Can NRIs living in Malaysia claim India-Malaysia DTAA benefits under territorial taxation?

Yes. Under Article 4 and the Protocol to the India-Malaysia DTAA, the exclusion for persons taxed only on locally sourced income does not shut out residents of countries with territorial taxation. NRIs who qualify as Malaysian tax residents are eligible to claim DTAA benefits.

What is the Indian tax rate on dividends for NRIs living in Malaysia?

Under Article 10 of the India-Malaysia DTAA, India caps the tax rate at 5% on gross dividends for beneficial owners who are tax residents of Malaysia, compared to the standard domestic NRI rate of around 20%.

Are capital gains from Indian mutual funds taxable in India for Malaysian tax residents?

Under Article 14 of the India-Malaysia DTAA, gains from Indian immovable property and shares of an Indian company are taxable in India, while other assets fall under the residuary clause giving sole taxing rights to the country of residence. Judicial pronouncements have held that Indian mutual fund units fall under this residuary clause, meaning they are only taxable in Malaysia.

What documents are required to claim India-Malaysia DTAA relief in India?

An NRI must obtain a Tax Residency Certificate (TRC) issued by the Inland Revenue Board of Malaysia covering the relevant financial year, furnish Form 10F on the Indian Income Tax portal, and file an Indian Income Tax Return.

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