TDS Still Deducted After Form 10F: The NRI Troubleshooting Guide

Most NRIs assume Form 10F is a one-step unlock and the treaty rate kicks in the next quarter. It triggers a four-step chain — TRC validity, Form 10F filing under Rule 21AB, NRI-cell record flagging at the bank, TDS-run logic at quarter-end — and the break is almost always at step three.

The Income Tax Department's portal generates the Form 10F acknowledgement instantly. That acknowledgement does not auto-feed your bank's core banking system. The branch's NRI cell must manually update the customer code from 'NRO-default' to 'NRO-treaty-XX%' where XX is the Article 11 rate for your country — 12.5% for UAE, 15% for the US/UK/Canada/Australia, 15% for Singapore, 10% for the Gulf cluster ex-UAE/Bahrain.

The RBI Master Direction on Non-Resident Deposits requires banks to apply the treaty rate from the date of receipt of valid documentation, not from the date of filing on the income tax portal. The receipt date at the NRI cell is the date that matters.

Verify your TDS rate against your 26AS now — every entry should show the treaty rate, not 30%.

Rule 21AB withholds treaty benefits unless a valid TRC covers the period in which the income arises. A UAE TRC issued in March 2025 and valid for 12 months expires on 28 February 2026. Any NRO interest credit on or after 1 March 2026 reverts to the Section 195 default of 30% — the bank is correct to do so.

The FTA portal at tax.gov.ae issues UAE TRCs in 3-10 working days at AED 800 total (AED 50 submission + AED 500 review + AED 250 issuance per FTA Cabinet Decision 7/2023). Apply 30 days before expiry. The US IRS Form 8802 to Form 6166 cycle takes 6-12 weeks at $85 — apply 90 days before expiry. UK HMRC certificates take 6-8 weeks at zero cost. Singapore IRAS issues TRCs in 1-2 weeks at zero cost.

A lapsed TRC blocks the treaty rate even where Form 10F is otherwise live on the portal. The bank cannot apply Article 11 without a valid TRC underlying the Form 10F claim.

Refile Form 10F with the renewed TRC and resubmit both documents to the NRI cell. The treaty rate restores from the next TDS cycle, not the prior one.

Branch staff routinely accept Form 10F across the counter and stamp the photocopy without forwarding it to the NRI cell. The customer record stays flagged 'NRO-default' and the next quarter's TDS run withholds at 30%. The RBI Master Direction on Non-Resident Deposits places the routing obligation on the bank's NRI cell, not the local branch — but the failure is the customer's to recover from.

Submit Form 10F and the TRC directly to the bank's centralised NRI cell, not the local branch. SBI's NRI cell sits in Mumbai. HDFC routes through Chennai. ICICI uses Hyderabad. Axis runs through Mumbai. Use email plus tracked courier and demand a written confirmation that the customer code has been flagged for treaty rate XX%.

If the bank refuses to confirm in writing within 7 working days, escalate to the bank's Nodal Officer for NRI Banking (each bank publishes one under Regulation 4 of the RBI Charter of Customer Rights). The Nodal Officer has 30 days to respond before the matter escalates to the Banking Ombudsman under the RBI Integrated Ombudsman Scheme 2021.

CPC matches the TIN on Form 10F character-by-character against the TRC. A single space, a missing leading zero, or a hyphen variation triggers rejection at processing. UAE TRNs are 15 digits with no spaces. US SSNs are 9 digits in the format XXX-XX-XXXX — the IRS Form 6166 prints them with hyphens, and Form 10F's TIN field must replicate that exactly. UK UTRs are 10 digits ending in 'K' on some HMRC certificates. Singapore FINs are 9 characters starting with 'G' or 'F'.

The PAN on Form 10F must match the PAN linked to the bank account. NRIs who hold accounts with old PANs (issued pre-2017 under the legacy format) and filed Form 10F with a newly-issued PAN will see the form on the portal but the bank's CBS system rejects the linkage. Update the PAN at the branch before resubmitting Form 10F.

The name on Form 10F must match the name on the PAN, not the passport. NRIs with married names on the passport but maiden names on the PAN consistently fail this check.

If the mismatch is the issue, withdraw the existing Form 10F on the portal, refile with the corrected fields, and resubmit the acknowledgement to the NRI cell with a covering letter explaining the correction.

Rule 21AB(1) and the CBDT notification framework require a TRC issued by the competent authority of the foreign tax administration. The rule does not require apostille under the Hague Convention nor notarisation by an Indian consulate. A bank demanding apostille is asking for documentation the Income-tax Act does not contemplate.

Cite Section 90(2) in writing. Section 90(2) gives the assessee the right to elect the treaty rate where it is more beneficial than the domestic rate. The treaty itself — Article 11 of the India-UAE DTAA, Article 11 of the India-US DTAA — is the source of the rate. The TRC is the proof of residency, not a substantive document requiring notarisation.

A written escalation citing Rule 21AB plus Section 90(2) plus the relevant DTAA article almost always closes the matter at the bank's NRI cell head level. If it does not, the Section 197 bypass below renders the bank's position irrelevant.

Section 197 unlocks the legal route to compel the deductor — the bank — to withhold at any rate the AO certifies, including zero. The NRI files Form 13 with the Jurisdictional Assessing Officer (International Taxation range) supported by the TRC, Form 10F acknowledgement, and projected income for the year. The AO issues a certificate within 30 days under Rule 28AA specifying the lower deduction rate.

A Section 197 certificate is binding on the bank. The bank cannot refuse the rate the AO specifies. For a UAE NRI holding a ₹50 lakh portfolio of NRO FDs at 7%, the certificate caps TDS at 12.5% — recovering ₹61,250 per year that would otherwise sit with the department for 9-12 months pending the Section 143(1) refund.

The Form 13 route is the only mechanism that produces a same-FY cash-flow benefit. Every other recovery — ITR-2 refund, Section 119(2)(b) condonation — produces the refund after the FY closes.

File Form 13 once a year, in April, immediately after the TRC is renewed. The certificate covers the full FY's interest credits.

Where Section 197 was not used and the bank withheld at 30% for part or all of the FY, ITR-2 recovers the overpaid TDS via the Section 143(1) intimation. The NRI files ITR-2 at the treaty rate — 12.5% for UAE under Article 11, 15% for US/UK/Canada — claims the full TDS deposited by the bank as credit in Schedule TR, and the CPC processes the refund.

The Section 143(1) intimation typically issues in 3-6 months from filing. The refund credits to the NRO account (or the foreign account if Schedule TR specifies foreign remittance). Section 244A adds 6% simple interest from 1 April of the AY to the date of refund — modest, but it offsets the cash-flow hit.

The ITR must be filed by 31 July of the AY (or 31 October for cases requiring audit). A belated return under Section 139(4) is permitted until 31 December but loses Section 244A interest from the original due date.

For past Assessment Years where the NRI never filed ITR-2 at the treaty rate — including years where Form 10F was never filed at all — Section 119(2)(b) plus CBDT Circular 11/2024 reopens recovery for the prior 5 Assessment Years. The condonation petition goes to the PCIT and is granted where the delay is bona fide and the refund claim is otherwise valid.

A UAE NRI who held a ₹15 lakh NRO FD at 7% interest from AY 2021-22 onwards and never filed Form 10F recovers ₹18,375 per AY × 5 AYs = ₹91,875 plus Section 244A interest accrued from 1 April of each AY to the refund date.

The petition must be supported by the TRC for each AY (the foreign tax authority typically issues retrospective TRCs on request), Form 10F filed at the time of the petition, the ITR-2 for each AY, and a covering letter explaining the cause of delay. Most condonations process in 6-9 months.

File the petition through a Section 288 Authorised Representative who can appear at the PCIT hearing if called.