India-Bahrain DTAA
Treaty signed: April 9, 2004 | Effective from: August 11, 2005
● Live · Rates served from /api/tax-rules/dtaa/BH
Dividends
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Interest
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Royalties
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Capital Gains
Fees for Technical Services
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Key Treaty Provisions
- Bahrain does not impose personal income tax - the treaty is primarily about preventing India from taxing Bahrain-source income of Indian residents
- Zero withholding on dividends and interest - most favourable among India's Gulf treaties
- Capital gains on Indian shares: residence-based - Bahrain residents are NOT taxed in India on gains from Indian shares (unusual provision)
- However, gains on Indian immovable property remain taxable in India
- Very limited treaty - does not cover royalties or FTS (domestic law applies)
Frequently Asked Questions
Is capital gains on Indian stocks zero for Bahrain-resident NRIs?▾
Technically, the India-Bahrain DTAA gives exclusive taxing right on capital gains to Bahrain (the country of residence). Since Bahrain has no capital gains tax, the effective rate is zero. However, this applies to the treaty provision on capital gains from movable property (shares). Indian real estate capital gains remain taxable in India.
What is the TDS rate on NRO interest income for a Bahrain-resident NRI?▾
The India-Bahrain DTAA specifies 0% withholding on interest. However, Indian banks may still apply standard TDS and you would need to claim a refund or apply for a lower/nil withholding certificate by proving Bahrain residency. Operationally, submit TRC and Form 10F to your bank.
Does India tax Bahrain company profits on Indian operations?▾
Only if the Bahrain company has a Permanent Establishment in India. Business profits attributable to an Indian PE are taxable in India. Without a PE, business profits are taxable only in Bahrain (which has no corporate tax for most entities).
Browse all articles
19 articlesArticle 1 of the India-Bahrain DTAA governs persons covered.…
Article 4 of the India-Bahrain DTAA governs resident.…
Article 5 of the India-Bahrain DTAA governs permanent establishment.…
Article 7 of the India-Bahrain DTAA governs business profits.…
Article 8 of the India-Bahrain DTAA governs shipping, inland waterways, and air transport.…
Article 9 of the India-Bahrain DTAA governs associated enterprises.…
Dividends paid by a company resident in one State to a resident of the other State may be taxed in the recipie…
Interest arising in one State and paid to a resident of the other may be taxed in the recipient's State, with …
Royalties paid to a resident of the other State may be taxed in the recipient's State; the source State retain…
Article 13 allocates taxing rights over capital gains between India and Bahrain.…
Article 14 of the India-Bahrain DTAA governs independent personal services.…
Article 15 sets the taxing rights for salaries earned by an employee of one State who works in the other.…
Article 17 of the India-Bahrain DTAA governs artistes and sportspersons.…
Article 18 of the India-Bahrain DTAA governs pensions.…
Article 19 of the India-Bahrain DTAA governs government service.…
Article 23 sets out the mechanism by which double taxation is eliminated - typically through a foreign tax cre…
MAP allows the competent authorities of India and Bahrain to resolve disputes - particularly transfer pricing …
Allows the competent authorities to exchange information necessary to apply the treaty or domestic tax laws.…
Treaty benefits are denied where the principal purpose of the transaction was to obtain them.…
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