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

Quick answer: The India-Thailand DTAA (signed 29 June 2015, in force since 13 October 2015, effective 1 April 2016 for India) applies a uniform 10% withholding rate to dividends, interest, and royalties — a 50% cut from India's 20% domestic rate. Interest paid to the Government of Thailand or Bank of Thailand is fully exempt. Both the construction and services PE thresholds are set at 183 days. Notably, the treaty has no separate article on fees for technical services, so technical service fees are generally taxable in India only if the Thai provider has a permanent establishment there.

Key takeaways:

• Uniform 10% rate on dividends, interest, and royalties
• That's a 50% reduction from India's 20% domestic withholding rate
• Interest to the Thai Government or Bank of Thailand is fully exempt
• Construction and services PE thresholds both set at 183 days
• No separate FTS article — technical service fees are generally taxable in India only if there is a PE

Overview of the India-Thailand DTAA

The Double Taxation Avoidance Agreement (DTAA) between India and Thailand is a modern bilateral tax treaty that governs the taxation of cross-border income between two of Southeast Asia's most important trading partners. The current agreement was signed on 29 June 2015, replacing the earlier treaty originally signed on 22 March 1985. The new treaty entered into force on 13 October 2015 and became effective from 1 April 2016 for Indian tax purposes and from 1 January 2016 for Thai tax purposes.

India and Thailand enjoy deep economic ties rooted in geographical proximity, cultural connections, and membership in regional frameworks like ASEAN-India cooperation. Bilateral trade between the two countries exceeds USD 15 billion annually, with significant investment flows in sectors including automotive, pharmaceuticals, IT services, and infrastructure. The DTAA provides the tax framework necessary for this commercial activity, reducing withholding tax burdens and preventing fiscal evasion.

A distinctive feature of the India-Thailand DTAA is its simplicity — the treaty applies a uniform 10% withholding rate across the major investment income categories (dividends, interest, and royalties). This consistency makes it one of the easiest Indian DTAAs to apply in practice. Beacon Filing's tax advisory services help businesses operating between India and Thailand navigate these provisions effectively.

Treaty History and Current Status

The original India-Thailand tax treaty was signed at New Delhi on 22 March 1985 and served both countries for three decades. As India-Thailand economic relations expanded considerably — particularly after India's Look East Policy and Thailand's role as an ASEAN gateway — the older treaty became inadequate to address modern cross-border transaction structures.

The revised DTAA was negotiated over several rounds and signed at Bangkok on 29 June 2015. The treaty entered into force on 13 October 2015, with provisions becoming effective from 1 April 2016 in India (for fiscal years beginning 1 April 2016) and 1 January 2016 in Thailand. The new treaty modernized provisions related to permanent establishment, exchange of information, and assistance in collection of taxes.

Both India and Thailand have signed the OECD Multilateral Instrument (MLI). India signed the MLI on 7 June 2017 and ratified it on 25 June 2019, with the MLI entering into force on 1 October 2019. Thailand signed the MLI on 9 February 2022 and deposited its instrument of ratification on 31 March 2022, with the MLI entering into force for Thailand on 1 July 2022. The India-Thailand DTAA is listed as a Covered Tax Agreement by both countries, meaning MLI modifications — particularly the Principal Purpose Test (PPT) and anti-abuse provisions — now apply. The MLI also modifies certain PE-related provisions under Article 12 (commissionnaire arrangements) and Article 13 (specific activity exemptions).

Key Treaty Articles

The India-Thailand DTAA contains 30 articles covering the full spectrum of cross-border income categories. Below are the provisions most relevant to businesses and investors.

Article 5 — Permanent Establishment

Article 5 defines when a Thai enterprise creates a permanent establishment (PE) in India. 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 any place of extraction of natural resources. Importantly, the services PE provision specifies that an enterprise is deemed to have a PE if it furnishes services through employees or other personnel in a contracting state for the same or a connected project for a period aggregating more than 183 days within any 12-month period. Construction, installation, or assembly projects constitute a PE if they last for more than 183 days.

Article 7 — Business Profits

Business profits of a Thai enterprise are taxable in India only if the enterprise carries on business through a PE situated in India. Profits are attributed to the PE on an arm's-length basis, as if the PE were a distinct and separate enterprise.

Article 10 — Dividends

Dividends paid by an Indian company to a Thai resident beneficial owner may be taxed in India at a rate not exceeding 10% of the gross amount. The domestic withholding rate is 20% under Section 195, so the treaty provides a 50% reduction. There is no tiered rate structure — the 10% rate applies uniformly regardless of the percentage of shareholding.

Article 11 — Interest

Interest arising in India and paid to a Thai resident may be taxed at a maximum of 10% of the gross amount. Interest derived and beneficially owned by the Government of Thailand, a political sub-division or local authority, the Bank of Thailand, the Export-Import Bank of Thailand, or other institutions agreed between the competent authorities is exempt. The 10% rate provides a 50% saving compared to the domestic rate of 20%.

Article 12 — Royalties

Royalties arising in India and paid to a Thai resident may be taxed at a rate not exceeding 10% of the gross amount. Royalties cover payments for copyrights, patents, trademarks, designs, models, plans, secret formulas, processes, and the use of industrial, commercial, or scientific equipment or experience. Notably, the treaty contains no separate article on fees for technical services (FTS) — unlike many of India's other treaties. Fees for managerial, technical, or consultancy services therefore fall under Article 7 (business profits) or Article 14 (independent personal services) and are taxable in India only if attributable to a permanent establishment or fixed base there.

Article 13 — Capital Gains

Capital gains from the alienation of immovable property are taxable where the property is situated. Gains from shares deriving more than 50% of their value from immovable property may be taxed in the source country. Gains from shares other than immovable property-rich shares may be taxed in the source country. The treaty does not cap the capital gains rate, meaning Indian domestic rates apply — 12.5% for long-term gains on listed equity and applicable rates for short-term gains.

Withholding Tax Rates Summary

The India-Thailand DTAA is notable for its uniform 10% withholding rate on dividends, interest, and royalties:

The uniform 10% rate simplifies compliance and makes the treaty straightforward to apply. Under Section 90(2) of the Income Tax Act, the taxpayer may apply whichever rate is more beneficial. For a detailed rate-by-rate breakdown, see our dedicated withholding tax rates page for India to Thailand.

Permanent Establishment Rules

The PE provisions in the India-Thailand DTAA are comprehensive and reflect modern international standards. 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 place of extraction of natural resources. The standard exclusions apply — activities of a preparatory or auxiliary character, such as storage, display, purchasing, or information gathering, do not constitute a PE.

Construction PE: A building site, or a construction, installation, or assembly project, or supervisory activities in connection therewith, constitutes a PE only if it lasts for more than 183 days. This is a moderately generous threshold — more lenient than the 120-day threshold in the India-USA treaty but shorter than the 12-month threshold in the OECD Model.

Services PE: An enterprise is deemed to have a PE if it furnishes services, including consultancy services, through employees or other personnel in a contracting state, provided such activities continue for the same or a connected project for a period or periods aggregating more than 183 days within any 12-month period. Thai service companies must carefully track the cumulative days their personnel spend in India on connected projects.

Insurance PE: An enterprise of Thailand is deemed to have a PE in India if it collects premiums or insures risks in India through an employee or representative (other than an independent agent).

With the MLI now applicable, the PE definition may be further modified by the anti-fragmentation rule and commissionnaire arrangement provisions, depending on each country's specific MLI positions. Thai companies should seek professional PE risk assessments from Beacon Filing's India entry strategy team.

Tax Residency and Certificate Requirements

Under Article 4, a resident of a contracting state means any person who is liable to tax in that state by reason of domicile, residence, place of management, place of incorporation, or any similar criterion. In India, tax residency is determined primarily by the 182-day presence test under Section 6. In Thailand, residency for individuals is based on residing in Thailand for 180 days or more in any tax year (calendar year).

For dual residents (individuals), the tie-breaker rules apply sequentially: permanent home, center of vital interests, habitual abode, and nationality. For dual-resident companies, the place of effective management determines residency.

To claim reduced treaty rates in India, a Thai resident must provide a Tax Residency Certificate (TRC) issued by the Revenue Department of Thailand. The TRC must certify that the person is a resident of Thailand for the relevant period. Additionally, Form 10F must be filed on the Indian Income Tax e-filing portal.

Mutual Agreement Procedure

Article 25 of the India-Thailand DTAA provides for a Mutual Agreement Procedure (MAP) where a resident of either country believes that actions of one or both states result in taxation not in accordance with the treaty. The resident may present the case to the competent authority of the state of residence within three years from the first notification of the taxing action.

The competent authorities shall endeavor to resolve the case by mutual agreement and may communicate directly. India's competent authority for MAP is the Central Board of Direct Taxes (CBDT). This procedure is particularly relevant for transfer pricing adjustments involving Thai subsidiaries or affiliates of Indian companies, which have increased in frequency as India-Thailand trade has grown.

How to Claim Treaty Benefits

Claiming benefits under the India-Thailand DTAA follows a standardized process:

Step 1: Obtain a Tax Residency Certificate (TRC)

The Thai resident must obtain a TRC from the Revenue Department of Thailand (Krom Sanphakon) certifying their tax residency status for the relevant fiscal year.

Step 2: Provide Form 10F

Furnish Form 10F to the Indian payer containing prescribed details — name, status, nationality, Thai TIN, period of residential status, and nature of income. The form can be filed electronically on the Indian Income Tax portal.

Step 3: Self-Declaration

A self-declaration confirming beneficial ownership, absence of PE in India (where relevant), and that the arrangement has a genuine business purpose. Under the MLI's Principal Purpose Test, arrangements designed primarily to access treaty benefits without economic substance may be challenged.

Step 4: Indian Payer Compliance under Section 195

The Indian payer must deduct TDS at 10% (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 required.

Step 5: Claim Relief under Section 90

Indian residents earning income in Thailand can claim double taxation relief under Section 90 by way of a foreign tax credit for Thai taxes paid, subject to Rule 128 provisions.

Beacon Filing's FEMA and RBI compliance services can assist with the entire process from TRC verification to Form 15CA/15CB filing.

Frequently Asked Questions

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

The India-Thailand DTAA is a bilateral tax treaty signed on 29 June 2015 between the Government of India and the Government of the Kingdom of Thailand. It replaced the earlier 1985 agreement and entered into force on 13 October 2015, becoming effective from 1 April 2016 for Indian tax purposes. The treaty aims to eliminate double taxation and prevent fiscal evasion.

What are the withholding rates under the India-Thailand DTAA?

The treaty applies a uniform 10% rate on dividends, interest, and royalties — a 50% reduction from India's domestic rate of 20%. Interest paid to the Government of Thailand or Bank of Thailand is fully exempt. There is no separate rate for fees for technical services because the treaty contains no FTS article.

Does the MLI apply to the India-Thailand DTAA?

Yes. Both India and Thailand have signed and ratified the MLI, and the India-Thailand DTAA is listed as a Covered Tax Agreement. The Principal Purpose Test (PPT) and certain PE-related modifications now apply to this treaty, adding anti-abuse provisions.

What is the services PE threshold under this treaty?

Under Article 5, a Thai enterprise creates a services PE in India if it furnishes services through employees or other personnel for the same or a connected project for a period aggregating more than 183 days in any 12-month period. This is a relatively generous threshold — Thai companies should track cumulative days carefully.

What documentation is needed to claim treaty benefits in India?

Thai residents need a Tax Residency Certificate from the Revenue Department of Thailand, Form 10F filed on the Indian Income Tax portal, and a self-declaration of beneficial ownership. The Indian payer must file Form 15CA (and Form 15CB for payments exceeding INR 5 lakh).

Is there a "make available" clause in the India-Thailand DTAA?

No — and more fundamentally, the India-Thailand DTAA contains no fees for technical services (FTS) article at all, so the "make available" concept does not arise. Managerial, technical, and consultancy fees paid to Thai residents are instead treated as business profits under Article 7 (or independent personal services under Article 14) and are taxable in India only if the Thai provider has a permanent establishment or fixed base in India.

How are capital gains from Indian investments taxed for Thai residents?

Capital gains from immovable property in India are taxable in India at domestic rates. Gains from shares of immovable property-rich Indian companies may also be taxed in India. For other shares, India may tax the gains at domestic rates. Thai residents can claim a foreign tax credit in Thailand for taxes paid in India to avoid double taxation.