Kuwait NRIs overpay ₹30k per ₹15L FD. Every year. Without knowing.
TL;DR
India and Kuwait signed a DTAA in 2006. It caps interest tax at 10%. Your bank is still deducting 30%. The gap is real, the recovery is boring paperwork, and you can go back 5 Assessment Years (CBDT Circular 11/2024).
By Vipul Sharma, Founder
Reviewed by Preetesh Maloo, Chartered Accountant, NRI Tax Partner
The 20% nobody tells a Kuwaiti NRI about
A ₹15 lakh NRO FD in SBI at 7% earns ₹1,05,000 in annual interest. SBI withholds under Section 195 of the Income-tax Act at the default 30% non-resident rate, ₹31,500 deducted before the credit hits the account.
India-Kuwait DTAA Article 11 caps interest withholding at 10% for Kuwaiti residents furnishing a valid TRC + Form 10F (Form 41 from 1 April 2026). Correct TDS on the same ₹1,05,000 is ₹10,500. Recoverable per FD per year: ₹21,000.
Across 5 Assessment Years under Section 119(2)(b) condonation (CBDT Circular 11/2024), the same gap recovers as ₹1.05 lakh of principal plus ~₹19,000 of Section 244A 6% simple interest on the delayed refund.
Why the treaty exists (and why nobody uses it)
India and Kuwait signed the DTAA on 15 June 2006 (notified by CBDT on 17 January 2007). Article 11 caps interest withholding at 10% for Kuwaiti residents; Article 10 caps dividends at 10%.
Section 90(2) of the Income-tax Act gives the assessee the right to invoke the treaty rate where it is more beneficial than the domestic rate. The deductor (Indian bank or AMC) applies the treaty rate only after TRC from the Kuwaiti Ministry of Finance and Form 10F are on file at the NRI cell, until then, the Section 195 default of 30% remains the operative rate.
The deductor has no financial incentive to alert the customer to this. The 30% Section 195 default is procedurally simpler and carries no penalty risk for the bank.
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Getting the TRC from Kuwait's Ministry of Finance
The Kuwait TRC is issued by the Ministry of Finance, not the Public Authority for Civil Information.
You apply with your Civil ID, your salary certificate, your residence permit (Iqama), and proof of tax residency (usually just a letter confirming you live and work in Kuwait since tax-free status applies).
Cost: free. Timeline: 2-3 weeks if your documents are clean.
The TRC must contain six things under Rule 75 (Rule 21AB until 31 March 2026), your name, status, country, TIN, period of validity, and address. Check yours before filing Form 10F / Form 41 in India.
Form 10F and the treaty rate your bank needs to see
Once you have the TRC, Form 10F is a 5-minute filing on incometax.gov.in. You log in with PAN, fill six fields, upload the TRC as a PDF, submit.
Download the acknowledgment. Share it with your Indian bank. The next interest credit cycle should apply 10% TDS instead of 30%.
If it doesn't, call the branch. Give them the acknowledgment number and the Article 11 reference. Most branches reset the rate within 2 weeks.
Form 10F expires after one year. Calendar a refile before every April or your bank silently reverts to 30%.
Past years: Section 119(2)(b) and the 6% bonus
Here's the part most Kuwaiti Indians miss. Section 119(2)(b) of the Income-tax Act lets you go back up to 5 past Assessment Years (CBDT Circular 11/2024) and claim the treaty rate you should have had.
You file a condonation application with the CBDT. Attach your TRC, Form 10F, 26AS for each year, and the refund computation. Approval comes in 3-8 months.
Section 244A adds 6% simple interest on every delayed refund. A Kuwaiti NRI reopening 4 years of NRO interest typically recovers the principal plus another 18-22% in 244A interest.
That's the bonus.
What we actually do
You upload your 26AS. We read every TDS entry, show you the gap at the 10% treaty rate, quote the full recoverable amount.
If you want us to take it on, a Kuwait-specialist CA files the current-year ITR at 10% and a Section 119(2)(b) condonation for past years. We handle the AO correspondence under Section 288 so you don't take a flight.
Our fee is success-fee based, so you pay only when money actually returns to your NRO account. If we recover zero, you pay zero. Form 10F / Form 41 renewal after that is a small annual flat fee, no NRI markup. We quote the exact numbers on the call.
If you'd rather book a free CA appointment first and ask questions, that's free, no card, no commitment, 15 minutes.
Frequently asked questions
Q: I don't have a PAN, can I still claim?
A: Yes, but you'll need to file Form 49AA for a PAN first. Form 10F without PAN is technically possible but banks usually reject it. Get the PAN, it's a 2-week process.
Q: What if my 26AS shows nothing?
A: That usually means your TDS was deducted under the wrong section or your PAN wasn't linked to the bank. We've seen it, we'll diagnose and fix it.
Q: Can I book an appointment without uploading 26AS?
A: Yes. Book free CA appointment. We'll review what you have and tell you honestly whether recovery is worth the fee.
Q: How long does recovery take?
A: Current-year refund: 3-6 months. Past-year condonation: 4-8 months per year, though we batch them. Section 244A interest accrues the whole time.
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Keep reading
Get Your Tax Residency Certificate: Country by Country
Your TRC is the one document that gets your Indian tax cut to the treaty rate. Here's how to get one from your country's tax office, with the costs and wait times.
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Form 10F for NRIs: What It Is and How to Fill It
Your TRC alone isn't enough. India also needs Form 10F, a self-declaration that takes 5 minutes but most NRIs either skip or fill incorrectly.
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Section 119(2)(b). How NRIs Can Recover TDS from Past 5 Assessment Years
You missed claiming DTAA last year. And the year before that. And the year before that. Good news: India lets you go back 5 Assessment Years (CBDT Circular 11/2024) and claim it all.
Read
The exceptions that change the answer
Where the general rule stops applying to you
Every rule below has a carve-out, a cut-off date or a condition that flips the answer. These are the ones that decide real cases.
NRO account: what it costs and what it caps
Right now: Interest taxed at 30% plus surcharge and cess; repatriation capped at USD 1 million a financial year
Where it works differently
- A TRC and Form 10F (Form 41 from 1 Apr 2026) are furnished
- The treaty rate applies to the interest, commonly 10-15% under Article 11 instead of 30% plus surcharge.
- s.90(2). This is the single largest recurring recovery item for most NRIs.
- Remitting out
- Form 15CA is needed, plus Form 15CB from a CA where the remittance is chargeable and above Rs 5 lakh in the year.
- Rule 37BB.
- Joint holders
- The USD 1 million ceiling is per person per financial year, so joint holders each have their own.
- FEMA 13(R).
Commonly got wrong
- NRO interest is taxed at 30%. Incomplete. Surcharge and 4% cess sit on top, and a treaty can cut it to 10-15%.30% plus surcharge and cess by default, but 10-15% under most treaties if you hold a TRC and file Form 10F.
Condonation of delay window for refund and loss claims
Right now: 5 years from the end of the assessment year
Where it works differently
- The claim arises from a court order
- Different limitation applies. The period the matter was pending is generally excluded.
- Para in Circular 11/2024.
- Deciding authority
- Tiered by claim amount across Principal Commissioner, Chief Commissioner and CBDT.
- Circular 11/2024 monetary limits.
Commonly got wrong
- The condonation window is six years. Circular 9/2015 was superseded on 1 October 2024.Five years, per Circular 11/2024.
Interest on income-tax refunds
Right now: 0.5% per month or part month
Where it works differently
- The return was filed late
- Interest runs from the date of filing, not from the start of the assessment year.
- s.244A(1)(a) proviso.
- The refund is under 10% of the tax determined
- No interest is payable.
- s.244A(1).
- Interest is received
- It is itself taxable as income from other sources in the year of receipt.
- Standard treatment, routinely missed on multi-year NRI refunds.
Commonly got wrong
- Refund interest is tax-free. It is taxable.Say so, and note the year of receipt.
TDS on NRO account interest
Right now: 30% plus surcharge and cess
Where it works differently
- A valid TRC and Form 10F (Form 41 from 1 Apr 2026) are furnished
- The treaty rate applies, commonly 10-15% under Article 11.
- s.90(2) gives the more beneficial of treaty or Act.
- No PAN is furnished
- s.206AA imposes at least 20%, but Rule 37BC allows escape by furnishing name, address, TIN and TRC. Courts have also held s.206AA cannot override a treaty rate.
- Rule 37BC + settled case law.
- Claiming the treaty rate at source
- The s.115A(5) filing exemption is lost, so an Indian return becomes necessary.
- That exemption requires TDS at not less than the s.115A rate.
- The account is NRE or FCNR instead
- Interest is exempt and no TDS applies, while the holder is a FEMA non-resident.
- s.10(4)(ii) and s.10(15)(iv)(fa).
Commonly got wrong
- NRO interest TDS is 30%. Incomplete. Surcharge and 4% cess sit on top, so the effective rate is higher.30% plus surcharge and cess, around 31.2% at the base level.
- You can file Form 15G/15H to stop NRO TDS. Those are resident-only declarations. An NRI filing one makes a false declaration.Use Form 13 (Form 128 from 1 April 2026), or claim the treaty rate with a TRC.