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India-Malaysia Double Taxation Avoidance Agreement (DTAA)

The Double Taxation Avoidance Agreement (DTAA) between the governments of India and Malaysia, signed on May 9, 2012, came into force on December 26, 2012. This DTAA aims to prevent double taxation and fiscal evasion concerning taxes on income. It is essential for individuals and businesses engaged in cross-border activities between the two countries.


The India-Malaysia DTAA applies to specific taxes:

  • In India, it covers income tax, including any surcharge.
  • In Malaysia, it encompasses income tax and the Petroleum income tax.

Key Takeaways

Here are some important aspects of the India-Malaysia DTAA:

  1. Residency: The DTAA defines residency as any person who, under the laws of a state, is liable to tax therein by reason of domicile, residence, place of management, or any similar criterion. It also includes political subdivisions, local authorities, or statutory bodies established under the Parliament’s act or a State Legislative Assembly.
  2. Income from Immovable Property: Income derived by a resident of one contracting state from immovable property located in the other state may be taxed in that other state. This provision applies to income from the direct use, letting, or any other form of use of immovable property.
  3. Business Profit: The DTAA stipulates that the profits of an enterprise of one contracting state shall be taxable only in that state unless the enterprise carries on business in the other state through a permanent establishment situated there.
  4. Dividends, Interest, Royalties, and Fees for Technical Services: The DTAA allows for taxation of these income types in the state where they are received. It specifies withholding tax rates of 5% on dividends and 10% on interests, royalties, and fees for technical services. Notably, interests earned by government institutions are exempt from these withholding taxes.
  5. Capital Gains: Gains derived by a resident of a state from the sale of immovable property situated in the other state may be taxed in that other state.
  6. Director’s Fees: Director’s fees and similar payments earned by a resident of one contracting state as a member of the board of directors in a company resident in the other contracting state may be taxed in the latter.


The India-Malaysia DTAA was established to prevent double taxation and fiscal evasion concerning income taxes, promoting ease of cross-border business and investment. The agreement has been crafted to offer several beneficial clauses and provisions, including the mutual agreement procedure, aimed at amicably resolving disputes. Additionally, it includes provisions for the exchange of tax-related information between competent authorities in both countries.

For comprehensive legal advice, assistance, or further information regarding the India-Malaysia Double Taxation Avoidance Agreement or other legal matters, please do not hesitate to contact Chandrawat & Partners. Our legal experts specialize in international tax agreements and are committed to providing tailored legal assistance to meet your specific needs.

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To know more about DTAA relations between India and Malaysia, please download our Guide.