Japan NRIs · Dividend Tax

Dividend tax on Indian shares for NRIs in Japan

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

When an Indian company pays you a dividend while you live in Japan, 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-Japan 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-Japan key facts: dividend tax

Default non-resident TDS rate	20%
India-Japan DTAA treaty rate	10%
Your saving via the treaty	10%
Treaty article / basis	Article 10: 10% on Indian-listed dividends to Japanese residents
Your TRC issuing authority	the National Tax Agency (NTA)

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

For your first five years in Japan as a foreign national you're a non-permanent resident (非永住者), so Japan taxes this Indian income only to the extent you bring money into Japan. Shares bought after you land are the exception: taxed in full, remitted or not. From year six you're taxed on worldwide income, with credit for Indian tax paid. The trap is a second filing, nothing to do with income: once you're past that status and your assets outside Japan top 50 million yen on 31 December, the Report of Foreign Assets (国外財産調書) is due by 30 June, months after your March kakutei shinkoku is filed and forgotten. Your Indian flat, NRO and NRE balances and demat holdings all count toward that 50 million. Miss it and the understatement penalty on the related tax goes up 5%, filing on time cuts it 5%, and missing it without good reason can mean up to a year in prison or a fine up to 500,000 yen.

Frequently asked questions

Common questions from Japan NRIs

India's default is 20% under Section 393(2), but the India-Japan 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 National Tax Agency (NTA). 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 Japan NRIs

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