GLOSSARY · VISA-HOLDER FINANCE
TDS (tax deducted at source, India)
Indian income tax that the payer, such as a bank, withholds before paying you. On NRO interest paid to a non-resident it is 30% plus a 4% cess, 31.2% before any surcharge (Income-tax Act, 2025, section 393(2) Table Sl. 17, formerly section 195, with the rates set in the Finance Act, 2026); a US resident who gives the bank a Tax Residency Certificate can have it limited to the 15% treaty rate on interest, though whether banks add cess on top of that rate is unconfirmed. TDS is a prepayment, not the final tax: tax withheld above what is owed can be claimed back by filing an Indian return, and only the tax at the treaty rate counts toward a US foreign tax credit.
Also called: TDS, tax deducted at source, NRO TDS, TDS on NRO interest, 31.2% TDS
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CHAPTER · TWO-COUNTRY MONEY · FOUNDATIONSNRE, NRO and FCNR AccountsCHAPTER · TWO-COUNTRY MONEY · FOUNDATIONSThe Treaty and the Foreign Tax CreditRELATED TERMS
SOURCES
- Income-tax Act, 2025: section 393(2), deduction of tax on payments to non-residents (read 2 October 2026). Income Tax Department, Government of India.
- Finance Act, 2026 (Act 4 of 2026), First Schedule Part II, item 1(b)(i)(O) and section 3(16). Gazette of India, 30 March 2026.
- Convention between the United States and India for the avoidance of double taxation, Article 11 (Interest). Internal Revenue Service.
- Publication 514, Foreign Tax Credit for Individuals. Internal Revenue Service.
- Form No. 145 (earlier Form No. 15CA): FAQs, pairing section 195 of the 1961 Act with sections 393 and 395 of the 2025 Act. Income Tax Department, Government of India.