Why is my NRO interest taxed at 30%, and how do I bring it down?

Your bank deducts 30% TDS on NRO interest under Section 195, plus surcharge and health-and-education cess, because the account is held by a non-resident and the bank has to assume the highest rate. Your country's tax treaty with India almost always allows a lower rate, often in the 10 to 15% range. You bring the deduction down by giving the bank a Tax Residency Certificate and Form 10F (renamed Form 41 from FY 2026-27), and you recover the excess already taken by filing a return. None of it needs you to be in India.

For a resident, bank interest is taxed at the slab rate and TDS is only 10%. For a non-resident it is different. NRO interest is fully taxable in India, and the bank withholds under Section 195 at the rate in force for non-residents, which works out to 30% plus surcharge and cess. The bank applies that maximum because it cannot assume which treaty you are entitled to, or whether you have filed the paperwork to claim it.

This is also why NRO is not NRE. NRE interest is exempt under Section 10(4)(ii) and carries no TDS at all. NRO holds your India-earned money, so it is taxable, and that is where the 30% bites.

Two documents do most of the work. A Tax Residency Certificate from your country's tax authority proves where you are resident, and Form 10F (now Form 41) records the treaty details the bank needs. Once both are on file, the bank can deduct at your DTAA rate going forward instead of the full 30%.

Where the income is large or the treaty rate still leaves too much withheld, a lower-deduction certificate under Section 197 tells the bank exactly what to deduct. We prepare the residency-certificate support, the Form 10F / Form 41 and, where it helps, the Section 197 application, and we lodge them with your bank's NRI desk.

If the bank has been taking 30% for months or years, that excess is not lost. You claim your treaty rate by filing an ITR-2, and the difference comes back as a refund, with interest under Section 244A on the amount that was over-withheld.

For earlier years where the deadline has passed, a condonation request under Section 119(2)(b) can reopen them, currently up to five past years under CBDT Circular 11/2024. We work out the exact recoverable figure from your 26AS and AIS before you commit to anything.

Pick your country above and the table below shows the default rate the bank applies, the treaty rate you are entitled to, and the gap you can recover. The saving is the difference between the two, every year, on every interest credit.