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US NRIs · NRO TDS Recovery

NRO account TDS recovery for NRIs in the US

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

If you live in the US 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-US tax treaty caps that interest withholding at 15% (Article 11), so for most American 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-US key facts: nro tds recovery

Default non-resident TDS rate30%
India-US DTAA treaty rate15%
Your saving via the treaty15%
Treaty article / basisArticle 11, caps Indian interest withholding at 15% for US-resident beneficial owners
Your TRC issuing authoritythe Internal Revenue Service (IRS)

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

US residents are taxed on worldwide income, so this Indian income also lands on your IRS Form 1040, with a foreign tax credit (Form 1116) for the Indian tax paid. On top of that you report your Indian accounts and assets on the FBAR (FinCEN 114) and Form 8938 once the thresholds are crossed, and Indian mutual funds can trigger punitive PFIC treatment. The India-side tax here is only half the picture.

Frequently asked questions

Common questions from American 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 Internal Revenue Service (IRS), the India-US treaty brings that down to 15% 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 15% treaty rate, and the excess is refunded with Section 244A interest.

Two documents: a Tax Residency Certificate issued by the Internal Revenue Service (IRS), and Form 41, the successor to Form 10F, filed on the Indian e-filing portal. Together they tell your bank to apply the India-US treaty rate of 15% 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 serviceUS NRI tax guide: every income type and the rates that apply

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

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