Hong Kong NRIs · Dividend Tax

Dividend tax on Indian shares for NRIs in Hong Kong

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

When an Indian company pays you a dividend while you live in Hong Kong, 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-Hong Kong treaty position is more favourable, capping the rate at 5% 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-Hong Kong key facts: dividend tax

Default non-resident TDS rate	20%
India-Hong Kong DTAA treaty rate	5%
Your saving via the treaty	15%
Treaty article / basis	Article 10: 5% on Indian-listed dividends to HK residents, joint-lowest with Malaysia
Your TRC issuing authority	the Inland Revenue Department (IRD)

Rates reflect India's domestic withholding under Section 393(2) (Section 195 until 31 March 2026) and the India-Hong Kong 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 Hong Kong

Hong Kong taxes only what's sourced in Hong Kong, so your Indian interest, rent, dividends and gains stay outside the IRD's net, and there's no Hong Kong capital gains tax. That cuts both ways. Hong Kong's foreign tax credit (section 50 of the Inland Revenue Ordinance) only works where the same income is also chargeable to Hong Kong tax, and yours isn't, so there's nothing to credit here. A US or UK resident has a home tax bill to credit Indian tax against; you don't, so Indian tax you overpay is money only India can give back. Fixing the Indian side up front, or reclaiming it there, is your only route. Two things help: Hong Kong's year of assessment runs 1 April to 31 March, so it maps exactly onto the Indian financial year, and the Certificate of Resident Status for individuals is form IR1314B, the one for India and other treaty partners, not the IR1314A that goes to Mainland China.

Frequently asked questions

Common questions from Hong Kong NRIs

India's default is 20% under Section 393(2), but the India-Hong Kong treaty caps it at 5% for individual residents, a saving of 15%. To get the lower rate you file Form 41 with a Tax Residency Certificate from the Inland Revenue Department (IRD). 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 5% applies instead of the 20% default, a 15% reduction. Dividends withheld at the higher rate before your paperwork was lodged are reclaimed when you file your Indian return.

Go further

Read the full guide, or see your country's complete picture

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

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