Last reviewed: 25 September 2026. India's tax treaties routinely cut the tax on an NRI's Indian income — interest on NRO deposits taxed at treaty rates instead of 30%-plus, royalties and fees at 10–15%, and tie-breaker rules when two countries both claim you as resident. But treaty relief in India is paperwork-gated: without a Tax Residency Certificate (TRC) from your country of residence and an electronically filed Form 41 (Form 10F for income up to 31 March 2026) carrying the prescribed particulars, the payer must deduct at full domestic rates, and the relief becomes a refund chase instead of a lower deduction. Here is the machinery, current for FY 2026-27.
Where treaties actually save NRIs money
| Income | Domestic default | Typical treaty position* |
|---|---|---|
| NRO deposit interest | 30% + surcharge + cess TDS under section 393(2) (old 195) | 10–15% in many major treaties (UAE, USA, UK, Singapore vary by article) |
| Dividends | 20% + cess (domestic NRI rate) | Often 10–15% by treaty article |
| Royalties / fees for technical services | 20% + cess domestic | 10–15% commonly |
| Capital gains, salary, pensions | Domestic computation | Article-specific — some treaties allocate taxing rights entirely; needs case-by-case reading |
*Treaty rates vary by country and article — the exact treaty text governs; the table shows the shape of the saving, not your rate.
The three-document drill
- TRC from your country's tax authority (IRS Form 6166 for the US, HMRC certificate for the UK, FTA certificate for the UAE, IRAS for Singapore) covering the relevant period. Apply early — some authorities take weeks.
- Form 41 on the e-filing portal (Form 10F only for pre-1 April 2026 income). Form 41, prescribed under Section 159(8) of the Income-tax Act, 2025 and Rule 75 of the Income-tax Rules, 2026, is now the operative filing for any income earned from 1 April 2026 onward — Form 10F should not be used for FY 2026-27 income. It captures identity, residency/TIN, the specific income and DTAA article, and the TRC declaration in four parts. Filing is electronic; the acknowledgement goes to the payer. Non-residents without a PAN use the portal's dedicated non-PAN registration route. See our Form 41 vs Form 10F guide for the full mechanics, a worked TDS example and the payer-side compliance risk.
- A declaration of beneficial ownership / no permanent establishment where the payer asks — banks and companies routinely do before applying treaty rates.
Give all three to the deductor — the bank on your NRO account, the tenant, the company paying you — before the payment cycle. The deductor applies the beneficial rate at source, and your money never takes the 30% detour. Miss the timing and the route is the ITR: claim the treaty rate in the return and give the TRC/Form 41 details (Schedules FSI and TR apply to residents claiming foreign tax credit, not to an NRI's treaty-rate claim — see our Schedule FA guide for the disclosure side) and recover the excess as a refund.
Residency first — the part people skip
Treaty relief presumes you are actually non-resident (or treaty-resident abroad under the tie-breaker). Check the Indian tests every year: 182 days; the 60-day test with its NRI relaxations; the 120-day rule for Indian citizens with India-sourced income above ₹15 lakh; and deemed residency for high-income citizens untaxed anywhere. Our NRI ITR guide walks the ladder. Dual-resident years are exactly what treaty tie-breakers (permanent home → centre of vital interests → habitual abode → nationality) are for — documented positions, not guesses.
Common mistakes we keep fixing
- Claiming treaty rates in the ITR with no TRC in hand — section 159(8)(a) (old 90(4)) makes the claim indefensible.
- TRC for the wrong period (calendar year vs Indian financial year mismatches — cover the Indian FY).
- Assuming Form 41 (or Form 10F for earlier years) needs a PAN — the no-PAN portal route exists and works.
- Handing documents to the bank after TDS is deducted, then waiting a year for the refund.
- Forgetting the India-side disclosures that ride along — keep Schedule FA/FSI/TR, where they apply, consistent with the treaty claim.
Frequently asked questions
Is a TRC compulsory for claiming DTAA benefit?
Yes — section 159(8)(a) of the Income-tax Act, 2025 (old section 90(4)) makes a Tax Residency Certificate from your country of residence mandatory for any treaty claim. The other prescribed particulars are furnished electronically in Form 41 (Form 10F for income up to 31 March 2026).
Is it still Form 10F, or has that changed?
Form 10F applied only to income earned up to 31 March 2026. For any income from FY 2026-27 onward, the operative filing is Form 41 under Section 159(8) of the Income-tax Act, 2025 and Rule 75 of the Income-tax Rules, 2026 — a four-part filing, not a like-for-like renumbering. Non-residents without a PAN can still register through the portal's dedicated non-PAN route and file without obtaining one. Full mechanics and a worked example: Form 41 vs Form 10F.
Can my bank deduct lower TDS on NRO interest using the DTAA?
Yes — hand the bank your TRC, the acknowledgement of Form 41 e-filed for the relevant tax year (Form 10F for income up to 31 March 2026) and the declarations it asks for, and it can apply the treaty rate on NRO interest at source under section 393(2) (old 195) instead of the 30%-plus domestic rate. Do it at the start of the tax year and on every renewal of the TRC.
What if TDS was already deducted at 30%?
The treaty position can still be claimed in your income-tax return — compute the income at the treaty rate, disclose the TRC particulars, and claim the excess TDS as a refund. It works, but it parks your money with the department for months; at-source relief is always the better route.
Does claiming DTAA relief affect what I must disclose in India?
Yes. A non-resident claims the treaty rate in the return and gives the TRC/Form 41 details; Schedules FSI and TR apply to residents claiming foreign tax credit, and Schedule FA applies where you are resident and hold foreign assets. Inconsistent treaty claims and disclosures are an easy scrutiny trigger; keep the TRC, Form 41 (Form 10F for earlier years) and computations in one file.
How does a CA firm set this up end to end?
We determine residency under both domestic law and the treaty, obtain and calendar the TRC renewals, e-file Form 41 (Form 10F for income up to 31 March 2026), prepare the payer declarations, instruct the bank or tenant on the correct at-source rate, and file the ITR with the treaty computation and disclosures aligned — one consistent record from deduction to assessment.
We set up TRC + Form 41 relief at source, align the ITR and disclosures, and handle the refund where deduction already happened.
NRI Lower TDS Certificate Form 15CA/15CB Certification Talk to us CA for NRIsThis article is general information, updated 25 September 2026 to reflect Form 41 superseding Form 10F for FY 2026-27 income and the Income-tax Act, 2025 section references. Treaty rates and articles vary by country and case; the treaty text, the TRC and current CBDT procedure govern. Not professional advice — treaty positions should be documented with advice before adoption.