Visa holders · US-India treaty
Indian students can take the standard deduction under the US-India tax treaty, though their US wages stay taxable.
Article 21(2) gives students and business apprentices from India the standard deduction, $16,100 for 2026. Other nonresident aliens cannot claim it. Once you become a resident alien, the US taxes your income from India and credits the Indian tax.
Updated · Sources
The US-India treaty for tax year 2026
- $16,100
- is the standard deduction an Indian student claims on line 12 of Form 1040-NR.
- 2 years
- is the longest a teaching or research visit can last and keep its pay exempt under Article 22.
- 15%
- is the most tax India may charge on a US resident’s deposit interest.
Married students also use $16,100, because nonresident aliens cannot file jointly. For 2025, the amount was $15,750.
Can you claim the US-India tax treaty as a student?
Article 21 covers F-1 and J-1 students and business apprentices from India. You must pass all four tests below to claim it.
You lived in India just before the visit
Article 21 requires you to have been a resident of India immediately before your visit. You also meet the test if you were resident in India in the tax year you arrived or the year before.
Study or training is your main purpose
You must be in the US principally for your education or training. If work becomes your main reason for being here, the article no longer applies.
You have no green card
The saving clause leaves Article 21 in place unless you are a US citizen or hold a green card. So the article still applies after you become a resident alien under the substantial presence test.
Your program is still running
The benefits last only as long as your education or training reasonably or customarily takes. The treaty sets no fixed number of years. The five-year figure people quote belongs to another rule, which keeps an F-1 student’s days from counting toward US residency.
Teachers and researchers from India claim Article 22 instead, which has its own tests.
What Article 21(2) is worth on $30,000 of pay.
No treaty relief
$30,000
A student from a country whose treaty gives students no relief is taxed on every dollar of pay.
From China
$25,000
Article 20(c) of the US-China treaty exempts the first $5,000 of pay each year.
From India
$13,900
Article 21(2) subtracts the $16,100 standard deduction from the pay.
Each figure is taxable income, meaning the $30,000 of pay minus the treaty relief shown. The $16,100 is the 2026 standard deduction under Rev. Proc. 2025-32, and the $5,000 is a fixed treaty amount. The figures leave out any itemized deductions the other two students could claim. Each student’s tax bracket then sets the tax.
Your US residency status decides whether income from India is taxed here.
Under Article 1(3), the saving clause, the US taxes a resident alien’s income from India under its own law. The treaty still caps India’s tax on dividends and interest, and Article 25 makes the US credit what India charges.
| Nonresident alien | Resident alien | |
|---|---|---|
| Interest from India | No US tax | Taxed in full The US credits any Indian tax on it |
| Dividends from Indian shares | No US tax | Taxed in full India may tax them at up to 25% |
| Rent or gains on property in India | No US tax | Taxed The treaty does not cap India’s tax |
| Indian mutual funds | No US tax | Generally treated as PFICs Passive foreign investment companies. Form 8621 is usually due for each fund every year. |
| FBAR for accounts in India | Not required | Required over $10,000 All foreign accounts combined, at any time in the year |
On an H-1B, you often become a resident alien in your arrival year, from your first day in the US. On an F-1 visa, that usually happens in your sixth calendar year.
Where Indian visa holders misread the treaty.
A teaching visit that runs past two years
If a teaching or research visit runs past two years, the IRS treats the Article 22 exemption as lost for the whole visit. The exemption covers pay for teaching or research at a university or other recognized educational institution. Research done mainly for the benefit of a private person or company never qualifies.
Treating NRE interest as tax-free in the US
India exempts interest on an NRE (non-resident external) account for an individual resident outside India under FEMA, its foreign exchange law. US law has no matching rule, so a resident alien reports it as ordinary interest. With no Indian tax paid, there is no credit to set against it.
Expecting the treaty to exempt H-1B wages
The treaty does not exempt the wages of an H-1B worker on a US company’s payroll. Article 16 exempts pay for US work only if you are here 183 days or less in the tax year. Your employer must also be a non-US resident, with no US branch bearing the cost.
Filing Form 8833 for a student or teacher claim
A student or teacher claim does not need Form 8833. Treasury regulations waive it for treaty claims on wages and on the income of students, trainees and teachers. You claim Article 21 or 22 on the return itself. Form 8833 is still needed for some claims, such as being treated as a resident of India under the Article 4(2) tie-breaker.
Counting the FICA exemption as a treaty benefit
On-campus jobs and practical training on an F-1 or J-1 visa are usually free of Social Security and Medicare. That rule is in the Internal Revenue Code and applies to students from every country. It ends once you become a resident alien, even while Article 21 still applies.
We file your US return with the treaty applied.
Valim’s CPAs prepare the US returns of students and H-1B workers from India, alongside any accountant they have back home.
- We claim your treaty benefits on Form 1040-NR, including the Article 21(2) standard deduction.
- Once you are a resident alien, we credit your Indian tax on Form 1116 and file your FBAR. We add Form 8938 for foreign assets and Form 8621 for each Indian mutual fund where they apply. Your instant quote prices each account and fund.
- We weigh selling property in India before your US tax residency starts against selling after it.
- We figure estimated tax on Indian rent and interest.
- We answer IRS and state notices on returns we prepared, treaty claims included, within your fee.
- Individual return
- from $195
- Business return
- from $495
We quote a flat fee before work starts. We do not bill hourly.
What do students and H-1B workers from India ask about the US-India tax treaty?
What treaty benefits can Indian students claim?
Under Article 21, Indian students owe no US tax on money from abroad for living costs and study, and can take the standard deduction. Article 21(2) sets the deduction, $16,100 for 2026, against US wages and scholarships. On Form 1040-NR, it may also let them claim dependents who meet the tests US citizens use, such as a US-born child. The benefits last as long as the program reasonably needs, and they end with a green card or US citizenship.
Does the treaty stop double tax on income from India?
Yes, for most income, because the US lets you claim Indian tax as a foreign tax credit. Article 25 requires that credit, subject to the limit in US law. Once you are a resident alien, the US taxes your Indian interest, dividends, rent and gains. The treaty also caps India’s tax at 15% on deposit interest and 25% on an individual’s dividends. While you are a nonresident alien, the US does not tax income arising in India, such as Indian bank interest, rent or gains. Pay for work you do in the US is generally US income, even from an Indian employer.
How is a property sale in India taxed in the US?
A US citizen or resident alien reports the full gain on property sold in India, figured in US dollars. Article 13 of the treaty lets India tax the same gain under its own law. The US then credits India’s tax on that gain, up to the foreign tax credit limit. The US home sale exclusion may also cover a main home in India that meets its ownership and use tests. If you sell while still a nonresident alien, the US does not tax the gain. Our page on moving to the US from India works through a sale and India’s TDS.
Is there a tax treaty between India and the US?
Yes, the US and India have an income tax treaty, formally a convention for the avoidance of double taxation. India’s Income Tax Department lists it under “USA” as a DTAA (double taxation avoidance agreement). The treaty’s saving clause keeps US citizens and residents taxable under US law, as if the treaty had never taken effect. Two things survive it: the US credit for Indian tax, and the student and teacher articles for visitors without a green card.
Who qualifies for the US tax treaty?
The US-India tax treaty covers residents of India and the US, with residence set by Article 4. If India and the US both claim you, Article 4(2) decides, starting with where you keep a permanent home. Each article then adds its own conditions, such as Article 21’s rule that a student be here mainly to study. Each country’s treaty with the US has its own residence article, so a resident of Canada claims under the US-Canada tax treaty instead.
What is the India-US tax treaty exemption amount?
The India-US tax treaty sets no fixed exemption amount for wages. For students, the figure that matters is the standard deduction under Article 21(2): $16,100 for 2026, and $15,750 for 2025. Payments from outside the US for a student’s living costs and studies are exempt in full. Pay for teaching or research at a university is exempt in full for a visit of up to two years. The $5,000 exemption people cite is in the US-China tax treaty.
Sources
- US-India income tax convention (IRS text)
- US Treasury, Technical Explanation of the US-India convention
- IRS, Publication 519 (2025), U.S. Tax Guide for Aliens
- IRS, Instructions for Form 1040-NR (2025)
- IRS, Publication 901 (Rev. September 2024), U.S. Tax Treaties
- IRS, Rev. Proc. 2025-32 (2026 inflation adjustments)
- 26 U.S.C. § 901, Taxes of foreign countries and of possessions of United States
- 26 U.S.C. § 121, Exclusion of gain from sale of principal residence
- 26 U.S.C. § 1297, Passive foreign investment company
- 26 C.F.R. § 301.6114-1, Treaty-based return positions
- 31 C.F.R. § 1010.350, Reports of foreign financial accounts
- Income Tax Department (India), FAQs on non-residents
- Income Tax Department (India), Double Taxation Avoidance Agreements
- US-China income tax agreement (IRS text)
Reviewed and updated September 2026. General information, not advice for your situation.