UK-India Double Taxation Convention: NRI Landlords, Indian Companies and the Treaty-vs-Statute Gap

The single most misunderstood feature of the 1993 UK-India Double Taxation Convention is that Article 13 does not contain an indirect-disposal extension. The treaty allocates UK source-state taxing rights for direct alienation of UK immovable property under Article 13(1). It is silent on the disposal of shares in UK property-rich entities; that case falls to the residuary Article 13(5), which typically allocates taxing rights to the residence state (India). And yet UK domestic NRCGT under TCGA 1992 s.1A and Schedule 1A Part 4 captures indirect disposals of UK property-rich entity shares regardless of treaty silence.

HMRC's published position, set out in the International Manual entries on the UK-India Convention, is that the UK is exercising taxing rights the treaty does not expressly deny. Treaty silence is not treaty exemption. The 60-day NRCGT return obligation is live; the UK CGT charge under Schedule 1A Part 4 applies; India gives foreign tax credit for the UK CGT paid under Article 24 of the DTAA and s.90 of the Indian Income Tax Act. Indian-resident shareholders selling stakes in UK property-SPVs need to plan on the basis that UK CGT applies, with Indian credit available through Form 67.

This page walks the 1993 Convention as modified by the 2013 Protocol (in force 27 December 2013) and the MLI (effective from 1 January 2020), the treaty-vs-statute matrix that catches Indian-resident shareholders, five worked examples (NRI individual landlord, the Article 13 indirect-disposal trap, Article 4 dual-resident tie-breaker, UK emigrant to India hitting the s.10A trap, Indian private limited company holding an ATED dwelling), and the 13 most common UK-India bilateral landlord questions. For the framework that underlies every UK treaty, see our UK tax treaties framework guide. For the NRL mechanics that the treaty does not displace, see our non-resident landlord scheme complete guide. For the 60-day NRCGT rules, see our NRCGT rates and reporting page.

The 1993 Convention and how it has been modified

The UK-India Double Taxation Convention entered into force on 25 October 1993, with UK effective dates 6 April 1994 for Income Tax and Capital Gains Tax and 1 April 1994 for Corporation Tax. It is published at gov.uk under "India: tax treaties". The 1993 Convention is older than the OECD Model 2017 form that includes the property-rich-entity indirect-disposal provision in Article 13(4). The 1993 treaty does not have that provision.

The Convention has been modified twice. The 2013 UK-India Protocol entered into force on 27 December 2013 (UK withholding-tax effective date the same day, UK Corporation Tax 1 April 2014), and tightened administrative and limitation-of-benefits provisions plus updated exchange-of-information articles. It did not introduce an Article 13(4) indirect-disposal extension. The Multilateral Instrument modifications, effective from 1 January 2020 with later effective dates for some tax types, imported a Principal Purpose Test that overlays the entire Convention. Treaty benefits can be denied where obtaining the benefit was a principal purpose of any arrangement, unless granting the benefit would accord with the object and purpose of the relevant treaty provisions.

What did not change across either modification: the indirect-disposal allocation gap. Anyone selling shares in a UK property-rich entity needs to plan around UK domestic NRCGT applying regardless of treaty silence.

The treaty-vs-statute matrix

Indian-resident landlords and Indian-resident shareholders in UK property-rich entities need to self-identify against this matrix before reading any of the worked examples below. The third row is the operative differentiator and the source of the most common Indian-bilateral planning mistakes we see.

Scenario	1993 Treaty allocation	UK statutory charge	Operative position
Indian-resident receives UK rental income	UK source-state (Art 6)	ITTOIA 2005 Part 3 (individual) or CTA 2009 Part 4 (company)	UK tax applies; treaty and statute aligned
Indian-resident sells UK land directly	UK source-state (Art 13(1))	NRCGT under TCGA 1992 s.1A	UK tax applies; 60-day return required; treaty and statute aligned
Indian-resident sells shares in UK property-rich SPV	TREATY SILENT. Falls to residuary Art 13(5), typically allocating to India	NRCGT under TCGA 1992 Schedule 1A Part 4 plus Schedule 4AA	UK statutory charge applies regardless. HMRC view: treaty silence is not exemption. 60-day return required. Indian-side FTC available
Indian NRI sells UK flat in own name	UK source-state (Art 13(1))	NRCGT under s.1A	Aligned; 60-day return
Indian company holds UK dwelling worth more than £500,000	UK retains source rights (no treaty bar)	ATED under FA 2013 Part 3	Annual charge per band; s.133 relief claim if let commercially; 30 April return
UK-resident moves to India, sells non-UK shares during non-residence, returns within 5 tax years	India taxes the gain as Indian-resident at time of disposal	UK CGT under TCGA 1992 s.10A on return (gain deemed to arise in return year)	Both tax; UK gives FTC for Indian CGT paid via TIOPA 2010 s.18

The treaty-silence-equals-treaty-exemption misframe is the most common adviser mistake on UK-India indirect-disposal cases. Statute applies regardless; planning should assume UK CGT and Indian FTC, not UK exemption.

Example one: Mrs Iyengar, Mumbai-resident NRI individual landlord

Mrs Iyengar is Mumbai-resident throughout 2026/27, UK-non-resident under the Statutory Residence Test, and an OCI cardholder. She owns a Manchester BTL flat. Annual gross rent £14,400; agent's fees £1,440; mortgage interest £3,200; service charge and repairs £1,800.

Treaty: UK has primary taxing rights under Article 6. NRL: the letting agent withholds 20% (£2,880 a year) unless Mrs Iyengar holds NRL1 approval; she applies on instructing the agent. UK Self-Assessment: register for SA, file SA100 plus SA105 annually. Property profit after deductible expenses is £11,160; mortgage interest restricted to 20% basic-rate tax credit (£640) under ITTOIA 2005 s.274A. UK Income Tax: basic rate on £11,160 is £2,232, less the £640 credit gives £1,592 UK Income Tax due. UK personal allowance is available for non-residents under ITA 2007 s.56 based on nationality and Commonwealth-citizen status (Indian nationals retain UK personal allowance under domestic law; verify currency at consultation date).

NRL offset: the £2,880 withheld appears on the agent's NRL6 and is credited against UK SA liability, so a UK refund of £1,288 is due. Indian side: Mrs Iyengar reports the UK rental on her Indian Income Tax Return (ITR-2 plus Schedule FA for foreign assets and income). Under Article 24 of the DTAA plus s.90 of the Indian Income Tax Act and Rule 128, India gives FTC for the £1,592 UK Income Tax paid against any Indian Income Tax on the same income. The FTC claim mechanism is Form 67, filed online with the Indian return. If the Indian effective rate exceeds the UK effective rate, residual Indian tax is payable; if not, no residual. The common misframing ("I'm NRI / OCI, UK rental income is exempt under the treaty") is false; Article 6 allocates source-state taxing rights to the UK.

Example two: Mr Mehta, the Article 13 indirect-disposal trap

Mr Mehta is Bangalore-resident, UK-non-resident under SRT, and an Indian citizen. He owns 30% of the shares in a Jersey-incorporated holding company ("Mayfair Property HoldCo Ltd") whose sole asset is an £8.2m London office building. The other 70% is held by his Indian business partner. In 2026/27 he sells his 30% stake to an unrelated buyer for £2.5m (base cost £900k acquired in 2018; gain £1.6m).

Property-rich entity test: HoldCo's value is more than 75% derived from UK land (its sole asset), so the entity is property-rich under Schedule 1A paragraph 6. Threshold-holder test: Mr Mehta held at least 25% at any time in the two years before disposal (he held 30% throughout), so he is a substantial holder under Schedule 1A paragraph 8. NRCGT applies under TCGA 1992 s.1A and Schedule 1A Part 4 (indirect disposals); the 60-day return is required.

1993 treaty position: Article 13(1) covers gains from alienation of immovable property situated in the UK. The shares Mr Mehta is selling are shares in a HoldCo, not immovable property. The 1993 treaty does not contain an Article 13(4)-equivalent indirect-disposal provision. The gain on the shares falls to the residuary Article 13(5) (alienation of any property other than that mentioned in paragraphs 1 to 4), which typically allocates to the residence state (India).

Statutory override: UK NRCGT under Schedule 1A Part 4 applies regardless. HMRC's position (see the International Manual entries on the UK-India Convention) is that the UK is exercising taxing rights the treaty does not expressly deny; treaty silence is not exemption. The 60-day NRCGT return is required, and UK CGT at the prevailing non-residential rate (18% basic / 24% higher band from 30 October 2024) applies on the gain. Indian side: Mr Mehta reports the gain on his Indian ITR. India operates the credit method under Article 24 and s.90; UK CGT paid is creditable against Indian CGT on the same gain. India-side LTCG treatment depends on Indian holding-period rules (currently 2 or more years for unlisted equity shares qualifies as LTCG; verify Indian Income Tax Act and recent Indian Finance Act at consultation date). The trap is the assumption that treaty silence equals UK exemption.

Example three: Dr Singh, Article 4 tie-breaker

Dr Singh was born in Delhi, does UK consultancy work, spent 165 UK days in 2026/27, rents a flat in Marylebone, and retains the family home in Delhi (spouse and adult children in Delhi). SRT analysis: 165 UK days under the sufficient-ties test with 4 ties (accommodation, work, 90-day, family), so he is UK-resident. Indian domestic law: more than 182 India days or habitual abode in India or Indian taxable-presence threshold met, so he is Indian-resident. He is dual-resident.

The Article 4 tie-breaker: permanent home is available in both UK and India, so the first limb does not resolve. Centre of vital interests: family, personal and economic ties closer to Delhi (spouse, children, primary bank accounts, social ties), so this limb resolves to India. Dr Singh is treaty-resident in India. UK retains source-state taxing rights on UK consultancy income (Article 7 if there is a permanent establishment, Article 14 for independent personal services) and on any UK property income or gains (Articles 6 and 13). For non-treaty UK matters (Self-Assessment registration, NRL withholding) he remains UK-resident under SRT; the tie-breaker affects treaty allocation only.

Example four: Mr Chowdhury, UK landlord emigrating to India and the s.10A trap

Mr Chowdhury was UK-resident throughout 2018/19 to 2025/26 (he satisfies the s.10A preceding-4-of-7 gateway). He moves to Mumbai in June 2026 for a permanent corporate role, retains a UK BTL portfolio, and sells a portfolio of US shares in 2028/29 for a £140,000 gain while Indian-resident. In 2030/31, after 4 complete tax years non-UK-resident (2026/27 to 2029/30), he returns to the UK.

The s.10A position: Mr Chowdhury's non-UK residence period is 4 complete tax years, within the "5 years or less" window. He had been UK-resident in 4 or more of the 7 preceding tax years. He is a temporary non-resident. Effect: the £140,000 gain on the US shares disposed during non-residence is deemed to arise in the 2030/31 return year and is chargeable to UK CGT. UK property gain (separate analysis): Mr Chowdhury's UK BTL portfolio is in NRCGT throughout his non-residence; if he sells UK BTL during non-residence, the 60-day NRCGT return and UK CGT applies with no s.10A overlay (UK land is already in NRCGT regardless of return).

Indian side: India taxed him on the £140,000 gain in 2028/29 (Indian-resident at the time of disposal). UK CGT on the same gain in 2030/31 is creditable against the Indian CGT paid in 2028/29 under Article 24, but only up to the lower of the two amounts. Practically the credit requires Indian s.155 rectification of the 2028/29 Indian return or a revised return within the available window. Planning lesson: to break s.10A entirely, Mr Chowdhury needs more than 5 complete tax years non-UK-resident. A 4-year stint with planned return crystallises the recapture risk.

Example five: UK Realty India Private Limited, Indian-company holding UK BTL

UK Realty India Private Limited is a Mumbai-registered Indian private limited company, Indian-resident as a company, UK-non-resident. It buys a £900,000 Birmingham city-centre apartment in 2026. Annual rental £42,000 to an unconnected tenant.

NRL: the UK letting agent withholds 20% unless NRL2 approval is held. UK Corporation Tax on rental: UK Realty India Private Limited is within UK CT under CTA 2009 Part 4 (non-resident companies in UK CT scope since 6 April 2020). Rental profit after deductible expenses is taxed at UK CT rates with the small profits rate at 19% likely available (augmented profits below £50,000); the CIHC carve-out at s.18N(2)(b) CTA 2010 applies (commercial letting to unconnected tenant), preserving the small profits rate.

ATED: £900,000 dwelling falls in the £500,001 to £1m band, 2026/27 charge £4,600. The company files the ATED return by 30 April 2026 and pays £4,600 unless a relief applies. The s.133 FA 2013 property-rental-business relief is available (commercial letting to unconnected tenant) but must be claimed on the return; failing to file even where relief applies triggers Schedule 55 FA 2009 penalty points. For the ATED architecture in detail, see our ATED complete guide. NRCGT on disposal: when sold (say in 2032 for £1.08m, gain £180k), the 60-day NRCGT return is required; UK CT on the chargeable gain at the prevailing CT rate applies. ATED-related CGT was abolished from 6 April 2019. MLI Principal Purpose Test: if the Indian private limited company structure was inserted purely to access treaty benefits without commercial substance, PPT can deny benefits; standard commercial-investment structures with genuine Indian business substance are typically unaffected.

The MLI PPT in practice

The Principal Purpose Test imported by the MLI into the 1993 Convention from 1 January 2020 affects three categories of structure on the UK-India axis. First, treaty-shopping holding chains (an Indian or third-country holding company inserted between the underlying Indian-resident owner and the UK property to access treaty benefits) where the structure lacks independent commercial substance. Second, hybrid arrangements that exploit timing or characterisation differences between the UK and Indian tax systems. Third, conduit arrangements where treaty benefits flow through to a non-resident of either contracting state.

For straightforward Indian-resident landlord cases (NRI individual holding a UK BTL in their own name; Indian private limited company holding a UK property as a genuine investment) the PPT is not engaged. For more elaborate structures (multi-tier holding companies, Mauritius / Singapore conduits, Indian-side trust structures) the PPT analysis is part of the front-end planning. HMRC has the right to deny treaty benefits where the PPT is triggered; the burden then sits with the taxpayer to show that granting the benefits would accord with the object and purpose of the relevant treaty provisions.

Frequently asked questions

The FAQ list above covers the most common UK-India bilateral landlord questions: NRL withholding, 60-day NRCGT return, the Article 13 indirect-disposal gap, Article 4 tie-breaker, the 2013 Protocol and MLI modifications, FTC mechanics through Indian Form 67, the FIG regime for OCI inbound new residents, the s.10A trap for UK landlords emigrating to India, ATED for Indian-company structures, and the new LTR IHT tail for UK-domicile emigrants. For the SDLT non-resident 2% surcharge that applies on UK residential purchases by Indian residents, see our SDLT non-resident surcharge page. For the NRL1 mechanics in detail, see our NRL gross-payment approval page. For the broader Crown Dependencies treaty comparison and the modern-treaty Article 13(4) form (which the 1993 UK-India treaty lacks), see our UK-Crown Dependencies DTA page.

Next step

If you are an NRI or OCI cardholder with UK property, an Indian-resident shareholder in a UK property-rich SPV, an Indian-incorporated company structure holding UK property, or a UK landlord planning a permanent move to India, the 1993 Convention (as modified by the 2013 Protocol and the MLI) plus the UK domestic NRL, NRCGT, ATED, CT and LTR-IHT architecture sit together in ways that need to be planned across both jurisdictions. The indirect-disposal trap and the s.10A temporary-non-residence trap are where Indian-bilateral planning fails most often. Contact us via the form below to discuss your position.