If you earn money in India while living in the UK, you might feel like you're being squeezed by two different tax offices. Rental income from a flat in Delhi or interest from an NRO account in Mumbai is often taxed at the source in India. Then, as a UK resident, you have to declare that same income to HMRC.
The good news is that you don't have to pay full tax in both countries. The UK-India Double Taxation Avoidance Agreement (DTAA) ensures that you only pay your fair share. At Indian Attorneys (UK), we help NRIs use this treaty to protect their global earnings.
How the DTAA works in 2026
The treaty doesn't mean you pay zero tax. Instead, it decides which country gets to tax you first and how much credit the other country must give you.
For most types of income, India has the "primary" right to tax because the money was earned there. When you file your UK tax return, HMRC then gives you a Foreign Tax Credit for the amount you’ve already paid in India. This effectively offsets your UK tax bill, so you only pay the difference if the UK rate is higher.
Concessional rates for NRIs
One of the biggest benefits of the DTAA is that it caps the amount of tax India can deduct from certain types of income. In 2026, these "treaty rates" are often much lower than the standard Indian tax rates.
Dividends: Capped at 10% or 15% depending on your shareholding.
Interest: Usually capped at 15%, though some bank interest can be as low as 10%.
Royalties and Technical Fees: Capped at 10%.
Without the DTAA, you could be facing a flat 20% or 30% Tax Deducted at Source (TDS) in India. By applying the treaty, you keep more of your money upfront.
The paperwork you need
The DTAA doesn't apply automatically. If you don't provide the right documents, Indian banks and tenants will continue to deduct tax at the higher standard rates. To claim the relief in 2026, you must provide three things.
First, you need a Tax Residency Certificate (TRC) from HMRC. This proves you are a tax resident in the UK and are eligible for treaty benefits. You can usually request this online through your Personal Tax Account.
Second, you must file Form 10F electronically on the Indian Income Tax portal. This is a self-declaration that accompanies your TRC. Third, you must provide your Indian PAN card details. If you don't have a PAN, the TDS rate in India can jump to 20% regardless of what the treaty says.
The 2026 Non-Dom shift
If you have been in the UK for more than four years, pay close attention to the recent changes. The UK has moved away from the old "Non-Dom" system to a residency-based model. This means that after your fourth year in the UK, HMRC will tax your worldwide income regardless of whether you bring the money into the UK or not. Using the DTAA is now more important than ever to ensure this global taxation doesn't result in a double hit to your savings.
Why you should file an Indian tax return
Many NRIs think that because tax was deducted at the source, they don't need to file an Indian return. This is a mistake. Often, the TDS deducted is more than what you actually owe under the DTAA. The only way to get that overpaid tax back as a refund is to file your ITR-2 or ITR-3 in India. It’s essentially leaving money on the table if you don't.
