Tax Deducted at Source (TDS) for NRIs: What It Is and How to Get It Refunded
Non-Resident Indians (NRIs) often face Tax Deducted at Source (TDS) on various India-source incomes—from NRO account interest to rental receipts and capital gains. While TDS ensures tax compliance, it can sometimes be higher than your actual liability. This guide walks you through everything you need to know about TDS as an NRI and shows you exactly how to claim a refund of any excess deductions in the 2025 filing season.
1. What Is TDS and Why NRIs Are Affected
Tax Deducted at Source (TDS) is a mechanism where the payer (bank, tenant, broker) withholds tax before crediting your payment. For NRIs, common TDS scenarios include:
- NRO account interest: 30% TDS by banks
- Rental income: 30% TDS by tenants or collection agents
- Capital gains: 15% TDS on long-term gains for listed securities, 10% on others
- Dividend income: 20% plus surcharge and cess (no dividend distribution tax)
- Professional fees or technical services: 10–15% under DTAA rates
Why it matters: You may have deductions exceeding your slab rate or treaty rate, leading to excess TDS which you can—and should—claim back.
2. How to Verify Your TDS Deducted
- Download Form 26AS:
- Log in to the Income-tax e-filing portal → My Account → View Form 26AS.
- Log in to the Income-tax e-filing portal → My Account → View Form 26AS.
- Check TDS Entries:
- Under Part C – TDS/TCS, confirm:
- Deductor TAN (e.g., your bank’s TAN)
- Challan number
- Amount deducted and date
- Deductor TAN (e.g., your bank’s TAN)
- Under Part C – TDS/TCS, confirm:
- Match with Certificates:
- For banks, use Form 16A or bank TDS certificate.
- For tenants, request Form 16A or rent TDS certificate.
- For banks, use Form 16A or bank TDS certificate.
3. When You’re Owed a Refund
You qualify for a TDS refund if actual tax liability < TDS deducted, typically because:
- Allowable deductions/exemptions (80C, 80TTA on interest, municipal taxes on rent) lower your taxable income.
- DTAA benefits allow you to apply a lower withholding rate—bank used 30% but treaty rate is 15%.
- Slab rate for individuals (up to 30% plus surcharge/cess) is lower than flat TDS rates on certain incomes.
4. Step-by-Step: How to Claim Your TDS Refund
Step 1: Compute Your True Tax Liability
- Aggregate Income: Salary (if any), NRO interest, rental, capital gains.
- Deduct Exemptions: Section 80C, 80TTA, standard deduction on rental (30% and municipal taxes).
- Calculate Tax: Apply NRI slab rates; add surcharge and cess.
Step 2: Choose the Correct ITR Form
- ITR-2: For salary, interest, rental, gains, and DTAA claims.
- ITR-3: If you have business or professional income.
Step 3: Fill TDS Details in ITR
- Schedule TDS2 (Other Sources): Enter your bank/tenant TDS details exactly as per Form 26AS.
- Schedule CG (Capital Gains): TDS on gains under Sections 112A/112.
- Schedule IT (Tax Paid): The system calculates refundable TDS automatically.
Step 4: Submit & E-Verify
- Submit ITR: Note acknowledgement number.
- E-Verify: Via Aadhaar OTP, net banking, or bank ATM within 30 days.
Step 5: Track Your Refund
- e-Filing Portal: e-File → Refund/Demand Status → Enter PAN & AY.
- Bank Account: Refund credited to your Indian bank account (ensure correct IFSC).
5. Common Pitfalls & How to Avoid Them
| Pitfall | Solution |
| Mismatch in Form 26AS vs Form 16A | Request your bank/tenant to correct entries before filing |
| Wrong ITR form | Use ITR-2/ITR-3 only; avoid ITR-1/ITR-4 for NRI incomes |
| Incorrect bank details | Double-check account number & IFSC in your ITR |
| Missing e-verification | Complete immediately after filing; else your return stays pending |
| Overlooking DTAA lower rates | File Form 67 by July 24 to claim treaty-based TDS relief |
6. How Taxsure.ai Streamlines Your TDS Refund
- Auto-Populate TDS Data: Pulls Form 26AS entries directly into your ITR.
- Real-Time Tax Calculator: Shows your actual liability vs. TDS paid.
- Guided Filing Flow: Step-by-step prompts for deductions and TDS schedules.
- Deadline Alerts: Never miss ITR or e-verification deadlines.
- Expert Review: Optional CA check ensures accurate refund claims.
Final Takeaway & Call to Action
Don’t let excess TDS eat into your returns. By verifying your deductions, choosing the right ITR form, and following the refund process diligently, you can reclaim every rupee you’re owed. And with Taxsure.ai, the entire workflow—from TDS import to ITR filing and refund tracking—becomes fully automated, precise, and stress-free.
Ready to recover your TDS?
Visit Taxsure.ai today and claim your full refund with confidence!
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