The India-US Tax Treaty (DTAA) for Individuals: Which Articles Matter and How to Claim Them (2026)

What does the India-US tax treaty actually do for an individual?

It splits taxing rights between the two countries and promises a credit where both still tax the same income. It is not an exemption. The treaty was signed in New Delhi on September 12, 1989 and entered into force on December 18, 1990 (treaty text).

For an Indian on an H1B or green card, three things follow:

• The US keeps taxing you as a resident. Article 1(3): a country "may tax its residents (as determined under Article 4 (Residence)), and by reason of citizenship may tax its citizens, as if the Convention had not come into effect."
• Double tax is removed by credit. Article 25(1) requires the US to credit "the income tax paid to India", but "subject to the limitations of the law of the United States". In practice, that means Form 1116.
• India mirrors it. Under Article 25(2)(a), an Indian resident gets a credit against Indian tax equal to the US tax paid, limited to the Indian tax attributable to that income.

Reporting basics for NRE, NRO and FD income are in reporting India income on a US tax return. This post covers the articles that change the answer.

Which treaty benefits survive the saving clause?

Once you are a US resident, most articles stop protecting you from US tax. Article 1(4) lists the exceptions, in two groups.

For everyone, including citizens and green card holders (Article 1(4)(a)):

• Article 20(2): social security and public pensions
• Article 20(6): child support
• Article 25: the foreign tax credit
• Articles 26 and 27: non-discrimination and the mutual agreement procedure
• Article 9(2): associated enterprises

The Treasury's Technical Explanation gives the effect of Article 20(2): "the United States may not apply the Code rules to tax its citizens or residents on Indian social security benefits."

Only for people who are neither US citizens nor green card holders (Article 1(4)(b)):

• Article 19: government service
• Article 21: students and apprentices
• Article 22: professors and researchers
• Article 29: diplomats

The Technical Explanation says these benefits are meant "to be granted by a Contracting State to temporary residents, but not to permanent residents." So an Indian F-1 student who becomes a resident alien under US rules, without a green card, keeps Article 21. A green card ends it.

Am I a resident of India or the US under the treaty? (Article 4)

Article 4 applies only when both countries treat you as resident for the same period. The tie-breaker then decides in this order:

1. Permanent home: where you have a permanent home available to you.
2. Centre of vital interests: if you have a home in both, where your "personal and economic relations are closer."
3. Habitual abode: where you habitually live.
4. Nationality.
5. Mutual agreement between the two tax authorities.

For Indians this mostly comes up in the year you move back. India's basic test makes you resident at 182 days or more in the April-March "previous year", with other conditions on top (Income Tax Department). The US counts calendar years, so the two periods overlap.

Pub 519 is strict about claiming this: "If you are a dual-resident taxpayer and you claim treaty benefits, you must file a return using Form 1040-NR with Form 8833 attached, and compute your tax as a nonresident alien."

Green card holders, stop here. Form 8833 warns that a long-term resident who elects treaty residence in another country "will be deemed to have expatriated pursuant to section 877A." That is the exit tax. Most H1B holders moving back don't need a tie-breaker claim at all; a dual-status return for the move year does the job. See dual-status returns and RNOR status for returning NRIs.

How much can India tax my NRO interest and Indian dividends? (Articles 10 and 11)

The treaty caps what India can charge a US resident. It doesn't change your US tax.

Interest (Article 11(2)). India's tax may not exceed:

• 10% if the interest is paid on a loan granted by a bank carrying on a bona fide banking business or by a similar financial institution (including an insurance company), or paid "in connection with the sale on credit of any industrial, commercial or scientific equipment or merchandise"
• 15% "in all other cases"

The 10% rate is for interest where the lender is a bank (or similar financial institution), or for sale-on-credit financing. On an NRO fixed deposit, you are the lender and the bank is the borrower, so the 15% cap normally applies to you. Many summaries get this backwards.

Dividends (Article 10(2)). The cap is 15% for a company holding at least 10% of the voting stock and 25% "in all other cases". Individuals fall in the 25% bucket. Check your TDS certificate for what was actually withheld.

Worked example. Priya is on an H1B in Seattle and a US resident for 2025. Her NRO FD in Hyderabad earns ₹2,00,000 of interest in 2025. The treaty cap on Indian tax is 15%, or ₹30,000. Her bank has no tax residency certificate or Form 10F on file, so it withholds at India's higher domestic rate.

Priya reports all the interest on her 1040 and claims a credit on Form 1116. But the 1116 instructions deny credit for "Taxes paid to a foreign country that you don't legally owe, including amounts eligible for refund by the foreign country." The IRS's own example: where a treaty caps the tax at $15 and $25 was withheld, "Only $15 is eligible for the foreign tax credit (whether or not you apply for a refund)" (Instructions for Form 1116).

So Priya's credit is limited to the treaty amount. She can reclaim the excess through an Indian return, or stop it at source next year (India section below). Whether a given withholding is "legally owed" is a fact question for a CPA.

After you move back, it runs the other way. The same caps limit US tax on US dividends and interest paid to an Indian resident. You claim them by giving your broker Form W-8BEN; Pub 519 confirms reduced treaty withholding needs no Form 8833.

Does the treaty stop double tax on capital gains and RSUs? (Article 13)

No. Apart from shipping and air transport, "each Contracting State may tax capital gains in accordance with the provisions of its domestic law."

Sell Indian mutual funds, a flat in Pune or US RSUs, and each country applies its own rules. The only relief is the Article 25 credit (Form 1116 in the US, Form 67 in India). Which country gives the credit depends on where the gain is sourced, and Article 25(3) leaves that to each country's domestic credit rules. This is where treaty returns most often need professional judgment. See selling RSUs when moving back to India.

Is my salary taxed in the US on a short assignment? (Article 16)

Not if all three Article 16(2) conditions are met. An Indian resident's pay for work in the US is taxable only in India if:

1. you are in the US for no more than 183 days in total "in the relevant taxable year";
2. your employer is not a US resident; and
3. the pay is not borne by a US permanent establishment, fixed base or trade or business of the employer.

The Technical Explanation adds that if a US company reimburses the Indian employer in an identifiable way, conditions 2 and 3 fail. "All three conditions must be satisfied."

Worked example. Rahul works for an Indian IT company in Pune. He is in New Jersey from March 1 to July 15, 2026: 31 + 30 + 31 + 30 + 15 = 137 days. His employer pays him in India and doesn't recharge his salary to a US entity. Condition 1 is met. Conditions 2 and 3 depend on how the client work is billed, and that is where these claims usually fail.

It works in reverse too. An H1B holder working from India for a few weeks is protected from Indian tax on that salary if the same conditions hold with the countries swapped. The US still taxes the salary under the saving clause.

What can Indian students claim under Article 21?

Two separate benefits:

• Article 21(1). A student or apprentice who was an Indian resident just before arriving, and is here "principally for the purpose of his education or training", is exempt on "payments which arise outside that other state for the purposes of his maintenance, education or training". A typical case is money from your parents in Chennai.
• Article 21(2). For "grants, scholarships and remuneration from employment" not covered by 21(1), the student gets "the same exemptions, reliefs or reductions in respect of taxes available to residents" of the US, during the education or training.

Pub 519 turns 21(2) into a concrete benefit: "Nonresident aliens cannot claim the standard deduction... A special rule applies to students and business apprentices who are eligible for the benefits of Article 21(2)... You can claim the standard deduction, provided you do not claim itemized deductions."

• Amount. For tax year 2025, Pub 519 Worksheet 5-1 sets it at $15,750 for single or married filing separately and $31,500 for a qualifying surviving spouse. It is lower if someone can claim you as a dependent.
• Spouse rule. You can't use it if you're married filing separately and your spouse itemizes.
• How to enter it. Put the amount on Form 1040-NR line 12 and write "Standard Deduction Allowed Under U.S.-India Income Tax Treaty" to the left of the line.

Article 21(2) students also get benefits no other Indian nonresident gets. They can claim dependents, the child tax credit and the credit for other dependents on the limited terms in Pub 519. A married student living apart from their spouse may also qualify for Single status under the 1040-NR instructions.

Worked example. Ananya is on an F-1 at Arizona State: nonresident, single, $14,000 of on-campus W-2 wages in 2025. The $15,750 treaty deduction brings her federal taxable wages to zero. Her income is under the 2025 filing threshold for Article 21(2) students, but if tax was withheld she files to get it back.

Limits:

• Time. Article 21(3) limits the benefit to the time "reasonable or customarily required" to finish.
• Green card. A green card ends it.
• OPT. The benefit applies "during such education or training". Whether OPT or STEM OPT work counts is fact-dependent, not a settled yes, so confirm it before claiming in an OPT year.

How are pensions and social security treated? (Articles 19 and 20)

• Private pensions and annuities (Article 20(1)): taxed only where you live. The treaty defines a pension as "a periodic payment made in consideration of past services", so a lump-sum withdrawal may not qualify. That matters for your 401(k) when moving back.
• Social security and public pensions (Article 20(2)): taxed only by the paying country, so US Social Security paid to you in India is taxed only by the US.
• Government service pensions (Article 19(2)): taxed only by the paying country, unless you are both resident in and a national of the other country.

How do I claim treaty relief on my US return?

Resident aliens: Form 1116. Most H1B and green card holders use the treaty only through Form 1116. Two rules from the instructions:

• Exchange rate. Convert Indian tax at "the rate of exchange in effect on the day you paid the foreign taxes (or on the day the tax was withheld)".
• Refunds. If India later refunds tax you credited, file an amended return reducing the credit.

If a treaty re-sources US income as foreign, it needs "a separate Form 1116 for each amount of re-sourced income" and possibly Form 8833.

Form 8833: when it is required. You file it when you claim a treaty overrides the Internal Revenue Code in a way that reduces, or might reduce, your tax. Pub 519's common triggers for individuals:

• claiming a credit for a foreign tax the Code wouldn't allow;
• claiming treaty relief on the sale of US real property;
• determining your residence under a treaty, with payments over $100,000.

The 8833 instructions also list a treaty-based residency determination as specifically reportable.

When you don't need it. Pub 519 and the 8833 instructions waive it for:

• reduced withholding on interest, dividends, rents or royalties;
• treaty relief on wages, pensions, annuities and social security;
• income of students, trainees or teachers;
• disclosable items totalling $10,000 or less.

Nonresident aliens (Form 1040-NR). Put treaty-exempt income on line 1k, not line 1a. Then complete Schedule OI item L with:

• the country;
• the treaty article;
• the months you claimed the benefit in prior years;
• this year's exempt amount.

Attach any Form 1042-S. If your employer withheld because it had no Form 8233, attach a statement with what the 8233 would have contained (Instructions for Form 1040-NR).

How do I claim DTAA relief in India? (Form 67, TRC, Form 10F)

Resident in India, with US tax to credit: Form 67. This covers people who have moved back and become resident in India. The Income Tax Department says a resident can claim credit for foreign tax under Rule 128, and "The credit shall be allowed only if the assessee furnishes the required particulars in Form 67".

• Deadline. File "on or before the due date specified for furnishing the return of income under sub-section (1) of Section 139."
• How. Online only, with "a copy of the certificate or statement and proof of payment / deduction of foreign tax" attached.
• CA certificate. Not mandatory.

Sources: Form 67 user manual and FAQ. India's year runs April to March, so you have to match US calendar-year tax to the right Indian year.

Non-resident, claiming treaty rates at source: TRC + Form 10F / Form 41. This is how Priya stops excess TDS on her NRO interest. You need two documents:

1. A US tax residency certificate. This is IRS Form 6166, "a letter of U.S. residency certification", which you request on Form 8802. The IRS says it is used "to claim income tax treaty benefits... in foreign countries" (IRS).
2. Form 10F, now Form 41. India's Income-tax Act, 2025 took effect on April 1, 2026 and renumbered Form 10F as Form 41, "Information to be provided under section 159(8)" (Form Mapping Guide). Form 41 "must be filed when a nonresident wants to claim relief under a Double Taxation Avoidance Agreement". You file it online with your US tax ID and a copy of the certificate. Non-residents without a PAN use a separate login (Form 41 user manual).

Give both to your bank or payer.

Indian residents who need an Indian TRC apply on Form 42 (formerly 10FA). The certificate is issued on Form 43 (Form 42 user manual).

The portal still lists Form 67. We could not confirm from an official page what it is called under the 2025 Act, so check the portal for the year you're filing.

India-US tax treaty cheat sheet