Why 15G and 15H do not work for an NRI
Form 15G and Form 15H are declarations under Section 197A (Section 393(6) from FY 2026-27) that a resident individual, or a resident senior citizen for 15H, gives a bank to say their total income is below the taxable limit, so no tax should be deducted. The whole basis is that the person has no tax to pay.
An NRI cannot make that declaration. Interest on an NRO account is taxable for a non-resident from the first rupee, with no basic-exemption cushion against the deduction, so the nil-liability statement is simply not true. Banks know this and will not accept a 15G or 15H from an NRO account holder. This is a rule, not a bank being difficult.
What the bank deducts, and why there is no threshold
On NRO interest the bank deducts TDS under Section 195 (Section 393 from FY 2026-27) at 30%, plus surcharge where your income crosses the surcharge slabs, plus 4% health and education cess. Unlike a resident, who faces TDS only above a rupee threshold, an NRI has tax deducted on every rupee of NRO interest. That is why even a small NRO balance shows a deduction.
Three ways to bring the TDS down
A lower-TDS certificate, before the interest is paid. You apply under Section 197 (Section 395 from FY 2026-27) on Form 13 (Form 128), and the officer tells the bank to deduct at a lower rate or nil. It works, but it is valid only for the financial year it is issued in, so you reapply each year, and the application takes preparation and time. It suits large interest more than a small deposit.
Your treaty rate. Most of India's tax treaties cap NRO interest at 10% to 15% instead of 30%. To claim it you give the bank a Tax Residency Certificate from your country plus Form 10F (Form 41 from FY 2026-27). The exact cap depends on your country's treaty.
File and reclaim. If the year is already running and 30% is being cut, you file your Indian return, pay tax at your actual rate on the interest, and the excess comes back as a refund with interest under Section 244A (Section 437) at 6% a year. For modest interest this is usually the simplest route, because it avoids chasing a certificate every year.
A worked example
Anjali, an NRI in Toronto, earns two lakh rupees of NRO interest in the year and has no other Indian income. The bank cuts about sixty-two thousand rupees as TDS at 30% plus cess, even though her Indian income is well below the taxable limit. She cannot stop it with a 15G.
She files her Indian return. After the basic exemption that applies to ordinary income like interest, the tax actually due on two lakh rupees is far below what was deducted, so almost all of it comes back as a refund with 6% interest. Next year she gives the bank a TRC and Form 10F so the India-Canada treaty rate of 15% applies up front and less is locked away in the first place.