DTAA Income Map: Which Article Covers Your US Income

Salary RSUs 401k rental income dividends each falls under a different DTAA article. Here is the complete map.

One DTAA, Many Articles

The India-USA DTAA is not a single rule — it is a 30-article treaty where each type of income is governed by a different article with different taxing rights, withholding rates and credit mechanics. Returnees who treat "DTAA" as a generic shield routinely misapply it and either overpay tax or fail audit. Below is the income-by-income map.

Article 16: Dependent Personal Services (Salary)

Salary for services rendered in the USA is taxable only in the USA when paid to a non-resident of the USA, provided you were not present in India when earning it. Post-return remote salary from a US employer is taxable in India (residence) and may also be taxable in the USA if services are deemed US-source — Foreign Tax Credit resolves overlap.

Article 16(2) + Article 15: RSUs and ESOPs

RSU income is bifurcated based on the period between grant and vest. The portion attributable to services rendered in the USA is US-source; the portion attributable to services in India is India-source. Both countries tax their respective portions; FTC eliminates double taxation. This is the most-litigated article for returnees.

Article 20: Pensions and Social Security

US Social Security payments are taxable only in the source country (USA). 401(k) distributions are pensions — Article 20(1) gives India taxing rights when paid to an Indian resident, with FTC for US tax. Roth IRA distributions are technically tax-free in the USA but India may still tax them on receipt unless Section 89A election is in place.

Article 11: Interest

US bank and bond interest paid to an Indian resident is taxable in India at slab rates, with US withholding capped at 15% under DTAA — claimable as FTC. NRE FD interest is exempt in India regardless.

Article 10: Dividends

US-source dividends are taxable in India at slab rates. US withholding is capped at 25% under DTAA (often 15% if Form W-8BEN is filed correctly), claimable as FTC. Indian dividends to a non-resident are taxed in India at 20% plus surcharge.

Article 6: Immovable Property (Rental)

US rental income is taxable in the USA (situs country). India also taxes it on a worldwide basis once you are Resident, with FTC for US tax paid. Depreciation rules differ sharply — treat US and Indian computations separately.

Article 13: Capital Gains

Gains on sale of US-listed shares are taxable only in the country of residence (India for returnees). Gains on US real estate are taxable in the USA (situs). Crypto is unaddressed by the treaty — both countries claim taxing rights.