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

By default your bank deducts 30% under Section 195 — the non-resident rate. With a valid Form 10F and a Tax Residency Certificate from Autoridade Tributaria e Aduaneira (AT), the India-Portugal treaty brings that down to 10% 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 10% 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 Portugal to claim the lower NRO TDS rate?

Two core documents: a Tax Residency Certificate issued by Autoridade Tributaria e Aduaneira (AT), and Form 10F filed on the Indian e-filing portal. Together they tell your bank to apply the India-Portugal treaty rate of 10% instead of the 30% default. The TRC has to be renewed each period it covers, otherwise the bank reverts to the full rate.

Portugal NRIs · NRO TDS Recovery

NRO account TDS recovery for NRIs in Portugal

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

If you live in Portugal 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-Portugal tax treaty caps that interest withholding at 10% (Article 11: 10% treaty cap on Indian-source interest), so for most Portuguese 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-Portugal key facts: nro tds recovery

Default Section 195 rate	30%
India-Portugal DTAA treaty rate	10%
Your saving via the treaty	20%
Treaty article / basis	Article 11: 10% treaty cap on Indian-source interest
Your TRC issuing authority	Autoridade Tributaria e Aduaneira (AT)

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

Portuguese residents report this Indian income on the Modelo 3 IRS return with a foreign tax credit for the Indian tax paid. With the old Non-Habitual Resident regime now closed to new arrivals and replaced by the narrower IFICI incentive, most recent movers no longer get the ten-year holiday, so the Indian income is fully taxable in Portugal with only the credit to soften it. On the plus side, other income not covered by a specific treaty article is taxable only in Portugal, so India cannot tax it.

Frequently asked questions

Common questions from Portuguese NRIs

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

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

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