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UAE and India · Interest

Position as at 12 November 2026

Withholding rates

What tax is taken at source.

Last checked 12 November 2026.

India → UAE

What tax is taken at source.
PaymentTreaty capDomestic rate without treatyConditions and evidence
InterestArt. 11 5% / 12.5% Indian rate without the treaty: 20% on foreign-currency loans and bonds; other interest at the rates in the Income-tax Act 2025 (s 207 and s 393), plus surcharge and cess

India can tax interest at no more than 5% on loans from a bank or similar financial institution, and 12.5% on other interest. Interest to the UAE Government, its local governments or its central bank is exempt.

  • India's 5% and 12.5% caps on interest apply only if the UAE recipient is the beneficial owner of the interest (Art 11(2)).
3 of 3 official sources

Art. 11

The treaty can reduce the rate to the lower of the two, usually only once you claim it with a UAE tax residence certificate. Position as at 12 November 2026.

UAE → India

The UAE charges 0% on these payments.

Checked by PBF against official sources. Position as at 12 November 2026. How we check

PBF UAE Tax Hub. General information, not advice.