China NRIs · Dividend Tax

Dividend tax on Indian shares for NRIs in China

Dividends from Indian companies are withheld at the non-resident rate before they reach you in China. Here's the treaty position and how to reclaim any excess.

When an Indian company pays you a dividend while you live in China, the company withholds tax at source before the money reaches you. India's default withholding on non-resident dividends is 20% under Section 393(2), the successor to Section 195. The India-China treaty position is more favourable, capping the rate at 10% for individual residents, a real saving over the 20% default (Article 10). To claim it you need Form 41, the successor to Form 10F, and a Tax Residency Certificate on file with the company or your broker.

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India-China key facts: dividend tax

Default non-resident TDS rate	20%
India-China DTAA treaty rate	10%
Your saving via the treaty	10%
Treaty article / basis	Article 10: flat 10% treaty cap, no shareholding sub-rate
Your TRC issuing authority	the State Taxation Administration (STA), local tax bureau

Rates reflect India's domestic withholding under Section 393(2) (Section 195 until 31 March 2026) and the India-China treaty. Surcharge and cess apply on top where relevant.

How it works on the India side

Since the 2020 shift back to classical dividend taxation, dividends from Indian companies are taxable in the shareholder's hands and the company deducts TDS before paying. For a non-resident the default is 20% under Section 393(2) (Section 195 until 31 March 2026), plus surcharge and cess, and Section 115A taxes those dividends at 20% of the gross amount with no expenses allowed. A lower rate only ever comes from a treaty, and only where that treaty writes one for individuals: several of India's treaties reserve the reduced dividend rate for companies holding a large stake in the Indian payer, and some countries have no treaty with India at all, so portfolio investors there stay at the domestic rate.

Where a lower individual rate does apply, you claim it with Form 41 (formerly Form 10F) and a Tax Residency Certificate lodged with the company or broker, and any dividend withheld at the higher rate before your paperwork was on file is reclaimed through your Indian return. Where no lower rate applies, the 20% is generally your final Indian tax, so the questions worth asking are whether the payer withheld more than the correct rate and surcharge, and whether the country you live in gives you a credit for that Indian tax.

What changes because you live in China

Chinese tax residents are taxed on worldwide income, but only once they cross the six-year residence line for foreigners, so track that count because the year you cross it your Indian portfolio enters the Chinese tax base. A foreign tax credit offsets the Indian tax against the individual income tax on the same income. The recurring chore is the Certificate of Chinese Fiscal Resident: it is valid only for its year of issue, so you re-apply each year to keep claiming the 10% treaty rate at your Indian bank.

Frequently asked questions

Common questions from China NRIs

India's default is 20% under Section 393(2), but the India-China treaty caps it at 10% for individual residents, a saving of 10%. To get the lower rate you file Form 41 with a Tax Residency Certificate from the State Taxation Administration (STA), local tax bureau. Any excess withheld beforehand is reclaimed on your Indian return.

Yes. With Form 41 and a Tax Residency Certificate on file, the treaty rate of 10% applies instead of the 20% default, a 10% reduction. Dividends withheld at the higher rate before your paperwork was lodged are reclaimed when you file your Indian return.

Go further

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Dividend Tax sorted, by an Indian CA who works with China NRIs

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