Bank Rejecting Your Foreign TRC: The Escalation Path That Works

An oral rejection at the branch counter is not actionable. The first move is to convert the rejection into a written record citing the bank's stated reason. The Banking Ombudsman scheme under the RBI Integrated Ombudsman Scheme 2021 requires a written complaint with documented prior correspondence with the bank.

Email the bank's NRI cell from the registered email address on the account and request a written confirmation of the rejection reason. Reference the date of TRC submission, the branch where it was submitted, and the specific reason cited orally. The NRI cell typically responds within 3-7 working days.

If the bank does not respond in writing, the failure-to-respond is itself a Banking Ombudsman complaint head. Print the email trail, mark the date of submission, and proceed to the Section 90(2) escalation letter below.

Compare your treaty rate against the rate actually being deducted on each entry of your 26AS — that comparison is the foundation of any escalation.

Section 90(2) of the Income-tax Act unlocks the assessee's statutory right to elect the treaty rate where it is more beneficial than the domestic withholding rate. The treaty itself — Article 11 of the India-UAE DTAA, Article 11 of the India-US DTAA, Article 12 of the India-UK DTAA — caps the rate. The bank is the deductor under Section 195 and is bound to honour the assessee's election once the documentation under Rule 21AB is on file.

Rule 21AB prescribes the TRC issued by the competent authority of the foreign tax administration plus Form 10F (Form 41 from 1 April 2026). The rule does not prescribe apostille, notarisation, consular attestation, or any Indian-format certificate. Any bank requirement beyond the rule is a bank-side policy, not a statutory requirement.

The written escalation must reference Section 90(2), Rule 21AB, the relevant DTAA Article, and the CBDT's own clarification that the treaty rate applies on furnishing the TRC. The bank's NRI cell head is typically the level at which the issue resolves.

The template below has resolved bank-side TRC rejections in 4-6 weeks in roughly 80% of cases handled. Send it from the registered email address on the account to the bank's NRI cell head with a copy to the Nodal Officer for NRI Banking.

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Subject: TRC Rejection on Account XXXXXX1234 — Treaty Rate Claim under Section 90(2)

[NRI cell head name]

[Bank name] NRI Banking

I hold NRO account XXXXXX1234 at the [branch] branch. I am a tax resident of [country] and hold a valid Tax Residency Certificate issued by [Federal Tax Authority / Internal Revenue Service / HM Revenue & Customs] for the period [DD/MM/YYYY] to [DD/MM/YYYY]. I submitted the TRC plus Form 10F acknowledgement [number] dated [date] at the [branch] branch on [date].

The branch has indicated the TRC is unacceptable on the ground of [stated reason]. I respectfully submit:

1. Section 90(2) of the Income-tax Act grants the assessee the statutory right to elect the more beneficial treaty rate.

2. Rule 21AB read with CBDT Notification 96/2025 requires a TRC issued by the competent authority of the foreign tax administration — which the attached TRC is. The rule does not require apostille, notarisation, or any Indian-format certification.

3. Article [11] of the India-[country] DTAA caps the withholding rate on interest at [12.5% / 15% / 10%]. The current Section 195 default deduction of 30% on my account is in excess of the treaty rate.

I request that the customer record be flagged for treaty rate [XX%] with effect from the date of original document submission, and that all interest credits from that date forward be reprocessed at the treaty rate. A written confirmation within 15 working days is requested.

In the absence of resolution, I will escalate to the Nodal Officer for NRI Banking and thereafter to the Banking Ombudsman under the RBI Integrated Ombudsman Scheme 2021.

[Name, PAN, signature]

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Attach the TRC PDF, Form 10F acknowledgement PDF, and a copy of the relevant 26AS entries showing the 30% deduction.

Where the NRI cell head does not resolve within 15 working days, the next escalation is the bank's Nodal Officer for NRI Banking. The RBI Charter of Customer Rights places a 30-day response obligation on the Nodal Officer for any unresolved complaint forwarded with prior correspondence.

SBI's Nodal Officer for NRI Banking is published at sbi.co.in/nri under the customer rights section. HDFC publishes the equivalent under hdfcbank.com/personal/customer-care. ICICI publishes at icicibank.com/customer-care. Axis publishes at axisbank.com/grievance-redressal.

The Nodal Officer email must reference the prior NRI cell email trail, the date of original document submission, and the cumulative TDS over-deducted (calculated from 26AS at 30% minus treaty rate × interest credited). A specific quantified loss accelerates resolution.

Most Nodal Officer escalations resolve in 20-30 days. The bank's internal compliance review tends to close the matter rather than escalate to the Ombudsman where the statutory citations are properly laid out.

The RBI Integrated Ombudsman Scheme 2021 covers deficiency in non-resident deposit services as a complaint head. File at cms.rbi.org.in after the Nodal Officer has either issued a final reply or 30 days have lapsed without response.

The complaint requires: the bank's name and branch, the account number, a chronological narrative of the events, the prior correspondence with the bank, and the relief sought (treaty rate application from date X, refund of excess TDS deducted between dates X and Y). The Ombudsman issues an award within 90 days of complaint admission.

Ombudsman awards in TDS-rate cases typically direct the bank to: refund the excess TDS deducted, credit interest at the bank's NRE deposit rate from date of deduction to date of refund, and flag the customer record for treaty rate going forward. The bank is bound to comply within 30 days of the award.

The Ombudsman cannot order a refund of TDS that has already been deposited with the Income Tax Department — that recovery is a Section 143(1) ITR-2 refund. But the Ombudsman can order the bank to compensate the customer for the cash-flow loss caused by the bank's documentation failure.

Section 197 grants the Jurisdictional Assessing Officer the power to issue a lower-deduction certificate that the deductor — including the bank — is legally bound to honour under Section 197(1). The certificate specifies the rate (including the treaty rate or even zero) and the period for which it applies.

Form 13 is filed online on TRACES with supporting documents: TRC, Form 10F acknowledgement, projected income for the FY, prior year ITR copies. The AO issues the certificate within 30 days under Rule 28AA. The bank's NRI cell is bound by Section 197(1) — it cannot demand additional documentation or refuse the rate the AO has certified.

For a UAE NRI holding ₹50 lakh of NRO FDs at 7% who has been deducted at 30% for two quarters, a Form 13 certificate from April caps the remaining quarters at 12.5%. The annual saving on a single ₹50 lakh portfolio is ₹61,250 in TDS that would otherwise sit with the department awaiting a Section 143(1) refund.

The Form 13 route is appropriate where the bank's resistance is entrenched and the cash-flow saving justifies the AO filing cost. It is also appropriate where the NRI is planning a property sale or large investment exit in the FY and wants TDS certainty from the start.

Each route has a specific window where it is the right answer. Section 90(2) written escalation is the first move and resolves 60-70% of cases at the NRI cell head level. The Nodal Officer adds another 20% resolution at the 30-day mark. The Banking Ombudsman closes the residual 5-10% but takes 90 days.

Section 197 Form 13 runs in parallel as the cash-flow guarantor — if the FY's interest is large enough that 30% withholding for 4-9 months would be painful, file Form 13 in April regardless of where the bank-side escalation sits. The two routes do not conflict.

For past FYs where the bank's documentation rejection caused over-deduction, the Section 143(1) ITR-2 refund recovers the excess plus Section 244A interest at 6% from 1 April of the AY. For FYs more than 5 years stale, the recovery window has closed even under Section 119(2)(b) condonation.