Withholding Tax Rates: India to Qatar Under DTAA

India to Qatar Withholding Tax Rates Under the DTAA

An Indian payer remitting dividends, interest, royalties, or fees for technical services to a Qatari resident must deduct tax under section 393(2) of the Income-tax Act, 2025 (Table, Sl. No. 17; section 195 of the Income-tax Act, 1961). The India-Qatar DTAA — a new Agreement signed 18 February 2025, in force from 10 September 2025 — caps these rates below the domestic 20% rate, and section 159(4) of the Income-tax Act, 2025 (section 90(2) of the Income-tax Act, 1961) lets the taxpayer apply whichever rate, domestic or treaty, is more beneficial. Because entry into force fell in 2025, the Agreement has effect in India only for income arising on or after 1 April 2026 (FY 2026-27); it replaced the 1999 India-Qatar convention, which governed income up to that point. For the treaty's full residence, PE, and capital-gains rules, see our complete India-Qatar DTAA guide.

Rate Matrix at a Glance

Dividend Withholding Rates

Under Article 10 of the India-Qatar DTAA, dividends paid by an Indian company to a Qatari beneficial owner are capped at 5% of the gross amount where that owner is a company holding at least 25% of the paying company's shares (Article 10(2)(a)), and at 10% in every other case (Article 10(2)(b)). Article 10(3) goes further: where the beneficial owner is the Qatari or Indian government itself, a political subdivision, or a local authority, the dividend is taxable only in the recipient's own State — a 0% Indian withholding outcome.

On this treaty the common error runs the other way from most: a payer may assume that the Qatar Investment Authority (QIA) and Qatar Holding LLC exemption extends to dividends. It does not. The Protocol to this Agreement names QIA and Qatar Holding LLC only "for the purposes of paragraph 3 of Article 11" — the interest article. There is no equivalent clause under Article 10, so Indian dividends paid to QIA or Qatar Holding LLC are taxed at the ordinary 5%/10% rates under Article 10(2), regardless of the size of the underlying interest exemption these entities enjoy elsewhere in the treaty.

Interest Withholding Rates

Article 11(2) caps interest at a flat 10% of the gross amount for any Qatari beneficial owner — there is no separate bank or financial-institution tier in this treaty. Article 11(3) exempts interest that is derived and beneficially owned by a Contracting State itself, a political subdivision, or a local authority.

The Protocol — this treaty's only substantive Protocol clause — expands "State" for Article 11(3) purposes to include, on the India side, the Reserve Bank of India and the Export-Import Bank of India, and on the Qatar side, the Qatar Investment Authority and Qatar Holding LLC. Given QIA's scale as a holder of Indian debt and equity, this is the treaty's single most consequential clause: interest QIA and Qatar Holding LLC earn from Indian borrowers bears no Indian tax, and the Reserve Bank of India and the Export-Import Bank of India get the mirror exemption on Qatari-source interest. Article 11(4) separately confirms that "interest" includes income from arrangements such as Islamic financial instruments "where the substance of the underlying contract can be assimilated to a loan," while excluding late-payment penalty charges. Where the debt-claim is effectively connected with a permanent establishment in India, Article 11(5) disapplies paragraphs 1 through 3 — including the government exemption — and routes the income to Article 7 at ordinary business-profit rates.

Royalty and FTS Withholding Rates

Article 12 covers both royalties and fees for technical services in a single article, both capped at 10% — there is no standalone FTS article and no Article 12A.

The royalty definition in Article 12(3)(a) is OECD-style and reaches "the use of, or the right to use, any industrial, commercial or scientific equipment," so equipment rental is caught, along with cinematograph films and broadcast tapes. The FTS definition in Article 12(3)(b) — "payment of any kind in consideration for the rendering of any managerial, technical or consultancy services including the provision of services by technical or other personnel" — has no "make available" requirement, and expressly includes managerial services and personnel secondment. The only exclusions are payments already covered by Article 14 (independent personal services) and Article 15 (dependent personal services).

The Permanent-Establishment Carve-Out

All four passive-income articles share the same structure: the treaty cap applies only where the recipient has no PE or fixed base in India connected with the income. Once a Qatari enterprise crosses the PE threshold in Article 5 — a construction or supervisory project beyond six months, or services furnished through personnel for more than 90 days within any rolling 12-month period, with no carve-out for services already taxed as FTS — dividends, interest, royalties, and FTS effectively connected with that PE fall out of Articles 10-12 entirely and are instead taxed on a net basis as business profits under Article 7, generally at the 35% foreign-company rate.

Capital Gains Treatment

Article 13 allocates taxing rights rather than capping a rate:

Article 13(5) gives India an unconditional right to tax a Qatari resident's gain on Indian-company shares — no minimum shareholding, no look-back period, and no grandfathering. Article 13(4)'s land-rich test is a point-in-time >50% test with no 365-day look-back, and reaches shares only, not partnership or trust interests.

How to Apply the Reduced Rates

Tax Residency Certificate

The Qatari recipient must obtain a Tax Residency Certificate from the Qatari tax authorities; section 159(8) of the Income-tax Act, 2025 (section 90(4) of the Income-tax Act, 1961) makes it a condition of treaty relief. Article 3(1)(g)(ii) names Qatar's competent authority as "the Minister of Finance, or his authorized representative."

Form 41 (formerly Form 10F)

The non-resident must electronically file Form 41 with status, nationality, tax identification, and residence-period details before treaty relief is available at source.

Forms 145 and 146 (formerly Forms 15CA and 15CB)

The Indian payer files Form 145 before remitting. Form 146 — a Chartered Accountant's certificate — is required only for Part C of Form 145: a taxable remittance above ₹5 lakh made without a section 395 certificate. It is not required for every remittance.

Lower-Deduction Certificate

If the applicable rate is uncertain, the recipient can apply under section 395(1) of the Income-tax Act, 2025 (section 197 of the Income-tax Act, 1961) for a certificate from the Assessing Officer specifying the correct rate.

Domestic Rates vs Treaty Rates Comparison

India’s domestic rates for these payments sit in the two Tables to section 207 of the Income-tax Act, 2025 (section 115A of the Income-tax Act, 1961).

Domestic rupee-denominated (NRO) interest of non-residents falls outside this Table altogether and stays at the "rates in force" — 30% for individuals and 35% for foreign companies — so the 20% domestic figure above applies to foreign-currency debt only. The treaty cap is a ceiling on the Indian tax on the gross amount, and Article 2(3)(a) brings "the income-tax, including any surcharge thereon" inside that ceiling — unlike the domestic figure, to which surcharge is added.

Worked Examples

Dividend to a substantial Qatari shareholder: A Qatari company holds 30% of an Indian subsidiary and receives a ₹50,00,000 dividend. Meeting the 25% threshold, Article 10(2)(a) caps withholding at 5%: 50,00,000 × 5% = ₹2,50,000, against 50,00,000 × 20% = ₹10,00,000 domestically — a ₹7,50,000 saving.

Interest to the Qatar Investment Authority versus an ordinary lender: QIA extends a loan to an Indian company and earns ₹40,00,000 in interest. Because QIA is Protocol-listed, this is fully exempt — nil withholding. An ordinary Qatari bank earning the same ₹40,00,000 in interest, with no Protocol listing, would instead be capped at the Article 11(2) rate: 40,00,000 × 10% = ₹4,00,000. If QIA instead receives a ₹40,00,000 dividend from a 25%+ holding, the Protocol gives no relief: Article 10(2)(a) still applies, and 40,00,000 × 5% = ₹2,00,000 must be withheld.

Common Mistakes and Compliance Tips

Applying the superseded 1999 rate structure. Only the 2025 Agreement's 5%/10% dividend split and 10% interest/royalty/FTS caps are current for income from FY 2026-27.

Assuming QIA or Qatar Holding LLC dividends are exempt. The Protocol exemption is confined to Article 11 interest; Article 10(2) still applies to their dividends.

Missing the services PE day-count. Article 5(3)(b)'s 90-day rolling test has no carve-out for services already taxed as FTS under Article 12.

Applying a 12-month construction PE threshold. This treaty's threshold is six months, not the OECD Model's twelve.

Assuming an MFN benefit is available. There is no MFN clause, and Article 24(4) rules out reading one into the non-discrimination article.

Filing Form 146 for every remittance. It is required only for Part C of Form 145 — a remittance above ₹5 lakh without a section 395 certificate — not for every payment.

Frequently Asked Questions

What TDS rate applies when an Indian company pays a Qatari resident?

Under the 2025 Agreement, dividends are capped at 5% where the Qatari beneficial owner is a company holding at least 25% of the Indian payer's shares, and 10% in all other cases; interest, royalties and fees for technical services are each capped at a flat 10%. The Indian payer deducts under section 393(2) of the Income-tax Act, 2025 (Table, Sl. No. 17; section 195 of the Income-tax Act, 1961), applying whichever of the treaty or domestic rate is more beneficial.

What must an Indian payer file before remitting to Qatar?

The payer files Form 145 before the remittance. Form 146, a Chartered Accountant's certificate, is required only for Part C of Form 145 - a taxable remittance above INR 5 lakh made without a section 395 certificate - not for every payment. The Qatari recipient supplies a Tax Residency Certificate and files Form 41.

What is the withholding rate on royalties and technical service fees paid to Qatar?

Both are capped at 10% under Article 12(2), which covers royalties and fees for technical services in one paragraph - this treaty has no separate Article 12A. The definition in Article 12(3)(b) carries no 'make available' requirement, so managerial and consultancy fees and payments for seconded personnel are all covered. The domestic comparators are 20% under section 207(2) (Table, Sl. Nos. 1 and 2).

From when do the 2025 treaty rates apply to a remittance from India?

From income arising on or after 1 April 2026 - FY 2026-27. The Agreement entered into force on 10 September 2025, but Article 30(3) delays effect to the first fiscal year following the calendar year of entry into force. Income up to 31 March 2026 was governed by the 1999 convention, which Article 30(4) then displaced.

Is surcharge added on top of the India-Qatar treaty rate?

No. The treaty rate is a ceiling on the Indian tax on the gross amount, and Article 2(3)(a) brings 'the income-tax, including any surcharge thereon' inside that ceiling. The 20% domestic figures under section 207, by contrast, are increased by applicable surcharge before any comparison is made.

What happens to the treaty rate if the Qatari recipient has a PE in India?

The cap falls away. Articles 10(5), 11(5) and 12(4) disapply the reduced rates where the holding, debt-claim, right or service is effectively connected with a permanent establishment or fixed base in India, and the income is taxed on a net basis as business profits under Article 7, generally at the 35% foreign-company rate. For dividends and interest the disapplication reaches paragraph 3 as well, so even the government exemption is lost.