Saudi Arabia NRIs · Dividend Tax

Dividend tax on Indian shares for NRIs in Saudi Arabia

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

When an Indian company pays you a dividend while you live in Saudi Arabia, 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-Saudi Arabia treaty position is more favourable, capping the rate at 5% 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.

Request a free CA call

India-Saudi Arabia key facts: dividend tax

Default non-resident TDS rate	20%
India-Saudi Arabia DTAA treaty rate	5%
Your saving via the treaty	15%
Treaty article / basis	Article 10: flat 5% on Indian dividends to Saudi residents (no individual-vs-corporate sub-rate)
Your TRC issuing authority	ZATCA (Zakat, Tax and Customs Authority)

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

Nothing you earn in India is taxed again in the Kingdom. Saudi Arabia charges individuals no personal income tax and no inheritance or gift tax, and Zakat reaches Saudi and GCC nationals rather than you, so the Indian rate above is the entire cost. Plan the paperwork early, because that's where this corridor actually goes wrong. A residence certificate from ZATCA needs your iqama, an employer letter and proof of 183 days, and it realistically takes three to six weeks, not the few days Gulf blogs promise. In practice only the Riyadh and Dammam regional offices process expat applications reliably. Start it a clear quarter before the Indian filing or payout it has to support.

Frequently asked questions

Common questions from Saudi NRIs

India's default is 20% under Section 393(2), but the India-Saudi Arabia treaty caps it at 5% for individual residents, a saving of 15%. To get the lower rate you file Form 41 with a Tax Residency Certificate from ZATCA (Zakat, Tax and Customs Authority). 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 5% applies instead of the 20% default, a 15% reduction. Dividends withheld at the higher rate before your paperwork was lodged are reclaimed when you file your Indian return.

Go further

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

NRI ITR for interest, rent and dividend income Saudi Arabia NRI tax guide: every income type and the rates that apply

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

Tell us your situation and a practising Chartered Accountant will confirm the rate that applies, the paperwork you need, and what you can reclaim, on a free call with no obligation.