Indian founder with a US company? How the India–US treaty stops you paying tax twice
Worried about being taxed in both the US and India? The India–US tax treaty exists to prevent exactly that. Here’s how it works for founders.
You’re in India, you’ve got a US company and US clients, and one fear keeps circling: “Am I going to get taxed on the same income twice — once by the IRS and again by India?” It’s a completely reasonable worry, and the good news is that the two countries signed an agreement precisely to stop this from happening.
Why double taxation is even a risk
The US can tax income connected to the US. India taxes you on your global income because you’re a resident there. Left alone, the same dollar of profit could get taxed on both sides. The India–US Double Taxation Avoidance Agreement (the tax treaty) is the referee that decides who gets to tax what, and gives you tools to avoid being hit twice.
Those tools include reduced withholding rates on certain income, tie-breaker rules for residency, and foreign tax credits so that tax paid in one country offsets tax in the other. When you rely on a treaty position on your US return, you often disclose it on Form 8833.
What’s at stake
- Don’t use the treaty, and you may genuinely pay tax twice — a direct, avoidable hit to your margins.
- Claim a treaty benefit incorrectly or without the right disclosure (like Form 8833 when it’s required), and you risk penalties or a challenge from the IRS.
- Miss the interaction between US and Indian filings and you can end up out of compliance in one country while fixing the other.
The common approach
- Identify which types of your income the treaty covers and at what rate.
- Claim the correct treaty positions on the US side, disclosing on Form 8833 where required.
- Coordinate with your Indian filing so foreign tax credits are claimed properly and nothing is taxed twice.
How Add-wise handles this
We sit right at the India–US intersection — it’s one of our specialties. Our India Tax Advisory works alongside our US filings so both sides talk to each other, treaty benefits are claimed correctly (including Form 8833 where needed), and you’re not overpaying or double-paying. One team, both countries, one coherent plan.
Indian founder with a US business? Let’s make sure you’re taxed once — not twice.