TDS on dividend to non resident shareholders

• TDS Obligation: Yes, the Indian company must deduct TDS; it cannot pay with zero withholding tax. The rate is governed by the more beneficial of the Income Tax Act (20%) or the India-France DTAO (treaty cap, typically 10%).

• Rate Application: The tax rate will be the treaty-capped rate (yielding around 10.4% inclusive of applicable surcharges/cess), provided the French shareholder submits a valid Tax Residency Certificate (TRC), Form 10F, and a declaration of beneficial ownership/no PE in India.

TDS on dividend to NR shareholders depends on two things: the applicable rate and whether DTAA reduces it.

Default TDS rate under Income Tax Act:
- 20% on gross dividend (Section 195 / Section 393 in Income Tax Act 2025) plus applicable surcharge and cess
- For FPIs: 10% under Section 196D

DTAA can reduce this. Most Indian treaties cap dividend withholding at 10-15%:
- USA: 15% (or 25% in some cases)
- UK: 10-15%
- Singapore: 10%
- Netherlands: 10%

To apply DTAA rate, you need: (a) a valid Tax Residency Certificate from the NR, (b) Form 10F filed with the income tax department, (c) self-declaration confirming no permanent establishment in India.

Important: Beneficial ownership must be with the NR (not a conduit). Post-2017 GAAR provisions override DTAA if the arrangement is tax-motivated. This [TDS on dividend and Section 195 guide](https://taxgarden.in/blog/tds-calculation-tool-formula-complete-guide-with-rates-examples-2026) has the full rate table with treaty comparisons.