You can potentially avoid double taxation if you earn income from multiple countries through Double Taxation Avoidance Agreements (DTAAs), which are treaties that allocate taxing rights and often give the country where income originates the initial right to tax. These treaties provide tax credits or exemptions (among other mechanisms) to prevent you from being taxed twice. However, you’ll need a Tax Residency Certificate (TRC) that confirms your tax residency in one country to claim these benefits. Having a TRC can also make it easier to buy villas in Coimbatore.
If you don’t have a TRC yet, keep reading. We’ll explain why it’s worth securing, especially if you’re buying a home.
Avoid multiple taxation
In India, the Income Tax Department issues TRC proving your residency for a given financial year. If you qualify as a Resident and Ordinarily Resident (ROR), you’re taxed on your worldwide income. This can result in double taxation, as foreign countries may also tax your earnings. To prevent this, you can use India’s Double Taxation Avoidance Agreements (DTAAs) with various nations. Providing your TRC proves your Indian residency, enabling you to claim DTAA benefits.
Proof of residence
Tax residency certificates are proof of residence documents for financial transactions, making them useful if you are planning to buy villas in Coimbatore. Your TRC can also help you open a bank account, invest, or take out a home loan from a local bank or lender.
If you’re a non-resident, you can use a TRC from your home country to claim benefits under DTAAs. This covers:
- Foreign salaries and service income
- Interest from overseas bank accounts
- Dividends and capital gains from foreign investments
- Profits from selling property abroad
- Income from foreign assets
Buying a house?
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