Double taxation treaty

A Double Taxation Treaty (DTT) is a bilateral agreement between two nations intended to eliminate or reduce the incidence of double taxation on the same income. It defines how taxing rights are divided between the contracting countries and offers mechanisms such as tax credits, exemptions, or concessional rates to provide relief to taxpayers. Such treaties help encourage cross-border trade, investment, and economic cooperation by ensuring fair and predictable taxation.

Example: The India–USA Double Taxation Avoidance Agreement (DTAA) allows income earned by a resident of one country in the other to be taxed only once, in accordance with the treaty’s allocation of taxing rights.