W8 Form Explained: What Indian Residents Must Know

W8 forms are IRS (Internal Revenue Service)  forms that non-American individuals and businesses, including those in India, need to file if they’re earning from U.S. clients or employers. These forms help confirm your country of residence for tax purposes so that you can benefit from a reduced tax withholding rate under tax treaties.

With global work becoming the norm, many of us in India are earning from U.S. clients or companies. But figuring out international tax rules can feel like a maze, and without the right forms, you could lose more of your income to taxes. That’s where a W8 form comes in—they help you keep more of what you earn by reducing unnecessary U.S. tax withholdings. In this guide, we’ll walk you through W8 forms, so you can stay compliant and avoid losing out on your hard-earned income.

What is W8 Form? 

W8 forms are IRS forms that, Indian residents and companies earning from the US, must complete to qualify for a reduced U.S. tax withholding rate on income earned from U.S. sources. Although the IRS issues these forms, they aren’t submitted directly to the IRS. Instead, they are provided to the payer or withholding agent handling your U.S. income - basically your client or employer in the US.

Typically, your payer will ask you to submit the relevant W8 form before disbursing any payment. This ensures they apply the correct withholding rate as per U.S. tax treaties. Submitting the form to your payer in advance helps you avoid unnecessary tax deductions and ensures smoother payment processing.

Here’s a simple example: Imagine you’re an Indian resident working remotely for a U.S.-based company and receiving payment for your services. Although the payment comes from the U.S., since you’re performing the work outside the U.S., it’s considered foreign-sourced income by the US tax authorities. This means it’s generally not subject to U.S. tax withholding. If you were based in the US, your employer would deduct taxes from your income before paying you. At the end of the year, you would need to file a tax return to report your earnings and taxes paid.

To certify your foreign status as an Indian resident and avoid any automatic U.S. tax deductions, you would submit Form W8BEN to your employer. This form confirms that your income is foreign-sourced and only taxable in India, not the U.S

In the following section, we’ll break down the different types of W8 forms and how the U.S.-India tax agreement impacts your tax obligations.

Who Can File W8 Form?

W8 forms are filled by individuals or entities who aren’t residing in the US, but earn income from the U.S. This can include Indian freelancers and full-time employees working remotely or on-site, Indian investors in the US market, real estate owners having and earning from property in the US, Indian students, Indian businesses and non-profit organisations and more. 

Here are some common income types that require a W8 form:

If you don’t submit the required Form W8, your income could be taxed at 30% under US tax laws. As an Indian resident, this same income would also be taxed in India, leading to double taxation.

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What are the different types of W8 Forms? 

There are 5 different types of W8 Forms depending on their usage

Form W8BEN

Form W8BEN ("Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding and Reporting") must be submitted by Indian individuals who receive certain types of income in the United States including royalty/passive income. 

The form, sometimes referred to as a "certificate of foreign status," establishes that the individual is a foreign person earning from the US. You need to submit Form W8 BEN when requested by the withholding agent or payer whether or not you are claiming a reduced rate of or exemption from the 30% tax rate. 

Here’s what Form W8BEN looks like : 

You can also download Form W8BEN right here

Form W8BEN-E

The W8BEN-E form serves a similar purpose as the W8BEN but is specifically designed for foreign businesses and entities rather than individuals. Like individuals, income earned by foreign entities from U.S. sources is also typically subject to a 30% withholding tax. However, by submitting a correctly completed W8BEN-E, Indian businesses will qualify for a reduced withholding rate as per the India-US Income tax treaty. 

Here’s what the first page of Form W8BEN-E looks like:

You can download the entire Form W8BEN-E right here

Form W8ECI

Form W8ECI is for Indian individuals and entities conducting business in the U.S. and earning income directly connected to that business—known as ‘effectively connected income’ (ECI). The key benefit of ECI is that it’s taxed at a lower rate than non-business income like interest or dividends. 

You can download Form W8ECI right here

Form W8EXP 

Form W8EXP is for foreign entities like governments, banks, and nonprofits to claim tax exemptions or reduced withholding on U.S. income

You can download Form W8EXP right here

Form W8IMY

Form W8IMY is for foreign intermediaries like banks, brokers, and mutual funds to certify their status and claim reduced tax withholding on U.S. income received on behalf of clients. It ensures proper tax compliance and smooth handling of client obligations. 

You can download the full Form W8IMY right here

If you're an Indian freelancer, service provider, or exporter earning from U.S. clients, the W8BEN or W8BEN-E forms are likely the ones you need. Filling out the right W8 form is crucial—not just to stay compliant with U.S. tax laws but also to avoid unnecessary or double taxation on your income. 

What is the Difference Between Form W8 BEN and Form W8 BEN-E?

For most Indian residents, and businesses with U.S.-sourced income, the relevant forms are Form W8BEN and Form W8BEN-E. The key difference between them is: Form W8BEN is for individuals, while Form W8BEN-E is for entities (such as businesses) receiving U.S.-sourced income.

Which Countries Have an Income Tax Treaty with the US?

The United States has income tax treaties with various foreign countries, allowing residents (not necessarily citizens) of those countries to benefit from reduced tax rates or exemptions on certain U.S.-sourced income. These tax benefits vary by country and type of income.

If a tax treaty applies to your income, filing the appropriate W8 form can help you claim these benefits and reduce unnecessary U.S. tax withholding. However, if your income type isn’t covered by a treaty—or if no treaty exists between your country and the U.S.—you’ll generally be taxed at the standard rate, as outlined in Form 1040NR (U.S. Nonresident Alien Income Tax Return) instructions.

Tax treaties often work both ways, meaning U.S. residents earning income in treaty countries may also qualify for similar tax benefits abroad, such as credits, deductions, and reduced tax rates. Some of the countries with which the US has income tax treaties include: 

You can find the full list of countries right here

India-United States International Income Tax Treaty

The India-U.S. Income Tax Treaty has been effective since 1st  JANUARY 1991 and it is an agreement that helps Indian and U.S. residents avoid being taxed twice on the same income. It’s designed to make earning across borders easier, fairer, and more financially efficient.

Key Points of the India-U.S. Tax Treaty:

Double Tax Relief:

If you’re an Indian resident earning income from the U.S., or vice versa, the treaty can provide tax credits to prevent double taxation. For instance, if you’ve paid tax on U.S. income, you may be eligible for a credit in India on that same income.

Reduced Withholding Taxes:

The treaty reduces withholding tax rates on certain U.S.-sourced income, like dividends, interest, and royalties. For example, instead of the standard 30% tax on dividends, Indian residents often qualify for a reduced 15% rate.

Business Profits and Permanent Establishment (PE):

If you run a business, the treaty ensures you won’t be taxed in the other country unless you have a significant, ongoing presence (called a "permanent establishment" or PE) there. 

Information Sharing:

The treaty also allows India and the U.S. to share tax information, which helps prevent tax evasion and promotes transparency.

How to Claim Treaty Benefits:

File a W8 Form: If you’re an Indian resident earning income from the U.S., submitting a W8 form can qualify you for a lower tax rate under the treaty.

Claim Tax Credits: When filing taxes in India, you can often claim a credit for taxes paid/withheld in the U.S., reducing your total tax burden.

In short, the India-U.S. Tax Treaty makes it easier to earn across borders without paying double, offering lower tax rates on certain incomes and supporting a fairer tax process for cross-border business and work.

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How do I fill out a W8 Form as an Indian?

If you’re an Indian earning income from the U.S., the first step is figuring out which W8 form applies to you. The type of W8 form you need depends on whether you’re an individual or a business, and the type of income you’re receiving.

As we’ve mentioned, for Indian residents and businesses Form W8BEN and Form W8BEN-E are what will be most relevant respectively.  If you’re working with a U.S.-based employer or client, they may ask you to complete a W8 form to confirm your foreign status.

Additionally, if you’re investing in U.S. stocks through a brokerage platform, the platform might also require this form.

How to fill Form W8BEN and Form W8BEN E? 

Here’s a quick snapshot of how to fill Form W8BEN

 Part I: Identification

Part II: Tax Treaty Benefits

Part III: Certification

Submit the completed form to your employer/client with accurate details to avoid delays.

Filling out Form W8BEN-E is similar to Form W8BEN but is designed for Indian businesses. It requires additional details about the business, such as its structure and tax status. 

What is W8 form validity period? 

W8 forms are valid from the date they’re signed until the end of the third calendar year following that date. For example, if you sign on April 15, 2024, it will remain valid until December 31, 2027, unless there are changes in your circumstances.

What are the Benefits of W8 Forms?

The benefits of filing the correct W8 Form include:

What happens if I do not submit a Form W8?

While there’s no direct penalty for not filing a W8 form, you’ll miss out on valuable tax benefits. Without a W8 form, your U.S.-sourced income will automatically be taxed at 30%, as per U.S. regulations. By submitting the correct W8 form, you can qualify for lower tax rates on certain income types under applicable tax treaties.

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