Your bank deducts TDS of about 31.2% on NRO interest, whatever your actual income. Most NRIs with modest Indian income owe far less than that. This calculator shows how much TDS is deducted, what your real tax is, and the refund you can claim by filing an Indian return.
How NRO interest is taxed for NRIs
- Interest on NRO savings accounts and NRO fixed deposits is taxable in India. Interest on NRE and FCNR deposits is tax-free while you remain an NRI.
- Banks deduct TDS at 30% plus 4% cess (31.2%) on NRO interest, plus surcharge on very large amounts. This is deducted regardless of your total income.
- Your actual tax is calculated at slab rates on your total Indian income. NRIs get the basic exemption (₹4 lakh under the new regime) but not the ₹60,000 rebate that resident taxpayers get.
- The difference between TDS deducted and your actual tax is refunded only if you file an Indian income tax return for that year.
How DTAA can lower TDS on NRO interest
If you are tax resident in a country that has a tax treaty (DTAA) with India, your bank can deduct TDS at the lower treaty rate instead of 31.2%. General treaty rates on interest include:
| Country of residence | DTAA rate on interest |
|---|---|
| USA, UK, Canada, Australia, Singapore | 15% |
| UAE | 12.5% |
| Saudi Arabia, Qatar, Kuwait, Oman, Germany, New Zealand | 10% |
| No DTAA / documents not submitted | 30% + cess (31.2%) |
To get the treaty rate deducted at source, your bank needs a Tax Residency Certificate (TRC) from your country of residence, Form 10F filed online on the income tax portal, and your PAN — before the interest is credited. Without these, the bank deducts 31.2% and you can only recover the excess through your return. How the DTAA affects your final tax liability depends on your full income and treaty conditions, and may require professional review.
How we can help
- NRI ITR filing to claim your TDS refund — from ₹3,499, reviewed personally by a practising Chartered Accountant.
- DTAA set-up — guidance on the TRC and Form 10F your bank needs so less tax is deducted next year.
Everything is handled in writing over WhatsApp and email. Message us on WhatsApp with your NRO interest and country of residence for a fixed quote. Redeemed Indian mutual funds too? Try our NRI Mutual Fund Tax & Refund Calculator.