India, Oman revise DTAA: What's the income tax impact on professionals earning in both countries?
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If you earn income in both India and Oman—say through employment in Oman and investments in India—and pay taxes in India, there's good news, whether you're a salaried professional, business owner, or freelancer.Both nations have revised their Double Taxation Avoidance Agreement (DTAA), originally signed in 1997, to reflect today's global tax norms and economic conditions. This update will be effective from 28 May 2025, ensuring that taxpayers aren't unfairly taxed twice on the same income in India and Oman. This brings relief to individuals and businesses working across both countries by creating clear rules about where and how income will be taxed.Oman will be the first country in the Gulf Cooperation Council (GCC) to start levying personal income tax at the rate of 5% for high income earners.The tax proposed with effect from January 2028 would be applicable for income above OMR 42,000. Until now, GCC nations, including Bahrain, Kuwait, Qatar, Saudi Arabia, and the UAE, have relied mainly on oil exports and have not imposed personal income tax. After the introduction of GCC VAT and corporate income tax, introduction of personal income tax seems to be the next step towards expanding sources of revenue for the government.Comprehensive DTAAs cover all income types, while others apply to limited or specific cases.'The revision aims to promote crossborder investments and technology transfer by lowering tax rates on royalties and fees for technical services from 15% to 10%. Further, updates have been made in the form of changes in certain definitions, mutual agreement procedures (MAP) and enhancing the framework for information exchange between the two jurisdictions. The agreement has been amended to adapt to the changing economic conditions and global tax reforms, aligning it with the current economic realities,' says Pankaj Agrawal, Associate Director, Global People Solutions, Grand Thornton.'The revised India-Oman tax treaty is a positive move for fair and clear taxation. It also prevents misuse of the treaty and makes information sharing stronger, helping honest businesses and reducing tax evasion,' says Sudhir Kaushik, Cofounder & CEO, Taxspanner.com.Another important change is the introduction of a non-discrimination clause, which guarantees equal tax treatment for residents of both countries. So, for example, an Indian company operating in Oman will not face a higher tax burden than a comparable Omani firm. The treaty strengthens information exchange mechanisms between the two countries. Tax authorities will now share data more freely, even from banks and financial intermediaries, making it harder to hide income across borders. The revised agreement includes a better MAP to resolve tax disputes more efficiently. It also introduces new rules to prevent abuse of treaty benefits by third-country entities through treaty shopping.Furthermore, both nations will assist each other in tax collection. If someone owes tax in India and relocates to Oman, the local authorities can now help recover that amount and vice versa.
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