South Africa NRIs · Dividend Tax

Dividend tax on Indian shares for NRIs in South Africa

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

When an Indian company pays you a dividend while you live in South Africa, 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-South Africa treaty position is more favourable, capping the rate at 10% 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.

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India-South Africa key facts: dividend tax

Default non-resident TDS rate	20%
India-South Africa DTAA treaty rate	10%
Your saving via the treaty	10%
Treaty article / basis	Article 10
Your TRC issuing authority	SARS (South African Revenue Service)

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

South Africa taxes residents on worldwide income, so this Indian income also lands on your ITR12, with a section 6quat credit for the Indian tax paid. Here's the part that costs Durban families money: SARS credits only foreign tax that is payable with no right of recovery, so any Indian tax withheld above your real Indian liability earns you nothing here. India will refund that excess, but only if you file the Indian return, so skipping it turns a recoverable overpayment into a permanent loss. On the gains side, from 1 March 2025 (the 2026 year of assessment) you can credit the Indian tax on a foreign capital gain up to the South African tax on that gain, where before only 40% of it counted because only 40% of a gain enters your taxable income. Watch the calendar too, because your SARS year ends in February, so one Indian financial year straddles two ITR12s.

Frequently asked questions

Common questions from South African Indians

India's default is 20% under Section 393(2), but the India-South Africa treaty caps it at 10% for individual residents, a saving of 10%. To get the lower rate you file Form 41 with a Tax Residency Certificate from SARS (South African Revenue Service). 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 10% applies instead of the 20% default, a 10% reduction. Dividends withheld at the higher rate before your paperwork was lodged are reclaimed when you file your Indian return.

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Dividend Tax sorted, by an Indian CA who works with South African Indians

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