What rate of TDS does my Indian bank deduct on NRO interest if I live in Canada?

By default your bank deducts 30% under Section 195 — the non-resident rate. With a valid Form 10F and a Tax Residency Certificate from Canada Revenue Agency (CRA), the India-Canada treaty brings that down to 15% on the interest. Anything deducted above the treaty rate before your paperwork was on file can be reclaimed through your Indian return.

Can I get back TDS that was already over-deducted on my NRO account?

Yes. The over-withheld amount is reclaimed by filing your Indian income tax return: the bank's TDS shows against your PAN in Form 26AS, you compute the tax actually due at the 15% treaty rate, and the excess is refunded with Section 244A interest. Missed prior years can usually be picked up through a condonation request within the CBDT's window.

What paperwork do I need as an NRI in Canada to claim the lower NRO TDS rate?

Two core documents: a Tax Residency Certificate issued by Canada Revenue Agency (CRA), and Form 10F filed on the Indian e-filing portal. Together they tell your bank to apply the India-Canada treaty rate of 15% instead of the 30% default. The TRC has to be renewed each period it covers, otherwise the bank reverts to the full rate.

Canada NRIs · NRO TDS Recovery

NRO account TDS recovery for NRIs in Canada

Your Indian bank deducts tax on NRO interest at the full non-resident rate — the India-Canada treaty lets you bring it down and reclaim the excess.

If you live in Canada and hold an NRO fixed deposit or savings account in India, your bank deducts tax at source on the interest at 30% — the default Section 195 rate for a non-resident. The India-Canada tax treaty caps that interest withholding at 15% (Article 11, caps interest withholding at 15% for Canadian-resident beneficial owners), so for most Canadian NRIs the gap between the two is over-withheld tax you are entitled to recover. To claim the lower rate you file Form 10F backed by a Tax Residency Certificate from your country of residence, and any tax already over-deducted comes back as a refund when you file your Indian return.

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India-Canada key facts: nro tds recovery

Default Section 195 rate	30%
India-Canada DTAA treaty rate	15%
Your saving via the treaty	15%
Treaty article / basis	Article 11, caps interest withholding at 15% for Canadian-resident beneficial owners
Your TRC issuing authority	Canada Revenue Agency (CRA)

Rates reflect India's domestic Section 195 withholding and the India-Canada treaty. Surcharge and cess apply on top where relevant.

How it works on the India side

Indian banks apply TDS on NRO interest under Section 195 at the 30% non-resident rate (plus surcharge and cess) unless you have given them a valid Form 10F and Tax Residency Certificate showing you qualify for the treaty rate. Once those are on file, the bank deducts at the lower DTAA rate going forward.

For interest the bank has already over-deducted, the route is your income tax return: the TDS the bank deposited shows in your Form 26AS and AIS against your PAN, you compute your actual liability at the treaty rate, and the difference is refunded with interest under Section 244A. Past years that were missed can often still be recovered through a condonation request, within the window the CBDT allows.

What changes because you live in Canada

Canada taxes worldwide income, so this Indian income goes on your T1 with a foreign tax credit (line 40500 federal via Form T2209, plus a provincial foreign tax credit on Form T2036) for the Indian tax paid. Indian assets over CAD $100,000 in cost amount must be disclosed each year on Form T1135, the CRA already receives your Indian account data through CRS, and a deemed-disposition departure tax (s.128.1) can crystallise on the day you give up Canadian residence — so the India-side rate is only part of the planning.

Frequently asked questions

Common questions from Canadian NRIs

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