DTAA Between India and Oman:
Essential Guide for Businesses & Individuals
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Global trade and cross-border investments are no longer limited to large corporations—today, even SMEs and professionals are expanding their presence internationally. With this expansion, however, comes the challenge of double taxation, where the same income is taxed in both the source country and the resident country.
To address this, India and Oman signed a Double Taxation Avoidance Agreement (DTAA), ensuring smoother financial cooperation and clarity in taxation. At Al Nuha Internationals, we believe understanding this treaty is essential for businesses and individuals operating across both nations.
What is the DTAA?
The DTAA is a bilateral agreement that prevents the same income from being taxed twice—once in India and again in Oman. Instead, it lays out clear rules for taxation, offering relief through exemptions, credits, and reduced tax rates on specific types of income.
Understanding the India–Oman DTAA
The DTAA was signed on 2nd April 1997 and came into effect on 4th April 1998. It was later updated through protocols, the most recent changes being:
- From May 28, 2025 – Tax on royalties and technical service fees reduced to 10% (earlier 15%).
- From January 2028 – Oman will implement a 5% personal income tax on individuals earning above OMR 42,000 annually.
These updates show how both countries adapt their tax treaties to meet changing economic and regulatory conditions.
Taxes Covered Under DTAA
In India:
- Income Tax (including surcharge)
In Oman:
- Company Income Tax
- Profit Tax on Commercial & Industrial Establishments
- Any similar or new taxes introduced in the future
Tax Rates Under the India–Oman DTAA
The treaty clearly defines withholding tax rates for different types of income:
- Dividends – 12.5%
- Interest – 10%
- Royalties – 10%
- Technical Service Fees – 10%
These reduced rates make cross-border transactions more tax-friendly compared to standard domestic tax rates.
Taxation Rules for Specific Income
Capital Gains
- Gains from immovable property – taxed where the property is located.
- Gains from business property of a Permanent Establishment (PE) – taxed in the country where the PE operates.
- Gains from shares of a company – taxed in the country where the company is resident.
- Gains from ships or aircrafts – taxed only in the country of the transferor’s residence.
- Other property transfers – taxed in the transferor’s country of residence.
Income from Immovable Property
If an Omani resident owns property in India, the income is taxable in India (where the property is located) and can also be taxed in Oman. Relief will be provided under DTAA provisions to avoid double taxation.
Business Profits
- Taxed only in the country of residence, unless the business has a Permanent Establishment (PE) in the other country.
- Example: An Indian company with a PE in Oman will have profits from that PE taxed in Oman, while the rest remains taxable in India.
Importance of the DTAA
The India–Oman DTAA is more than just a tax treaty—it’s a tool for economic cooperation. It helps:
- Prevent Double Taxation – ensuring fair treatment for residents and businesses.
- Encourage Cross-Border Investment – reduced tax rates make trade and business expansion more attractive.
- Provide Certainty – businesses and individuals know in advance how their income will be taxed.
- Support Transparency – exchange of information between tax authorities helps prevent evasion and builds investor confidence.
Claiming DTAA Benefits
To access DTAA advantages, taxpayers must obtain a Tax Residency Certificate (TRC):
- Indian Residents – TRC from the Indian Income Tax Department.
- Omani Residents – TRC from the Oman Tax Authority.
This document is mandatory when filing returns or seeking relief under DTAA.
Conclusion
The India–Oman DTAA creates a predictable, transparent, and business-friendly tax environment. Whether you are an expatriate professional, an investor, or a company with cross-border operations, this agreement ensures that your income is not taxed twice, while also promoting economic growth between both nations.
At Al Nuha Internationals, we specialize in guiding clients through international taxation, DTAA compliance, and tax optimization strategies.
Need help claiming DTAA benefits? Contact our experts at Al Nuha Internationals and simplify your global tax obligations today.
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