Important changes in the Double Taxation Avoidance Agreement (DTAA) between India and Oman were introduced in 2025. These changes help both countries to enforce strict laws related to double taxation, prevent tax evasion, and more. Learn more about the India-Oman DTAA amendments & treaty updates here:
As the leading tax consultant in Gurgaon, we will explain what this new tax treaty means for individuals and businesses, why it matters, and how it affects cross-border transactions between India and Oman.
A DTAA or Double Taxation Avoidance Agreement is a form of agreement between two countries that prevents individuals and businesses from being taxed twice by both countries on the same income.
The India-Oman DTAA was first signed on 2nd April, 1997 by the government of India and the Sultanate of Oman. Due to changes in global tax laws, the two countries agreed to revise the treaty in 2025. The amendment will be enforced on Indian individuals and businesses from April 1, 2026.
Recommended: Disclosures and Penalties of Foreign Assets in Income Tax Return
New challenges in taxation, changes in cross border transactions, and more made it necessary to update old provisions listed in the DTAA. Here’s why the amendments in the DTAA were needed:
These are some of the most important changes from the treaty that you should know:
The updated treaty now clearly mentions that it is meant to avoid double taxation, and not to create chances for non-taxation or tax avoidance. This is part of the new anti-abuse provisions.
There’s also a new rule called the Principal Purpose Test (PPT). This rule says that if the main purpose of a transaction is to get treaty benefits, the country can deny the benefit if the tax authorities find that it is inconsistent with the purpose of the treaty. So, now you must prove that your business reason is not just to save tax.
Good news for businesses: the withholding tax rate on certain types of income tax has been reduced.
This makes it cheaper to pay for technical services (by lowering the technical fees), license royalties, or borrow money across borders between India and Oman.
Article 25A (Non-Discrimination has been introduced to prevent discriminatory practices in taxation of individuals and businesses. This applies to both nationalities, irrespective of the status of a permanent establishment, or foreign control or ownership. This ensures that deductions on cross-border payments will be done under the same conditions as domestic payments.
There have been changes made in the definition go the Mutual Agreement Procedure (MAP). To settle tax disputes more efficiently, competent authorities from both countries must resolve difficulties that may arise and provide consultation to eliminate cases of double taxation that are not listed within the provisions themselves.
Read Also: Foreign Subsidiary Company Compliances in India
Earlier, India used to give credit to companies for taxes that were forgiven or reduced in Oman (known as tax-sparing). This helped Indian investors benefit from Oman's tax breaks. But the new treaty has removed this benefit. Now, only actual taxes paid in Oman will be counted for credit in India.
The two countries have agreed to a better exchange of information. This means they will now share more data, like bank details, ownership structures, and nominee accounts, to combat tax evasion. If someone tries to hide their income in either of the two countries, both countries will collaborate on such cases.
A new non-discrimination article has been added. This means that a company or person from Oman operating in India (or vice versa) will not be taxed unfairly just because they are a foreign company. This means equal treatment will be given to all taxpayers to support cross-border trade.
Under the amended treaty, the tax departments of India and Oman can now collaborate to collect taxes, including penalties and interest. This helps ensure that tax debts are paid by the individual, even if the person moves to another country.
If you do business or earn income in both India and Oman, now is the time to:
Read More: Corporate Tax Filing Obligations for Foreign Companies in India
The recent changes to the India–Oman DTAA are meant to make the tax system fairer, more transparent, and better suited for the modern economy. With updated withholding tax rates, stronger anti-abuse provisions, and improved information exchange, both countries aim to stop tax avoidance and simplify tax compliance.
Whether you're an individual earning income in both countries or a business managing cross-border transactions, our team of tax consultants is here to help you through the complex taxation laws.
What's new in compounding under FEMA? Learn about recent changes in compounding mechanism for contravention under FEMA (Foreign Exchange Management Act).
Understand how Indian companies can leverage Overseas Direct Investment (ODI) for investment abroad. Explore the ODI framework for investing outside India.
Learn about the India-Oman DTAA updates! Understand amendments impacting tax rates and how India and Oman have updated their double tax treaty for 2025.
