TDS stands for Tax Deducted at Source. Instead of collecting tax only when you file a return, India makes whoever pays you — a tenant, a bank, a buyer, an employer — deduct a slice of the payment up front and deposit it with the government on your behalf. What lands in your account is already net of that deduction.
TDS on payments to non-residents has its own rules, separate from the rates that apply to residents, under 2025 Act s. 393(2) Table Sl. 17was s. 195. Payers dealing with an NRI generally can’t use the simpler flat rates that apply to residents; they have to work out the correct rate for the kind of income involved — rent, interest, capital gains and so on each have their own treatment — and deduct accordingly. That’s one reason NRIs often see more deducted than they’ll actually owe: the payer, quite reasonably, deducts on the assumption that nothing reduces your tax, because they have no way to check your other income, deductions or exemptions.
Where you see the proof
Whoever deducts TDS from you has to give you a certificate confirming it — Form 131 (was Form 16A) for most non-salary payments. The running total of everything deducted against your PAN during the year shows up on Form 168 (was Form 26AS), which is worth checking before you file, since a credit that hasn’t shown up there yet can hold up your refund.
Getting it back
TDS is only ever an advance against your final tax bill, never the final word on what you owe. If the amount deducted is more than your actual tax — often the case for NRIs, since deduction rates don’t account for your personal circumstances — you file a return to claim the difference back as a refund. There’s no way to get a TDS refund without filing; skipping the return because “tax was already deducted” is one of the more expensive mistakes NRIs make.
Cutting the deduction before it happens
Waiting for a refund isn’t the only option. If your actual tax on a payment is genuinely lower than the standard rate the payer would otherwise deduct, you can apply in advance for a lower or nil-deduction certificate — Form 128 (was Form 13) — so the payer deducts closer to what you’ll really owe, rather than the full standard rate. It has to be in the payer’s hands before they pay you; applying afterwards is too late for that payment.
Also called: Tax Deducted at Source, withholding tax
See also
Where it matters
- TDS on NRO interest: why the bank deducts so much, and how to get it back
- Do NRIs need to file an ITR? Every case where you must (and where you don't)
- The lower-deduction certificate for NRI property sellers: how to get the buyer's TDS cut
- Renting out property in India as an NRI: tax, the tenant's TDS and your refund
- Saving tax on a property sale as an NRI: a new home, bonds or the deposit account