July 11, 2025

Returned to India? Update Your W-8BEN to Claim Lower Tax on US Income (Dividend, Interest & Capital Gains)

Why NRIs Returning to India Must Update Form W-8BEN with US Brokers?

If you're an NRI or OCI who has returned to India after living in the US, you must update your W-8BEN form with your US brokerage or financial institution.

This simple step helps you:

Avoid 30% default US tax withholding on your investments
Claim lower tax rates on dividends, interest, and capital gains
Comply with the India – US Double Taxation Avoidance Agreement (DTAA)

Key Tip: W-8BEN is not filed with the IRS — it’s submitted directly to the broker or financial institution.

What is Form W-8BEN?

Form W-8BEN (Certificate of Foreign Status of Beneficial Owner for US Tax Withholding and Reporting) is a tax document that non-resident aliens (NRAs) submit to:

Prove non-US tax residency
Claim treaty-based tax benefits
Prevent excessive US tax deductions
For Indian residents with US assets, this form is crucial for proper tax treatment.

Why You Must Re-Submit W-8BEN After Moving Back to India?

If your W-8BEN still shows your old US address or status, you may be taxed as a US resident or default foreigner, missing out on India–US treaty benefits.

After returning to India:

You're treated as a Resident in India (or RNOR for a transitional period)
You still earn US-sourced income from stocks, funds, or interest
But treaty protection kicks in only if your W-8BEN is up to date

India–US DTAA Tax Rates with W-8BEN (2025)

Once W-8BEN is properly submitted with India as your country of tax residence, the following reduced US withholding tax rates apply:

Type of US Income	Default US Rate	Treaty Rate (India–US DTAA)
Capital Gains (US Stocks/ETFs)	30%	0% (in most cases)
Dividends	30%	25%
Interest	30%	15%

What Happens If You Don't Update W-8BEN?

If your US broker or platform doesn't have an updated W-8BEN:

30% flat withholding tax applies on dividends and interest
Capital gains may be incorrectly taxed
You may lose eligibility for DTAA benefits
Getting a refund from the IRS is complex and slow

What Should You Do?

Here’s a checklist for NRIs and Indian residents with US investments:

Download and fill W-8BEN form with your Indian address
Declare Indian Tax Residency and PAN number
Request a Tax Residency Certificate (TRC) from the Indian Income Tax Department
Fill Form 10F (often required by US brokers)
Submit to your broker or financial institution, not the IRS
Re-submit W-8BEN every 3 years or upon a change in status

Who Should Update W-8BEN?

Former NRIs who’ve returned to India
Indian residents with US stock or ETF investments (via platforms like Interactive Brokers, Charles Schwab, TD Ameritrade, etc.)
Anyone earning dividends or interest income from the US
Individuals claiming treaty benefits under India–US DTAA

Need Help with W-8BEN or Tax Residency Certificate?

At Dinesh Aarjav & Associates, we specialize in helping:

NRIs returning to India
Indian investors with US assets
Cross-border tax planning and DTAA claims
Filing TRC, Form 10F, and coordinating with US brokers

Conclusion

Don’t let incorrect tax documentation lead to 30% US withholding.
By updating your W-8BEN and claiming the right DTAA benefits, you save tax, stay compliant, and streamline your global income reporting.