A Dubai-based Indian expat — let’s call him Arjun — recently made a discovery that many NRIs only realise after losing a chunk of their income. What started as a routine review of his rental earnings in India quickly turned into an eye-opening moment about how Tax Deducted at Source (TDS) impacts non-residents.

Arjun owns an apartment in Mumbai and rents it out, expecting the full amount to be transferred monthly. Instead, he repeatedly noticed a lower figure landing in his bank account. At first, he believed his tenant had miscalculated the payment. But after checking the numbers more closely, he realised the deduction was not an error — it was a direct result of India’s NRI TDS structure.

His experience reflects a widespread reality for many overseas Indians who continue to earn income from assets back home. NRIs are subject to fixed, higher TDS rates on almost all India-based earnings, from rental income to interest, dividends, and capital gains. Because they live abroad and may not file returns consistently, the tax is collected at the source, before they even receive the money. For many, the upfront deduction is more than what they actually owe, leaving refunds pending for months and affecting cash flow.

As Arjun reviewed his financial statements, he saw these cuts appear across different types of income. He eventually learned that there is a legal way to reduce these deductions — a provision that many non-residents are still unaware of. By applying for a lower or nil TDS certificate, NRIs can request a rate aligned with their actual tax liability instead of the default flat deduction. This simple step can make monthly income more predictable and prevent excess tax from being blocked for long periods.

The process requires submitting expected income, past tax records, NRI status proof, and basic financial documents. Once reviewed, authorities issue a certificate showing the revised TDS rate. Arjun noticed the difference immediately — the next rental transfer reflected the updated rate, finally matching his actual obligations.

For NRIs receiving rent, interest, company payouts or planning to sell property, understanding TDS rules can make a significant impact. The deductions are applied automatically, but they don’t always reflect what an individual is truly required to pay. As more overseas Indians invest in real estate and financial products in India, knowing how to manage TDS can protect earnings and improve financial planning.

Key Insight for NRIs: Arjun rents out his Mumbai property for about ₹100,000 (around Dh4,000), but nearly 30% — roughly ₹30,000 (Dh1,200) — was being deducted every month as TDS because he is classified as a non-resident. Similar flat deductions also apply to capital gains, interest, and dividends. A lower or nil TDS certificate can significantly reduce this upfront cut and prevent overpayment.