The India-Fiji DTAA, signed 30 January 2014 and in force since 15 May 2014, was the first tax treaty between the two countries -- a comparatively modern agreement offering relief against double taxation on dividends, interest, royalties, and other income for NRIs based in Fiji.
A comparatively new, first-of-its-kind DTAA
The India-Fiji Double Taxation Avoidance Agreement was signed on 30 January 2014 and entered into force on
15 May 2014 -- described at the time as the first tax treaty of its kind between the two countries. Unlike
some of India's older Commonwealth-era treaties, the India-Fiji DTAA was negotiated relatively recently, and
covers the standard categories of business profits, dividends, interest, royalties, and capital gains,
providing relief from double taxation generally through a tax-credit mechanism -- tax paid in one country can
be credited against the tax liability in the other on the same income. Confirm the current treaty text and any
subsequent protocol with a chartered accountant before relying on a specific provision for a significant
transaction.
NRI residential status -- the same rules regardless of country
Whether someone is treated as a Resident, Non-Resident, or Resident but Not Ordinarily Resident (RNOR)
under Indian tax law depends on the standard day-count tests under the Income-tax Act, applied the same way
regardless of whether the person is based in Fiji or any other country. Only income that is received in India,
accrues in India, or arises from an Indian source is generally taxable for a genuine Non-Resident;
foreign-sourced income earned and received in Fiji is not taxable in India for a non-resident.
TDS on Indian-source income and DTAA relief
Payments to a non-resident from an Indian source -- rent, interest, or capital gains on Indian assets, for
example -- are generally subject to withholding (TDS) under Section 195 of the Income-tax Act at the
applicable rate, with the payer typically responsible for deducting and depositing the tax. Where the
India-Fiji DTAA provides a lower rate or different treatment for a specific income category, an NRI can claim
that relief by furnishing a Tax Residency Certificate from Fiji along with the prescribed Form 10F, consistent
with how DTAA relief works for NRIs based in any treaty country.
Common mistakes made in this area:
- Assuming no India-Fiji tax treaty exists because it is comparatively recent (2014) -- it is in force
and available for relief.
- Not obtaining a Tax Residency Certificate before claiming DTAA relief on Indian-source income.
- Continuing to file as a Resident after becoming a genuine NRI, missing the lower NRI tax treatment on
foreign income.
