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Getting the treaty rate on your Indian dividends instead of a flat 20%

The registrar cut 20% plus surcharge on my Indian dividend even though my country's treaty says less. How do I fix this?

You hold shares in an Indian company, a dividend is paid, and the tax withheld is 20% plus surcharge and cess, well above the 10% or 15% your country's treaty allows. It happened because the paperwork that unlocks the treaty rate has to reach the company's registrar before the record date, and it did not. You want to know how to get the lower rate next time and how to recover the excess now.
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Last reviewed: 30 July 20266 min readReviewed by Preetesh Maloo, CA

The short answer

Dividends from an Indian company to a non-resident are taxed at 20% plus surcharge and cess under Section 195. Your tax treaty usually caps this at 10% or 15%, but you only get the lower rate at source if you give the company or its registrar a Tax Residency Certificate, Form 10F, and a beneficial-ownership declaration before the record date. Miss that window and 20% is deducted. You then reclaim the excess over the treaty rate by filing an Indian return with the same documents. The registrars are firms like KFintech and MUFG Intime, and each company sets its own cut-off, so the paperwork has to be in early.

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Related situations

Why 20% was deducted

When an Indian company pays a dividend to a non-resident, it withholds tax under Section 195 at 20%, plus surcharge and cess. That is the default rate the company must apply unless you have given it a reason to apply a lower one.

Your country's tax treaty with India almost always caps the dividend rate below 20%, commonly at 10% or 15% depending on the country and how much of the company you hold. But the company cannot simply assume your treaty applies. It needs proof, and it needs it in time, or it deducts the full 20% to be safe.

The paperwork, and the record-date deadline

To get the treaty rate deducted at source, you give the company or its registrar three things: a Tax Residency Certificate from your country, Form 10F, which becomes Form 41 from FY 2026-27, and a short declaration that you are the beneficial owner of the shares and have no permanent establishment in India.

The catch is timing. Each company fixes a record date for a dividend, and the documents have to reach its registrar on or before that date. The registrars are firms like KFintech and MUFG Intime, formerly Link Intime, and they process the withholding for many companies. Submit late, or to the wrong place, and the system deducts 20%. When the treaty rate is applied, the surcharge and cess are not added on top, so the saving is real.

How to reclaim it if you missed the date

If 20% was already taken, the treaty rate is not lost, it just moves to your return. You file an Indian income-tax return, ITR-2, for that year, report the dividend, apply your treaty rate with the Tax Residency Certificate and Form 10F, and claim the difference between the 20% deducted and the treaty rate as a refund.

This is the same relief, only after the fact, and it comes with interest on the refund. The reason to get the paperwork in before the record date anyway is cash flow: the treaty rate at source means you keep the money now, rather than waiting a year to reclaim it.

A worked example

Priya, an NRI in the UK, holds shares in an Indian company that declares a dividend of five lakh rupees. The registrar deducts 20% plus surcharge and cess, over a lakh, because her Tax Residency Certificate and Form 10F did not reach it before the record date.

Her India-UK treaty caps an ordinary dividend at 10% under Article 11(2). The 15% figure people quote is the sub-rate, and it applies only where the dividend is paid out of income derived from immovable property by an investment vehicle. For the next dividend she sends the registrar her Tax Residency Certificate, Form 10F and the beneficial-ownership declaration well before the record date, so only 10% is deducted. For the dividend already over-taxed, she files her Indian return, applies the 10% treaty rate, and reclaims the difference with interest.

What's involved

What the CA actually does

  1. 1

    Get the treaty rate at source

    We prepare your Form 10F (Form 41 from FY 2026-27) and set up your Tax Residency Certificate and beneficial-ownership declaration, and get them to the registrar before the record date.

  2. 2

    Track the record dates

    We watch the dividend record dates on your holdings so the paperwork is always in on time and you keep the money up front.

  3. 3

    Reclaim past over-deductions

    For dividends already cut at 20%, we file your return at the treaty rate and recover the excess with interest.

  4. 4

    Handle multiple companies and registrars

    We deal with KFintech, MUFG Intime and the others across all your holdings, so the treaty rate applies everywhere it should.

What to have ready

Documents you'll typically need

  • Tax Residency Certificate from your country
  • Your demat and dividend statements
  • PAN and passport
  • Details of your shareholding in each company

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 195 (Section 393 from FY 2026-27)
  • Section 90 and 90A (Section 159 from FY 2026-27)
  • Form 10F (Form 41 from FY 2026-27)
  • Tax Residency Certificate

Frequently asked questions

Common questions

Because dividends to a non-resident are withheld at 20% plus surcharge and cess under Section 195 by default. The company only applies your lower treaty rate if it has your Tax Residency Certificate and Form 10F before the record date. Without them in time, it deducts the full 20%.

You give the company or its registrar a Tax Residency Certificate, Form 10F (Form 41 from FY 2026-27) and a beneficial-ownership declaration, on or before the record date for the dividend. Then it deducts at your treaty rate, usually 10% or 15%, with no surcharge or cess on top.

Yes. You reclaim the excess over your treaty rate by filing an Indian return with the Tax Residency Certificate and Form 10F, and the difference comes back as a refund with interest. Getting the paperwork in on time only matters for cash flow, so you keep the money now rather than reclaiming later.

The registrar and transfer agent, firms like KFintech or MUFG Intime, processes the dividend and the withholding for the company. Your treaty documents have to reach the registrar, not just the company, and before its cut-off, or the system defaults to 20%.

No. When the treaty rate is applied, it is the final rate, with no surcharge or cess added. That is another reason the treaty rate, at 10% or 15%, is well below the 20% plus surcharge and cess the default withholding takes.

No. The Supreme Court held in Nestle SA on 19 October 2023 that a most favoured nation clause needs a separate notification under Section 90(1) before it applies, and India has never issued one importing the 5% rate into the Netherlands, France or Switzerland treaties. Claim the base treaty rate of 10%. See [why the 5% MFN rate cannot be claimed](/situations/nri-dividend-mfn-clause-nestle-ruling).

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.

Surcharge cap on capital gains

Right now: Surcharge on income under s.111A, 112 and 112A capped at 15%

Where it works differently

Other income also exists
The cap applies only to the capital-gains component. Other income carries the normal surcharge slab.
The proviso is income-component specific.
The taxpayer is in the new regime
The highest surcharge is 25%, not 37%.
Finance Act 2023 removed the 37% slab from the new regime.
Adding cess
4% health and education cess sits on tax plus surcharge.
Standard computation order.

Commonly got wrong

  • Surcharge on a large NRI property gain can reach 37%. Capped at 15% for capital gains under 111A/112/112A, and 25% overall in the new regime.Surcharge on capital gains taxed under sections 111A, 112 and 112A is capped at 15%, whatever the total income. Cess of 4% then applies on tax plus surcharge.

Treaty rate on Indian dividends

Right now: Domestic rate 20% plus surcharge and cess; most treaties cap it at 10-15% under Article 10

Where it works differently

A TRC and Form 10F are furnished to the registrar or company
The treaty rate applies at source. Without them the full 20% plus surcharge and cess is deducted and you recover it by filing.
s.90(4) and (5).
The exact rate matters
It is per treaty, not a single number. Check the country entry. Some treaties are 10%, some 15%, and Italy's dividend article can be WORSE than the domestic rate.
Never quote one figure across countries.
Claiming the treaty rate
The s.115A(5) filing exemption is lost, so an Indian return becomes necessary.
That relief needs TDS at not less than the s.115A rate.

Commonly got wrong

  • The DTAA rate on dividends is 10%. It varies by treaty. Quoting one number across countries is wrong, and at least one treaty is worse than domestic law.Check your country's Article 10 rate, commonly 10% or 15%, against 20% plus surcharge and cess under domestic law.

When the rule was applied against someone else

3 taxpayers in this position won

The rule reads as settled. These are decisions where it was applied to someone in your situation and did not hold, with the exception that carried them and a link to the source.

Related

If this matched your situation, these go further

The 5% MFN dividend rate, and why you cannot claim itYour fund house cut more tax than you owe on a redemption, and how to get it backWhy an NRI cannot use Form 15G or 15H, and how to cut the TDS on NRO interest insteadTDS was deducted on your NRE interest. Here is why, and how to get it backDTAA TDS recoveryForm 10F filing serviceForm 10F generatorDTAA rate lookup

Registrar cut 20% on your Indian dividend?

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