BorderFolio/Withholding by residence/India
US dividend withholding tax for residents of India
Last reviewed 31 August 2026
A US dividend paid to a tax resident of India is withheld at 25% rather than the 30% statutory rate, under the income tax treaty between the two countries — but only where your broker holds valid documentation for you. Without it, $171 is withheld from $571 instead of $143.
This page is about the tax the United States withholds from dividends before they reach a resident of India — not about the tax India itself charges on dividends, which is the separate second step and is deliberately not modelled here.
Step one, on real numbers
A portfolio paying $571 a year in gross dividends from US-domiciled funds, held by a
tax resident of India:
| Holding | Taken before it reaches you | Reaches you |
|---|---|---|
| US-domiciled fund or US stocks | 25% · $143 | $428 |
| Irish-domiciled UCITS on the same US stocks | 15% at fund level · $86 | $485 |
This is only the first of two steps. What happens next depends on the tax rules of India itself, and this page deliberately does not state a rate for that — see below.
What the paperwork is worth
The treaty rate is not automatic. It applies where the broker holds valid documentation for you, and that documentation expires. On $571 of gross dividends a year:
| Documentation current | Documentation missing or expired | |
|---|---|---|
| Rate applied at source | 25% | 30% |
| Withheld | $143 | $171 |
| Reaches you | $428 | $400 |
$29 a year, on identical holdings and identical dates, riding on whether one
form is current. Over-withheld amounts are generally not recovered through a credit at home, because such credits
are capped at the treaty rate — the excess has to be reclaimed from the US authority, or not at all.
Step two, and why this page stops here
A foreign dividend can pass through two independent tax layers: withheld at source by the fund's country, then taxed by the country where you are resident. The two steps are independent, which produces the result that surprises people most — moving somewhere with no dividend tax does not make step one disappear.
Step one is a published number and this page states it. Step two is your own tax position — the rate, whether a foreign tax credit is available and how it is capped, whether income is aggregated or taxed separately, and what regime you personally fall under. Publishing a single figure for that would be exactly the kind of confidently wrong number this whole product exists to avoid, so there isn't one here.
BorderFolio models the second step from the residence you configure, on your own holdings. The full method and its limits are here.
What the IRS footnotes attach to this rate
- Footnote w. The rate applies to dividends paid by a regulated investment company (RIC) or a real estate investment trust (REIT). For a REIT it applies only where the beneficial owner is an individual holding less than a 10% interest (25% in the case of Portugal and Thailand).
The RIC footnote is the one that matters to fund investors: a US-domiciled ETF is a regulated investment company, so this is the rate that reaches your distribution.
Fund domicile: what it changes for this residence
This is the case where the structural argument is strongest. A resident of India holding a US-domiciled fund loses 25% at source. An Irish-domiciled UCITS holding the same US stocks suffers 15% inside the fund under the US–Ireland treaty, and Ireland withholds nothing further from non-residents. On $571 of gross dividends that is about $57 a year of difference on the same underlying index.
It still isn't automatic. The saving scales with your dividend yield; the higher expense ratio a UCITS wrapper usually carries is charged against your entire position. On a low-yield fund the arithmetic can come out negative — barely any withholding to save, higher ongoing cost on everything. Run it per holding, not as a rule.
US estate tax
US-situs assets — which include US-domiciled ETFs and US stocks — above $60,000 can expose a non-resident, non-citizen estate to US estate tax at rates reaching 40% on the excess. The United States maintains estate tax treaties with a limited number of countries, and India is not among them, so the relief some other residences rely on is not available here.
Whether it bites, and how hard, depends on how the assets are held and on the circumstances of the estate. It is a line worth knowing you have crossed — not a bill anyone can compute for you. A long-term index investor crosses it in an ordinary month, with no email, no warning and no change of state on any dashboard, because the threshold is not in the model.
Irish-domiciled UCITS are not US-situs assets for this purpose, which is the one place where fund domicile changes the answer completely rather than by a few percent.
If you move
None of this is retroactive. When your tax residence changes, the portfolio doesn't move — not one share changes hands — but the withholding rate on every future dividend changes, the treatment at home changes, and sometimes what you are permitted to buy changes too.
Which means the honest answer to "how much tax has this portfolio cost me" is not one rate applied to a history. It is the rate that applied at the time, changing partway through, applied to the dividends actually paid in each period.
Limitations
- Rates come from a published table, not from your account. The figure above is the IRS treaty table rate. What your broker actually withheld is on your statement, and the two can differ — most often because documentation was missing or expired.
- A treaty rate depends on paperwork. Where required documentation is not on file, the statutory 30% applies regardless of what any treaty table says.
- Eligibility is not covered here. The IRS table itself cautions that it is not a comprehensive guide to eligibility for a treaty rate; limitation-on-benefits provisions and the treaty text govern.
- Residence tax is not modelled on this page. Step two is stated nowhere above, on purpose.
- Rules change. Treaty status, rates and thresholds change, and treaties are occasionally terminated or suspended — which is why this page carries a review date and names its source.
- This is not advice. Nothing here accounts for your full tax position. Confirm anything material with a qualified adviser in your jurisdiction.
Common questions
How much US withholding tax does a resident of India pay on US dividends?
A resident of India is subject to 25% US withholding tax on portfolio dividends from US-domiciled funds and US stocks, according to the IRS treaty table. The reduced treaty rate applies only where the broker holds valid documentation for the investor, typically a W-8BEN; without it the 30% statutory rate is withheld instead.
Is an Irish UCITS better than a US-domiciled ETF for a resident of India?
For a resident of India it usually is, on withholding alone: 25% is withheld from a US-domiciled fund, against 15% suffered inside an Irish UCITS at fund level, with no further Irish withholding to non-residents. The saving scales with dividend yield while the UCITS wrapper's higher expense ratio is charged on the whole position, so it should be checked per holding rather than applied as a rule.
Does US estate tax apply to a resident of India holding US ETFs?
No estate tax treaty between the United States and India. US-situs assets, including US-domiciled ETFs and US stocks, above USD 60,000 can expose a non-resident, non-citizen estate to US estate tax at rates reaching 40% on the excess, and no treaty relief is available for this residence.