India's tax treaties compared for Indian fund holders
India has treaties with the USA, Canada, the UK, Germany, France, the Netherlands and Switzerland. Article numbers differ, and none clearly settles how an Indian fund's payouts are treated.
Prepared by Prem Tax and Accounting Corp. Last checked against official sources on November 5, 2026.
A tax treaty splits taxing rights between India and your home country; it does not erase tax on an Indian fund. Our Treaty Page-Marker Set keeps the right article in view. Your adviser applies the treaty; we work alongside. See the countries guide and our Indian CPA page.
- Dividends are Article 10 in five treaties and Article 11 in the UK and French ones. The USA, Canada and the UK let both countries tax a gain.
- India wants a Tax Residency Certificate and Form 41 (was Form 10F) for a treaty rate. Whether a fund house applies one to IDCW (the payout option) is its call; if it deducts 20% plus surcharge and cess, the claim goes on your Indian return.
- Not settled in all seven: whether IDCW from an Indian trust-based scheme is a treaty "dividend".
The treaty table
| Treaty | Dividend cap in India | Gains | Home relief | IDCW and fund units |
|---|---|---|---|---|
| USA, 1989 | 25% (15% for a 10% company holder), Art. 10 | Art. 13: both may tax | Credit, Art. 25 | Art. 10 or 23: open |
| Canada, 1996 | 25% (15% for a 10% company holder), Art. 10; trust income 15%, Art. 21(3) | Art. 13(2): both may tax | Credit, Art. 23 | Art. 10 or 21(3): open |
| UK, 1993 | 10%, Art. 11 | Art. 14: both may tax | Credit, Art. 24 | Art. 11 or 23(3): open |
| Germany, 1995 | 10%, Art. 10 | Art. 13(4) or (5): open | Credit, Art. 23 | Protocol: fund payouts count as dividends for German tax |
| France, 1992 | 15% in the text, 10% via MFN clause, Art. 11 | Art. 14(6): France alone for a small holder | Credit, Art. 25 | Open |
| Netherlands, 1988 | 15% in the text, MFN may lower it, Art. 10 | Art. 13(5) or (6): open | Reduction and credit, Art. 23 | Open |
| Switzerland, 1994 | 10% from 2025 (5% from April 28, 2020 to 2024), Art. 10 | Art. 13(5)(b) or (6): open | Credit on Form DA-1, Art. 23 | Open |
Open means not settled. MFN is a most-favoured-nation clause: a lower rate India later agrees elsewhere can apply.
Our checklist
The Treaty Page-Marker Set:
- Mark the dividend, gains and relief articles of your treaty by number.
- Keep your residency certificate and Form 41 ready for the fund house.
- Keep each tax statement showing the rate and the date withheld.
- Note which article your adviser relied on for IDCW.
Common questions
Does a treaty exempt my Indian fund gains?
No. The USA, Canada and UK treaties let both countries tax a gain. Under the French treaty a small holder's gain is taxed in France alone, and Switzerland exempts private gains under its own law.
Which treaty article covers IDCW?
Not settled: the articles speak of company dividends, and a scheme is a trust. See [India's tax rules](/indian-mutual-funds/india-rules/india-tax-on-fund-gains-and-dividends/).
Is the France treaty changing?
A protocol signed February 18, 2026 is not in force; the French Senate passed the approval bill on October 27, 2026. It would drop the MFN clause, raise portfolio dividends to 15% and let India tax gains on Indian trust units. Dates change, so see [key dates](/indian-mutual-funds/tools/key-dates/).
Official sources
- IRS: India tax treaty documents
- GOV.UK: UK-India tax treaties
- Canada: Canada-India tax agreement
- Income Tax Department, India: Germany agreement
- Impots.gouv: France-India treaty text
- Impots.gouv: France-India amending protocol, not in force
- ESTV: Switzerland-India country sheet
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