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India–Qatar DTAA, Oman and Saudi Treaties: 2026 Gulf Update

ATB Knowledge Series · 10 min read · Published October 2026

From 1 April 2026 the new India–Qatar DTAA caps Indian tax on dividends at 5% for a company holding at least 25% and on technical fees at 10%, and a Protocol to the India–Oman DTAA cuts royalties and technical fees from 15% to 10%. Both treaties now contain a principal purpose test, while the India–Saudi DTAA, the Kuwait treaty and the absence of any Bahrain treaty are unchanged. A Gulf group paid from India in the tax year ending 31 March 2027 should check which caps now apply and document its substance before the next payment, and note that Qatar investment-treaty cover ends on 23 March 2027.

Gulf treaty rates compared: Qatar, Oman, Saudi Arabia, Kuwait and Bahrain

The table shows the maximum Indian tax for a Gulf beneficial owner. Treaty rates are ceilings: a lower domestic rate applies where it is “more beneficial” (s.159(4), Income-tax Act 2025). Domestic rates are in our withholding tax rates insight.

State Tax treaty Dividends Interest Royalties Technical fees Service PE Anti-abuse rule Investment treaty cover ends
Qatar New; applies to income from 1 Apr 2026 5% (company with 25%+); 10% 10% 10% 10% Over 90 days in 12 months Principal purpose test (Art 28) 23 Mar 2027
Oman 1997; Protocol effective from 1 Apr 2026 10% (company with 10%+); 12.5% 10% 10% (was 15%) 10% (was 15%) No service PE clause Principal purpose test (Art 27B) 23 Mar 2037
Saudi Arabia 2006 5% 10% 10% No article Over 182 days in 12 months “Main purpose” of creating the enterprise (Art 26(2)) 1 Aug 2039 (Arts 1–15)
Kuwait 2006; 2018 Protocol 10% 10% 10% 10% 183 days or more in 12 months “Primary purpose” (Art 27) 28 Jun 2033
Bahrain None (information exchange agreement only) Domestic Domestic Domestic Domestic Domestic law Domestic law 24 Mar 2036
UAE (comparison) 1992; see the India–UAE tax treaty guide 10% 12.5% (5% bank loans) 10% No article Over 9 months in 12 months Art 29; MLI test contested 2024 treaty in force

None of the four treaties stops India taxing a Gulf parent’s gain on shares of an Indian company (Art 13(5) for Qatar, Saudi Arabia and Kuwait; Art 15(5) for Oman). Where exit relief survives is covered in where India still can’t tax your exit.

India–Qatar DTAA: a new treaty from 1 April 2026

The new India–Qatar DTAA and Protocol were signed at New Delhi on 18 February 2025, entered into force on 10 September 2025 and were notified on 24 October 2025 (G.S.R. 789(E)). They apply in India to income arising from the first day of the fiscal year after the calendar year of entry into force (Art 30(3)), which is 1 April 2026, and replace the 1999 treaty (Art 30(4)).

  • Dividends. 5% where the beneficial owner “is a company which owns at least twenty-five per cent of the shares” of the payer, otherwise 10% (Art 10(2)). Dividends beneficially owned by the State, a political subdivision or a local authority are taxable only in Qatar (Art 10(3)).
  • Interest. 10% (Art 11(2)), with the same exemption for the State (Art 11(3)). The Protocol clarifies that “State” in Article 11(3) includes the Qatar Investment Authority and Qatar Holding LLC. It says nothing equivalent for dividends, so whether those bodies fall within Article 10(3) is not settled by the text. Interest includes income from “Islamic financial instruments where the substance of the underlying contract can be assimilated to a loan” (Art 11(4)).
  • Royalties and technical fees. 10% (Art 12(2)). Technical fees cover “any managerial, technical or consultancy services” (Art 12(3)(b)), with no “make available” condition, so on the text routine management charges fall within it.
  • Service PE. Services through employees or other personnel create a PE “only where activities of that nature continue (for the same or connected project) within the country for a period or periods aggregating more than 90 days within any 12-month period” (Art 5(3)(b)).
  • Anti-abuse. Article 28 contains a principal purpose test.

India–Oman DTAA: the 2025 Protocol and the CEPA

The India–Oman DTAA has been in force since 3 June 1997. A Protocol signed at Muscat on 27 January 2025 entered into force on 28 May 2025 and was notified on 25 June 2025 (Notification No. 69/2025, S.O. 2858(E)). It has effect in India for income derived in fiscal years beginning on or after the 1 April following entry into force (Protocol Art 15(3)(a)), so from 1 April 2026. The “w.e.f. 25-6-2025” note in the consolidated text is the notification date, not the date the new rates apply.

  • Royalties and technical fees: 10%. In Articles 13 and 14, 10% is “Substituted for ‘15 per cent’”. Technical fees mean payments for “any services of a technical, managerial or consultancy nature”, other than to the payer’s employees (Art 14(3)).
  • Dividends and interest unchanged. Dividends 10% for a company owning at least 10% of the payer, otherwise 12.5% (Art 11(2)); interest 10% (Art 12(2)).
  • Principal purpose test. New Article 27B denies a benefit where obtaining it “was one of the principal purposes of any arrangement or transaction” that produced it, unless granting it accords with the treaty’s object and purpose.
  • No service PE clause. Service days alone do not create a PE. A construction project must last more than 6 months (Art 5(2)(g)).

Other Protocol changes. A company or other non-individual resident in both states is no longer automatically treated as resident where its place of effective management is situated: the competent authorities “shall endeavour to determine by mutual agreement” its residence, and without agreement it gets no treaty relief except as they agree (Art 4(3)). The Protocol also adds a corresponding transfer-pricing adjustment (Art 10(2)), deletes the tax-sparing credit (former Art 25(4)), replaces the mutual agreement and exchange of information articles (Arts 26 and 27), adds assistance in the collection of taxes (Art 27A) and omits the airline definition in Article 8(5).

The India–Oman CEPA has been in force since 1 June 2026. The Press Information Bureau (PIB) describes a “structured framework for investment facilitation”. We have not reviewed the CEPA text and draw no conclusion on investor–state provisions.

India–Saudi DTAA: no technical-fees article

The India–Saudi DTAA was signed on 25 January 2006 and has been in force since 1 November 2006. Nothing in it changed on 1 April 2026.

  • Dividends: 5% flat, whatever the holding (Art 10(2)), the lowest Gulf rate for a minority shareholder.
  • Interest (“income from debt-claims”): 10% (Art 11(2)), with exemptions for the Government, the Saudi Arabian Monetary Agency and wholly government-owned financial institutions (Art 11(3)). Royalties: 10% (Art 12(2)).
  • No technical-fees article. A service fee that is not a royalty is business profit, taxable in India only through a PE (Art 7(1)). That outcome assumes the fee is in substance business profits and not a royalty or other income dealt with by another article, that the recipient is a Saudi resident entitled to the treaty’s benefits, and that no other article applies. Labels such as “management fee” or “reimbursement” do not decide it; the services actually provided do. A royalty includes payment “for information concerning industrial, commercial or scientific experience” (Art 12(3)), so know-how charges need careful drafting. The Protocol contemplated a review after five years “to consider the inclusion of an Article on ‘Fees for Technical Services’” (para 15); we found no protocol adding one.
  • Service PE only where activities for the same or a connected project continue “within the country for a period or periods aggregating more than 182 days within any 12-month period” (Art 5(3)(b)).
  • Anti-abuse. Benefits are denied “if the main purpose or one of the main purposes of the creation of such enterprise was to obtain the benefits”, and entities without bona fide business activities are covered (Art 26(2)–(3)).

Kuwait and Bahrain: old wording and no double tax treaty

Kuwait. The India–Kuwait treaty (in force 17 October 2007, effective in India from 1 April 2008) caps dividends, interest, royalties and technical fees at 10% (Arts 10–12), with a service PE “only if activities of that nature continue for a period or periods aggregating 183 days or more within any twelve-month period” (Art 5(4)). The 2018 Protocol (in force 26 March 2018) changed the Kuwaiti taxes covered, information exchange and collection, but added no principal purpose test. Article 27 still denies benefits only where a resident’s “affairs were arranged with the primary purpose to take benefits of this Agreement”.

Bahrain. India has no double taxation agreement with Bahrain. The Income Tax Department lists only a tax information exchange agreement (2012), which gives no rate relief. A Bahrain company paid from India bears domestic rates with no treaty relief.

Worked example: an Omani parent before and after 1 April 2026

An Omani company owns 100% of an Indian subsidiary, which pays it a dividend of INR 10 crore and technical fees of INR 4 crore a year. The parent is the beneficial owner, has no PE in India, holds a tax residency certificate and has filed Form 41. The last column shows a Qatari parent with the same flows. Figures are illustrative treaty ceilings.

Oman: income of fiscal year 2025-26 Oman: income from fiscal year 2026-27 Qatar: income from 1 Apr 2026
Dividend, INR 10 crore 10%: INR 1 crore (Art 11(2)(a)) 10%: INR 1 crore 5%: INR 50 lakh (Art 10(2)(a))
Technical fees, INR 4 crore 15%: INR 60 lakh (Art 14(2), pre-Protocol) 10%: INR 40 lakh 10%: INR 40 lakh (Art 12(2))
Maximum Indian tax INR 1.6 crore INR 1.4 crore INR 90 lakh

The Protocol saves the Omani parent INR 20 lakh a year, all on the fees. The Qatari parent’s holding (100%, above the 25% threshold) earns the 5% dividend rate. Two cautions:

  1. Timing. The Oman Protocol applies to income derived in fiscal years beginning on or after 1 April 2026 (Protocol Art 15(3)(a)). The question is the fiscal year in which the fee accrues or is derived under Indian law, not when the work is done or when cash is paid. On that basis, a fee that accrued in fiscal year 2025-26 should stay under the 15% cap even if paid in May 2026.
  2. Substance. Both lower caps now depend on passing a principal purpose test in the treaty itself. A Gulf company that only invoices fees, with no staff or decision-making of its own, is exposed.

Anti-abuse, the MLI and paperwork

The Qatar and Oman principal purpose tests sit in treaty texts notified under section 90(1) of the 1961 Act, and those notifications continue under the 2025 Act (s.536(2)(j)). On our reading, the Tribunal’s objection to the MLI, that no section 90(1) notification gave it effect (Sky High Appeal XLIII / TFDAC Ireland II, ITAT Mumbai, 13 August 2025, para 47), does not arise for them.

For Saudi Arabia and Kuwait, whether the MLI adds a principal purpose test is unconfirmed, and that ruling makes the MLI route doubtful in any case; the India–UAE tax treaty guide explains the same doubt for UAE companies. Their own anti-abuse articles apply meanwhile. GAAR (Chapter XI) can apply even where a treaty is more beneficial (s.159(6)), but not to income from transferring investments made before 1 April 2017 (rule 128(1)(d) and (2), Income-tax Rules 2026, as substituted by Notification 55/2026).

Any treaty claim needs a tax residency certificate and the prescribed information (s.159(8)), now Form 41; see our Form 10F and Form 41 insight.

Investment treaties: the Qatar tail ends in March 2027

India’s investment treaties with all five states have been terminated, but each still protects investments made before termination: to 23 March 2027 for Qatar, 28 June 2033 for Kuwait, 24 March 2036 for Bahrain, 23 March 2037 for Oman and 1 August 2039 for Saudi Arabia (Department of Economic Affairs dates; Art 14(2) Qatar, Art 16(2) Kuwait, Art 15(2) Bahrain, Art 15(2) Oman, Art 16(2) Saudi Arabia). The Saudi tail covers Articles 1 to 15 only. A new India–Saudi investment treaty was reported as concluded (All India Radio, 29 September 2026); it was not signed as of 29 October 2026.

The Qatar tail is the urgent one. Arbitration is open only if the dispute is unsettled “within six months from the date of request in writing for settlement” (Art 8(2), India–Qatar BIT 1999). On DEA dates, the last request that could complete those six months before the sunset was about 23 September 2026, and that date has passed. Whether a claim can be started after the sunset on a request made in time is a question of interpretation.

Seconded staff: no Gulf social security agreement

No Gulf state appears on the Ministry of External Affairs list of India’s social security agreements (viewed 30 October 2026), so Gulf nationals working in India pay PF on full wages as international workers; see PF for foreign employees in India. The Oman CEPA provides only for future negotiations on a social security agreement (PIB, 1 June 2026).

Common questions

What is the dividend rate under the India Qatar DTAA from 1 April 2026?

At most 5% for a Qatari company holding at least 25% of the Indian payer, otherwise 10% (Art 10(2)). Dividends owned by the Qatari State, a political subdivision or a local authority are taxable only in Qatar (Art 10(3)).

Did the India Oman DTAA rate on technical fees change?

Yes. The 2025 Protocol cut royalties and technical fees from 15% to 10% for income of fiscal years beginning on or after 1 April 2026 (Arts 13(2), 14(2)). Dividends and interest did not change.

Does the India Saudi DTAA cover fees for technical services?

No. A service fee that is in substance business profits, not a royalty, is taxable in India only through a PE (Art 7(1)), if the recipient is a Saudi resident entitled to the treaty’s benefits; a service PE needs more than 182 days in any 12-month period (Art 5(3)(b)).

Does India have a tax treaty with Bahrain?

No double taxation agreement. The Income Tax Department lists only a tax information exchange agreement, which sets no rates, so domestic rates apply to a Bahrain recipient.

Can a Qatari investor still bring a claim under the India–Qatar investment treaty?

Only for investments made before the treaty was terminated on 23 March 2017, and only while its ten-year tail runs, to 23 March 2027 (Art 14(2)). Arbitration needs six months from a written request for settlement (Art 8(2)). A request made by about 23 September 2026 could complete that period before the tail ends; a request made now cannot. Whether a claim can be started after 23 March 2027 on a request made in time is a question of interpretation.

Points to review

  • Rate mapping. Each Indian payment stream is matched to the right Gulf treaty article and cap from 1 April 2026, or to the domestic rate where lower (s.159(4)).
  • Holding thresholds. A Qatari parent holds at least 25% for the 5% dividend rate; an Omani parent at least 10% for the 10% rate.
  • Oman timing. Income derived before 1 April 2026 is not claimed at the new 10% cap.
  • Service days. Staff days on Indian projects are tracked against each treaty’s wording: more than 90 days (Qatar) and more than 182 days (Saudi Arabia) within any 12-month period, both for the same or connected project; 183 days or more within any twelve-month period (Kuwait). One day can decide it. Staying under a service-PE threshold does not remove fixed-place or agent PE risk.
  • Substance file. Commercial reasons, staff and decision-making are documented for the Qatar and Oman principal purpose tests, Saudi Article 26, Kuwait Article 27 and GAAR, with a residency certificate and Form 41 for the year.
  • Investment treaty position. Pre-termination investments and live disputes are listed against each tail, from Qatar (23 March 2027) to Saudi Arabia (1 August 2039).

Sources

  1. Agreement and Protocol between India and Qatar for the avoidance of double taxation (signed 18 February 2025; in force 10 September 2025), notified by G.S.R. 789(E), 24 October 2025 (Arts 5, 10–13, 28, 30; Protocol). Ministry of Finance (Department of Revenue). https://www.incometaxindia.gov.in/documents/d/guest/notification-154-2025-pdf [not in client folder]
  2. Agreement between India and Oman for the avoidance of double taxation (signed 2 April 1997; in force 3 June 1997), consolidated text as amended by the 2025 Protocol. Income Tax Department. https://www.incometaxindia.gov.in/w/oman-comprehensive-agreements-1 [TAX-DTAA_Oman.html]
  3. Notification No. 69/2025, S.O. 2858(E), 25 June 2025: Protocol amending the India–Oman DTAA (signed 27 January 2025; in force 28 May 2025). Ministry of Finance (Department of Revenue). https://www.incometaxindia.gov.in/documents/d/guest/notification-69-2025-pdf [not in client folder]
  4. Convention between India and Saudi Arabia for the avoidance of double taxation (signed 25 January 2006; in force 1 November 2006), GSR 645(E), 17 October 2006, with Protocol. Income Tax Department. https://www.incometaxindia.gov.in/w/saudi-arabia-comprehensive-agreements-1 [TAX-DTAA_Saudi-Arabia.html]
  5. Agreement between India and Kuwait for the avoidance of double taxation (signed 15 June 2006; in force 17 October 2007), S.O. 2000(E), 27 November 2007, as amended by S.O. 1823(E), 4 May 2018. Income Tax Department. https://www.incometaxindia.gov.in/w/kuwait-comprehensive-agreements-1 [TAX-DTAA_Kuwait.html]
  6. Income-tax Act 2025, ss.159 and 536. Income Tax Department. https://www.incometaxindia.gov.in/w/section-159-85 [ITA2025_s159.txt]
  7. India–Qatar BIT, signed 7 April 1999 (Arts 8, 14). Department of Economic Affairs. https://dea.gov.in/documents-bilateral-investment-treaties [INV-Sunset_Qatar_BIT_1999.pdf]
  8. India–Oman BIT 1997 (Art 15), India–Saudi Arabia BIT 2006 (Art 16), India–Kuwait BIT 2001 (Art 16) and India–Bahrain BIT 2004 (Art 15), with the DEA table of signature, entry-into-force and termination dates. Department of Economic Affairs. https://dea.gov.in/documents-bilateral-investment-treaties [INV-Sunset_Oman_BIT_1997.pdf; INV-Sunset_Saudi-Arabia_BIT_2006.pdf; INV-Sunset_Kuwait_BIT_2001.pdf; INV-Sunset_Bahrain_BIT_2004.pdf; NOTE-DEA_India-BIT-signature-entry-termination-dates_as-of-29-Oct-2026.csv]
  9. India–Oman CEPA entry into force, 1 June 2026, and signing, 18 December 2025. Press Information Bureau, Ministry of Commerce and Industry. https://www.pib.gov.in/PressReleasePage.aspx?PRID=2267513&reg=3&lang=1 and https://www.pib.gov.in/PressReleseDetailm.aspx?PRID=2205889&reg=3&lang=2 [not in client folder]
  10. “India, Saudi Arabia review cooperation in defence, trade, energy and technology”, 29 September 2026. All India Radio (news report). https://newsonair.gov.in/india-saudi-arabia-review-cooperation-in-defence-trade-energy-and-technology/ [not in client folder]
  11. “Social Security Agreements”, page viewed 30 October 2026. Ministry of External Affairs. https://www.mea.gov.in/social-security-agreements [not in client folder]
  12. Sky High Appeal XLIII Leasing Company Ltd / TFDAC Ireland II, ITA 1122/Mum/2025 and 1198/Mum/2025 and others, ITAT Mumbai ‘I’ Bench, 13 August 2025 (para 47). Income Tax Appellate Tribunal. https://itat.gov.in [CASE-Tax_Sky-High-XLIII-and-TFDAC-Ireland-II_ITAT-Mumbai_ITA-1122-and-1198-Mum-2025_13-Aug-2025.pdf]

Disclaimer: This article is general information, not tax or legal advice; rules change, so check the current position and take advice on your facts before acting.

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