TDS Refund for NRIs & Foreign Companies
If TDS was deducted on your Indian income at a rate higher than your actual tax liability, the excess is recoverable, but only if you file the right return, correctly, and follow it through.
✓Recent outcome: a UK-based NRI recovered a full TDS refund of approximately ₹18 lakhs after excess deduction on a property sale.
The Cost of Excess TDS
TDS on payments to non-residents is deducted at fixed, often high rates, regardless of what your actual tax liability turns out to be.
Deducted on the Full Amount, Not the Profit
On property sales, TDS is usually deducted on the entire sale value, not the capital gain. If your actual gain is a fraction of the sale price, the deducted tax is far higher than what you owe.
Flat Rates on Interest and Dividends
Banks deduct TDS on NRO interest and dividend income at standard rates, without factoring in exemptions, treaty benefits, or your total taxable income.
Treaty Rate Not Applied at Source
If the payer didn't have your Tax Residency Certificate and Form 41 (formerly Form 10F) on file, they were required to deduct at the higher domestic rate, even where a lower treaty rate should have applied.
No PAN at the Time of Payment
Without a PAN, deductors are required to apply a flat higher rate. This is one of the most common, and most avoidable, causes of excess deduction.
Left unclaimed, this money stays with the government until a return is filed. There's no automatic adjustment.
What Is a TDS Refund
A TDS refund is the excess tax deducted at source on your Indian income, once your actual tax liability for that year is computed under the Income Tax Act and, where applicable, the relevant Double Taxation Avoidance Agreement.
The excess isn't returned automatically. It has to be claimed by filing an Indian income tax return, a step many non-residents assume doesn't apply to them, since TDS already feels like tax "paid in full."
TDS is not your final tax. It's an advance collection. Your actual liability is settled only when a return is filed and processed.
TDS on payments to non-residents was governed by Section 195 of the Income Tax Act, 1961. Under the Income Tax Act, 2025, this is now covered under Section 393(2). References to Section 195 in older correspondence or certificates should be read as Section 393(2) going forward. Refunds are not claimed under Section 195 or 393(2). Those sections govern the deduction, and the refund is claimed by filing your return. To reduce TDS before it is deducted, see our Lower Deduction Certificate (Section 197, now 395(1)).
Who This Is For
For NRIs
- →Sold property in India and the buyer deducted TDS on the full sale value
- →Earn rental income from an Indian property, taxed at a flat rate regardless of expenses
- →Hold an NRO account where interest is taxed at 30% before any exemption is applied
- →Receive dividend income from Indian companies with TDS deducted at source
- →Had no PAN at the time of a transaction, resulting in a higher flat deduction
For Foreign Companies
- →Received royalty, fees for technical services, or interest from an Indian payer, taxed at the domestic rate instead of a lower treaty rate
- →Have no permanent establishment or ongoing presence in India, but still had TDS deducted on India-sourced income
- →Were unable to submit a Tax Residency Certificate or Form 41 before the payment was made
- →Need to file a return purely to recover excess withholding, typically a one-time filing with no other India compliance obligation
If your situation involves ongoing India operations, a project office, or questions about permanent establishment, our Foreign Company Tax Return in India page covers that in depth. This page focuses specifically on recovering excess TDS.
Can an NRI claim a TDS refund on a property sale?
Yes. An NRI can claim a TDS refund on the sale of immovable property by filing an Indian income tax return. The buyer deducts TDS on the full sale value, but your tax is only on the capital gain, so the excess is refundable once the return is filed and processed.
Reduce the tax further
Exemptions such as Section 54 or 54EC can reduce the tax further.
Haven't sold yet?
If you haven't sold yet, a Lower Deduction Certificate reduces the TDS at the time of sale.
Income Types & Situations Covered
Property Sale (NRI)
TDS is deducted on the full sale consideration, not the capital gain. The section above explains how an NRI claims the refund.
Rental Income (NRI)
Tenants deduct TDS on rent without accounting for municipal taxes, loan interest, or the standard deduction you're entitled to claim.
Interest Income (NRI)
NRO fixed deposit interest is taxed at a flat rate at source. If your total Indian income falls below the taxable threshold, or a treaty rate applies, the difference is refundable.
Dividend Income (NRI)
TDS on dividends from Indian companies is deducted before any relief you may be entitled to under a DTAA.
Royalty, FTS & Interest (Foreign Company)
Cross-border payments are often taxed at the domestic rate by default. Where a lower treaty rate applies and wasn't used at the time of payment, the excess is claimable through a return.
Already know the treaty rate should have applied? This is closely linked to our DTAA Advisory service, which covers how DTAA benefits, treaty rates, and Tax Residency Certificates work in detail. This page covers what to do once TDS has already been deducted at the higher rate.
Not Sure If You're Owed a Refund?
If any of the following apply to you, there's a reasonable chance TDS has been deducted in excess of what you owe:
- ?Your India income is close to, or below, the basic exemption threshold
- ?You didn't submit a Tax Residency Certificate or Form 41 before receiving payment
- ?TDS was deducted on the full sale value of a property, not your capital gain
- ?You've never filed an Indian return despite having TDS deducted on Indian income
How the Refund Process Works
PAN Verification
We confirm you have a valid PAN, or assist with a fresh application if you don't. A refund cannot be processed without one.
Compute Actual Tax Liability
We calculate what you actually owe under the Income Tax Act and the applicable DTAA, and compare it against the TDS already deducted.
Reconcile Form 26AS and AIS
We confirm the TDS deducted by the payer has been correctly deposited and reflects accurately against your PAN in Form 26AS and the Annual Information Statement. Mismatches here are the single biggest cause of delayed refunds.
File the Income Tax Return
We prepare and file the correct ITR form for your situation through the Income Tax Department's e-filing portal, with the refund claim, supporting computation, and required disclosures.
Respond to Department Queries
If the Assessing Officer raises a clarification or notice, we handle the response directly.
Track and Follow Up
We monitor the refund status and follow up with CPC Bangalore or the Assessing Officer until the refund is credited.
This is where most refunds get delayed, not because they're rejected, but because nobody is following up. We track every case until the money is credited.
Book a ConsultationHow Long Does It Take?
Answers the #1 question every client asks, with an honest range rather than a vague promise.
What speeds it up
TDS correctly reflected in Form 26AS from the start, the return filed and verified without delay, and no mismatches between your computation and the department's records.
What slows it down
In our experience, cases selected for scrutiny, incomplete documents, or unanswered notices, which is common for non-residents managing this from abroad without someone tracking the case locally.
Foreign Company Refund: Special Considerations
A foreign company TDS refund, or a refund for any non-resident company receiving India-sourced income, raises two questions that don't come up for individual NRI clients: whether a return is required at all when there's no other India presence, and where the refund actually gets credited.
Does the treaty rate still matter once TDS has already been deducted? Yes. If your company's country of residence has a DTAA with India and the applicable treaty rate is lower than the domestic TDS rate, that difference is part of what's recoverable, provided the residency documentation can be produced with the return, even if it wasn't available at the time of payment.
We coordinate the tax computation, the return filing, and the banking formalities together, so a missing Indian account isn't a reason to leave the claim unfiled.
Common Mistakes That Delay or Block Refunds
These are the issues we see most often in the refund cases we handle.
Assuming TDS is final tax and never filing a return
There is no refund without a filed, verified return.
Missing the filing deadline
The Income Tax Act provides for interest on delayed refunds where the return is filed on time. A late return can still be filed in most cases, but you lose part or all of this interest benefit, and beyond a certain point, the claim lapses entirely.
Entering incorrect or unvalidated bank account details
This is one of the most common reasons a refund fails to credit even after approval.
Not reconciling TDS against Form 26AS and AIS before filing
If the payer hasn't correctly deposited or reported the TDS, your claim will be flagged.
Ignoring a department notice or query
An unanswered clarification request is the single most common cause of a refund stalling indefinitely.
Waiting until after filing to start the banking conversation
This one is specific to foreign companies. An SNRR account takes time to open, and firms that leave it until the refund is already approved add months to a case that was otherwise ready to close. Starting the account conversation alongside the filing, not after it, avoids the delay entirely.
Documents Required
NRIs
- PAN
- Form 26AS/AIS
- Sale deed or rental agreement (as applicable)
- Computation of income
- TRC and Form 41 (if treaty rate is being claimed)
- NRO account details
Foreign Companies
- PAN
- Incorporation documents
- Contract/invoice for the India-sourced payment
- TRC and Form 41 (if treaty rate is being claimed)
- Indian or SNRR bank account details
The exact document list depends on the nature of the income and whether a treaty rate is being claimed. We confirm the specific requirements for your case at the outset. All documents you share are handled confidentially and used solely for your filing.
Why Choose Cash Stream Advisors
We don't stop at filing. Refunds are delayed as often by inaction after filing as by errors in the filing itself. We track every case with CPC Bangalore and the Assessing Officer until it's resolved, and we handle the banking, not just the tax, from NRO account coordination for NRIs to SNRR account setup for foreign companies without an existing Indian presence.
Mismatched capital gains or income computations are one of the most common reasons refund claims stall for months. We get the computation right the first time, so that back-and-forth doesn't happen later. Our DTAA experience isn't limited to one or two countries either, we've worked through treaty applications across the US, UK, UAE, Singapore, and other major jurisdictions, which matters wherever a treaty rate affects the size of your refund.
You've seen how we work. The next step is a conversation about your specific case.
Book a ConsultationReviewed by Cash Stream Advisors, 6+ years assisting non-resident clients with Indian tax compliance.
Our TDS Refund Services
Refund Eligibility Assessment
Reviewing your TDS deductions and computing whether a refund claim is worthwhile.
Tax Computation
Accurate computation of actual liability under the Income Tax Act and applicable DTAA.
Return Filing
Preparing and filing the correct ITR form with supporting documentation.
Notice & Query Response
Handling any clarification requests from the Assessing Officer on your behalf.
Refund Tracking
Active follow-up with the department until credit.
Banking Coordination
NRO account guidance for NRIs; SNRR account coordination for foreign companies.
Real Outcomes
NRI Property Sale, United Kingdom
A UK-based NRI had TDS deducted on the full sale value of a Mumbai property. After a proper capital gains computation and return filing, the client received a full refund of approximately ₹18 lakhs.
Read the complete case study →Foreign IT Company, Cross-Border Services
A foreign IT company had TDS deducted at the domestic rate on fees for technical services paid by an Indian client. We filed the claim under the applicable treaty rate and secured the excess refund.
Read the complete case study →Frequently Asked Questions
Typically 3 to 9 months from a verified, correctly filed return. Cases selected for scrutiny, or with documentation mismatches, take longer.
If TDS Has Already Been Deducted
The only way to get it back is to file. We handle the computation, the filing, and the follow-up, start to finish.
Lower Deduction Certificate·DTAA Advisory·Withholding Tax Advisory·Foreign Company Tax Return in India·NRI Tax & Relocation Advisory