DTAA Benefits for NRIs: How to Claim the Treaty Rate on Indian Income

Most NRIs know India has a tax treaty with the country they live in. Far fewer see it on their bank statement. The NRO deposit still shows tax deducted at about 31%, and the dividend still arrives with a fifth of it missing.

The reason is procedural. A treaty does not apply itself. Indian law gives the lower rate only to a non-resident who holds a certificate of residence from the other country and files prescribed information in India. The bank, company or fund house paying you is liable if it deducts too little, so it deducts at the full domestic rate unless your papers arrive in time and look complete.

This guide covers that procedure: which documents, obtained where, given to whom, by when, and what to do when the higher rate is deducted anyway. Because the Income-tax Act, 2025 replaced the 1961 Act on 1 April 2026, it gives both old and new section and form numbers.

Before 2012 the Act did not ask a non-resident for a residence certificate. The Finance Act, 2012 made a tax residency certificate a condition for treaty relief, and banks began asking NRO depositors for it from financial year 2013-14.

In August 2013 the tax department introduced Form 10F, a short self-declaration that filled the gaps: tax identification number, period of residence, overseas address. It was a paper form handed to the payer until 16 July 2022, when a notification made electronic filing compulsory. Non-residents with no PAN were given until 30 September 2023, after which the portal opened a separate registration category for them.

From 1 April 2026 the Income-tax Act, 2025 and the Income-tax Rules, 2026 apply. The substance carried over, but the labels moved:

Income earned up to 31 March 2026 stays under the old law and the old form. From tax year 2026-27 the new numbers apply.

Company notices for the 2026-27 dividend season, such as this shareholder communication filed with the NSE, ask non-resident shareholders for almost the same set of papers, and banks ask NRO depositors for the same set under their own cover form.

Section 159(8) of the 2025 Act entitles a non-resident to treaty relief only if two conditions are met. The first is a certificate of residence obtained from the government of the other country.

The Act does not fix a validity period. In practice the certificate must cover the period in which the income is paid, and Indian payers think in tax years, 1 April to 31 March. One 2026 notice asks for a certificate covering 1 April 2026 to 31 March 2027; another accepts one "of calendar year 2026 or TY 2026-27 or later". If your country certifies calendar years, you may need two certificates to cover one Indian tax year. Some companies also ask for a notarised, apostilled translation if the certificate is not in English.

The second condition is that the non-resident "provides such other documents and information, as may be prescribed". Rule 75 prescribes Form 41. It is short: name, address, PAN if you have one, tax year, country, your tax identification number there, the period the certificate covers, your overseas address, and an upload of the certificate.

It can be filed only online, and payers do not accept it in any other format. It is a declaration, not an approval: the department issues nothing in return except an acknowledgement number.

Without a PAN, section 397(2) pushes the deduction to at least 20%. A relaxation exists for non-residents who instead give prescribed details, such as name, contact details, overseas address and home-country tax identification number, with the certificate. For an investor this is academic: a demat account and mutual fund units need a PAN, and so does the return that brings a refund.

The last item is not a government form. Each payer has its own format, usually an annexure to its notice. You declare that you are the beneficial owner of the income, that you have no permanent establishment or fixed base in India, and that you meet the treaty's conditions.

These statements matter because the dividend and interest articles give the reduced rate to the beneficial owner and withdraw it where the income belongs to an Indian business presence. Sign only what is true.

The certificate is the slowest link, and the one outside India's control. The specifics below come from each tax authority's own guidance as read in October 2026.

The United States certifies residence on Form 6166. You apply on Form 8802, which the IRS says is mandatory in its guidance on certification of US tax residency. The application goes by mail or fax; uploading it to the payment site alone does not start processing. From 1 October 2026 the user fee for individuals rose from USD 85 to USD 105.

HMRC issues a certificate of residence to a UK resident claiming relief under a treaty. Individuals apply online and must name the treaty, the type of income and the period. HMRC will not issue one if you are not entitled to treaty benefits, and it will not certify a future date. A UK resident therefore cannot obtain a certificate in March for the Indian tax year starting in April.

The Federal Tax Authority issues the certificate through its EmaraTax portal. A treaty certificate always needs a passport, with an Emirates ID or entry and exit report and proof of income where applicable. The fee is AED 50 on submission plus AED 500 for an applicant with a corporate tax registration number or AED 1,000 without one. The stated processing time for the electronic certificate is 10 business days.

The certificate and the treaty do not ask quite the same question. The India–UAE treaty treats an individual as a UAE resident only if present there for at least 183 days in the calendar year concerned, while UAE domestic rules can recognise residence on fewer days. If you spend long stretches outside the UAE, check the treaty test with an adviser before relying on a certificate.

Singapore, Canada and Australia issue similar certificates through their tax authorities.

The official Form 41 user manual on the e-filing portal sets out the sequence.

1. Log in to the e-filing portal with your PAN. A non-resident with no PAN registers under "Others", then "Non-Residents not holding PAN", and receives an NR ID.
2. Go to e-File, then Income Tax Forms, then File Income Tax Forms.
3. Open the tab for forms under the Income-tax Act, 2025, search for Form 41 and choose File Now.
4. Select the tax year: 2026-27 for income paid between 1 April 2026 and 31 March 2027.
5. Complete Part A (your particulars) and Part B (country, tax identification number, the period on the certificate, overseas address, and the upload).
6. Complete the declaration, preview and e-verify. A PAN login verifies with an electronic verification code or digital signature; an NR ID login uses one-time passwords sent to email and mobile.
7. Save the acknowledgement. This is what payers ask for.

Names on the passport, PAN, certificate and form should match, and the period entered must be the one printed on the certificate.

Filing with the tax department does not inform anyone who pays you. Each deductor needs its own copy of the set before it deducts.

A portfolio of twenty stocks means twenty deductors, each with its own deadline. Shares in a portfolio management account are still in your name, so the treaty claim is still yours to make; ask your portfolio manager or custodian how they handle the registrars.

On share sales, do not expect much. For residents of the United States, the United Kingdom and the UAE, the treaty lets India tax gains on Indian shares under its own law, so there is usually no lower rate to claim at source. Where the treaty position is disputed, as it is for mutual fund units, expect the deductor to be cautious and the argument to move to your return.

Under the 2025 Act a payer deducts tax on income paid to a non-resident under section 393(2), at the "rates in force". Section 159 lets the non-resident be governed by the treaty where that is more beneficial. So the payer has two possible numbers.

The domestic number is the Act's rate plus surcharge and cess. For dividends that is 20% plus surcharge and 4% cess, so 20.8% for most individuals. For NRO interest banks quote 30% plus cess, or 31.2%, with surcharge on top for larger incomes.

The treaty number is the cap in the relevant article, with no surcharge or cess added, as PwC's summary of Indian withholding taxes and treaty rates sets out. For interest paid to an individual, the cap is 15% under the US, UK, Singapore, Canada and Australia treaties and 12.5% under the UAE treaty. For dividends it is 10% under the UAE and UK treaties, 15% under the Singapore and Australia treaties, and 25% for individuals under the US and Canada treaties.

That last figure is not a misprint. For a US or Canadian resident individual the treaty cap on dividends is higher than the domestic 20.8%. Since the Act applies wherever it is more beneficial, the company deducts at the domestic rate and the treaty adds nothing for that income.

Company notices are frank. One 2026 dividend notice filed with the NSE says "the Company is not obligated to apply beneficial DTAA rates at the time of tax deduction" and that the rate depends on "completeness and satisfactory review" of the documents. The usual reasons for a full-rate deduction:

• The set arrived after the cut-off, or after the interest was credited.
• The certificate covers the wrong period or only part of the tax year.
• Form 41 was missing or filed for the wrong year.
• The declaration was unsigned or not in the payer's format.
• Names or identification numbers did not match.
• The payer chose caution, because it bears the liability for short deduction.

A bank that has deducted at the full rate will not hand the difference back; one bank's published note says so in terms. The route back is your return.

Both examples assume income below the surcharge threshold, at rates in force for tax year 2026-27.

Example 1: a dividend paid to a UAE resident. Farah lives in Dubai, meets the 183-day test and receives a dividend of Rs 2,00,000.

The difference is Rs 21,600. The UAE has no personal income tax, so there is no home-country bill against which to credit Indian tax. For her, Indian tax is simply a cost. Had she lived in New York, the table would have one column: the 25% cap in Article 10 of the India–US treaty is above 20.8%, so the company deducts 20.8% either way.

Example 2: NRO interest paid to a US resident. Arjun lives in Texas and earns NRO interest of Rs 5,00,000 in the year.

The difference is Rs 81,000. Two further points. The United States taxes the interest too and gives credit for Indian tax, but only for what India was entitled to under the treaty; an extra Rs 81,000 deducted by the bank is not creditable there and has to be recovered from India. And the rate at source is not the final Indian tax. If his total Indian income is small, tax at slab rates may be lower than 15%, and his return will then show a refund.

A UAE resident with the same interest would see 12.5%, or Rs 62,500.

• Less tax leaves your account. NRO interest falls from 31.2% to 15% or 12.5%, and dividends for UAE and UK residents from 20.8% to 10%.
• No surcharge or cess on top. The treaty cap is the whole deduction.
• Cash stays invested. A refund arrives after the year ends and the return is processed; tax not deducted earns from day one.
• Your home-country credit lines up. The US and the UK credit only the tax the treaty permits, so a correct deduction leaves nothing stranded.
• One certificate serves many payers. A single certificate and one Form 41 acknowledgement can be copied to every bank and registrar for the year. Only the declaration changes format.
• It never costs you. Where the treaty cap is higher than domestic law, the Act applies instead.

Start with what PMS Sahi Hai is not. It is not a tax filer or a tax adviser, and nothing on the site walks through the certificate, the portal form or a refund claim. What the site does have is narrower, and useful in the right place.

A corridor page for orientation. The DTAA by country page explains relief in three steps and covers six corridors: the US, UK, Singapore, UAE, Canada and Australia. It tells you the method, credit or exemption, and flags that a residency certificate matters. It carries no rates and no forms, and it says plainly that it is general information, not tax advice. Read it for the map, then use the procedure in this post for the route.

An NRI hub that names the paperwork. The NRI hub lists treaty paperwork among the things the team helps NRI clients keep track of, and still calls the portal form by its old name. Ask what that help covers in practice. A residence certificate can only be issued to you by your own tax authority, and the tax figures on any marketing page are no substitute for the treaty text and your adviser.

Research that keeps tax in its place. Nyra, the platform's AI research tool, scores PMS and AIF strategies on five pillars. Its published methodology says tax is not an input and that a high-scoring strategy may still be unsuitable for your tax position. That honesty is useful here: a strategy's score tells you nothing about how much of a dividend survives deduction for a resident of your country.

Structure you can reason about. In a PMS the shares sit in your own demat account, a point the insight on how NRIs fund and hold a PMS sets out. For this topic that has a direct consequence: every dividend is paid to you by the company, so every treaty claim on a dividend is yours, one registrar at a time. A pooled fund behaves differently. Knowing which you hold tells you whose cut-off dates to watch.

So the sensible sequence is this. Use the compare tool and Nyra to shortlist strategies on research grounds. Use the corridor page to see which relief method applies to you. Then carry the list of expected income, interest, dividends and gains, to a cross-border tax adviser and work through the documents described above before the first payout.

A treaty is not the only way to reduce tax at source. Section 395 of the 2025 Act, the successor to section 197, lets the Assessing Officer issue a certificate directing a payer to deduct at a lower rate or not at all. The application is Form 128, which replaced Form 13 on 1 April 2026.

According to the tax department's FAQ on the form, any person, resident or non-resident, may apply; it is filed electronically on the TRACES portal; and it can be filed at any time during the tax year.

A lower deduction certificate is worth the trouble when:

• your actual Indian tax will be lower than even the treaty cap, because your total income is small or you carry losses;
• a payer will not apply the treaty on your documents, and the sums are large; or
• the income has no treaty cap to fall back on.

Three limits apply. The certificate names the payer; one company's notice insists it be obtained on that company's own tax deduction account number. It covers a stated period and amount. And it works forward only: tax already deducted is recovered through the return. There is no fixed statutory processing time, so apply early.

Whatever happened at source, the return is where the claim is finally made, and the only place to recover an excess deduction.

For an NRI with no business income, the form is ITR-2, as the e-filing portal's page for non-resident individuals confirms. Report the Indian income, apply the treaty rate where you are entitled to it, and claim credit for the tax deducted. Keep that year's certificate and Form 41 acknowledgement at hand, because the return asks for treaty particulars. Return forms for tax year 2026-27 had not been notified at the time of writing; check the schedules in the form you file.

Before filing, reconcile. Each payer issues a tax deduction certificate, and the totals appear in your Form 26AS and Annual Information Statement. A deduction that does not appear there cannot be credited.

The due date for individuals without business income has been 31 July after the year ends. Dates for belated and revised returns have been changing, so confirm them for your year.

A common mix-up: Form 67, reported to have become Form 44 under Rule 76 of the 2026 Rules, is the statement an Indian resident files to claim a foreign tax credit for tax paid abroad. A non-resident claiming a treaty rate on Indian income does not file it. It becomes relevant only if you move back and become an Indian resident with foreign income.

A country that taxes your worldwide income normally gives credit for Indian tax on the same income.

• United States. The IRS allows credit for the legal and actual foreign tax liability, which it says is not necessarily the amount withheld. Its own example is a 30% withholding where the treaty allows 15%: only the 15% qualifies.
• United Kingdom. HMRC's guidance limits credit to the minimum foreign tax due under the treaty. Any excess has to be reclaimed from the foreign tax authority.
• UAE. With no personal income tax, there is nothing to credit against.

Over-deduction in India is not fixed at home. It is fixed by an Indian return.

A complete file is necessary. It is not always sufficient.

• A certificate that does not cover the period. Both conditions in section 159(8) must be met for the year of the income.
• A certificate is not conclusive. In January 2026 the Supreme Court, ruling for the tax department in the Tiger Global case, treated the certificate as a condition of eligibility that does not stop the department examining the substance behind it.
• Treaty residence itself. The treaty has its own residence test and tie-breaker. A year with long stays in India can make you an Indian resident, and the non-resident claim falls away.
• Beneficial ownership. The reduced rates belong to the beneficial owner. Income received for someone else does not qualify.
• The Principal Purpose Test. The Multilateral Instrument, in force for India since 1 October 2019, adds this test to the treaties it covers: a benefit can be refused if obtaining it was one of the principal purposes of an arrangement. A 2025 CBDT circular says it applies prospectively and case by case. The India–US treaty has its own limitation on benefits article, and companies ask Singapore residents for evidence on that treaty's Limitation of Relief article.
• GAAR. Section 159(6) applies India's general anti-avoidance chapter even where the treaty would be more favourable. The rules switch it off where the aggregate tax benefit of an arrangement does not exceed Rs 3 crore in the year, so an ordinary investor is unlikely to meet it.

Add the mundane limits: yearly repetition, fees, lead times and a payer's freedom to play safe. How the anti-abuse tests apply to an unusual residence pattern is a matter of judgment, and a reason to take advice.

The cycle follows the Indian tax year, 1 April to 31 March.

The common mistakes are predictable: treating last year's set as still valid, filing the form for the wrong tax year, sending the set after interest has been credited, assuming the treaty always beats domestic law, claiming home-country credit for the full Indian deduction, and skipping the Indian return.

The procedure is repetitive rather than difficult: one certificate from your home tax authority, one form on the Indian portal, one declaration per payer, and a check of the tax credit statement each quarter. Done on time, DTAA benefits arrive as a lower deduction on every payout. Done late, they arrive as a refund a year later, and only if you file.

The parts that need judgment are few but real: whether you are a treaty resident at all, whether the treaty or domestic law is better for a given income, whether a section 395 certificate is worth applying for, and what your home country will credit. Those depend on your facts. Take them to a cross-border tax adviser who works with both systems. PMS Sahi Hai and Nyra can help you choose what to hold; they do not replace that advice, and Nyra's score does not measure tax.

Look at your last NRO interest credit and your last dividend. If the deduction was about 31% or 21%, the treaty has not been applied. Request this year's certificate, file the portal form, send the set to each payer, and ask a cross-border tax adviser to confirm the rate you are entitled to before the next payout date.

If you are still deciding what to hold in India, start with the DTAA by country page for your corridor, ask Nyra to compare the strategies on your shortlist, and book a consultation with PMS Sahi Hai to talk through structure before you fund the account.