My US client withheld 30%: can I get it back?

A designer, developer or writer in India invoices a US client $2,000 and receives $1,400. The client or platform says 30% was withheld for US tax.¹ This is fixable in many cases, but the fix usually lies with the US payer or the Internal Revenue Service (IRS), not with the Indian tax department.

Why does a US payer withhold 30%?

US payers withhold 30% on certain US-source payments to foreign persons unless they hold a valid form that allows less. The IRS instructions for Form W-8BEN say that failing to provide the form when requested "may lead to withholding at the foreign-person withholding rate of 30%".¹ The IRS treats income from personal services as sourced where the services are performed, so work done entirely in India is generally not US-source income.² The withholding is then usually a paperwork problem.

How do I get the money back?

Work through these steps in order:

1. Give the payer a valid Form W-8BEN (or W-8BEN-E for a company) and ask it to stop withholding on future payments.¹ See W-8BEN for Indian freelancers.
2. Ask the payer to correct the over-withholding. IRS Publication 515 lets a withholding agent that discovers over-withholding by 15 March of the following calendar year adjust it with the recipient, and describes reimbursement and set-off procedures after that.³
3. If the payer will not adjust, claim from the IRS. The Form 1040-NR instructions tell nonresident aliens that they are eligible to get a refund of any federal income tax withheld, and set out a simplified procedure for refund claims of tax withheld at source.⁴ Keep the Form 1042-S the payer issues as proof.

What can I claim in India instead?

Foreign tax credit under rule 76 of the Income-tax Rules, 2026 is the lower of the Indian tax on that income and the foreign tax paid, and any foreign tax above the amount payable under the treaty is ignored.⁵ The claim is made in Form No. 44 within twelve months of the end of the tax year.⁵ If the work was done in India and the treaty does not let the US tax it, little or none of the 30% may qualify. The foreign withholding tax guide and foreign tax credit guide cover the details.

When could the US actually be entitled to tax it?

The US may have a claim if you worked while physically in the US, or if the payment is a royalty, such as a licence of artwork or code. Article 15 of the India-US treaty lets the US tax an individual's professional income where there is a fixed base or a stay of 90 days or more in the taxable year.⁶ Royalty rates are explained in the India-US treaty guide. Because the amounts can be large, take advice from a chartered accountant (CA) or US tax adviser before filing a US return.