NRI TDS Rates FY 2026-27: Interest, Rent and Capital Gains Under the New Tax Act

Most money an NRI earns in India arrives with tax already taken out. Your bank deducts 31.2% on NRO interest, a tenant deducts 31.2% on rent, and a property buyer deducts 13% on long-term gains, all before any surcharge.

From FY 2026-27 these deductions run under the Income-tax Act 2025, which came into force on 1 April 2026. The old section 195 is now section 393(2), and most TDS forms have new numbers. The rates themselves barely moved, which is the part most people get wrong: they assume a new Act means new rates.

TDS is not your final tax bill. It is an advance the payer sends to the tax department on your behalf, set high because the payer cannot see your other income. If your real tax works out lower, you can stop the excess with a lower TDS certificate or claim it back as a TDS refund.

NRI TDS rates for FY 2026-27 by type of income

For most NRI income the TDS rate is 30%, or 31.2% once the 4% cess is added. Capital gains and dividends are the exceptions, with lower rates set by how long you held the asset. The rates below are the TDS rates for non-residents published by the Income Tax Department, as amended by the Finance Act 2026.

Holding periods: listed shares and equity funds turn long-term after 12 months, property and most other assets after 24 months (Income Tax Department). Concessional rates of 4% to 9% apply to interest on certain foreign-currency loans and bonds issued by Indian companies, listed at serial numbers 2 to 5 of the section 393(2) table; these rarely touch individual NRIs.

Income-tax Act 2025: old TDS sections and forms mapped to the new ones

The new Act renumbered almost everything an NRI deals with but kept the rates. Section 195 is now section 393(2), Form 27Q is now Form 144, and the "assessment year" is replaced by a single tax year. If your tenant, buyer or CA quotes an old number, this is the translation.

One practical change for property sales: from 1 October 2026, a resident individual buying from an NRI no longer needs a TAN and deducts TDS through a PAN-based form. We cover the buyer's side in our lower TDS certificate guide.

Surcharge and cess: how 30% TDS becomes 31.2% or more

The 31.2% figure on your bank statement is the 30% base rate plus a 4% health and education cess on top. Once the amount crosses ₹50 lakh, a surcharge is added before the cess, so a large property sale or a big FD maturing can attract more than 31.2%.

Surcharge on capital gains and dividends stops at 15%, which is why those rates top out lower.

Each rate is base rate × (1 + surcharge) × 1.04. Surcharge bands are from the Income Tax Department's rate chart for individuals. Above ₹5 crore the surcharge depends on your tax regime, so get the deductor's working in writing before the payment goes through.

Paying less than the default NRI TDS rate

The rates above are what a payer deducts when they know nothing else about you. There are three ways to bring the deduction closer to the tax you actually owe, and which one fits depends on whether the money has been paid yet.

Claiming your tax treaty rate

If India has a tax treaty with your country of residence, the payer can deduct at the treaty rate instead, where it is lower. You give the payer a Tax Residency Certificate from your country and a self-declaration in Form 41, which replaced Form 10F under section 159(8). This mostly helps with NRO interest and dividends. Rent is a different case: India keeps the right to tax income from property located here, as we explain in our rental income tax guide.

Getting a lower TDS certificate before the payment

A certificate under section 395(1) tells the payer to deduct at a lower rate, or nothing, based on your real tax. You apply in Form 128, and the application cannot be processed once the transaction is complete, so apply well before a property sale closes. Our lower TDS certificate guide walks through it.

Claiming excess TDS back after it is deducted

If the TDS has already gone out, you file an Indian income tax return and claim the difference as a refund. Check the deductions in your Form 26AS first, using our Form 26AS and AIS guide, then follow the steps in our NRI TDS refund guide.

Whichever route you take, give every payer your PAN. Without one, TDS is deducted at a higher rate.

NRI TDS rates: questions NRIs ask

If both the tenant and the landlord are NRIs, does the tenant still deduct TDS?

Yes. The duty to deduct under section 393(2) applies to any payer, resident or non-resident, whether or not they have a home or business in India. An NRI tenant paying rent to an NRI landlord deducts 31.2% the same way a resident tenant would.

Is TDS on an NRI property sale charged on the full sale price or only on the gain?

The tax is on your gain, not the sale price. In practice, most buyers deduct on the full price unless you hand them a lower TDS certificate, because they cannot verify what you paid for the property. That gap is why a lower TDS certificate is usually worth applying for before the sale.

Can I claim the TDS deducted in India against my US taxes?

Partly. The US gives a foreign tax credit only for the Indian tax due at the treaty rate; any excess deducted above that is not creditable and has to be claimed back from India. So if your bank took 31.2% on NRO interest, the gap between that and the treaty rate only comes back through an Indian TDS refund.