FY 2026-27

A tax treaty, and what is deducted when you are not a resident

Day counts are on the returning to India page. This page starts after that label is known. Section 159 of the Income-tax Act, 2025 is the treaty. Section 207 is the tax on some of the income. The TDS table for tax year 2026-27 is what the payer deducts.

Official sources

Section 159, Income-tax Act, 2025. An agreement with another country. The Act applies only to the extent it is more beneficial. A person who is not a resident needs a residence certificate.
Section 160, Income-tax Act, 2025. Tax paid in a country with no agreement under section 159. The lower of the two rates.
Section 207, Income-tax Act, 2025. Tax on dividend, some interest, royalty, and fees for technical services of a non-resident (not being a company) or a foreign company.
TDS rates, tax year 2026-27. The page says it contains the Income-tax Act, 2025, as amended by the Finance Act, 2026. The non-resident rows below are this table. Each rate is increased by applicable surcharge and health and education cess.
Double Taxation Avoidance Agreements on the department site. The list of treaties. Country percents are in the treaty, not in section 207.
FAQ on the higher TDS rate under section 397(2). No PAN: the highest of the section rate, the rates in force, or 20% (5% only on two rows of the section 393(1) table).
Benefits available to non-residents, tax year 2026-27. Rule 217: five incomes where a non-resident need not give a PAN, and the four details to give instead. The PDF says it contains the Income-tax Act, 2025, as amended by the Finance Act, 2026.

The Act gives way where the agreement is better for you

Section 159(1) lets the Central Government make an agreement with the government of any other country, or of a specified territory, and notify it. Section 159(2) is the same idea for a specified association in India and a specified association in that territory, once the Central Government notifies that agreement.

Section 159(3) says the agreement may cover relief where tax has been paid under both laws, relief to promote trade and investment, avoidance of double taxation without creating a chance of non-taxation or reduced taxation through evasion or avoidance (including treaty-shopping for residents of a third country), and exchange of information.

Section 159(4) is the line that picks the rate. Where an agreement under subsection (1) or a notified agreement under subsection (2) grants relief or avoids double taxation, then, for the assessee to whom it applies, the provisions of this Act apply to the extent they are more beneficial to that assessee.

Read the notified text for the country on the department treaty list. Section 207 does not print those country percents. A department page titled "Tax rates, DTAA v. Income-tax Act" says it contains the Income-tax Act, 1961, as amended by the Finance Act, 2026. That is not the section 207 table. Use it only to find a treaty article. Use section 207, and the tax year 2026-27 TDS table, for the Act figure.

A person who is not a resident needs a certificate

Section 159(8) says an assessee, not being a resident, is entitled to claim any relief under an agreement in subsection (1) or (2) only when both of these are true.

Section 159(8)	Required
(a)	A certificate of being a resident in that country or specified territory, obtained from the government of that country or territory.
(b)	Such other documents and information as may be prescribed.

The section stops at "as may be prescribed". It does not name a form on that page. Whether you are a resident in India is the day-count page. This certificate is about residence in the other country.

No agreement: the lower of the two rates

Section 160(1) is for a person who is resident in India in the tax year. The income must have accrued or arisen outside India in that tax year, and it must not be deemed to accrue or arise in India. The person must have paid income-tax on it, by deduction or otherwise, in a country with no agreement under section 159 for relief or avoidance of double taxation.

The deduction from Indian income-tax, on that doubly taxed income, is:

Section 160(1)	Deduction
(a)	The Indian rate of tax, or the rate of tax of that country, whichever is lower.
(b)	The Indian rate of tax, if the two rates are equal.

Section 160(3) defines the Indian rate as Indian income-tax after any other relief under the Act, and before relief under this Part, divided by total income. The other country's rate is income-tax and super-tax actually paid there, after reliefs other than double-taxation relief, divided by the income assessed in that country.

Section 160(2) is a narrower case: a non-resident who is assessed on a share of the income of a registered firm that is assessed as resident in India, where that share includes foreign income of the same kind and tax was paid on it in a country with no section 159 agreement. The deduction follows the same lower-rate rule.

Section 160(1) does not apply while you are a non-resident. Foreign accounts and foreign shares, once section 6 makes you a resident, are on Schedule FA.

Section 207 rates, before a treaty cuts them

Section 207(1) applies to a non-resident (not being a company) or a foreign company, on the income in the table. The tax is the rate in the last column on that income, plus tax on the rest of total income at the rates in force.

Section 207(1)	Income	Tax
1	Dividend, other than the dividend in row 2.	20%
2	Dividend from a unit in an International Financial Services Centre.	10%
3	Interest from the Government or an Indian concern on money borrowed, or debt incurred, in foreign currency. Not the interest in rows 4 and 5.	20%
4	Interest from an infrastructure debt fund referred to in Schedule VII (table serial 46).	5%
5	Interest of the nature and extent referred to in section 393(2), table serials 2, 3 and 4.	The rates specified in those serials. On the TDS table those serials are 5%, or 4% for a long-term bond or rupee denominated bond listed on a recognised stock exchange in an IFSC, or 9% where the money was borrowed from outside India by a long-term bond or rupee denominated bond issued on or after 1 April 2023 and listed only on a recognised stock exchange in an IFSC.
6	Distributed income, being interest referred to in section 393(2), table serial 6.	The rate specified in that serial. The TDS table prints 5% and 10% against two Schedule V rows under the same serial. Use the row that names the payment.
7	Income from units, bought in foreign currency, of a mutual fund in Schedule VII (table serial 20 or 21), or of the Unit Trust of India.	20%
8	Total income after removing rows 1 to 7.	Rates in force. Section 207 does not print a slab here.

Section 207(2) is royalty and fees for technical services received from the Government or an Indian concern under an agreement made after 31 March 1976, other than income referred to in section 59(1). Where the agreement is with an Indian concern, it must be approved by the Central Government, or, if the matter is in the industrial policy, it must be in accordance with that policy. The rate on that royalty is 20%. The rate on those fees is 20%. The rest of total income is again at the rates in force.

If section 159(4) makes the treaty more beneficial on that income, the treaty figure is the one that applies. Section 207 does not itself compare the two.

What the payer deducts in tax year 2026-27

The TDS rate page is headed "For tax year 2026-27" and says it contains the Income-tax Act, 2025, as amended by the Finance Act, 2026. These rows are under "where the person is not resident in India". The footnote on that page says the rate of TDS shall be increased by applicable surcharge and health and education cess. The page does not print the surcharge bands.

Salary is a separate row: section 392, deducted at the normal slab rate. The salaried guide and the income-tax calculator run an Indian salary. They do not apply a treaty percent, and they do not rerun the day count.

TDS table	Payment	Deducted
Section 392	Salary	Normal slab rate
Section 393(2), table serial 17(a)	Income in respect of an investment made by a non-resident Indian citizen	20%
Serial 17(b)	Long-term capital gains referred to in section 214, for a non-resident Indian citizen, in respect of a transfer which takes place	12.5%
Serial 17(c)	Long-term capital gains referred to in section 197(4), in respect of a transfer which takes place	12.5%
Serial 17(d)	Long-term capital gains referred to in section 198, above ₹1,25,000, in respect of a transfer which takes place	12.5%
Serial 17(e)	Short-term capital gains referred to in section 196, in respect of a transfer which takes place	20%
Serial 17(f)	Any other long-term capital gains, other than long-term capital gains referred to in Schedule II (table serial 14 or 17), in respect of a transfer which takes place	12.5%
Serial 17(g)	Dividend from a unit in an International Financial Services Centre	10%
Serial 17(h)	Dividend other than row (g)	20%
Serial 17(i)	Interest payable by the Government or an Indian concern on money borrowed, or debt incurred, in foreign currency, other than interest in section 393(2) table serials 2 to 5	20%
Serial 17(j) and (k)	Royalty, and fees for technical services, payable by the Government or an Indian concern under an agreement. If the agreement is with an Indian concern, it must be approved by the Central Government, or be in accordance with industrial policy where the matter is in that policy.	20% each
Serial 17(l)	Any other income	30%
Section 393(2), table serial 5	Interest on an infrastructure debt fund	5%
Section 393(2), table serials 2, 3 and 4	Interest paid by an Indian company or a business trust on money borrowed in foreign currency under a loan agreement, or by issue of long-term bonds, including a long-term infrastructure bond	5%, 4%, or 9%, on the conditions in row 5 of the section 207 table
Section 393(2), table serial 10	Income in respect of units of a non-resident	20%
Section 393(2), table serial 15	Income of foreign institutional investors from securities, other than dividend or capital gain from those securities	20%. The same row says tax shall be deducted at the DTAA rate if that rate is lower than 20%.

On rows (b) to (f), the department cell says "in respect of a transfer which takes place" and does not print a date after those words. The 30% in row (l) is the residual deduction. It is not row 8 of section 207. That row taxes the rest of total income at the rates in force.

The Section 87A page says only a resident individual can claim that rebate. A non-resident does not get it at any income.

No PAN: the higher of three rates, with a short list of exceptions

The department FAQ on section 397(2) says that if the person receiving the income does not give a PAN to the deductor, tax is deducted at the highest of these:

Section 397(2)	Rate used in the "highest of" test
(a)	The rate specified in the relevant provision of the Act.
(b)	The rate or rates in force.
(c)	5% where tax is deducted under section 393(1), table serial 8(ii) or 8(v). 20% in any other case.

The same FAQ says section 397(2) does not apply to a non-resident, or a foreign company, for interest on long-term bonds in section 393(2) table serials 2, 3 and 4, and for specified payments under Rule 217.

The non-resident benefits note for tax year 2026-27 states Rule 217. A non-resident or a foreign company need not give a PAN to the deductor for these incomes: interest, royalty, fees for technical services, dividend, and payments for transfer of a capital asset. In place of the PAN, that note requires:

Name, e-mail id, and contact number.
Address in the country of which the person is a resident.
A certificate of residence from the government of the home country, if the law of that country provides for such a certificate.
The tax identification number of the home country. If there is no such number, a unique number on which the government of that country can identify the person.

That certificate of residence is the Rule 217 list. The certificate in section 159(8) is what the treaty claim itself requires. The note does not say one document replaces the other.

More of the withholding machinery, including salary and resident payments, is on the TDS guide.