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NRI – How to claim Income Tax refund



Any interest earned in NRO Account is taxable and TDS of 30% flat is deducted by the Bank.

There are few ways by which you can reduce this tax amount.

1) Check for DTAA – If the DTAA between India and country of your residence allows a lower rate of TDS

India has Double Taxation Avoidance Agreement (DTAA) with many countries under which a lower rate of tax is deducted.

For e.g. if you are residing in US or UK, a concessional rate of 15%  will de deducted (instead of 30%) provided you complete the documentation formalities. You will need to submit :

  • PAN Card Copy
  • DTAA Declaration form
  • Original or certified true copies of the ‘Tax Residency Certificate’ (TRC) from the income-tax authorities. For tax residents of countries where there is no income tax, a “Self-declaration” shall be submitted by the depositor to the Branch.
  • Self attested copy of passport & visa.

See this link on information on getting Tax Residency Certificate in US

2) If your total income is lower than the basic exemption limit of Rs 2 lakh

If your total income in India is less than the basic exemption limit of Rs 2 lakh per financial year, you may apply to the Income Tax Officer in your jurisdiction in India, requesting for a waiver of TDS. If the Tax Officer grants you the waiver, you may submit this to the payers such as your bank and claim TDS exemption.

As granting this waiver depends on the discretion of the Tax Officer, it may or may not come through easily. Then, it is best to file your tax returns and claim a refund of the TDS.

3) File Tax Return and claim Refund of TDS

As Banks deduct TDS at flat rate of 30%, it is most likely that the tax deducted is higher than your actual tax liability. You should calculate the tax as per the income tax slab rates and check if more tax is deducted and whether a Refund should be given.

Check the tax rates for FY 2013-2014 (Assesment year 2014-15)

You can then file the Income tax return online and claim refund of excess tax paid. Normally it takes 4-6 months for refund to be credited to your bank account.


1) You must have PAN to get refund or benefit of DTAA.  See my other post on How to Apply for PAN

2) Note that TDS on NRO interest is mandatory as per Section 195.  Form 15G / Form 15H for lower / Nil deduction of Tax is applicable for residents only & not for NRIs.

3) Any interest earned in NRE Account is Tax free.  So , as far as possible, you should keep money in NRE Account.

If you have any queries related to this article or any other personal finance query ( Investment, Taxation etc), please comment below

About Vivek Jain

Vivek is a Chartered Accountant with 13+ years of Global Experience. He loves to write about Personal Finance, Wealth Management, Taxation etc.


  1. Dear sir

    I am sn Indian and earned dollars for books sold online. I get payment after deduction of 30% tax as seller is USA based.

    Can I get DTAA benefits on this. How to get this?

    • Hi, I think it is better to check from seller that on what basis 30% Tax is deducted. You should get some sort of certificate regaridng the deduction.

      As the taxes are already paid in US, you should not be require to pay tax in India on that Income.

  2. Pradeep K Tandon

    Dear Sir

    (1) What will be tax implication in case of giving unsecured loan to some indian firm in india by an NRI living in USA from his NRO account ? NRI is not having income in india beyond exempted limit. What will be TDS rate by the firm ? If this TDS is claimed for refund by filing return in india, whether this interest earned on USL will be added to the income in USA while filing return in USA .

    (2) What are the new rules framed by IT dept few month back for NRI investing in india which says that any investment by NRI where the income and principal amount can not be repatriated in forex, will be treated at par with resident indians and transaction will be treated as if made by indian resident only.

    • 1) TDS need to be deducted by the company @ 10% (u/s 194A) if the interest is more than Rs 5000

      You can file return and claim the TDS refund if your total income comes below taxable limit.

      Regarding the taxation in US, I believe that you need to declare all Global income in your US returns. please consult a local advisor.

      2) That’s related to FD rules. In May 2015, Government revised the foreign direct investment (FDI) policy to allow non-resident Indians (NRIs) to invest in India like any other Indian citizen but with a rider that the investment so made cannot be repatriated.

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