What tax is withheld on Indian dividends for an NRI in Sri Lanka?

India's default is 20% under Section 195, but the India-Sri Lanka treaty caps it at 7.5% for individual residents — a saving of 12.5%. To get the lower rate you file Form 10F with a Tax Residency Certificate from Inland Revenue Department (IRD); any excess withheld beforehand is reclaimed on your Indian return.

Can I reduce the tax withheld on my Indian dividends?

Yes. With Form 10F and a Tax Residency Certificate on file, the treaty rate of 7.5% applies instead of the 20% default — a 12.5% reduction. Dividends withheld at the higher rate before your paperwork was lodged are reclaimed when you file your Indian return.

Sri Lanka NRIs · Dividend Tax

Dividend tax on Indian shares for NRIs in Sri Lanka

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

When an Indian company pays you a dividend while you live in Sri Lanka, the company withholds tax at source before the money reaches you. India's default withholding on non-resident dividends is 20% under Section 195. The India-Sri Lanka treaty position on dividends is more favourable — it caps the rate at 7.5% for individual residents, a real saving over the 20% default (Article 10: flat 7). To claim it you need Form 10F and a Tax Residency Certificate on file with the company or your broker.

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India-Sri Lanka key facts: dividend tax

Default Section 195 rate	20%
India-Sri Lanka DTAA treaty rate	7.5%
Your saving via the treaty	12.5%
Treaty article / basis	Article 10: flat 7
Your TRC issuing authority	Inland Revenue Department (IRD)

Rates reflect India's domestic Section 195 withholding and the India-Sri Lanka 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 Section 195 at 20% (plus surcharge and cess). Whether a treaty rate is available depends on the specific treaty — for many countries the lower dividend rate is written only for companies holding a large stake in the Indian payer, which means individual portfolio investors stay at the domestic rate.

Where a lower individual rate does apply, you claim it with Form 10F and a Tax Residency Certificate lodged with the company or broker, and any quarter withheld at the higher rate before your paperwork was on file is reclaimed through your Indian return. Where no lower rate applies, the dividend still goes on your return, and the real relief sits on your home-country side as a foreign tax credit for the Indian tax already paid.

What changes because you live in Sri Lanka

Sri Lankan residents are taxed on worldwide income, with a foreign tax credit for the Indian tax paid. The standout benefit is the dividend rate: the treaty caps Indian dividends at just 7.5%, one of the lowest India offers any country, so claim it up front with a TRC and Form 10F rather than letting the company withhold 20%. Note that the large Hill-Country Tamil community are mostly Sri Lankan citizens, not NRIs, so your Indian-passport and OCI status is what decides whether the treaty applies.

Frequently asked questions

Common questions from Sri Lanka NRIs

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Read the full guide, or see your country's complete picture

NRI ITR for interest, rent and dividend income Sri Lanka NRI tax guide — all income types & DTAA rates

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