NRI fixed-income portfolio:
claim the right rate, reconcile every distribution, exit cleanly.
Your typical NRI fixed-income portfolio crosses several distinct tax regimes, tax-free bonds (Section 10(15)(iv)(h), interest exempt for all holders), corporate bonds / NCDs (Section 195 default 30%, treaty cap 7.5%-15%), NPS Tier I (60/40 exit rule, Section 10(12A) lumpsum exemption), REITs / InvITs (component-level taxation under Section 115UA). Each issuer / RTA / registrar applies its own TDS without coordinating across your holdings.
We coordinate your full fixed-income lifecycle: initial documentation (one PAN + TRC + Form 10F / 41 set covers everything), per-issuer treaty rate application, NPS exit decisions, REIT distribution reconciliation, ITR-2 filing with correct schedules for each income type, and repatriation paperwork.
First call is free. We review your holdings and the TDS gaps; tell you honestly which levers move the needle for your specific portfolio.
Four levers across the fixed-income spectrum
The right combination depends on your portfolio mix. Tax-free bond portfolios need declaration cleanup; NCD portfolios need treaty rate setup; NPS needs exit planning; REITs need distribution reconciliation.
Section 10(15)(iv)(h) tax-free bond status
Confirm each bond's notification status (which government-issued entity, which tranche, which notification number). Interest is fully exempt but must be correctly identified to claim Schedule EI exemption. Mis-classification can create Section 142(1) inquiries.
DTAA treaty rate on corporate bond interest
Default 30% Section 195 vs treaty 10%-15% typical (UAE 12.5%, Singapore 10-15%, USA 15%, UK 10-15%, Canada 15%, Australia 15%). We file PAN + TRC + Form 41 (formerly Form 10F) / 41 with each issuer, dropping the rate from the next interest credit cycle. Saves 15-20 percentage points × your bond interest = material annual savings.
NPS 60/40 exit + Section 10(12A) exemption
60% of the corpus is exempt under Section 10(12A). Since December 2025 the minimum annuity for non-government subscribers is 20%, not 40%, so you can withdraw up to 80% and pay slab tax on the 20% above the exemption. Annuity with a PFRDA-approved provider, provider selection (LIC / HDFC Life / ICICI Pru Life / SBI Life / Star Union Dai-ichi etc.) materially affects post-tax annuity income. We help with the choice + the exit paperwork.
REIT / InvIT distribution component reconciliation
Each distribution split into dividend (Article 10 treaty rate 10-25%. India-USA individuals 25%; UAE/UK/Singapore typically 10-15%) + interest (Article 11 treaty rate 10-15% typical) + capital-return / repayment-of-debt (post-FA 2023 Section 56(2)(xii): reduces cost basis up to issue price; cumulative excess taxable as IOS). REIT issues per-distribution tax statements. We reconcile and apply correct treaty rates per component.
Common situations we handle
Engagement size scales by portfolio diversity. Single asset class (e.g., only NCDs) is light; multi-asset portfolios (bonds + NPS + REITs) require more reconciliation work.
NRI with tax-free bond portfolio (REC / NHAI / IRFC etc.)
Holding Section 10(15)(iv)(h) tax-free bonds, issued in FY 2011-12, 2012-13, 2013-14 and 2015-16 and not since. Interest is exempt, but the declaration in ITR-2 Schedule EI is often missed. Maturity timing and any premature sale also need coordination.
NRI with corporate bond / NCD portfolio
HDFC / Tata / L&T / Reliance NCDs and corporate bonds. Issuer / RTA defaults to 30%+ Section 195 TDS unless treaty rate documented via PAN + TRC + Form 41 (formerly Form 10F) / 41. We coordinate the documentation across multiple issuers.
Retiring NRI with NPS Tier I balance
Approaching age 60. The PFRDA cut the mandatory annuity for non-government subscribers from 40% to 20% in December 2025, so up to 80% can now come out as a lump sum above a ₹12 lakh corpus, and a corpus of ₹8 lakh or less needs no annuity at all. Watch the mismatch nobody flags: Section 10(12A) still exempts only 60%, so the slice between 60% and 80% is taxable at slab. Annuity from a PFRDA-approved provider. We coordinate the exit decision, provider selection, and ITR documentation.
NRI REIT / InvIT unitholder
Embassy / Mindspace / Brookfield / Nexus Select / IndiGrid / India Grid Trust holdings. Distributions split into dividend + interest + capital-return components; each has different treaty treatment. We reconcile and optimize.
How the engagement actually runs
Five steps. Steps 1 and 2 are free. You see the portfolio map and the optimization opportunities before any documentation setup.
- Step 1
Free 20-minute fixed-income portfolio diagnostic
We map your bonds (tax-free / govt / corporate / NCDs), NPS account (Tier I / Tier II balance), and REIT / InvIT holdings. Identify the TDS regime per holding, treaty applicability, and any back-year reporting gaps.
- Step 2
Documentation + treaty rate setup
Furnish PAN + TRC + Form 10F (FY 2025-26) or Form 41 (FY 2026-27 onwards) to every issuer / RTA / REIT registrar. The same set covers your entire fixed-income portfolio, reduces TDS from default 30% to treaty caps of 7.5%-15% depending on country.
- Step 3
Redemption / maturity / exit coordination
Bond maturity (capital returned at par), direct to your NRO. NPS exit: Exit modelling against the December 2025 PFRDA rules (20% minimum annuity, not 40%) and the Section 10(12A) 60% exemption cap, with a PFRDA-approved provider. REIT distributions: ongoing TDS reconciliation. We handle each event end-to-end.
- Step 4
ITR-2 reconciliation + Schedule EI for tax-free items
ITR-2 captures: tax-free bond interest (Schedule EI), taxable bond / NCD interest (IOS), NPS distributions (60% exempt under 10(12A); annuity in IOS), REIT components (each in its respective schedule). We file the comprehensive return reflecting all income.
- Step 5
Repatriation + foreign-jurisdiction reporting
Form 145 (formerly Form 15CA) + Form 146 (formerly Form 15CB) (CA-certified) for outward remittances under USD 1M/FY NRO cap. Coordinated documentation for your home-country tax preparer to claim foreign tax credit on taxable items.
What this costs
Scoped per case, by number of holdings, diversity across asset classes (bonds-only vs bonds + NPS + REITs), and whether ongoing annual coordination is part of the engagement. Quoted transparently on the diagnostic call. No fee for the diagnostic.
For multi-asset portfolios where treaty rate setup saves 15-22 percentage points annually, the engagement cost is typically recovered within the first year via TDS optimization.
Common questions
Is the interest from REC / NHAI / IRFC tax-free bonds really exempt?
Yes for bonds notified by the Government under Section 10(15)(iv)(h). Issued in FY 2011-12, 2012-13, 2013-14 and 2015-16, with nothing since, so these can only be bought on the secondary market now. Issuers were REC, NHAI, IRFC, HUDCO, PFC, IIFCL, NABARD qualify. Interest is fully exempt for all holders including NRIs. Declare in ITR-2 Schedule EI. Verify each bond's notification status, not all subsequent issuances qualify.
What treaty rate applies to NCD interest for a UAE NRI?
India-UAE DTAA Article 11 caps interest at 12.5% inclusive of cess. Default Section 195 rate is 30%+. We file PAN + TRC + Form 41 (FY 2026-27) with the issuer's RTA; the rate drops to 12.5% from the next interest credit cycle. Same documentation covers all your bond / NCD holdings.
Can NRIs subscribe to new NPS Tier I accounts?
Yes via eNPS portal at npscra.nsdl.co.in. Contributions can be from NRO or NRE source; tax-deduction under Section 80CCD(1) + 80CCD(1B) applies if you have Indian taxable income. Lock-in until age 60 (or extended to 70). Exit on superannuation: 60% lumpsum tax-free + 40% annuity.
How are REIT distributions taxed for NRIs?
Component-based per Section 115UA. Dividend component: the LOWER of the treaty rate and the domestic rate, per Section 90(2), and for the USA that is the domestic one. Article 10 gives an individual 25%, while Section 115A charges 20% plus surcharge and cess, at most 23.92%, so chasing the US treaty rate on dividends makes you worse off. UAE, UK and Singapore treaty rates of roughly 10-15% do beat it. Interest component: withheld at 5% under Section 194LBA(2), which beats every treaty rate (Article 11 runs 10-15%), so claiming the treaty here would raise your withholding rather than lower it. Capital-return / repayment-of-debt component: post-FA 2023 Section 56(2)(xii), reduces cost basis up to issue price; cumulative excess over issue price is taxable as IOS. REIT issues per-distribution tax statements; we reconcile and file correctly.
Can you handle the entire fixed-income portfolio in one engagement?
Yes. The diagnostic maps everything (bonds, NCDs, NPS, REITs, InvITs) and the documentation set (one PAN + TRC + Form 10F/41) covers all issuers. Each issuer / RTA / registrar then applies the treaty rate from the next coupon / distribution. Quarterly reconciliation across all holdings.
What about the AT-1 perpetual bond risk?
AT-1 bonds carry write-down risk (Yes Bank AT-1 saga 2020). For tax purposes, interest is taxable as IOS; capital risk is separate. We flag AT-1 exposure on the diagnostic and recommend treating as quasi-equity for risk-budgeting purposes.
How do you handle the 80CCD(1B) deduction for NRI NPS contributors?
Section 80CCD(1B) provides additional ₹50,000 deduction over the ₹1.5 lakh 80C limit. For NRIs with Indian taxable income (NRO interest, rent, business income), this is fully claimable. We optimize the deduction across 80C / 80CCD(1) / 80CCD(1B) / 80CCD(2) for the most efficient stack.
Can I exit NPS prematurely if I permanently leave India?
Yes, with PFRDA-specific exit rules for permanent emigration. Full lumpsum payout possible with documentation (foreign residency proof, etc.). Annuity component may be deferred. We coordinate via the NPS portal, typically 30-60 days for full exit settlement.
Free 20-minute fixed-income portfolio diagnostic
Send us your holdings (bonds / NCDs / NPS / REIT units). We map the TDS regime per holding, identify treaty-rate gaps and reporting cleanups, and tell you honestly what the optimization will deliver in your case.
Adjacent situations we handle
Different problem? Here's the right page.
One NRI tax problem usually opens a door to the next. Here's the most likely next step from where you are right now.