What tax is withheld on Indian dividends for an NRI in Israel?

India's default is 20% under Section 195, but the India-Israel treaty caps it at 10% for individual residents — a saving of 10%. To get the lower rate you file Form 10F with a Tax Residency Certificate from Israel Tax Authority (Rashut HaMisim); any excess withheld beforehand is reclaimed on your Indian return.

Can I reduce the tax withheld on my Indian dividends?

Yes. With Form 10F 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.

Israel NRIs · Dividend Tax

Dividend tax on Indian shares for NRIs in Israel

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

When an Indian company pays you a dividend while you live in Israel, the company withholds tax at source before the money reaches you. India's default withholding on non-resident dividends is 20% under Section 195. The India-Israel treaty position on dividends is more favourable — it caps the rate at 10% for individual residents, a real saving over the 20% default (Article 10: flat 10% treaty cap (unchanged by the 2016 protocol)). To claim it you need Form 10F and a Tax Residency Certificate on file with the company or your broker.

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India-Israel key facts: dividend tax

Default Section 195 rate	20%
India-Israel DTAA treaty rate	10%
Your saving via the treaty	10%
Treaty article / basis	Article 10: flat 10% treaty cap (unchanged by the 2016 protocol)
Your TRC issuing authority	Israel Tax Authority (Rashut HaMisim)

Rates reflect India's domestic Section 195 withholding and the India-Israel 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 Section 195 at 20% (plus surcharge and cess). Whether a treaty rate is available depends on the specific treaty — for many countries the lower dividend rate is written only for companies holding a large stake in the Indian payer, which means individual portfolio investors stay at the domestic rate.

Where a lower individual rate does apply, you claim it with Form 10F and a Tax Residency Certificate lodged with the company or broker, and any quarter withheld at the higher rate before your paperwork was on file is reclaimed through your Indian return. Where no lower rate applies, the dividend still goes on your return, and the real relief sits on your home-country side as a foreign tax credit for the Indian tax already paid.

What changes because you live in Israel

Israeli residents are taxed on worldwide income, with a foreign tax credit for the Indian tax paid. Your Indian tax turns on residence and OCI status, not on heritage, so long-settled Bene Israel families and recent arrivals are treated the same way on their Indian income. A genuine relief: other income not covered by a specific treaty article is taxable only in Israel, so India cannot tax it, apart from lottery and gambling winnings.

Frequently asked questions

Common questions from Israel NRIs

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NRI ITR for interest, rent and dividend income Israel NRI tax guide — all income types & DTAA rates

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

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