US-source income and W-8BEN

4 min · For educational purposes only

W-8BEN is the form that tells the US your treaty position. Filing it correctly cuts your dividend withholding by 40% relative to the default.

Default vs treaty withholding

The US default withholding on dividends paid to a non-resident alien is 30%. If you file a W-8BEN claiming India treaty benefits, the rate drops to 25% for most retail investors. Through an IFSC structure that elects the LLP/partnership lookthrough, certain investors achieve 15%.

Interest on most US government bonds is portfolio interest and exempt from withholding entirely. Capital gains on US equity are taxed in India, not the US — there is no US capital gains withholding for non-resident aliens on listed securities.

The W-8BEN essentials

Tax residence: India
Foreign tax identifying number: your PAN
Treaty article: typically Article 10 for dividends
Renewal: every three years or on material change

Key takeaways

W-8BEN cuts US dividend withholding from 30% to 25%.
Capital gains on US equity are taxed in India, not the US.
Renew the form every three years and after PAN/address changes.