
Long term gain on unlisted shares	3,00,00,000
Tax at 12.5%, section 197	37,50,000
Surcharge at 2%	75,000
Cess at 4% on 38,25,000	1,53,000
Indian tax	39,78,000

The buyer withholds INR 39,78,000 under section 393(2), serial 17. The 2 percent slab is an assumption; the buyer applies the slab for the actual payment. GAAR does not apply to the 2015 investment under rule 128(2), but Indian tax still does.

Common mistakes

1. Citing Singapore or US article numbers for a UK payment. Fix: cite Article 11 for dividends, 12 for interest, 13 for royalties and fees and 14 for gains.
2. Using 10 percent for every UK royalty or technical fee. Fix: apply 15 percent, and 10 percent only for equipment rentals and services ancillary to them.
3. Quoting the 20 percent rate from the first five years. Fix: that rate ended on 31 Mar 1999.
4. Treating a management fee as a technical fee. Fix: test it against Article 13(4); the UK definition leaves out "managerial".
5. Counting service PE days by tax year. Fix: count the parent's staff days in India within any rolling twelve month window.
6. Assuming old UK holdings are exempt from Indian capital gains tax. Fix: apply Article 14; the UK treaty has no grandfathering.
7. Adding surcharge and cess to the treaty rate. Fix: apply the treaty rate flat and cite the article in Form 146.
8. Relying on the CoR alone. Fix: keep Form 41, beneficial ownership evidence and a substance file for the PPT.
9. Telling the parent the treaty rate ends its Indian filings. Fix: plan a PAN and an Indian return under section 207(8).
10. Treating the CETA or the DCC as a tax treaty change. Fix: keep using the 1993 convention, as amended in 2013 and by the MLI.

Checklist for claiming India UK treaty benefits

1. Confirm the UK company holds an HMRC CoR covering each payment date.
2. File Form 41 once for the tax year before the first payment.
3. Obtain a PAN, or collect the six rule 217 details.
4. Classify each payment as dividend, interest, royalty, technical fee, business profit or capital gain.
5. Test service fees against the make available clause in Article 13(4) and the exclusions in Article 13(5).
6. Count the parent's staff days in India against the 30 and 90 day limits in Article 5(2)(k).
7. Check whether a royalty is for equipment, at 10 percent, or for intangibles, at 15 percent.
8. Add up the year's payments to fix the domestic surcharge slab.
9. Collect beneficial ownership and no PE declarations.
10. Review the substance file against the PPT and GAAR.
11. Deduct tax at the earlier of credit and payment, at the flat treaty rate.
12. Obtain Form 146 and file Form 145 before each remittance.
13. Deposit the tax by the 7th of the next month, file Form 144 and issue Form 131.
14. Benchmark interest, royalties and fees for Form 48.
15. Remind the UK company to file its Indian return.

To have us review a UK payment or a share sale before it happens, send the agreement and the shareholding through our contact page.

Frequently Asked Questions

Is the India UK DTAA dividend rate 10 or 15 percent?+

It is 10 percent in almost every case. Article 11(2)(b) caps Indian tax at 10 percent for a UK resident beneficial owner, whatever the size of its holding. The 15 percent cap in Article 11(2)(a) applies only to dividends a property investment vehicle pays out of exempt property income. The 2013 Protocol set these rates.

What is the TDS rate on royalties paid to a UK company?+

Article 13(2)(a) caps it at 15 percent for royalties for copyright, patents, trade marks, designs, formulas or know how. Article 13(2)(b) caps it at 10 percent for the use of industrial, commercial or scientific equipment. Domestic law charges 20 percent under section 207, plus surcharge and cess. The payer needs the CoR and Form 41.

Is the India UK royalty rate still 20 percent?+

No. The 20 percent cap applied only during the first five years for which the convention had effect. In India that was fiscal years 1994-95 to 1998-99. Since 1 Apr 1999 the cap under Article 13(2)(a) has been 15 percent for every payer. Some older summaries still print the 20 percent figure.

Are management fees taxable in India under the UK treaty?+

On our reading, not without a PE. Article 13(4) defines fees for technical services as payments for "technical or consultancy services" and leaves out "managerial". A management fee that makes nothing available is business profit under Article 7. India taxes it only if the UK company has a PE, such as a service PE after 30 days.

Do surcharge and cess apply on top of the treaty rate?+

We do not add them. Article 2 of the treaty names Indian income tax "including any surcharge thereon" as a covered tax. Tribunal rulings treat cess as part of the tax capped, though no CBDT circular settles the point. So we apply 10 percent flat on a dividend and state Article 11 in Form 146.

What is the TDS rate on interest paid to a UK parent?+

Article 12(2) caps it at 15 percent, and Article 12(3)(a) at 10 percent for a UK bank in bona fide banking business. Domestic law charges 20 percent on foreign currency loans under section 207 and 35 percent on rupee loans. So a rupee loan from a UK parent bears 15 percent with the CoR and Form 41.

Is a software subscription paid to a UK company a royalty?+

Usually not. The Supreme Court ruled in Engineering Analysis Centre of Excellence Private Limited on 2 Mar 2021. It held that end user software licences are not royalty under India's treaties. Section 9(6) of the Income Tax Act, 2025 still counts software as royalty at home. So the CoR and Form 41 decide the result.

Does India tax a UK company's gain on Indian shares bought before 2017?+

Yes. Article 14 lets India tax capital gains under its own domestic law, and the UK treaty has no grandfathering. A long term gain on unlisted shares bears 12.5 percent under section 197, plus surcharge and cess. Rule 128(2) keeps GAAR away from investments made before 1 Apr 2017, but not the tax itself.

Can staff sent from the UK create a PE for the parent?+

Yes. Article 5(2)(k)(ii) covers staff furnishing services in India for an associated enterprise. They create a service PE after 30 days within any twelve month period. For unrelated customers the limit is 90 days. Services taxable under Article 13 are excluded. Secondments also need review under the agent rules in Article 5(4).

Is the Indian subsidiary itself a PE of the UK parent?+

Not by control alone. Article 5(6) says control between companies does not, by itself, make either a PE of the other. A subsidiary can still become a dependent agent PE under Article 5(4). That happens if it habitually negotiates and concludes contracts, keeps and delivers stock, or habitually secures orders for the parent.

What if a UK company's board meets in India?+

It risks Indian residence under section 6(10) of the Income Tax Act, 2025. The MLI replaced the treaty's place of effective management tie breaker with a mutual agreement rule. Until the competent authorities agree, the company gets no treaty relief except as they agree. Hold board meetings in the UK and take key decisions there.

How often does a UK company file Form 41?+

Once per tax year. Form 41 is filed under section 159(8)(b) and rule 75 of the Income Tax Rules, 2026. Its guidance note says "only once in a tax year". PAN is optional, and a filer without one verifies by OTP. The HMRC certificate of residence must still cover each payment date in that year.

What happens if the CoR arrives after the payment?+

The Indian company deducts at the domestic rate under section 207, plus surcharge and cess. Section 159(8) makes the certificate a condition of treaty relief. The UK company then files an Indian return with the CoR and Form 41 and claims the excess as a refund. A Form 128 certificate under section 395(1) is the other route.

Does the principal purpose test apply to the India UK treaty?+

Yes. MLI Article 7(1) applies to the India UK treaty and replaced its Article 28C. For India it applies to tax withheld from 1 Apr 2020 and to taxable periods beginning on or after that date. CBDT Circular No. 01/2025 guides Indian officers and names no grandfathering in the UK treaty.

Is there a time limit for MAP under the India UK treaty?+

Yes, since the MLI. Article 16 of the MLI added a three year window. It runs from the first notification of the action that taxes against the treaty. The Indian application is Form 55, which replaced Form 34F. A bilateral advance pricing agreement starts with Form 51.

Does the India UK trade agreement change withholding rates?+

No. The Comprehensive Economic and Trade Agreement signed on 24 Jul 2025 covers trade, not income tax. The Double Contribution Convention signed on 10 Feb 2026 covers social security contributions. Both entered into force on 15 Jul 2026. Withholding rates still come from the 1993 DTAA as amended.

Sources

• Income Tax Department, India UK DTAA with the 2013 amendments (GSR 91(E), 11 Feb 1994; S.O. 372(E), 10 Feb 2014), read 2 Oct 2026, https://www.incometaxindia.gov.in/w/uk-comprehensive-agreements-1
• Income Tax Department, Synthesised text of the India UK DTAA as modified by the MLI, read 2 Oct 2026, https://www.incometaxindia.gov.in/w/uk-synthesised-text-1
• HM Revenue and Customs, Synthesised text of the MLI and the 1993 UK India double taxation convention, 12 Oct 2022, https://www.gov.uk/government/publications/india-tax-treaties/2020-uk-india-synthesised-text-of-the-multilateral-instrument-and-the-1993-double-taxation-convention-in-force
• HM Revenue and Customs, 2013 UK India Protocol to the double taxation agreement (signed 30 Oct 2012), https://assets.publishing.service.gov.uk/media/5a80a19c40f0b62305b8c423/2013-uk-india-dta-protocol_-_in_force.pdf
• HM Revenue and Customs, Get a certificate of residence, read 2 Oct 2026, https://www.gov.uk/guidance/get-a-certificate-of-residence
• Press Information Bureau (Ministry of Commerce and Industry), CETA and Agreement on Social Security Contributions set to enter into force on 15 Jul 2026, 17 Jun 2026, https://www.pib.gov.in/PressReleasePage.aspx?PRID=2274280
• Press Information Bureau, India UK CETA Comes into Effect, 15 Jul 2026, https://www.pib.gov.in/PressReleasePage.aspx?PRID=2284878
• Central Board of Direct Taxes, Circular No. 01/2025, Guidance for application of the Principal Purpose Test under India's DTAAs, 21 Jan 2025, https://www.incometaxindia.gov.in/documents/d/guest/circular-1-2025-pdf
• Central Board of Direct Taxes, Notification No. 55/2026, Income Tax (Amendment) Rules, 2026 (rule 128), G.S.R. 241(E), 31 Mar 2026, https://www.incometaxindia.gov.in/documents/d/guest/notification-no-55-2026-1-pdf
• Supreme Court of India, Engineering Analysis Centre of Excellence Private Limited v. Commissioner of Income Tax, 2 Mar 2021, https://api.sci.gov.in/supremecourt/2011/38137/38137_2011_33_1501_26629_Order_02-Mar-2021.pdf
• Income Tax Department, Income Tax Act, 2025 as amended by the Finance Act, 2026, https://www.incometaxindia.gov.in/documents/d/guest/income_tax_act_2025_as_amended_by_fa_act_2026-pdf
• Income Tax Department, Section 9 of the Income Tax Act, 2025 (income deemed to accrue or arise in India), read 2 Oct 2026, https://www.incometaxindia.gov.in/w/section-9-1
• Income Tax Department, Section 6 of the Income Tax Act, 2025 (residence; sub section (10)), https://www.incometaxindia.gov.in/w/section-6-1
• Income Tax Department, Section 159 of the Income Tax Act, 2025 (double taxation relief), https://www.incometaxindia.gov.in/w/section-159-89
• Income Tax Department, Section 207 of the Income Tax Act, 2025 (sub sections (1), (2) and (8)), https://www.incometaxindia.gov.in/w/section-207-78
• Income Tax Department, Section 197 of the Income Tax Act, 2025 (long term capital gains), https://www.incometaxindia.gov.in/w/section-197-78
• Income Tax Department, Section 393 of the Income Tax Act, 2025 (tax deducted at source), https://www.incometaxindia.gov.in/w/section-393-6
• Income Tax Department, Section 397 of the Income Tax Act, 2025 (PAN and information on payments to non residents), https://www.incometaxindia.gov.in/w/section-397-6
• Income Tax Department, Rules 215, 217, 218, 219 and 220 of the Income Tax Rules, 2026, https://www.incometaxindia.gov.in/w/rule-215-1, https://www.incometaxindia.gov.in/w/rule-217-1, https://www.incometaxindia.gov.in/w/rule-218-1, https://www.incometaxindia.gov.in/w/rule-219-1, https://www.incometaxindia.gov.in/w/rule-220-1
• Income Tax Department, First Schedule to the Finance Act, 2026 (Part II rates), https://www.incometaxindia.gov.in/w/first-schedule-104
• Income Tax Department, Guidance note on Form 41, https://www.incometaxindia.gov.in/documents/d/guest/fn-41
• Income Tax Department, FAQs and Guidance Notes on Forms as per Income Tax Rules, 2026 (form map), https://www.incometaxindia.gov.in/faqs-and-guidance-notes-on-forms-as-per-income-tax-rules-2026