Quick answer: Under Article 10(2) of the India-Thailand DTAA (signed 29 June 2015, in force 13 October 2015, effective in India from 1 April 2016), dividends paid to a Thai beneficial owner are taxed at a flat 10% withholding rate -- a 50% cut from India's 20% domestic rate under section 207(1) of the Income-tax Act, 2025. The rate applies uniformly regardless of shareholding percentage; there is no tiered structure and no exempt category for dividends. Claiming it requires a Tax Residency Certificate from Thailand's Revenue Department and Form 41 (formerly Form 10F).
Key takeaways:
- Flat 10% DTAA dividend rate vs 20% domestic rate -- a 50% reduction
- Applies uniformly regardless of the Thai shareholder's ownership percentage -- no tiers
- Treaty signed 29 June 2015 at Bangkok, in force from 13 October 2015, effective in India from 1 April 2016
- Requires a Tax Residency Certificate from the Revenue Department of Thailand plus Form 41
- The MLI's Principal Purpose Test applies -- the treaty is a matched Covered Tax Agreement
Dividend Tax Rate Between India and Thailand
The Double Taxation Avoidance Agreement (DTAA) between India and Thailand, signed at Bangkok on 29 June 2015 and in force from 13 October 2015, replaced the earlier 22 March 1985 convention and became effective for Indian tax purposes from 1 April 2016. Under Article 10 of the treaty, the maximum withholding tax on dividends paid between the two countries is capped at 10% of the gross amount -- half of India's domestic rate of 20% under section 207(1) (Table, Sl. Nos. 1-3) of the Income-tax Act, 2025 (section 115A of the Income-tax Act, 1961).
This reduced rate applies equally to Indian companies distributing dividends to Thai shareholders and Thai companies paying dividends to Indian residents. Unlike several of India's other DTAAs, the India-Thailand treaty applies one flat rate with no distinction between portfolio and substantial shareholdings, which simplifies compliance considerably for both sides.
Thailand is one of India's important ASEAN trading partners, and cross-border equity investment between the two countries has grown steadily across automotive components, agro-processing, IT services, and hospitality. Beacon Filing's tax advisory services help businesses structure dividend flows between India and Thailand efficiently.
Treaty Rate vs Domestic Rate: Detailed Comparison
Domestic Rate (Without DTAA)
Under Indian domestic law, dividends paid to a non-resident shareholder are subject to withholding tax at 20% (plus applicable surcharge and health and education cess) under section 207(1) of the Income-tax Act, 2025. This is the default rate applied to all foreign shareholders absent a more favourable treaty rate. Since Dividend Distribution Tax was abolished from 1 April 2020, dividends are taxed directly in shareholders' hands, so the treaty rate applies straightforwardly to the withholding at source.
DTAA Rate (With Treaty)
Article 10(2) of the India-Thailand DTAA limits the source-state tax on dividends to 10% of the gross amount, "if the beneficial owner of the dividends is a resident of the other Contracting State" -- the treaty's exact wording. This is a flat ceiling: the treaty draws no distinction based on the size of the shareholding, unlike treaties such as India-USA (15%/25% split).
Effective Tax Savings
For a Thai company receiving INR 1 crore in dividends from its Indian subsidiary, the treaty saves INR 10 lakh in withholding tax (10% instead of 20%) -- INR 90 lakh received instead of INR 80 lakh. The Thai parent can then claim a tax credit at home for the 10% withheld in India under Article 23 of the treaty, eliminating double taxation on the same income.
Who Qualifies for the Reduced Rate
Beneficial Ownership Requirement
The Thai recipient must be the beneficial owner of the dividend -- someone with the unrestricted right to use and enjoy the income, not a nominee, agent, or conduit obligated to pass it on to a third party. Multi-layered holding structures designed to route dividends through Thailand purely to access the 10% rate remain vulnerable to challenge on this ground alone.
Tax Residency Requirement
The recipient must be a resident of Thailand under Article 4 of the DTAA -- for companies, incorporated in Thailand or having their place of effective management there. Individuals qualify based on Thai domestic residency rules, which treat a person as resident if present in Thailand for 180 days or more in a tax (calendar) year.
Anti-Abuse Rules: MLI Principal Purpose Test
Both India and Thailand have signed and ratified the Multilateral Instrument (MLI) -- India with effect from 1 October 2019, Thailand from 1 July 2022 -- and the two countries have matched the India-Thailand DTAA as a Covered Tax Agreement. This means the MLI's Principal Purpose Test (PPT) now applies: a treaty benefit can be denied if obtaining that benefit was one of the principal purposes of an arrangement, unless granting it would be in accordance with the treaty's object and purpose. The treaty itself has no Limitation of Benefits article, so the PPT -- together with India's domestic General Anti-Avoidance Rule (GAAR), in force since April 2017 -- is the operative anti-abuse safeguard. For withholding taxes specifically, the MLI took effect for India-source payments from 1 April 2023.
No Permanent Establishment Connection
Under Article 10(4), the 10% rate does not apply if the Thai beneficial owner carries on business in India through a permanent establishment (or performs independent personal services from a fixed base) and the shareholding generating the dividend is effectively connected with that PE or fixed base. In that case the dividend is instead taxed as business profits under Article 7, or under Article 14 for independent personal services.
Dividend-Specific Treaty Provisions Under Article 10
Article 10(1): Residence State Taxation
Dividends paid by a company resident in one state to a resident of the other state "may be taxed in that other State" -- establishing the residence country's primary taxing right alongside the source country's capped right under paragraph 2.
Article 10(2): The Rate Cap
The operative cap: source-state tax on dividends paid to a beneficial owner resident in the other state "shall not exceed 10 per cent of the gross amount of the dividends." Nothing prevents either country from applying a lower rate domestically.
Article 10(4): Permanent Establishment Exception
Where the dividend-generating holding is effectively connected with a PE or fixed base the beneficial owner has in the paying company's state, paragraphs 1 and 2 (and the 10% cap) do not apply -- Article 7 or Article 14 governs instead.
Documentation Required to Claim the Reduced Rate
Tax Residency Certificate (TRC)
The Thai shareholder must obtain a Tax Residency Certificate from the Revenue Department of Thailand (Krom Sanphakon), certifying Thai tax residency for the relevant year. This is required under section 159(8) of the Income-tax Act, 2025 (section 90(4) of the Income-tax Act, 1961).
Form 41 (formerly Form 10F)
If the TRC does not carry all prescribed details -- name, status, nationality, Thai tax identification number, period of residential status, and address -- the shareholder must also file Form 41 electronically on the Indian Income Tax e-filing portal. Since October 2023, this filing is compulsory even where the shareholder has no Indian PAN.
Self-Declaration and No-PE Confirmation
A self-declaration confirming beneficial ownership and the absence of a PE in India to which the shareholding is attributable is standard practice, and increasingly expected given the MLI's Principal Purpose Test.
Withholding Procedure for Indian Payers
Section 393(2): TDS Obligation
Under section 393(2) of the Income-tax Act, 2025 (Table, Sl. No. 17; section 195 of the Income-tax Act, 1961), the Indian company must deduct tax at source on the dividend at the time of payment or credit, whichever is earlier -- 10% where the treaty documentation is complete, 20% otherwise.
Forms 145 and 146 (formerly Forms 15CA and 15CB)
Before remitting the dividend to Thailand, the Indian company must file Form 145 online. For remittances exceeding INR 5 lakh in a financial year, a Chartered Accountant must additionally certify Form 146, confirming the applicable DTAA rate and that TDS has been correctly withheld.
Lower Withholding Certificate (Section 395(1))
If the Thai shareholder's actual tax liability would be lower than the amount otherwise deductible, they may apply to the Indian Assessing Officer for a lower or nil withholding certificate under section 395(1) of the Income-tax Act, 2025 (section 197 of the Income-tax Act, 1961).
Practical Examples and Calculations
Example 1: Thai Parent Receiving Dividends from an Indian Subsidiary
Siam Manufacturing Co Ltd, a Thai company, holds 100% of its Indian subsidiary, which declares dividends of INR 2 crore.
- Without DTAA: TDS at 20% = INR 40 lakh. Siam Manufacturing receives INR 1.60 crore.
- With DTAA: TDS at 10% = INR 20 lakh. Siam Manufacturing receives INR 1.80 crore.
- Tax saving: INR 20 lakh on this single distribution.
Siam Manufacturing then claims a foreign tax credit in Thailand under Article 23 of the treaty for the INR 20 lakh withheld in India, avoiding double taxation.
Example 2: Small Thai Shareholder in an Indian Listed Company
A Thai individual investor holding a 0.02% stake in an Indian listed company receives INR 5 lakh in dividends.
- Without documentation: Indian TDS at 20% = INR 1 lakh.
- With a valid TRC and Form 41: Indian TDS at 10% = INR 50,000.
Because the treaty applies the same flat 10% rate regardless of shareholding size, this small individual investor gets exactly the same rate as the 100%-owning parent company in Example 1 -- a genuine simplification compared with tiered treaties.
Example 3: PE Attribution Scenario
A Thai company operates a branch (PE) in India and separately holds a small portfolio stake in an unrelated Indian listed company. Dividends from the portfolio stake, held independently of the branch, qualify for the 10% rate. If the same shares were instead held as part of the branch's business assets, Article 10(4) would redirect the dividend to Article 7 business-profits treatment, taxed at the higher foreign-company corporate rate (35%, plus surcharge and cess) rather than at 10%.
For the full treaty text, see our India-Thailand DTAA complete guide and withholding tax rates page. Beacon Filing's tax advisory team and DTAA master guide can help structure dividend flows and documentation correctly.
Frequently Asked Questions
What is the dividend tax rate under the India-Thailand DTAA?
Under Article 10(2) of the India-Thailand DTAA, the maximum withholding tax on dividends is 10% of the gross amount, provided the recipient is the beneficial owner. This is half of India's domestic rate of 20% under section 207(1) of the Income-tax Act, 2025 (section 115A of the Income-tax Act, 1961), and applies regardless of shareholding percentage.
Does the dividend rate depend on how much of the company the Thai shareholder owns?
No. Unlike treaties with tiered dividend rates (such as India-USA), the India-Thailand DTAA applies one flat 10% rate to all dividends, whether the Thai recipient holds a 0.01% portfolio stake or a 100% controlling interest. This uniformity is one of the treaty's most practical simplifications for tax compliance.
What documentation does a Thai shareholder need to claim the reduced rate?
A Tax Residency Certificate from the Revenue Department of Thailand, Form 41 (formerly Form 10F) filed electronically on the Indian Income Tax portal, and a self-declaration confirming beneficial ownership and the absence of a permanent establishment in India to which the shareholding is attributable.
Does the MLI's Principal Purpose Test apply to India-Thailand dividends?
Yes. Both India and Thailand have ratified the MLI and matched the India-Thailand DTAA as a Covered Tax Agreement, so the Principal Purpose Test applies. Dividend arrangements structured primarily to obtain the 10% rate without genuine economic substance can be denied treaty benefits under the PPT or India's domestic GAAR.
What happens if the Thai company has a permanent establishment in India?
Under Article 10(4), the 10% rate does not apply where the shareholding generating the dividend is effectively connected with a permanent establishment or fixed base the Thai beneficial owner has in India. In that case, the dividend is instead taxed as business profits under Article 7, at India's foreign-company corporate rate.
Can excess withholding tax on dividends be refunded?
Yes. If an Indian payer withholds tax at the domestic 20% rate instead of the 10% treaty rate -- for example because the required documentation was not available at the time of payment -- the Thai recipient can file an Indian income tax return to claim a refund of the excess, subject to the applicable filing deadlines.
This article is for general information only and is not legal, tax, or investment advice. Confirm current rules with the relevant authority or a qualified professional — or ask our team. See our full disclaimer.
Doing business between India and Thailand? Our team handles the treaty filings.
Tax Advisory for Foreign Investors in IndiaThailand — Dividend Rates
DTAA Rate vs Domestic Rate
| Income Category | DTAA Rate | Domestic Rate | Article |
|---|---|---|---|
| General (all shareholdings) Beneficial owner is a resident of Thailand; flat rate with no shareholding tiers and no exempt category | 10% | 20% | Article 10(2) |
Thailand — Interest Rates
DTAA Rate vs Domestic Rate
| Income Category | DTAA Rate | Domestic Rate | Article |
|---|---|---|---|
| General Beneficial owner is a resident of Thailand | 10% | 20% | Article 11(2) |
| Government, RBI/EXIM Bank of India, and Bank of Thailand/EXIM Bank of Thailand Interest derived and beneficially owned by the Government, a political sub-division or local authority of either state; on the Indian side the Reserve Bank of India or the Export-Import Bank of India; on the Thai side the Bank of Thailand or the Export Import Bank of Thailand; or any other institution agreed between the competent authorities. The exemption runs to the recipient only -- there is no separate tier for commercial banks, which take the general 10% rate. | Exempt | 20% | Article 11(3) |
Thailand — Royalty Rates
DTAA Rate vs Domestic Rate
| Income Category | DTAA Rate | Domestic Rate | Article |
|---|---|---|---|
| Copyright, patent, trademark, and equipment royalties Beneficial owner is a resident of Thailand; covers copyright of literary, artistic or scientific work (including cinematograph film and radio/TV broadcasting tapes), patents, trademarks, designs, models, plans, secret formulas or processes, the use of industrial, commercial or scientific equipment, and information concerning industrial, commercial or scientific experience | 10% | 20% | Article 12(2) |
Thailand — FTS Rates
DTAA Rate vs Domestic Rate
| Income Category | DTAA Rate | Domestic Rate | Article |
|---|---|---|---|
| Fees for technical services The India-Thailand DTAA contains no separate article on fees for technical services. Managerial, technical, or consultancy fees fall under Article 7 (business profits, taxable in India only if attributable to a permanent establishment) or Article 14 (independent personal services, taxable only with a fixed base or a stay amounting to or exceeding 183 days in any 12-month period); where the arrangement is in substance for the use of industrial, commercial or scientific equipment or for know-how, Article 12 applies instead and India may tax at 10%. Absent a PE or fixed base the treaty leaves India no right to tax the fee, and the 20% domestic rate under section 207(2) (Table, Sl. Nos. 1 and 2) of the Income-tax Act, 2025 (section 115A of the Income-tax Act, 1961) applies only where the treaty position is not invoked. | No FTS article -- not a treaty income category | 20% | None (Article 7 or Article 14 if a PE/fixed base exists) |