NRI taxation in India runs on a "tax at source first, sort out later" model. Almost every NRI income stream — interest, dividends, rent, capital gains — has TDS deducted before it reaches your account, often at rates higher than the actual tax liability. Knowing how to claim the right rate and file for refunds is what separates well-managed NRI portfolios from leaky ones.

TDS rates for NRIs (FY 2025-26)

Income	TDS rate (before DTAA)
NRO interest (savings & FD)	30% + surcharge + cess
NRE interest	Nil (exempt)
FCNR interest	Nil (exempt)
Equity STCG (≤12m)	20% + surcharge + cess
Equity LTCG (>12m)	12.5% + cess (no ₹1.25L exemption applied at source)
Debt fund gains	30% (held <24m) / 12.5% (>24m, old units) / slab (new units)
Dividend	20% + surcharge + cess
Rent on Indian property	30% (tenant must deduct)
Sale of property by NRI	20% on LTCG (>24m), 30% on STCG; buyer must deduct

DTAA — Double Taxation Avoidance Agreement

India has DTAAs with 90+ countries. The relevant ones for NRI investors:

• US — typically lower TDS rates on dividends (25%) and interest (15%)
• UK — interest 15%, dividends 15%
• UAE — interest 12.5%, dividends 10%, capital gains often only in country of residence
• Singapore — interest 15%, dividends 10-15%, capital gains often only in country of residence
• Canada — interest 15%, dividends 15-25%
• Australia — interest 15%, dividends 15%

How to claim DTAA benefit

1. Get a Tax Residency Certificate (TRC) from your country of residence each year.
2. Submit a self-declaration in Form 10F (now mandatory online).
3. Submit both to the bank, AMC, broker, or tenant before they deduct TDS.
4. If deducted at the higher rate without DTAA, claim refund in your Indian ITR.

For Indian banks holding your NRO deposits, this is an annual ritual. For one-off transactions like property sale, plan early — last-minute Form 10F is a common cause of unnecessary TDS leakage.

Lower / nil TDS certificate (Section 197)

For high-value transactions where TDS would be far higher than the actual tax liability (typically property sales by NRIs), you can apply for a lower or nil TDS certificate from the assessing officer. This is the right way to handle a ₹3-crore property sale where actual LTCG tax might be ₹15 lakh — without the certificate, the buyer deducts 20% on the entire sale value (₹60 lakh), and you wait 12-18 months for the refund.

Form 67 — claiming foreign tax credit in India

If you are RNOR or returning to India and have paid tax abroad on foreign income that is now taxable in India, you can claim Foreign Tax Credit (FTC). Form 67 must be filed online before you file your ITR for that year. Missing Form 67 = losing the FTC = potentially being taxed twice on the same income.

Indian ITR for NRIs

An NRI must file an Indian ITR if:

• Total Indian income (before deductions) exceeds the basic exemption limit (₹3 lakh under new regime, ₹2.5 lakh under old)
• Any TDS was deducted and you want a refund
• You have any capital gains (even if below exemption)
• You sold property in India

NRIs use ITR-2 (or ITR-3 if business income exists). Foreign assets disclosure does not apply to non-residents.

The 87A rebate trap

NRIs are not eligible for the Section 87A rebate that makes income up to ₹12 lakh tax-free under the new regime for residents. NRI marginal rates start from the first taxable rupee above the basic exemption.

Common NRI tax mistakes

• Not submitting Form 10F + TRC each year → bank deducts 30% on NRO interest instead of 12.5-15%
• Forgetting to file ITR after property sale → refund of excess TDS lost after the deadline
• Treating NRE interest as taxable → unnecessarily including in returns
• Crediting Indian-source income to NRE account → FEMA violation
• Missing Form 67 → losing foreign tax credit

Next chapter: how to actually bring money home — repatriation rules.