DTAA Relief Claims in India: An Overview under the Income-Tax Act, 2025

The Income‑Tax Act, 2025, which comes into force from 1 April 2026, replaces the old Income‑tax Act, 1961. While the new law broadly preserves India’s treaty framework, it introduces procedural changes and new compliance requirements for claiming DTAA benefits, most notably replacing Form 10F with Form 41 for non‑residents.

DTAA Framework under the Old Law (Income‑Tax Act, 1961)

Under the Income‑Tax Act, 1961:

DTAA relief was governed by Sections 90 and 90A
Where DTAA provisions were more beneficial than domestic law, treaty provisions prevailed
Non‑residents claiming treaty benefits were required to furnish:
- Tax Residency Certificate (TRC) from the country of residence
- Form 10F (self‑declaration) if TRC did not contain the prescribed details
- PAN was not mandatory if DTAA rates applied and documentation was complete

Failure to file Form 10F often resulted in higher withholding tax under domestic law, including application of Section 206AA rates in certain cases, despite DTAA entitlement

DTAA Provisions Under the Income‑Tax Act, 2025

The Income‑Tax Act, 2025 does not dilute treaty protection, but it re‑codifies and modernises compliance.

Legislative Change

Particulars	Old Law	New Law
Governing Sections	Sections 90 & 90A	Section 159(8)
Declaration Form	Form 10F	Form 41
Rules	Rule 21AB (IT Rules, 1962)	Rule 75 (IT Rules, 2026)
Filing Mode	Electronic	Electronic only
Applicability	DTAA relief	DTAA relief

Form 41 is now a mandatory, digital self‑declaration for non‑residents seeking DTAA benefits.

What is Form 41 under the Income Tax Act, 2025

Form 41 is a statutory self-declaration prescribed under Section 159(8)(b) of the Income Tax Act 2025, to claim DTAA benefits such as:

Reduced withholding tax rates
Nil tax under the exemption methods
Relief via foreign tax credit mechanisms

Key Features:

Mandatory for non‑residents claiming DTAA benefits
Filed once per tax year
Filed electronically on the Income‑Tax portal
Cannot be revised after submission
Absence of Form 41 results in denial of DTAA benefits and taxation under domestic law.

Who Needs to File Form 41

Form 41 is required to be filed by:

Non-resident or Foreign companies earning income from India
Taxpayers without PAN but claiming DTAA benefits

It applies typically to income such as:

Royalty
Fees for Technical Services (FTS)
Interest
Dividends
Capital gains
Business income taxable in India.

Documents Required for Claiming DTAA Benefits

To validly claim DTAA relief under the 2025 Act, the following are essential:

Tax Residency Certificate (TRC) – Issued by foreign tax authorities
Form 41 (mandatory)
Tax Identification Number (TIN) of the foreign country
Supporting agreement/contract (for royalty / FTS, if applicable)

PAN is not mandatory where treaty protection applies and documentation is complete.

Step by Step Procedure to Claim DTAA Benefits (New Law)

Step 1: Determine Residential Status

Confirm whether the taxpayer is a non‑resident under Indian tax law.

Step 2: Identify Applicable DTAA

Check the DTAA between India and the taxpayer’s country of residence.

Step 3: Obtain TRC

Secure a valid TRC for the relevant tax year.

Step 4: File Form 41

Filing for the first time, Registration is required on the Income Tax portal.
Furnish details required, such as TRC, TIN.
Verify electronically (DSC / E‑verification through One Time Password)

Step 5: Share Acknowledgment with Deductor

Provide Form 41 acknowledgment to the Indian payer for applying DTAA rates.

Step 6: Claim Benefit in Return (if applicable)

Where a return is filed, DTAA relief must align with Form 41 details.

Practical Takeaways

Form 41 is not optional under the Income‑Tax Act, 2025
Deductors should insist on Form 41 before applying treaty rates
Non‑residents must ensure accuracy, as the form cannot be edited
Early filing avoids excess withholding and refund delays
Proper documentation remains key despite procedural simplification

Conclusion

The Income‑Tax Act, 2025 ushers in a simplified but stricter compliance regime for claiming DTAA benefits. While India continues to respect treaty supremacy, procedural discipline has been significantly enhanced through Form 41. Non‑resident taxpayers and Indian payers must adapt quickly to avoid denial of treaty relief and unnecessary tax costs.