India-Japan DTAA: Section 90 and 91 for Indian Nationals in Japan

Answer Snapshot

Section 90 is primary; Section 91 is usually not for Japan income.

Why This Matters for Indian Nationals in Japan

Indian nationals living, freelancing, or investing in Japan often face a two-country tax picture: Japan taxes based on Japanese residence and source rules, while India taxes based on Indian residential status under the Income-tax Act. The India-Japan DTAA then decides how both systems interact when the same income could be taxed twice.

The core point is simple: because India and Japan have a tax treaty, relief for India-Japan double taxation is generally analysed under Section 90 of the Indian Income-tax Act, 1961, not Section 91. Section 91 is India’s unilateral relief mechanism for countries where no treaty exists. Japan is a treaty country, so Indian nationals in Japan normally start with the India-Japan DTAA and Section 90.

The official Income Tax Department text of Section 90 confirms that India may enter into agreements with foreign countries for relief or avoidance of double taxation. The official text of Section 91 applies where there is no agreement under Section 90. For Japan, the relevant treaty is the India-Japan tax convention, available through Japan’s Ministry of Finance treaty materials, including the synthesised India-Japan treaty text.

For Indian nationals in Japan, this matters most in five situations:

• You freelance in Japan and still file an Indian ITR.
• You receive Indian bank interest, NRE/NRO interest, rent, dividends, or capital gains.
• You hold Indian mutual funds, listed shares, ESOPs, RSUs, or overseas brokerage assets.
• You are returning to India and may fall into RNOR status.
• You need your Indian CA to claim foreign tax credit using Form 67 or treaty relief under Section 90.

A treaty does not mean “no tax.” It means the taxing rights, credit method, exemption method, withholding limits, and residence tie-breaker must be applied correctly.

Quote-ready India-specific fact: India’s RNOR status can materially change the tax result for returning Indian nationals because an RNOR is not taxed in India on all foreign income in the same way as a Resident and Ordinarily Resident.

India-Japan DTAA, Section 90, and Section 91: The Practical Map

The India-Japan DTAA should be read before assuming that either country has exclusive taxing rights. Article 4 defines “resident of a Contracting State” and contains the treaty residence framework. For individuals, the treaty residence analysis becomes important when both India and Japan could treat you as resident under their domestic laws.

The typical order of analysis is:

1. Determine your Japanese tax residence status.
2. Determine your Indian residential status: Non-Resident, Resident but Not Ordinarily Resident, or Resident and Ordinarily Resident.
3. Identify the income category: salary, freelance business income, interest, dividend, capital gain, rent, pension, royalty, director fee, or stock compensation.
4. Apply the India-Japan DTAA article relevant to that income.
5. Apply Section 90 in India if treaty relief is claimed.
6. Use India’s foreign tax credit rules, including Rule 128 and Form 67, where applicable.
7. Coordinate the reporting position between the Japan return and the Indian ITR.

Section 91 is important to understand, but in an India-Japan case it is usually a background rule rather than the main rule. If an Indian resident has income from a country with no DTAA with India, Section 91 may become relevant. But for Japanese income, because India and Japan have a DTAA, Section 90 normally governs treaty-based relief.

This distinction matters when preparing an Indian ITR. Form 67 asks for details of foreign income and foreign tax credit, including whether credit is claimed under Section 90, 90A, or 91. If the foreign country is Japan, the claim is usually connected to Section 90 and the India-Japan DTAA, not Section 91.

The Income Tax Department’s Rule 128 page explains the foreign tax credit framework. It provides that a resident may claim credit for foreign tax paid in the year in which the corresponding income is offered to tax in India, subject to the rule’s conditions and documentation requirements.

Japanese Tax Residence for Indian Nationals

Japan-side tax treatment depends on your Japanese status, not your passport alone. Indian nationality does not by itself decide Japanese taxability.

A simplified Japan-side framework is:

• Non-resident in Japan: usually taxed only on Japan-source income.
• Resident but non-permanent resident for Japanese tax purposes: generally relevant for individuals who are not Japanese nationals and have had a domicile or residence in Japan for five years or less in the past ten years.
• Resident other than non-permanent resident: generally exposed to Japanese taxation on worldwide income.

For Indian nationals, the Japan-side issue often appears with foreign bank interest, Indian dividends, Indian mutual funds, Indian rental income, ESOPs, RSUs, crypto, and brokerage accounts. A common misunderstanding is that “tax-free in India” means “tax-free in Japan.” That is not correct. For example, NRE interest may be exempt or favourably treated under Indian rules when conditions are met, but Japan may still require reporting depending on your Japanese tax residence status and remittance facts.

Japan’s annual income tax return, commonly called kakutei shinkoku, is generally due by March 15 for individual income tax, with deadline adjustments when the date falls on a weekend or holiday. Indian nationals with freelance income, multiple employers, stock compensation, foreign income, or foreign tax credit issues should not wait until March to assemble documents.

Indian Residential Status: NR, RNOR, and ROR

India taxes individuals differently depending on residential status. The Income Tax Department’s official overview of Residential Status explains that individuals may be Resident and Ordinarily Resident, Resident but Not Ordinarily Resident, or Non-Resident.

For Indian nationals in Japan, the most important categories are:

• Non-Resident Indian for Indian tax purposes: generally taxed in India on Indian-source income and income received or deemed received in India.
• RNOR: a transitional category that can be crucial when returning to India after years abroad.
• Resident and Ordinarily Resident: generally taxable in India on global income.

The official Income Tax Department material on income deemed to accrue or arise in India explains that the scope of total income depends on residential status. It also notes that a Resident and Ordinarily Resident is taxed on global income, while an RNOR has a narrower foreign-income exposure.

This is where Indian nationals returning from Japan frequently miss planning opportunities. If you leave Japan and return to India, you should review RNOR status before changing investment accounts, exercising stock options, selling Japanese assets, remitting funds, or restructuring freelance contracts.

NRE, NRO, and Japanese Reporting

Indian nationals in Japan often maintain Indian bank accounts. The tax and reporting treatment may differ sharply between India and Japan.

Common account types include:

• NRE account: generally used for foreign earnings remitted to India.
• NRO account: generally used for Indian-source income such as rent, dividends, pension, or interest.
• Resident savings account: usually not appropriate after becoming non-resident under Indian foreign exchange rules.

The RBI’s official website is the starting point for foreign exchange and banking rules: Reserve Bank of India. Indian tax analysis and FEMA/RBI compliance are not identical. A bank account may be correctly maintained under RBI rules but still create Japanese income tax reporting.

Typical issues include:

• NRE fixed deposit interest that is exempt in India but potentially reportable in Japan.
• NRO interest taxed in India with TDS, requiring Japan-side reporting and possible foreign tax credit analysis.
• Indian rental income deposited into an NRO account.
• Indian mutual fund redemption proceeds credited in India.
• Remittances from India to Japan that are not income by themselves but may reveal underlying taxable income.

The key editorial point for Indian nationals is this: do not classify an item as “non-taxable” merely because it sits in an NRE account. First identify the legal nature of the income, the country of source, the year of accrual or receipt, and both countries’ residence rules.

Key Filing Mechanics

Indian nationals in Japan normally need two coordinated workflows: the Japan return and the Indian ITR.

On the Japan side, gather:

• Japanese withholding tax certificates from employers.
• Freelance invoices, platform statements, and business expense records.
• Social insurance, pension, and health insurance records.
• Japan bank statements showing business receipts.
• Indian bank interest certificates for NRE, NRO, and resident accounts.
• Indian Form 16A, Form 26AS, AIS, and TIS where relevant.
• Broker statements for Indian shares, mutual funds, ESOPs, RSUs, ESPP, and overseas brokerage accounts.
• Rental income statements, property tax receipts, loan interest certificates, and TDS records for Indian property.
• Evidence of foreign tax paid in India if Japanese foreign tax credit is considered.

On the India side, your Indian CA may need to consider:

• ITR-2 where there is no business or professional income but there are capital gains, foreign assets, foreign income, or other non-simple items.
• ITR-3 where there is business or professional income, including freelance or proprietary business income.
• Form 67 for foreign tax credit where Japanese tax is claimed as credit in India.
• Form 10F and Tax Residency Certificate issues where treaty benefit claims are relevant for non-residents.
• Schedule FA where applicable to Indian residents with foreign assets.
• Schedule FSI/TR where foreign-source income and treaty relief are reported.
• Form 26AS, AIS, and TIS reconciliation for Indian TDS and reported income.
• PAN and Aadhaar linkage/status issues, where relevant.
• RNOR analysis for returning Indian nationals.

For Indian filing, the ordinary due date for many non-audit individual returns is commonly July 31 after the financial year, but you should verify the applicable year’s due date on the official Indian e-filing portal and with your Indian CA because extensions and category-specific rules can apply.

For Japanese filing, individual income tax returns are generally filed by March 15 for the prior calendar year. Because India uses an April-March financial year and Japan uses a calendar year, the same transaction can straddle different reporting periods. This mismatch is one of the biggest practical causes of double taxation errors.

How Foreign Tax Credit Usually Works

Foreign tax credit is not automatic. It is a documented claim.

For India, Rule 128 requires the income and foreign tax to be matched. The official Income Tax Department Form 67 tax calendar page explains that a resident may claim foreign tax credit for foreign tax paid in the year in which the corresponding foreign income is offered to tax in India. It also lists supporting documentation such as a statement of income and foreign tax, plus a certificate or statement from the tax authority, deductor, or the assessee with proof of payment or deduction.

In practical India-Japan cases, mismatches often occur because:

• Japan taxes income in the calendar year, while India reports by financial year.
• Japanese residence status and Indian residence status do not change on the same date.
• Japanese withholding may be final for some items but only provisional for others.
• Indian TDS may appear in AIS/Form 26AS even when treaty relief should be considered.
• ESOP or RSU income may be taxed partly as employment income and partly as capital gain.
• Currency conversion rules differ between Japanese reporting and Indian FTC reporting.

The foreign tax credit schedule should be prepared from actual tax paid, not merely from estimated withholding. If tax is disputed, refunded, adjusted, or assessed later, both countries’ positions may need to be updated.

Common Mistakes

• Treating NRE interest as tax-free everywhere. NRE interest may have a favourable Indian tax treatment, but Indian tax treatment does not decide Japanese taxability.

• Using Section 91 for Japan income. Since India and Japan have a DTAA, Section 90 is normally the relevant Indian treaty-relief section for Japan income.

• Ignoring Article 4 residence tie-breaker. If India and Japan both appear to treat you as resident, the treaty residence analysis must be documented, not guessed.

• Filing ITR-1 when foreign income or foreign assets make it inappropriate. Indian nationals with Japan income, foreign assets, or foreign tax credit issues often need a more detailed ITR form.

• Missing Form 67. Indian foreign tax credit claims require proper documentation and timing.

• Forgetting RNOR when returning to India. RNOR can be one of the most important Indian tax concepts for returning Indian nationals after Japan assignments.

• Late ESOP, RSU, or ESPP analysis. Equity compensation may require grant, vest, exercise, sale, and employer recharge documents across both countries.

• Assuming remittance equals income. Moving funds from India to Japan or Japan to India is not always taxable by itself, but the underlying interest, gains, salary, rent, or business income may be taxable.

• Not reconciling Japan and India tax years. Japan’s calendar year and India’s financial year create timing differences that must be mapped transaction by transaction.

What We Do for You

Tsuji Global Tax Desk handles the Japan-side tax filing and Japan-side tax position for Indian nationals, freelancers, founders, employees, and returning residents with cross-border India-Japan issues.

Our role is not to replace your Indian CA. Instead, we coordinate with your home-country professional, including your Indian CA, CPA, EA, Steuerberater, or other qualified adviser, so that the Japan return and Indian ITR tell a consistent story.

For India-Japan cases, we typically support:

• Japan-side income tax return preparation.
• Classification of Japan-source and foreign-source income for Japan purposes.
• Review of Indian income items that may be reportable in Japan.
• NRE/NRO interest mapping for Japan reporting.
• Japan-side foreign tax credit analysis.
• ESOP, RSU, ESPP, and stock option reporting support.
• Freelancer income and expense classification in Japan.
• Document pack preparation for your Indian CA.
• Coordination notes for ITR-2, ITR-3, Form 67, and DTAA analysis.
• Treaty residence fact summaries for Article 4 discussions.

This E-E-A-T structure matters because cross-border tax is not a one-country exercise. Japan-side tax filings should be prepared by professionals who understand Japanese tax procedure, while Indian treaty relief, Form 67, ITR schedules, RNOR, and domestic Indian law should be reviewed with an Indian CA.

FAQ

For Indian nationals in Japan, does the India-Japan DTAA eliminate all double tax?

No. The DTAA reduces or relieves double taxation according to specific treaty articles and domestic procedures. You may still need to report the same income in both countries, then claim exemption, credit, or treaty relief where available.

For Indian freelancers in Japan, should Section 90 or Section 91 be used?

For Japan income, Section 90 is usually the relevant Indian provision because India and Japan have a DTAA. Section 91 is generally for foreign income from countries where India has no double tax agreement.

For Indian nationals with NRE deposits, is NRE interest taxable in Japan?

It can be. NRE interest may be exempt or favourably treated in India under Indian rules, but Japan applies its own residence and income tax rules. If you are a Japanese tax resident, NRE interest should be reviewed for Japan reporting.

For Indian nationals returning from Japan to India, why is RNOR important?

RNOR can limit the scope of foreign income taxable in India compared with Resident and Ordinarily Resident status. Returning Indian nationals should review RNOR before exercising stock options, selling foreign assets, or restructuring overseas accounts.

For Indian nationals in Japan, which Indian ITR form is commonly relevant?

It depends on income type. ITR-2 may be relevant where there is no business or professional income but there are capital gains, foreign income, or foreign assets. ITR-3 may be relevant where there is business or professional income. Your Indian CA should confirm the correct form.

For Indian nationals claiming Japanese tax credit in India, is Form 67 required?

Where foreign tax credit is claimed in India, Form 67 and supporting documents are generally central under Rule 128. The income, Japanese tax paid, proof of deduction or payment, and relevant treaty article should be reconciled before filing.

For Indian nationals with ESOPs or RSUs in Japan, which country taxes the income?

It depends on the grant-to-vest workdays, residence status, source rules, treaty article, and timing of exercise or sale. ESOPs, RSUs, and ESPP plans should be reviewed before filing because payroll withholding rarely captures the full cross-border answer.

Conversion Checklist Before You Contact Us

Before booking a paid scoping call, prepare a clean document pack. The more complete the pack, the faster we can identify the Japan-side filing issue and coordinate with your Indian CA.

1. Residence and timeline

Prepare:

• Date you first arrived in Japan.
• Visa status and residence card period.
• Dates of any temporary departures from Japan.
• Date you left India, if applicable.
• Expected return-to-India date, if known.
• Prior-year Japan tax filings, if any.
• Indian residential status used in your latest ITR: Non-Resident, RNOR, or Resident and Ordinarily Resident.
• Any Tax Residency Certificate already obtained or requested.

2. Japan income documents

Prepare:

• Japanese employer withholding certificate.
• Payslips and bonus statements.
• Freelance invoices and client contracts.
• Platform income reports.
• Business expense records.
• Japan bank statements for business receipts.
• Social insurance and pension deduction records.
• Prior-year Japanese income tax return, if filed.

3. India income documents

Prepare:

• Latest Indian ITR acknowledgment and computation.
• Form 26AS, AIS, and TIS.
• Form 16 or Form 16A, if applicable.
• NRE and NRO bank interest certificates.
• Indian bank statements for the tax year.
• Indian rental income records.
• Home loan interest certificate and property tax receipts.
• Mutual fund capital gain statements.
• Broker capital gain reports for Indian listed shares.
• Dividend statements.
• TDS certificates.

4. Foreign tax credit and DTAA documents

Prepare:

• Details of Japanese income offered or expected to be offered in India.
• Details of Indian income offered or expected to be offered in Japan.
• Proof of Japanese tax paid or withheld.
• Proof of Indian TDS or tax paid.
• Draft or filed Form 67, if any.
• Treaty position notes prepared by your Indian CA, if any.
• Any notice, assessment, refund, or correction from either tax authority.

5. Equity compensation and investments

Prepare:

• ESOP, RSU, ESPP, or stock option plan documents.
• Grant, vest, exercise, and sale statements.
• Employer mobility schedule, if available.
• Brokerage annual statements.
• Crypto exchange reports, if any.
• Details of unlisted shares or startup equity.
• Dates you worked in India, Japan, or other countries during the vesting period.

6. Deadline map

Prepare a deadline list:

• Japan income tax filing deadline for the relevant year.
• Japan consumption tax deadline, if you are a freelancer potentially in scope.
• Indian ITR due date applicable to your case.
• Form 67 timing for foreign tax credit.
• Any Indian advance tax or self-assessment tax deadlines.
• Any Japanese tax office notice deadline.
• Any Indian notice or e-proceeding deadline.

7. Questions for your Indian CA

Before our call, ask your Indian CA:

• Which ITR form do they expect to use: ITR-2, ITR-3, or another form?
• Will they claim relief under Section 90?
• Is Form 67 required?
• Are they treating you as NR, RNOR, or ROR?
• Are any Indian income items being excluded under treaty analysis?
• Are Schedule FA, Schedule FSI, or Schedule TR relevant?
• Do they need Japan-side tax payment certificates or return copies?

Official Sources

For India-side statutory and filing references, start with the Income Tax Department:

• Income Tax Department India
• Section 90: Agreement with foreign countries or specified territories
• Section 91: Countries with which no agreement exists
• Rule 128: Foreign Tax Credit
• Residential Status

For banking, remittance, and FEMA-related reference points, start with:

• Reserve Bank of India

For Japan treaty materials and India-Japan DTAA text, start with:

• Japan Ministry of Finance: India-Japan treaty synthesised text
• Japan Ministry of Finance: Application of the MLI to the India-Japan tax treaty
• Japan National Tax Agency: Tax treaty information

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