NRI TDS versus treaty rate
Compare Indian withholding at the domestic rate against the treaty cap.
Open itFour account types, four different answers, and the answer changes the day your exchange-control status does. Pick the account and your status, and this says whether the interest is exempt, what should have been withheld, and what is left to pay or reclaim.
The account
The account the interest is credited to, not the one the money came from.
Exchange-control status and tax residence are separate ideas, and the exemptions hang off both.
₹
Gross interest before any deduction.
%
Zero for an exempt account. For an ordinary rupee account, the rate for a non-resident plus surcharge and cess.
%
The rate you would actually pay once the whole return is taken into account.
Position in India
—
Amount in the Indian tax net —
Exempt from Indian tax —
Withheld by the bank—
Tax actually due—
Still to pay—
Refundable on the return—
Interest in hand after withholding—
The exemption follows your status, not the account name
Interest on a non-resident external account is exempt while the holder is a person resident outside India under the exchange-control law. That is the whole condition. It is not a permanent feature of the account, and it does not survive your return home — the day your status changes, the account has to be redesignated and the interest from that point is ordinary taxable interest.
A foreign-currency deposit works the same way, with one useful extension: a returning Indian keeps the benefit for the period the not-ordinarily-resident rules cover, which is why the deposit and the residence window are usually planned together. A resident foreign currency account carries an exemption over that same window and no longer.
The ordinary rupee account is where the tax actually is
Interest on a non-resident ordinary rupee account is Indian-source income and taxable however long you have been away. The bank withholds at the non-resident rate, which is usually well above the rate you would end up paying once the return is prepared, so the ordinary position on these accounts is a refund rather than a balance.
Two things reduce the gap. A treaty caps the Indian tax on interest for a resident of the other country, and a lower deduction certificate makes the bank withhold at your real rate instead. Both need paperwork with the bank before the credit, not after it.
Worked example
A resident of the Emirates holds both account types. The external account credits 4 lakh of interest and the ordinary account credits 3 lakh.
- The external account interest is exempt while she is a person resident outside India — no tax, no withholding, nothing to reclaim.
- The ordinary account interest is taxable. The bank withholds at the non-resident rate on the gross 3 lakh.
- Her effective rate across the return is lower than the withholding rate, so a refund arises on the ordinary account and nothing arises on the external one.
Now change her status to resident and ordinarily resident. Both accounts become taxable, and the external account has to be redesignated — the exemption was never about the account.
What this calculator assumes
- Exemption for the external account is tied to being a person resident outside India under the exchange-control law. That is a status question, not a tax-residence one.
- The rate the bank withheld at and your effective rate are both yours to enter. No rate is asserted here.
- A treaty cap on interest is not applied automatically. Where you are claiming one, enter the capped rate as the withholding rate.
- The foreign currency and resident foreign currency positions are described by mechanism. Confirm the current wording for your year before relying on the exemption.
An estimate, not advice. This is an estimate built from what you typed, not advice on your file. Nothing here reads your documents, checks your treaty article or looks at the year you are actually in. Where the number matters, we agree a fixed fee in writing before any work starts.
Where these figures come from
- current guidance India — exempt income of non-residents, Income Tax Department
- current master directions Reserve Bank of India — deposits by non-residents
- current chart India — TDS rates chart, Income Tax Department
Any figure prefilled in the panel above is stated with the year it belongs to and can be changed. Rates and thresholds move; a calculator that asks you for the current one stays right, and one that hides a guess does not.
Files that look like this one
Case study 1
Canadian Dividends and Interest Paid to a Non-Resident
Flat withholding applies at source whether or not a return would produce the same figure. The engagement establishes treaty entitlement, files what is needed to claim the reduced rate, and recovers what went out at the domestic rate.
Read how this one runs
Case study 2
A Shareholder Loan Across a Border at No Interest
An interest-free loan between related companies is priced as if it carried interest, and in some cases a deemed benefit follows as well. The file sets a rate against the borrower's own credit profile and documents the terms that support it.
Read how this one runs
Case study 3
Three Account Types, Three Tax Answers
Interest on each is treated differently and the deduction at source follows the account rather than the person. Holding the wrong one for the purpose is a recurring and avoidable cost.
Read how this one runs
Case study 4
Coming Back to Canada After Years Abroad
Returning restarts Canadian residence and re-values what you own on the day you arrive. Foreign pensions, employer plans and accounts opened abroad each land differently, and the reporting thresholds are tested against the whole portfolio rather than each account.
Read how this one runs
Case study 5
An Executor Administering Across Two Systems
An executor can be personally liable for what is assessed after a distribution, and the clearance that protects them is obtained rather than assumed. The engagement sequences the filings so the distribution is safe when it happens.
Read how this one runs
Case study 6
An Estate That Cannot Distribute Until the Clearance Comes
An executor who distributes before the clearance certificate can be held personally liable for what is later assessed. The file prepares the final return and the estate return, and applies for the clearance in the order that lets the estate close.
Read how this one runs
Case study 7
A Country-by-Country Report and Who Files It
The obligation sits with the group and the filing can fall on a surrogate where the parent's jurisdiction does not exchange. Establishing who files where comes before preparing anything.
Read how this one runs
Case study 8
A Second Opinion on a Return Already Filed
A cross-border return prepared on one side only is usually right in isolation and wrong in combination. The review checks residence, source and relief in that order, and says plainly whether an amendment is worth making.
Read how this one runsAll case studies — every published engagement in one place.
Core International & Cross-Border Tax Services
International Tax Planning & Advisory
Strategy and compliance for income, assets and families spread across borders.
One coordinating team: filings on every side of the border are sequenced so treaty relief and foreign tax credits are claimed once — and in the right country.
U.S. & Cross-Border Tax Returns
Dual filers: U.S. citizens in Canada and Canadians with U.S. income run two parallel systems — we prepare both, in the right order, every year.
Expat & Emigration Tax
The move year is its own project: the elections and valuations filed that year decide the next decade of both countries’ returns.
Non-Resident Canadian Tax
Default withholding is 25% of gross: elective returns routinely turn over-withheld rent and pensions into refunds.
Transfer Pricing & BEPS
Documentation prepared with the return is the cheapest insurance in international tax; reconstructing it during an audit is the most expensive.
Tax Treaties & Withholding
Relief is only as good as the paperwork claiming it — we build treaty positions that survive review on both sides.
Cross-Border Estates & Trusts
Wills drafted for one country routinely misfire in the other — deemed disposition here, estate tax there, credits in between.
Global Investments & Reporting
Information returns carry the sharpest penalties — $25 a day whether or not any tax is owing. We keep them clean and on time.
Cross-Border Corporate Tax
Expansion raises the same four questions every time — entity, PE, repatriation, payroll. We answer them before the tax authorities do.
India Tax for NRIs & Returning Residents
The deduction is taken on the sale price, not the gain — which is why an NRI property sale strands cash unless the certificate is applied for before closing.
Canadian Tax with a Foreign Element
Residency is decided on facts, not on a form — and the year you arrive or leave is the one where the largest amounts turn on the smallest details.
UAE Tax for Expats & Their Home Country
A zero-tax country is only half the answer — the question that decides the bill is whether the country you came from still treats you as resident.
Industries & Client Types We Serve Worldwide
Global E-commerce & Marketplaces
Technology & SaaS
Professional Services Firms
Cross-Border Real Estate
Importers, Exporters & Manufacturers
Athletes, Artists & Entertainers
Remote Workers & Digital Nomads
Investment Funds & Holding Companies
Global E-commerce & Marketplaces
- Foreign VAT / GST / sales tax registrations
- Marketplace withholding reviews
- Inventory nexus & PE analysis
- Multi-currency books reconciled
Who We Serve:
Technology & SaaS
- Cross-border revenue sourcing & withholding
- IP structuring with real substance
- Equity for cross-border teams
- U.S. expansion: entity & PE setup
Who We Serve:
Professional Services Firms
- Reg 105 / 102 waivers
- Permanent establishment risk
- Partner mobility planning
- Cross-border withholding recovery
Who We Serve:
Cross-Border Real Estate
- Section 216 rental returns
- FIRPTA withholding recovery
- Section 116 clearance
- Treaty credit optimization
Who We Serve:
Importers, Exporters & Manufacturers
- Transfer pricing documentation (s.247)
- Customs value vs transfer price
- Foreign affiliate reporting (T1134)
- Country-by-country reporting
Who We Serve:
Athletes, Artists & Entertainers
Performance income is taxed where earned — Regulation 105 in Canada, withholding agreements in the U.S. — with special treaty articles overriding the usual rules.
Performance income is taxed where the performance happens, and the deduction is usually taken at source on the gross fee before expenses. Recovering the difference is a filing exercise in the other country, and it only works if the tour, the residency and the withholding certificates were documented while the work was being done.
- Reg 105 & U.S. CWA agreements
- Multi-state & country calendars
- Touring income allocation
- Royalty & image-rights withholding
Who We Serve:
Remote Workers & Digital Nomads
- Residency analysis before moving
- Employer payroll exposure
- Totalization & social security
- Foreign tax credits
Who We Serve:
Investment Funds & Holding Companies
- Treaty access & PPT reviews
- FAPI & surplus computations
- Withholding-efficient routing
- Governance & substance
Who We Serve:
