UK-India Double Taxation Agreement: Pensions, Interest & Foreign Tax Relief 2026
Key UK-India Double Taxation Agreement rules for residents receiving pensions, interest and other Indian-source income, including Article 20 pensions, Article 12 interest, UK foreign-tax relief and India's Form 67 requirements.
Key Statutory Takeaways
Statutory Rules & Core Thresholds
Article 12 Interest: 15% maximum treaty source rate. Article 20 Pensions: 0% source tax (taxable only in country of residence).
In-Depth Legal Framework & Analysis
Under the UK-India Double Taxation Convention (1993, as modified by the Multilateral Instrument), non-government pensions and annuities paid to a resident of one Contracting State are taxable only in that state under Article 20. Government service pensions are reserved to the paying government state under Article 19. Under Article 12, Indian-source interest (such as NRO savings and fixed deposits) received by a UK resident is subject to a maximum Indian withholding tax of 15%, provided the taxpayer submits a UK Certificate of Residence (TRC) and Indian Form 10F. While NRE account interest is exempt from Indian income tax under Section 10(4) of the Indian Income-tax Act, UK tax residents must declare and pay UK tax on that interest under worldwide taxation rules, with foreign tax credit relief available under Article 24.
UK Self Assessment Foreign pages (SA106) due by 31 January. Indian ITR and Form 67 due by 31 July following the Indian financial year.
Double taxation if treaty relief or FTCR is not claimed correctly; Indian Section 206AA penal withholding (20%) if PAN/Form 10F is missing; HMRC non-declaration penalties under Schedule 24 FA 2007.
Important UK-India DTAA Articles
Indian-source interest received by a UK resident can be taxed in India, subject to the 15% treaty limit and the agreement's conditions.
The UK can also tax the interest where the recipient is UK resident, with double-tax relief potentially available.
A qualifying Indian private pension received by a UK treaty resident will generally be taxable only in the UK, while a qualifying UK private pension received by an Indian treaty resident will generally be taxable only in India.
The pension must fall within the treaty definition and must not instead be a government pension governed by Article 19.
Certain government pensions are generally taxable only in the paying government state, subject to the treaty conditions.
India tax payable in accordance with the treaty can generally be allowed as a credit against UK tax calculated on the same Indian-source income or gains, subject to UK foreign-tax-credit rules.
Foreign tax credit relief is subject to the applicable UK credit limitation and cannot simply be assumed to equal every amount of Indian tax paid.
Indian Interest for UK Residents
India Tax: Interest on an Indian NRO account is generally taxable in India under Indian domestic law.
Treaty Rate: A UK resident may be able to invoke the treaty's 15% maximum rate where the Article 12 conditions are met.
UK Tax: The gross interest can also be taxable in the UK for a UK tax resident, with possible credit for qualifying Indian tax.
India Tax: Qualifying NRE-account interest can be exempt from Indian income tax under Indian domestic rules, subject to the conditions for the exemption.
UK Tax: UK residence can nevertheless bring the interest within UK taxation because UK residents normally pay UK tax on foreign income.
Indian tax exemption does not automatically create a UK tax exemption.
Frequently Asked Questions: UK-India Double Taxation Agreement: Pensions, Interest & Foreign Tax Relief 2026
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Primary Statutory Authority
🌐 Claiming Relief for Indian Tax in the UK
A UK resident who pays qualifying Indian tax on income or gains that are also taxable in the UK may generally claim foreign tax credit relief under UK domestic rules and the treaty.
Frequently Asked Questions
Article 20 covers pensions and annuities. A qualifying private pension paid to a resident of one Contracting State is generally taxable only in that state. Government pensions are dealt with separately under Article 19.
Article 12 generally limits Indian source-country tax on qualifying interest beneficially owned by a UK resident to 15% of the gross interest. The recipient may still have UK tax to pay, with UK foreign-tax credit relief potentially available for qualifying Indian tax.
NRO interest is generally taxable in India under Indian domestic law. Where the recipient is a UK treaty resident and satisfies the treaty conditions, Article 12 can limit Indian source-country tax to 15%. The interest can also be taxable in the UK, with possible credit for qualifying Indian tax.
It can be. Qualifying NRE interest may be exempt from Indian tax under Indian domestic rules, but a person who is UK tax resident normally needs to consider UK tax on foreign interest. An Indian exemption does not automatically make the interest exempt in the UK.
Form 67 is used by eligible Indian resident taxpayers to claim Foreign Tax Credit for qualifying foreign tax paid outside India. It is filed online with India's Income Tax Department and is not the form used to claim UK foreign-tax credit relief.
It can allocate taxing rights and provide relief from double taxation, but the result depends on the relevant article and each country's domestic foreign-tax-credit rules. Where both countries tax the same income, the available credit is generally subject to statutory limits.
Common Taxpayer Misconceptions
✓ Rule: Under the UK-India Convention, Article 18 governs Artistes and Athletes. Private pensions and annuities are covered by Article 20, while government pensions are covered by Article 19.
✓ Rule: Article 12 provides a maximum 15% source-country rate for qualifying beneficial owners. To obtain it from Indian banks, non-residents must furnish a Tax Residency Certificate (TRC) and Form 10F.
✓ Rule: Qualifying NRE interest is exempt in India under domestic law, but a UK tax resident is taxable on worldwide income and must declare NRE interest on UK Self Assessment.
✓ Rule: Form 67 is an Indian form for Indian residents claiming credit for foreign taxes. UK foreign tax relief is claimed on HMRC SA106 Foreign pages.