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Why an NRI cannot use Form 15G or 15H, and how to cut the TDS on NRO interest instead

My bank is deducting 30% on my NRO interest even though my income is below the limit, and it will not accept a 15G from me.

Your bank keeps cutting 30% TDS on your NRO interest, even though your Indian income is well below the taxable limit, and it will not take a Form 15G or 15H from you. You want to know why the forms that stop TDS for everyone else do not work for you, and what actually brings the deduction down.
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Last reviewed: 30 July 20266 min readReviewed by Preetesh Maloo, CA

The short answer

Form 15G and 15H are declarations that a resident with income below the taxable limit gives a bank to stop TDS. An NRI cannot use them, because they rest on having no tax liability, and NRO interest is taxable for a non-resident from the first rupee. So the bank deducts 30% plus surcharge and cess on your NRO interest whatever your total income. Three routes bring it down: a lower-TDS certificate before the interest is paid, your country's treaty rate with a TRC and Form 10F, or simply filing your return and reclaiming the excess with interest. For modest interest, filing and reclaiming is usually the least painful.

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Full guide: How much TDS is deducted on an NRO account, and how to lower it

Related situations

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.

What's involved

What the CA actually does

  1. 1

    Work out the cheapest route

    We look at how much NRO interest you earn and tell you whether a lower-TDS certificate, the treaty rate, or simply filing and reclaiming saves you the most for the least effort.

  2. 2

    Get the treaty rate applied

    We prepare your Form 10F (Form 41 from FY 2026-27) and set up the TRC so the bank deducts at your treaty rate of 10 to 15% instead of 30%.

  3. 3

    Apply for a lower-TDS certificate

    Where the interest is large, we file the Form 13 (Form 128) application under Section 197 (Section 395) so the bank deducts less from the start.

  4. 4

    File and reclaim the excess

    We file your return, apply the basic exemption and your actual slab, and claim the over-deducted TDS back with Section 244A (Section 437) interest.

What to have ready

Documents you'll typically need

  • PAN and passport
  • NRO interest certificate or bank statement
  • TRC from your country, for the treaty rate
  • Details of any other Indian income

Your destination country can change the details

Requirements differ from one consulate, university and visa route to the next, how recent the figures must be, how long funds must have been held, and which certificates are mandatory. We assemble the documents around the exact checklist you're applying under. To see how India's tax treaty with your country of residence affects related filings, set your country below or compare all 46 countries.

References on this page

  • Section 197A (Section 393(6) from FY 2026-27)
  • Section 195 (Section 393)
  • Section 197 / Form 13 (Section 395 / Form 128 from FY 2026-27)
  • Section 244A (Section 437)

Frequently asked questions

Common questions

No. Those forms are only for residents whose total income is below the taxable limit, and they rest on having no tax to pay. NRO interest is taxable for a non-resident from the first rupee, so the declaration cannot be made and banks will not accept it from an NRI.

You cannot stop it with a 15G. You can lower it with a lower-TDS certificate under Section 197 (Section 395 from FY 2026-27), or apply your treaty rate of 10 to 15% with a TRC and Form 10F, or file your return and reclaim the excess. For a small deposit, filing and reclaiming is usually easiest.

Because TDS on NRO interest applies from the first rupee for a non-resident, with no threshold, unlike for a resident. The exemption still helps you at the return stage: you file, your actual tax on the interest is low or nil, and the deducted TDS comes back as a refund.

No. The bank keeps deducting 30% until you give it a Tax Residency Certificate from your country and Form 10F (Form 41 from FY 2026-27). Only then does it apply your treaty rate. Miss that, and your route is to reclaim the excess in your return.

For large interest, yes, because it stops the money being locked away for a year. For a small deposit it is often not worth the annual application and cost, and filing and reclaiming is simpler. We help you decide based on the amount.

The exceptions that change the answer

Where the general rule stops applying to you

Every rule below has a carve-out, a cut-off date or a condition that flips the answer. These are the ones that decide real cases.

NRO account: what it costs and what it caps

Right now: Interest taxed at 30% plus surcharge and cess; repatriation capped at USD 1 million a financial year

Where it works differently

A TRC and Form 10F (Form 41 from 1 Apr 2026) are furnished
The treaty rate applies to the interest, commonly 10-15% under Article 11 instead of 30% plus surcharge.
s.90(2). This is the single largest recurring recovery item for most NRIs.
Remitting out
Form 15CA is needed, plus Form 15CB from a CA where the remittance is chargeable and above Rs 5 lakh in the year.
Rule 37BB.
Joint holders
The USD 1 million ceiling is per person per financial year, so joint holders each have their own.
FEMA 13(R).

Commonly got wrong

  • NRO interest is taxed at 30%. Incomplete. Surcharge and 4% cess sit on top, and a treaty can cut it to 10-15%.30% plus surcharge and cess by default, but 10-15% under most treaties if you hold a TRC and file Form 10F.

TDS on NRO account interest

Right now: 30% plus surcharge and cess

Where it works differently

A valid TRC and Form 10F (Form 41 from 1 Apr 2026) are furnished
The treaty rate applies, commonly 10-15% under Article 11.
s.90(2) gives the more beneficial of treaty or Act.
No PAN is furnished
s.206AA imposes at least 20%, but Rule 37BC allows escape by furnishing name, address, TIN and TRC. Courts have also held s.206AA cannot override a treaty rate.
Rule 37BC + settled case law.
Claiming the treaty rate at source
The s.115A(5) filing exemption is lost, so an Indian return becomes necessary.
That exemption requires TDS at not less than the s.115A rate.
The account is NRE or FCNR instead
Interest is exempt and no TDS applies, while the holder is a FEMA non-resident.
s.10(4)(ii) and s.10(15)(iv)(fa).

Commonly got wrong

  • NRO interest TDS is 30%. Incomplete. Surcharge and 4% cess sit on top, so the effective rate is higher.30% plus surcharge and cess, around 31.2% at the base level.
  • You can file Form 15G/15H to stop NRO TDS. Those are resident-only declarations. An NRI filing one makes a false declaration.Use Form 13 (Form 128 from 1 April 2026), or claim the treaty rate with a TRC.

Health and education cess

Right now: 4% health and education cess

Commonly got wrong

  • 3% cess. Stale since AY 2019-20.Health and education cess is 4% on tax plus surcharge, from AY 2019-20 onward.

Basic exemption limit: new regime

Right now: Rs 4,00,000

Where it works differently

The taxpayer is a non-resident with capital gains
Unused basic exemption CANNOT be set against income taxed at special rates under s.111A/112/112A.
The set-off proviso is limited to residents, so a non-resident cannot use the basic exemption against these gains.
The old regime applies
Rs 2,50,000, unchanged. Senior-citizen higher limits are resident-only.
Old-regime slabs were not revised.

Commonly got wrong

  • The basic exemption is Rs 3 lakh. Stale from FY 2025-26.Rs 4 lakh in the new regime; Rs 2.5 lakh in the old.

Related

If this matched your situation, these go further

TDS was deducted on your NRE interest. Here is why, and how to get it backFiling your NRI return for NRO interest, Indian rent and dividendsYour NRI tax refund, which account it lands in, and how to keep it repatriableDTAA TDS recoveryForm 10F filing serviceForm 10F generatorFD TDS calculator

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