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Will my foreign client withhold tax, and what does the treaty say?

Author:: Editorial team, serviceexportguide.com
Verified by:: Editorial team
Published: 28 October 2026
Last modified: 30 October 2026
Reading time: 5 min read

Where is your client?

Tax treaty with India: India and the United States have a comprehensive tax treaty signed at New Delhi on 12 September 1989, in force from 18 December 1990.
Article covering technical services: Article 12 (Royalties and Fees for Included Services)
Treaty withholding rate: 15% of the gross amount of fees for included services after the first five taxable years the Convention had effect (15% for government or public sector payers and 20% for others during those first five years); 10% for fees ancillary to equipment rentals
Note: Fees for included services cover technical or consultancy services that are ancillary to a royalty payment or that make available technical knowledge, experience, skill, know-how or processes, or consist of the development and transfer of a technical plan or design. Services ancillary to a sale of property, teaching, services for personal use, and professional services by individuals are excluded. The text has no MFN clause.
United States's own withholding rules: Services performed outside the US are generally foreign-source income for a non-resident alien and not subject to US withholding; the IRS sources compensation for services by where the services are performed.
Form the client may ask for: A US client may ask a foreign supplier for Form W-8BEN (individuals) or Form W-8BEN-E (entities); the IRS says the form is given to the withholding agent or payer that requests it, not sent to the IRS.

Sources

Full guide: getting paid by clients in United States. Treaty rates are ceilings; whether tax is withheld at all depends on the client's country's law and the facts. Confirm with a chartered accountant before relying on a rate.

Short answer

India has comprehensive tax treaties (DTAAs) with most countries its service exporters bill.¹ Many of them cap the tax the client's country can withhold from fees for technical services, often at 10% or 15%.¹² Without such an article, services income usually falls under business profits. Tax withheld abroad may be credited in India using Form 44 from tax year 2026-27.³

What you enter	What the finder shows	Where the data comes from
Your client's country	Whether India has a comprehensive tax treaty with that country	Treaty texts published by the Income Tax Department¹
Your client's country	The treaty article and withholding rate for fees for technical services, with any note	Treaty text and any protocol that changed the rate¹
Your client's country	That country's own withholding rules and any form the client may ask for	The client country's own tax authority, where an official page could be opened

When a foreign client pays an Indian freelancer or company, the client's country may deduct tax before paying. Whether it can, and how much, depends on that country's law and on the tax treaty it has with India.¹ The Treaty Withholding Finder shows what the treaty text and official sources say for 43 countries.¹

What does the Treaty Withholding Finder show?

The Treaty Withholding Finder shows, for one client country at a time, whether India has a tax treaty with it, which treaty article covers technical services and at what rate, and what that country's own withholding rules say.¹ You enter only the client's country.

Row in the result	What it tells you
Tax treaty with India	Whether a comprehensive treaty is in force, or that none was found
Article covering technical services	The treaty article for fees for technical services, where one exists
Treaty withholding rate	The ceiling the treaty sets on tax at source for those fees
Note	Any condition or protocol change that affects the rate
The country's own withholding rules	What the client country's tax authority publishes, or a note that no official source could be opened
Form the client may ask for	A local form, shown only where an official source names one
Sources	Every page the entry relies on

Each result also links to a full guide for that country, such as getting paid by clients in the United States.

How does the Treaty Withholding Finder work out the withholding position?

The Treaty Withholding Finder does no arithmetic: it looks up the treaty text published by India's Income Tax Department, with any protocol that changed the rate, and the client country's own tax authority pages.¹ Each entry was read from those texts for this site.

Treaty data: taken from the treaty text and protocols on the Income Tax Department website.¹
Local rules and forms: taken only from the client country's own tax authority, and left as "not published" where no official page could be opened.
Rows hidden: the article and rate rows are hidden where they do not apply, for example where no treaty is in force.

For example, under Article 12 of the India-US treaty, US tax on fees for included services is capped at 15% of the gross amount, or 10% for fees ancillary to equipment rentals, subject to the treaty's definitions.¹² On a $1,000 fee for included services, the treaty ceiling is $150.² The finder shows the ceiling, and the client's own law decides whether anything is withheld.

How do you use the Treaty Withholding Finder?

You use the Treaty Withholding Finder by choosing your client's country and reading the rows that appear.

Choose the country where your client is located. The finder opens on the United States.
Check whether a treaty is in force, then read the article covering technical services and the treaty withholding rate.
Read the row on the client country's own withholding rules and any form the client may ask for.
Open the listed sources and the full country guide before you rely on a rate.

The result updates as soon as you change the country.

What does a Treaty Withholding Finder result mean?

A Treaty Withholding Finder result tells you the most the client's country may tax under the treaty, and what its own law says, where an official source publishes it.¹ It does not tell you that tax will be withheld.

A rate is shown: many Indian treaties tax fees for technical services at source at a capped rate, such as 15% under Article 12 of the India-US treaty.¹²
No technical services article: some treaties, such as several with Gulf and South-East Asian countries, have no such article. Services income then usually falls under business profits, which the client's country can generally tax only if you have a permanent establishment there. See permanent establishment risk.
Local rules not published: ask the client whether it will deduct tax.

Treaty questions turn on detail, so confirm with a chartered accountant before relying on a rate.

What does the Treaty Withholding Finder assume, and what does it not cover?

The Treaty Withholding Finder assumes the payment is for services and that you are an Indian tax resident who can prove it. It covers 43 countries.¹

Rates used: the treaty ceiling as stated in the treaty text and protocols, not a rate the client must apply.¹
Taxes included: only tax at source in the client's country; Indian income tax and GST are outside the finder.
Not covered: whether your work meets a treaty's definition of technical services, whether you have a permanent establishment abroad, and countries outside the list.

Use the country guide and the treaty text for anything the finder does not show.

What do people get wrong about foreign withholding tax on export of services?

The most common mistake about foreign withholding tax is treating the treaty rate as the tax that will be deducted, when it is only a ceiling.¹

Ceiling read as a charge: the client's own law and the facts decide whether tax is withheld at all.
Missing proof of residence: a client usually asks for proof that you are an Indian tax resident, such as a Tax Residency Certificate, before applying a treaty rate.²
No certificate kept: without the client's withholding certificate or statement, a foreign tax credit claim is hard to support.³
Every service treated alike: where a treaty has no technical services article, business profits and permanent establishment rules apply instead.

Checking these points before the first invoice avoids most disputes.

Which rules should you know about treaty withholding on fees for technical services?

The rules to know about treaty withholding on fees for technical services are the treaty article itself, the business profits article where none exists, and India's foreign tax credit rule.¹³

Technical services article: for example, Article 12 of the India-US treaty caps tax on fees for included services at 15%.²
Business profits: where a treaty has no technical services article, the client's country can generally tax services income only through a permanent establishment.
Foreign tax credit: claim credit for tax withheld abroad by filing Form 44 for tax year 2026-27 onwards.³ See Form 44, which replaces Form 67.

If tax was withheld, get the client's withholding certificate or statement before you file your Indian return.

How did we verify this?

We checked this page against the sources below on 30 October 2026. Read our methodology or report an error.

Frequently asked questions

Is the treaty rate shown by the Treaty Withholding Finder the tax my client must deduct?+

No. A treaty rate is a ceiling on what the client's country may tax. Whether anything is withheld at all depends on that country's own law, the treaty's definitions and the facts of the work, such as where it is done. Ask the client whether it plans to deduct tax before you invoice.

What does a foreign client need from an Indian exporter to apply a treaty rate?+

A foreign client usually needs proof that you are an Indian tax resident, such as a Tax Residency Certificate, and sometimes a local form of its own country. The Treaty Withholding Finder names a form only where an official source of that country names one, so check with the client as well.²

Can an Indian exporter claim credit for tax withheld by a foreign client?+

Generally yes. An Indian exporter can claim foreign tax credit against Indian tax on the same income by filing Form 44 with proof of the foreign tax, for tax year 2026-27 onwards.³ Keep the client's withholding certificate or statement for each payment, because the claim depends on that proof.

Why does the Treaty Withholding Finder say a country's rules are not published?+

The Treaty Withholding Finder shows local withholding rules only from the client country's own tax authority. Where no official page could be opened, it says so instead of guessing. In that case, ask the client directly whether it will deduct tax and under which local law, and keep its answer in writing.

Does the Treaty Withholding Finder cover every country India has a treaty with?+

No. The Treaty Withholding Finder covers 43 countries that Indian service exporters commonly bill.¹ For a country outside that list, read the treaty text on the Income Tax Department's website and check the client country's tax authority, or ask a chartered accountant to review the position.

Is foreign withholding the same as Indian TDS on export income?+

No. Foreign withholding is tax the client's country deducts under its own law before paying you, limited by any treaty with India.¹ It is separate from Indian tax, and an Indian exporter claims credit for it against Indian tax on the same income using Form 44 from tax year 2026-27.³

This page is general information for Indian service exporters, not tax or legal advice. Rules change and outcomes depend on your facts, so confirm with a chartered accountant before acting.

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