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

By default your bank deducts 30% under Section 195 — the non-resident rate. With a valid Form 10F and a Tax Residency Certificate from Agenzia delle Entrate (Italian Revenue Agency), the India-Italy 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 Italy to claim the lower NRO TDS rate?

Two core documents: a Tax Residency Certificate issued by Agenzia delle Entrate (Italian Revenue Agency), and Form 10F filed on the Indian e-filing portal. Together they tell your bank to apply the India-Italy 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.

Italy NRIs · NRO TDS Recovery

NRO account TDS recovery for NRIs in Italy

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

If you live in Italy 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-Italy tax treaty caps that interest withholding at 15% (Article 12: 15% treaty cap on Indian-source interest), so for most Italian 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-Italy key facts: nro tds recovery

Default Section 195 rate	30%
India-Italy DTAA treaty rate	15%
Your saving via the treaty	15%
Treaty article / basis	Article 12: 15% treaty cap on Indian-source interest
Your TRC issuing authority	Agenzia delle Entrate (Italian Revenue Agency)

Rates reflect India's domestic Section 195 withholding and the India-Italy 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 Italy

Italian residents are taxed on worldwide income, so this Indian income also goes on your Redditi PF return, with the credito d'imposta estero crediting the Indian tax already paid. On top of income tax, Italy runs two wealth taxes on foreign assets: IVIE on your Indian property and IVAFE on your Indian bank and investment accounts, both charged on the year-end balances. The dividend trap is real too: the 15% treaty rate is reserved for a company holding at least 10%, so as an individual you pay India's 20% domestic rate and recover it as a credit.

Frequently asked questions

Common questions from Italian NRIs

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

DTAA TDS recovery service Italy NRI tax guide — all income types & DTAA rates

NRO TDS Recovery sorted, by an Indian CA who works with Italian NRIs

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