The India-Indonesia DTAA, in force since 5 February 2016, generally caps dividend, interest, and royalty/fees-for-technical-services withholding at 10% each, and does not appear to contain a general Most Favoured Nation rate-reduction clause.
The India-Indonesia DTAA -- rates and scope
The current India-Indonesia Double Taxation Avoidance Agreement, superseding an earlier 1987 treaty, was
signed 27 July 2012 in New Delhi and entered into force 5 February 2016, effective from 1 April 2016 for
India and 1 January 2017 for Indonesia. Commonly cited withholding rates are 10% on dividends, 10% on
interest (with an exemption for interest paid to specified entities such as central banks or
government-owned financial institutions), and 10% on royalties and fees for technical services.
MFN clause status, and no confirmed amending protocol
Based on secondary tax-advisory summaries this platform reviewed, the treaty does not appear to contain
a Most Favoured Nation rate-reduction clause of the kind this platform describes for the Netherlands,
France, Switzerland, Spain, and Sweden -- but this platform could not independently verify this against the
primary treaty text on incometaxindia.gov.in in this research session and recommends confirming against the
official notified text before relying on it for a specific transaction. No amending protocol since 2016
could be confirmed, though this platform notes this is an absence-of-evidence finding rather than a
confirmed absence of any amendment.
Practical filing points for an NRI connected to Indonesia
Indian-source income paid to an Indonesia resident is subject to Section 195 TDS, generally at the rates
set by the Income Tax Act unless a lower treaty rate applies and is properly claimed with a Tax Residency
Certificate and Form 10F. Form 15CA (and Form 15CB where applicable) is required before remittance abroad.
Given Indonesia's comparatively modest modern NRI population, residential-status questions here often turn
on the standard Indian day-count tests rather than any Indonesia-specific complication.
Common mistakes in this area for NRIs connected to Indonesia:
- Assuming the India-Indonesia treaty carries a general MFN clause without confirming this against
the primary treaty text.
- Applying withholding rates from the superseded 1987 treaty rather than the current treaty in force
since 5 February 2016.
- Not claiming the treaty's interest exemption for specified entities where it genuinely applies.
