NRI director's fees: taxed in India, withheld under Section 195, and the treaty lets India tax it wherever you sit.

Yes, and the reason it reaches you even though you live abroad is worth understanding, because it surprises a lot of non-resident directors. A director's fee is treated as income arising in India because the company paying it is Indian. And most of India's tax treaties contain a specific directors'-fees article that gives the taxing right to the country where the company is resident, which is India, regardless of where in the world you actually attended the board meetings.

That last point is the one people miss. For most kinds of income, doing the work from abroad keeps it out of Indian tax. Directors' fees are the exception the treaties carve out on purpose: sit on the board of an Indian company from Dubai or London, join every meeting by video, and India can still tax your fee, because the treaty ties the fee to the company's location, not yours. Your country of residence may tax it too, and the treaty plus a foreign tax credit then sort out the overlap so you are not taxed twice.

So the starting point is that the fee is Indian-taxable. The two things that then matter in practice are how the fee is classified, salary or professional fee, and how the tax is withheld, which for a non-resident is not the section a resident director deals with.

Before the TDS question, settle what the payment actually is, because a director can be paid in two quite different capacities and they are withheld differently.

A whole-time or managing director, who has a genuine employment relationship with the company and is involved in running it, is paid salary. That is taxed under the salary rules, and the company withholds under Section 192, the salary-TDS provision, whether the director is resident or not. A non-executive or independent director is different: they sit on the board and give oversight but are not an employee, and their sitting fees and commission are not salary. That non-salary director's fee is the one this page is really about, because it is what most NRIs on Indian boards receive.

The distinction is not a labelling choice; it turns on whether there is an employer-employee relationship. Get it right, because it decides which withholding section applies and, for the non-salary fee paid to a non-resident, it leads straight to Section 195.

Here is where a non-resident director's fee parts company from a resident's. When an Indian company pays sitting fees or commission to a resident director, it withholds under Section 194J at 10%. That section applies only to residents.

Pay the same fee to a non-resident director and Section 194J does not apply; the payment falls under Section 195, the general rule for any sum paid to a non-resident. Under Section 195 the company withholds at the rate in force for a non-resident, which is materially higher than the resident's 10% and is often applied conservatively on the gross fee. So the fee arrives with a much larger deduction than a resident colleague on the same board would see, and, as the next paragraph explains, the treaty does not simply lower that rate.

The paperwork matters, but not in the way people assume. For a pure director's fee the treaty does not hand you a lower Indian rate; the directors'-fees article simply confirms India can tax the fee, and your home country then relieves the double tax by crediting the Indian tax. So the Tax Residency Certificate and Form 10F you give the company establish your residence and treaty position, and help you avoid the still-higher rate charged when a non-resident has no PAN, but they do not by themselves cut the directors'-fees rate. The real ways to reduce what is withheld are a lower-deduction certificate obtained in advance under Section 197 (Section 395 under the Income-tax Act 2025), and the refund you claim on filing if the company withheld more than your actual tax.

The practical playbook has two moves, one before payment and one after. Before payment, apply for a lower-deduction certificate under Section 197 (Section 395 under the Income-tax Act 2025) so the Section 195 withholding is set to your real liability rather than a conservative flat rate, and give the company your Tax Residency Certificate and Form 10F to establish the treaty position and avoid the higher rate that applies to a non-resident without a PAN. This is the step that avoids the problem rather than fixing it.

After payment, if too much was withheld anyway, you reclaim it by filing an Indian return for the year: report the fee, compute the tax at the correct rate, and claim the difference from the Section 195 TDS as a refund. It is a clean reclaim, but the money sits with the department until your return is processed, which is exactly why the before-payment step is worth the effort.

Then the money moves out through your NRI accounts. The fee is credited to your NRO account and, as current income rather than a capital receipt, is freely repatriable net of tax, with a CA's certificate in Form 15CA and 15CB, now Forms 145 and 146 under the Income-tax Act 2025, confirming the tax position; the USD 1 million yearly limit that catches capital items like sale proceeds does not apply to a current-income fee. Keep the company's record of the fee and the TDS certificate; they prove both the income and the tax already paid, which is what makes both the return and the remittance straightforward.