India-Brazil DTAA: Complete Guide to the Double Taxation Treaty

Quick answer: Following a 2022 amending protocol that is now in force (effective in India for income arising from FY 2026-27, i.e. from 1 April 2026; effective in Brazil for amounts paid or credited from 1 January 2026), the India-Brazil DTAA caps dividends at 10% for a corporate beneficial owner holding directly at least 20% of capital through a 365-day period (15% otherwise), interest at 10% for loans granted by a bank for at least five years financing the purchase of equipment or investment projects (15% otherwise, with government/central-bank interest fully exempt), royalties at 15% for trademarks and 10% for all other royalties, and — under a new standalone Article 12-A — fees for technical services at 10%. All these rates sit below India's 20% domestic withholding rate. Signed 26 April 1988 and in force since 11 March 1992, the treaty is not modified by the MLI, since Brazil never signed it; the 2022 protocol carries its own PPT/LOB anti-abuse rule under a new Article 26-A.

Key takeaways:

• Dividends: 10% for a corporate beneficial owner holding directly ≥20% of capital through a 365-day period; 15% otherwise — both below the 20% domestic rate
• Interest: 10% for qualifying 5-year-plus bank loans (equipment purchase/investment projects); 15% otherwise; government/central bank interest exempt
• Royalties: 15% for trademarks, 10% for all other royalties (patents, copyrights, know-how) — reduced from 25%/15% pre-protocol
• Fees for Technical Services: 10% under new standalone Article 12-A (previously taxed within Article 12 Royalties at 15%, with no dedicated FTS article)
• Brazil has not signed the MLI, so no MLI-driven PPT modifications apply; the 2022 protocol adds its own PPT/LOB anti-abuse rule under Article 26-A

Overview of the India-Brazil DTAA

The Double Taxation Avoidance Agreement (DTAA) between India and the Federative Republic of Brazil is a significant bilateral tax treaty governing cross-border taxation between two of the largest emerging market economies. Originally signed on 26 April 1988 at New Delhi, the treaty entered into force on 11 March 1992 and has applied since then. Based primarily on the UN Model Tax Convention, the agreement reflects the interests of both developing nations in retaining source-country taxation rights.

The primary objective of the India-Brazil DTAA is to eliminate or reduce double taxation on income earned by residents of one country in the other, promote bilateral trade and investment, and provide a predictable tax framework. The treaty covers business profits, dividends, interest, royalties, capital gains, and independent personal services, among other income categories.

Bilateral trade between India and Brazil has grown substantially over the decades, with both countries being members of BRICS and sharing strong economic ties. India is among Brazil's top trading partners in Asia, and the treaty plays a critical role in facilitating investment flows between the two nations. Beacon Filing's tax advisory services can help you navigate the treaty provisions and maximize available benefits.

Treaty History and Current Status

The India-Brazil tax convention was negotiated during the late 1980s as both nations sought to deepen economic ties and attract cross-border investment. The treaty was signed on 26 April 1988 at New Delhi and entered into force on 11 March 1992, notified in India by GSR 381(E) dated 31 March 1992.

The treaty has undergone significant updates through amending protocols:

• 2013 Protocol: Signed at Brasilia on 15 October 2013 and in force from 6 August 2017, this protocol replaced Article 26 (Exchange of Information) with an updated provision aligned with the international standard — extending information exchange to taxes of every kind and description and preventing either state from declining to supply information merely because it is held by a bank or financial institution. It was notified in India by S.O. 93(E) dated 4 January 2018.
• 2022 Protocol: A further amending protocol was signed at Brasília on 24 August 2022. Brazil ratified it via Decreto Legislativo No. 200 (11 September 2025) and Decreto No. 12.667 (13 October 2025); it entered into force on both sides on 18 October 2025. On the Indian side it was notified by CBDT Notification No. 39/2026, S.O. 1647(E), dated 30 March 2026. The protocol is effective in India for income arising from FY 2026-27 (i.e., from 1 April 2026) and in Brazil for amounts paid or credited on or after 1 January 2026 — the revised rates described below are therefore now live. It reduces the dividend, interest, and royalty rates, introduces a new standalone Article 12-A for Fees for Technical Services, and adds a PPT/LOB anti-abuse rule under a new Article 26-A.

Notably, Brazil has not signed the OECD Multilateral Instrument (MLI), which means the India-Brazil DTAA remains unmodified by MLI provisions such as the Principal Purpose Test (PPT) or modified PE rules. This distinguishes it from treaties like the India-UK DTAA where MLI modifications now apply. The treaty is governed by its original text and the 2013/2022 protocols.

Key Treaty Articles

The India-Brazil DTAA contains articles covering the full range of cross-border income categories. Below are the most relevant provisions for businesses and investors:

Article 5 — Permanent Establishment

Article 5 defines when a Brazilian enterprise creates a permanent establishment (PE) in India, triggering Indian taxation on its business profits. The definition includes a fixed place of business such as a place of management, branch, office, factory, workshop, mine, oil or gas well, quarry, or similar place of natural resource extraction. Construction projects and assembly activities constitute a PE if they last more than six months.

Article 7 — Business Profits

Business profits of a Brazilian enterprise are taxable in India only if the enterprise carries on business through a PE situated in India. Profits are attributable to the PE only to the extent they relate to the PE's activities and assets.

Article 10 — Dividends

Dividends paid by an Indian company to a Brazilian resident are subject to withholding at the source at 10% under Article 10(2)(a), where the beneficial owner is a company (other than a partnership) holding directly at least 20% of the paying company's capital throughout a 365-day period that includes the date of payment. All other dividends are taxed at 15% under Article 10(2)(b). Both rates are below India's 20% domestic withholding rate for non-residents. These reduced rates apply for income arising from FY 2026-27 onward following the 2022 protocol; before that, a flat 15% rate applied regardless of shareholding.

Article 11 — Interest

Interest income is taxable at source at 10% under Article 11(2)(a) where the beneficial owner is a bank and the loan was granted for at least 5 years to finance the purchase of equipment or investment projects, and at 15% under Article 11(2)(b) for other interest payments. Interest paid to the Government, political subdivisions, local authorities, or central banks remains exempt from taxation under Article 11(3). One carve-out applies: under Article 11(3)(b), interest from securities, bonds or debentures issued by the Government of a contracting state, a political subdivision, or a wholly-owned agency is taxable only in the issuing state — so interest on Indian government securities sits outside the 10%/15% caps and is taxed in India at domestic rates. For other interest, the treaty provides meaningful savings compared to India's domestic rate of 20% under Section 195. The 10%/15% split applies for income arising from FY 2026-27 onward under the 2022 protocol; before that, a flat 15% rate applied to all non-exempt interest.

Article 12 — Royalties

Following the 2022 protocol (effective in India from FY 2026-27), the royalties article taxes payments for the use of trademarks at 15%, and payments for all other royalties — including patents, copyrights, designs, models, plans, secret formulas, processes, and industrial/commercial/scientific equipment — at 10%. Both rates now sit below India's 20% domestic withholding rate, so the treaty rate applies rather than the domestic rate. Before the protocol took effect, trademark royalties were taxed at 25% (above the domestic rate, so the lower domestic rate applied instead) and other royalties at 15%. Fees for technical services, which previously had no dedicated article and were treated as royalties or business profits depending on their nature, now sit in a new standalone Article 12-A.

Article 12-A — Fees for Technical Services

The 2022 protocol introduced a standalone Fees for Technical Services article, effective in India for income arising from FY 2026-27 onward. Under Article 12-A, FTS payments to a Brazilian resident are taxed at a flat 10% of the gross amount, below India's 20% domestic rate. Before the protocol, FTS payments had no dedicated article and fell within Article 12 Royalties (15%) or Article 7 Business Profits, depending on the nature of the services.

Article 13 — Capital Gains

Gains from the alienation of immovable property situated in India are taxable in India at domestic rates. Gains from the sale of movable property forming part of a PE's business property are taxable in the PE's state. Gains from the alienation of ships or aircraft operated in international traffic are taxable only in the state of the enterprise operating them. Gains from the alienation of shares in a company may be taxed in the state where that company is resident, and capital gains from any other property may be taxed in both contracting states.

Withholding Tax Rates Summary

The following table compares the treaty rates with India's domestic withholding tax rates for payments to Brazilian residents:

Note: All the treaty rates above (effective in India from FY 2026-27 following the 2022 protocol) are lower than India's 20% domestic withholding rate, so under Section 90(2) of the Income Tax Act the treaty rate applies across every category, including trademark royalties. Before the protocol took effect, trademark royalties were taxed at 25% under the treaty — above the then-prevailing domestic rate — so the lower domestic rate applied instead for that category. For a detailed rate-by-rate breakdown, see our dedicated withholding tax rates page for India to Brazil.

Permanent Establishment Rules

The PE provisions in the India-Brazil DTAA follow the UN Model Convention approach, which generally provides broader PE definitions than the OECD Model. Article 5 establishes several categories of PE:

Fixed Place PE: A place of management, branch, office, factory, workshop, mine, oil or gas well, quarry, or any other place of extraction of natural resources constitutes a PE.

Construction PE: A building site or construction or assembly project constitutes a PE if it exists for more than six months. This 6-month threshold is standard for UN-model treaties and shorter than the OECD Model's typical 12-month threshold.

Services PE: The furnishing of services, including consultancy services, by a Brazilian enterprise through employees or other personnel in India may create a PE where such activities continue for a period aggregating more than 183 days within any 12-month period.

Agency PE: A person acting on behalf of a Brazilian enterprise who habitually concludes contracts, or habitually plays the principal role leading to the conclusion of contracts routinely concluded without material modification by the enterprise, creates a PE. However, independent agents acting in the ordinary course of their business do not constitute a PE.

Brazilian companies should carefully monitor the duration and nature of their activities in India to avoid triggering an unintended PE. Beacon Filing's India entry strategy services include PE risk assessments for Brazilian companies.

Tax Residency and Certificate Requirements

To claim treaty benefits, a person must be a tax resident of one of the contracting states. Under Article 4, residence is determined by each country's domestic law — in India, the 182-day presence test under the Income Tax Act, and in Brazil, residence registration with the Receita Federal (Federal Revenue Service).

For individuals who are resident in both states, the tie-breaker rule applies sequentially: permanent home, center of vital interests, habitual abode, and nationality. If the tie cannot be broken, the competent authorities resolve the matter by mutual agreement.

To claim reduced treaty rates in India, a Brazilian resident must provide a Tax Residency Certificate (TRC) issued by the Receita Federal do Brasil. Indian payers must also comply with Form 15CA/15CB requirements and the payee must furnish Form 10F.

Mutual Agreement Procedure

The treaty provides for a Mutual Agreement Procedure (MAP) where a resident of either country believes that the actions of one or both contracting states result in taxation not in accordance with the treaty. The resident may present the case to the competent authority of the state of which they are a resident within three years of the first notification of the action resulting in taxation not in accordance with the treaty.

The competent authorities shall endeavor to resolve the case by mutual agreement and may communicate directly with each other. This procedure is particularly relevant for transfer pricing disputes between India and Brazil, which are common given the significant bilateral trade in commodities, IT services, and pharmaceuticals.

How to Claim Treaty Benefits

Claiming benefits under the India-Brazil DTAA requires compliance with both procedural and substantive requirements:

Step 1: Obtain a Tax Residency Certificate (TRC)

The Brazilian resident must obtain a TRC from the Receita Federal certifying their Brazilian tax residency for the relevant fiscal year.

Step 2: Provide Form 10F

The non-resident must furnish Form 10F to the Indian payer with prescribed information including name, status, nationality, TIN, and period of residential status.

Step 3: Self-Declaration

A self-declaration confirming beneficial ownership of the income and that the recipient does not have a PE in India (if claiming that income is not attributable to a PE).

Step 4: Indian Payer Compliance under Section 195

The Indian payer must deduct tax at the treaty rate and file Form 15CA electronically before making the remittance. For payments exceeding INR 5 lakh, a Chartered Accountant's certificate in Form 15CB is also required.

Step 5: Claim Relief under Section 90

Indian residents earning income in Brazil can claim double taxation relief under Section 90 of the Income Tax Act by way of a foreign tax credit for Brazilian taxes paid, subject to the provisions of Rule 128.

Beacon Filing's FEMA and RBI compliance services ensure all documentation is properly prepared for claiming treaty benefits on India-Brazil cross-border payments.

Frequently Asked Questions

What is the India-Brazil DTAA and when was it signed?

The India-Brazil DTAA is a bilateral tax treaty signed on 26 April 1988 at New Delhi between India and the Federative Republic of Brazil. It entered into force on 11 March 1992 and aims to eliminate double taxation on cross-border income and prevent fiscal evasion. Amending protocols were signed in 2013 and 2022.

Does the MLI apply to the India-Brazil DTAA?

No. Brazil has not signed the OECD Multilateral Instrument (MLI), so the India-Brazil DTAA remains governed solely by its original text and the 2013/2022 amending protocols. Provisions like the Principal Purpose Test and modified PE rules introduced through the MLI do not apply to this treaty.

What is the current trademark royalty rate under the India-Brazil DTAA?

Following the 2022 protocol (effective in India from FY 2026-27), trademark royalty payments are taxed at 15% — below India's 20% domestic withholding rate — so the treaty rate now applies under Section 90(2) of the Income Tax Act. All other royalties (patents, copyrights, know-how) are taxed at 10%. Before the protocol took effect, trademark royalties were taxed at 25% under the treaty, which exceeded the domestic rate, so the lower domestic rate applied instead for that category.

How does a Brazilian company avoid creating a permanent establishment in India?

A Brazilian company can avoid PE exposure by keeping construction or assembly projects in India under six months and service activities under 183 days in any 12-month period. It should avoid maintaining a fixed place of business and not have dependent agents who habitually conclude contracts in India.

Does the India-Brazil DTAA have a Limitation of Benefits clause?

Yes — since the 2022 protocol. A new Article 26-A (Entitlement to Benefits) combines a detailed Limitation of Benefits rule, restricting treaty benefits to qualified persons and genuinely active businesses, with a Principal Purpose Test that denies benefits to arrangements set up primarily to access the treaty. The 2013 protocol did not deal with treaty benefits — it only replaced Article 26 on exchange of information.

What documentation is required to claim DTAA benefits in India?

The Brazilian resident must provide a Tax Residency Certificate from the Receita Federal, Form 10F, and a self-declaration of beneficial ownership and non-PE status. The Indian payer must file Form 15CA and Form 15CB for payments exceeding INR 5 lakh before making the remittance.

How are capital gains from Indian shares taxed for Brazilian residents?

Under Article 13, gains from the sale of shares in Indian companies by Brazilian residents may be taxed in India at domestic rates. The Brazilian resident can claim a foreign tax credit in Brazil for taxes paid in India, thereby avoiding double taxation on the capital gains.