What is DTAA with USA?
Nexa Consultancy | Startup & Finance Glossary
The India-USA DTAA helps prevent double taxation and determines which country has the right to tax income. For startups paying for US-based software or consultants, it often caps the TDS rate on royalties and fees for technical services at 15%.
Startup Example: A startup pays an American consultant. The payment is considered a Fee for Technical Services. Under the DTAA, the startup can withhold TDS at 15% (provided the consultant furnishes a Tax Residency Certificate), which is lower than the default rate.
Our foreign TDS advisory helps apply the correct treaty benefits.