Section 159 Income Tax Act 2025: How Does DTAA Relief Work?

Section 159 empowers India to enter into tax agreements with foreign countries and specified territories. It explains the legal basis for double taxation avoidance agreements (DTAAs), treaty relief, exchange of tax information and cooperation in tax recovery.

What is the purpose of Section 159?

Income may have a connection with two jurisdictions, such as where a person resides and where income arises. A tax treaty may allocate taxing rights, limit certain source-country taxes or provide mechanisms to relieve double taxation. Section 159 authorises the Central Government to enter into and implement these agreements. It also permits certain notified agreements between specified associations.

Section 159 is an enabling and interpretative provision. It does not itself prescribe a universal withholding-tax rate, guarantee a refund or automatically grant a foreign tax credit. The terms of the applicable agreement and other relevant provisions must be examined.

Section 159: Explanation of statutory provisions

Section 159(1): Agreements with foreign governments

A specified association in India may enter into an agreement with a specified association in a specified territory. The Central Government may notify provisions adopting and implementing the agreement.

Section 159(3): Purposes of the agreements

Where an applicable notified agreement grants tax relief or avoids double taxation, the Act applies to the covered assessee to the extent its provisions are more beneficial. The comparison must be made with the particular treaty article and facts, and is subject to the statutory exceptions.

Section 159(5): Foreign-company tax rates

The anti-avoidance provisions in Chapter XI may apply even where their application is less beneficial to the assessee. Treaty eligibility does not override the statutory general anti-avoidance framework.

Section 159(7): Meaning of undefined treaty terms

A non-resident claiming relief under an agreement must obtain a certificate of residence from the government of the relevant country or specified territory and provide other prescribed documents and information. A tax residency certificate is a necessary condition, but does not by itself establish entitlement to every treaty benefit.

Section 159(9): Statutory definitions

Section 159 consolidates the subject matter of agreements with foreign governments and notified specified associations previously dealt with broadly under Sections 90 and 90A of the 1961 Act. The law applicable to a particular earlier year or proceeding must be determined under the relevant commencement and savings provisions.

Frequently asked questions

Does Section 159 automatically exempt foreign income?

Section 159(8) requires a non-resident treaty-relief claimant to obtain a certificate of residence and provide other prescribed information and documents.

Does the treaty always override the Income-tax Act?

Section 160 addresses relief in specified cases involving countries with which no agreement exists, subject to its conditions.

Does Section 159 cover exchange of information?

Updated: 10 November 2026. This article is general legal information; verify the notified treaty, rules and amendments for the relevant tax year.