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UAE NRIs · NRO TDS Recovery

NRO account TDS recovery for NRIs in the UAE

Your Indian bank deducts tax on NRO interest at the full non-resident rate. The India-UAE treaty lets you bring it down and reclaim the excess.

If you live in the UAE and hold an NRO fixed deposit or savings account in India, your bank deducts tax at source on the interest at 30%, the default non-resident rate under Section 393(2) (Section 195 until 31 March 2026). The India-UAE tax treaty caps that interest withholding at 12.5% (Article 11), so for most UAE NRIs the gap between the two is over-withheld tax you're entitled to recover. To claim the lower rate you file Form 41, which replaced Form 10F on 1 April 2026, backed by a Tax Residency Certificate from your country of residence. Anything already over-deducted comes back as a refund when you file your Indian return.
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India-UAE key facts: nro tds recovery

Default non-resident TDS rate30%
India-UAE DTAA treaty rate12.5%
Your saving via the treaty17.5%
Treaty article / basisArticle 11
Your TRC issuing authoritythe Federal Tax Authority (FTA)

Rates reflect India's domestic withholding under Section 393(2) (Section 195 until 31 March 2026) and the India-UAE treaty. Surcharge and cess apply on top where relevant.

How it works on the India side

Indian banks deduct TDS on NRO interest at the 30% non-resident rate plus surcharge and cess, under Section 393(2) (Section 195 until 31 March 2026). Where India has a treaty with your country that caps interest lower, Form 41 (formerly Form 10F) and a Tax Residency Certificate lodged with the bank get you that capped rate on future interest. Where there is no treaty, there is nothing to claim down to, so the same paperwork changes nothing and the 30% stands.

A lower-deduction certificate is the one piece of paperwork that works at the bank either way. You apply on Form 128 under Section 395 (the old Form 13 under Section 197) through the TRACES portal, and it is open to non-residents on interest. Where your estimated Indian tax for the year is below what the bank is deducting, the Assessing Officer can certify a lower or nil rate, which the bank then applies to future interest.

The refund route is the same either way, and it's your Indian return. The bank's TDS shows against your PAN in Form 26AS and the AIS, you work out what you actually owe (the treaty rate where one applies, otherwise your slab rate, because NRO interest is ordinary slab income), and the excess comes back with interest under Section 244A. Years you never filed can often still be reached: CBDT Circular 11/2024 lets you apply for condonation under Section 119(2)(b) of the 1961 Act, the law that governs the years you're reclaiming, up to five years from the end of that assessment year, though a refund allowed that way carries no Section 244A interest.

What changes because you live in the UAE

The UAE charges no personal income tax, so there is no second layer on this Indian income and no foreign tax credit to chase. The India-side tax shown here is the entire story, which makes claiming the treaty rate pure saving: every point you bring the Indian withholding down by stays in your pocket. The 9% Corporate Tax that arrived in 2023 doesn't change that for most people, because it reaches business profits above AED 375,000, not your salary or your personal investment returns. The trap is Indian rather than Emirati: once your Indian income other than foreign-source income tops ₹15 lakh in a year, India's Section 6(1A) deemed-resident rule can tax a Gulf NRI as a resident, so check that line before you assume your Indian exposure stops at the withholding above.

Frequently asked questions

Common questions from UAE NRIs

By default your bank deducts 30% under Section 393(2), the non-resident rate. With a valid Form 41 and a Tax Residency Certificate from the Federal Tax Authority (FTA), the India-UAE treaty brings that down to 12.5% on the interest. Anything deducted above the treaty rate before your paperwork was on file can be reclaimed through your Indian return.

Yes. The over-withheld amount is reclaimed by filing your Indian income tax return: the bank's TDS shows against your PAN in Form 26AS, you compute the tax actually due at the 12.5% treaty rate, and the excess is refunded with Section 244A interest.

Two documents: a Tax Residency Certificate issued by the Federal Tax Authority (FTA), and Form 41, the successor to Form 10F, filed on the Indian e-filing portal. Together they tell your bank to apply the India-UAE treaty rate of 12.5% instead of the 30% default. The TRC has to be renewed for each period it covers, otherwise the bank reverts to the full rate.

Go further

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

DTAA TDS recovery serviceUAE NRI tax guide: every income type and the rates that apply

NRO TDS Recovery sorted, by an Indian CA who works with UAE NRIs

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