India – United States Tax Treaty
The India-United States tax treaty caps withholding on dividends at 25% for portfolio investors and 15% for qualifying direct investment, and interest at 15%. Royalty rates vary by category, from 10% on equipment to 15% on copyright. Private pensions are taxable only in the country of residence, with no withholding at source. This is one of 48 active treaties in India's network and one of 64 in United States's. The general dividend rate of 25% is above the median in both countries' networks (India: 10%, United States: 15%).
Verified data
IRS Table 1 - Tax Rates on Income Other Than Personal Service Income (Rev. May 2023)
Withholding Rate Summary
Source: IRS Table 1 (Withholding Rates)| Income Type | Treaty Rate | Statutory Rate (United States) |
|---|---|---|
| Dividends (general) Portfolio investors | 25%saves 5% | 30% |
| Dividends (qualified) Beneficial owner is a company holding >= 10% of voting stock | 15%saves 15% | 30% |
| Interest Bank interest, bonds, loans | 15%saves 15% | 30% |
| Royalties (avg) Patents, copyright, know-how, film/TV | 14% | — |
| Pensions Private pension distributions | 0% | — |
| Social Security Government social security benefits | 30% | — |
“Treaty Rate” is the maximum withholding permitted under this treaty. The actual effective rate may be lower if domestic law provides a more favorable rate independently. “Statutory Rate (United States)” shows the rate that applies when no treaty benefit is claimed. Qualified dividend rate requires: Beneficial owner is a company holding >= 10% of voting stock.
Dividends
The general dividend rate of 25% applies to portfolio investors. A reduced rate of 15% is available when beneficial owner is a company holding >= 10% of voting stock. Without the treaty, the statutory withholding rate on dividends is 30%.
Source: IRS Table 1 (Withholding Rates)
Interest
Interest payments (bank interest, bonds, loans) are subject to 15% withholding under this treaty, compared to the 30% statutory rate. This represents a 15% reduction from the statutory rate.
Source: IRS Table 1 (Withholding Rates)
Royalties
Royalty withholding rates vary by the type of intellectual property. This treaty distinguishes 5 categories, with rates ranging from 10% to 15%.
Source: IRS Table 1 (Withholding Rates)
Pensions & Social Security
Private pension distributions are taxable only in the country of residence, with no withholding at source. Government social security benefits are subject to 30% withholding.
Source: IRS Table 1 (Withholding Rates)
Comparative Context
🇮🇳India's Network
Among India's 48 active treaty partners, the 25% general dividend rate ranks 48th (median: 10%).
| Partner | Rate |
|---|---|
| Philippines | 20% |
| Thailand | 20% |
| Canada | 25% |
| United States (this treaty) | 25% |
🇺🇸United States's Network
Among United States's 64 active treaty partners, the 25% general dividend rate ranks 60th (median: 15%).
| Partner | Rate |
|---|---|
| Tunisia | 20% |
| Turkey | 20% |
| Israel | 25% |
| India (this treaty) | 25% |
| Philippines | 25% |
| Greece | 30% |
| Pakistan | 30% |