First Protocol to the India-Oman DTAA in 28 Years. Here's What Actually Changes.
TL;DR
Signed January 2025, notified June 2025, effective 1 April 2026. Lower withholding on royalties and technical services. A mutual-assistance article that means old Indian tax demands can now follow you to Muscat. Plain-English breakdown.
By Vipul Sharma, Founder
Reviewed by Preetesh Maloo, Chartered Accountant, NRI Tax Partner
The basics: dates and documents
The original India-Oman DTAA was signed 2 April 1997. For nearly three decades, nothing much changed. Then on 27 January 2025, India and Oman signed a Protocol amending the treaty.
Key dates:
If you're filing an Indian ITR for AY 2026-27, the old rates still apply. For AY 2027-28 (FY 2026-27 income), the new Protocol governs.
What the rates changed to
The headline change: royalty and technical services withholding dropped from 15% to **10%**.
That matters if you're an Omani-resident Indian consultant billing back to an Indian company, an Omani IT firm servicing Indian clients, or an Indian-origin engineer providing remote technical services to India from Muscat. A 5-percentage-point reduction on large invoices adds up fast.
Interest and dividend rates are unchanged (still 10% under Articles 10 and 11). FD interest, NRO savings, dividends from Indian companies, all continue to enjoy the same treaty cap.
What's new in addition to the rate changes: a Principal Purpose Test (PPT) anti-abuse provision aligned with BEPS, and an expanded Exchange of Information article.
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The mutual assistance article, this one matters
The Protocol adds a mutual assistance in tax collection article. In practice: if you have an outstanding Indian tax demand and you've ignored it, India can now request Oman's tax authority to help recover it from your Omani assets.
This is new. Before the Protocol, a 10-year-old Section 245 refund adjustment, a Section 148 reassessment demand, or a penalty order under Section 271(1)(c), applicable to AY 2016-17 and earlier; replaced by Section 270A from AY 2017-18, sat uncollected as long as you stayed in Oman. India's tax department couldn't reach across the border.
From 1 April 2026, that door opens. Not all demands will be pursued, mutual assistance has procedural thresholds, and only verified liabilities qualify. But the risk profile changes. Ignoring an Indian notice is no longer a safe option if you live in Muscat.
If you have pending Indian tax matters, a 148 notice you never replied to, a demand you thought was too old to matter, a rectification you kept meaning to file, resolve them before April 2026. That's not a hypothetical deadline. That's the day cross-border collection becomes a real procedural possibility.
What to do before April 2026
**If you have an open Indian tax matter:** Fix it now. Whether it's a rectification under Section 154, a reply to a 148A show-cause, or a stay application under Section 220(6), the window to clean up quietly is closing. Our tax notice team handles this end-to-end under Section 288 authorized representation.
**If you're earning Indian-source royalties or FTS:** Your counterparty can start applying the new 10% rate from 1 April 2026. Ask them to update your Form 10F and TRC on file so withholding drops the right day.
**If you're a retail NRI with interest, dividends, and MF gains:** Nothing changes for you rate-wise. Interest and dividends stay at 10% under the existing DTAA. Your TRC from the Oman Tax Authority and Form 10F workflow are unchanged.
**Your TRC process is unchanged.** Still apply through the Oman Tax Authority. Still valid for one year. The Protocol does not change the TRC mechanics.
Country guides mentioned
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The exceptions that change the answer
Where the general rule stops applying to you
Every rule below has a carve-out, a cut-off date or a condition that flips the answer. These are the ones that decide real cases.
Rectification window under s.154
Right now: 4 years from the end of the financial year in which the order was passed
Where it works differently
- The error is a missing TDS credit or a mis-picked figure
- Rectification is faster and cheaper than an appeal, and there is no fee.
- s.154 covers a mistake apparent from the record.
- The point needs argument or fresh evidence
- s.154 will not carry it. That is an appeal under s.246A.
- 'Apparent from the record' excludes debatable questions.
Commonly got wrong
- Any wrong assessment can be rectified. Only a mistake apparent on the face of the record. A debatable issue needs an appeal.Rectification fixes obvious errors within four years. Anything arguable goes to the Commissioner (Appeals) within 30 days.
Tax on royalty and fees for technical services paid to non-residents
Right now: 20% plus surcharge and cess
Where it works differently
- A treaty applies and is more beneficial
- The treaty rate governs, commonly 10-15%. The doubling of the domestic rate made treaty claims worth far more.
- s.90(2). Requires TRC and Form 10F (Form 41 from 1 Apr 2026).
- The India-US or India-UK treaty applies to FTS
- The make-available test can remove the income from Indian tax entirely, not merely reduce the rate.
- Article 12 of both treaties.
- Claiming the treaty rate
- A foreign company must file an Indian return to take the DTAA rate over s.115A.
- Condition attached to the FA 2023 amendment.
Commonly got wrong
- Royalty and FTS to non-residents are taxed at 10%. Doubled to 20% from 1 April 2023.20% plus surcharge and cess under domestic law from 1 April 2023, or the treaty rate (often 10-15%) if you hold a TRC and file the return.