India’s Income-tax Act, 2025 has quietly retired Form 10F, the document Indians in Australia have filed for years to claim the lower India-Australia DTAA tax rate, and replaced it with Form 41 from the 2026-27 tax year onward. Anyone who has ever claimed treaty relief on Indian dividends, bank interest or royalties needs the new form and a valid Tax Residency Certificate before an Indian payer deducts a single rupee.
The India Australia DTAA guide 2026 starts with a number worth knowing: the treaty caps India’s tax on dividends and interest paid to an Australian resident at 15 percent, against a domestic non-resident rate that otherwise runs above 30 percent once cess and surcharge are added, but claiming that lower rate now runs through Form 41 rather than the Form 10F most NRIs have filed for years.
Section 159(8) of the Income-tax Act, 2025, which came into force on 1 April 2026, now governs how a non-resident claims treaty relief, replacing Sections 90(5) and 90A(5) of the old 1961 Act. Rule 75 of the Income-tax Rules, 2026 replaces the old Rule 21AB and requires Form 41 in place of Form 10F. The new form has four parts covering the taxpayer’s identity, tax residency details, the nature of the India-sourced income, and the specific DTAA article being relied on, filed only through India’s e-filing portal, never on paper.
A valid Tax Residency Certificate from the Australian Taxation Office is still required alongside it. Form 41 alone does not secure the treaty rate, and neither does a Tax Residency Certificate alone. Both have to reach the Indian payer before tax is deducted, not after.
The DTAA’s rate caps vary by income type, and the difference matters when deciding what documentation to prepare. Dividends from an Indian company are capped at 15 percent under Article 10. Interest, including on NRO account balances, is capped at 15 percent under Article 11, well below the 31.2 percent effective TDS rate that otherwise applies to NRO interest under the Act 2025’s renumbered Section 393(2). Royalties are split in two: equipment-linked royalties are capped at 10 percent under Article 12(2)(a), while other royalties and technical service fees fall under Article 12(2)(b)(ii) at 15 percent.
Capital gains work differently again. Gains on Indian real property and on shares in an Indian company stay taxable in India regardless of the treaty, since Article 13 assigns taxing rights to the country where the property or company sits, so the DTAA’s contribution there is not a lower Indian rate but the credit an NRI can then claim in Australia for tax already paid in India.
What is the DTAA residency tie-breaker rule, and why does it matter for someone who splits the year between India and Australia?
Under Article 4 of the India-Australia DTAA, a person can occasionally qualify as a tax resident of both countries in the same year, for instance by spending enough days in India to meet its residency test while also holding Australian tax residency through work and family ties.When that happens, the treaty does not let both countries tax worldwide income at once. It first looks at which country has a permanent home available; if there is a permanent home in both or neither, it moves to whichever country the person’s personal and economic relations are closer to, sometimes called the centre of vital interests. Whichever country wins that test taxes worldwide income, and the other taxes only the income actually sourced there.
The credit side of this runs through Australian law as much as Indian law. Where Indian tax has genuinely been withheld or paid on income that also counts as assessable income in Australia, the Foreign Income Tax Offset under Division 770 of the Income Tax Assessment Act 1997 lets that Indian tax be credited against the Australian tax bill, converted to Australian dollars.
If total foreign tax paid across a year is 1,000 Australian dollars or less, no detailed offset limit calculation is required. Above that threshold, the offset is capped at whichever is lower: the actual foreign tax paid, or the Australian tax payable on that same income at the taxpayer’s marginal rate. Excess foreign tax beyond that cap cannot be recovered or carried forward.
This sits one step earlier than the NRO account TDS mechanics themselves, covered separately, since a DTAA claim is what determines whether that TDS gets applied at the higher domestic rate or the lower treaty rate in the first place, and Form 41 is now the document that makes the difference.
What this means in practice is a paperwork deadline hiding inside a bigger legislative changeover. NRIs in Australia who have relied on a Form 10F filed in a previous year should not assume it still works for income received from the 2026-27 tax year, in the same way that Form 15CA and 15CB stopped covering new remittances once their own Form 145/146 replacements took effect.
The safer sequence is to renew the Tax Residency Certificate with the Australian Taxation Office ahead of any dividend or interest payment, file Form 41 online well before that payment date, and keep the exchange rate and payment records the Australian Taxation Office will want if the Foreign Income Tax Offset claim exceeds the 1,000 dollar threshold. Further coverage of tax questions facing the diaspora is available in the Business section.
India Australia DTAA guide 2026: what Indian-Australians need to sort before claiming relief
Do I still need to file anything if my Form 10F was accepted last year?
Yes. Form 41 governs claims for income received from the 2026-27 tax year onward under the Income-tax Act, 2025, and a Form 10F filed in an earlier year does not carry forward automatically.
What tax rate applies to Indian bank interest paid to an Australian resident under the DTAA?
Article 11 of the India-Australia DTAA caps it at 15 percent, well below the 31.2 percent effective TDS rate that otherwise applies to NRO interest, provided Form 41 and a valid Tax Residency Certificate are filed with the Indian payer before the interest is paid.
Does the DTAA reduce Indian tax on selling property or shares in India?
No. Article 13 keeps taxing rights over Indian real property and shares in Indian companies with India regardless of the treaty. Relief for an Australian resident comes instead through the Foreign Income Tax Offset claimed in Australia, not through a lower Indian withholding rate.
What happens if I am taxed as a resident of both India and Australia in the same year?
Article 4’s tie-breaker test resolves it, first by which country has a permanent home available, then by which country the person’s personal and economic ties are closer to, so only one country ends up taxing worldwide income for that year.
