Tax Treaty Benefits for Indian F1 Students: The Complete Article 21 Guide

If you're an F1 student from India, you have a significant tax advantage that students from most other countries don't: you can claim the standard deduction on your tax return.

This single benefit can reduce your taxable income by $14,600 (2024) or $15,750 (2025), potentially saving you thousands of dollars in taxes.

What Is Article 21 of the US-India Tax Treaty?

Article 21 of the United States-India Income Tax Treaty provides special benefits to Indian students and business apprentices who are temporarily present in the U.S. for education or training.

The key provisions are:

Article 21(1): Payments received from outside the United States for maintenance, education, or training are exempt from U.S. tax.

Article 21(2): Indian students may claim the same deductions available to U.S. citizens and residents. This is the game-changer.

The Standard Deduction: Your Biggest Benefit

Normally, nonresident aliens filing Form 1040-NR cannot claim the standard deduction. But Indian students can claim the full standard deduction:

Example: How Much You Save

Scenario: You earned $30,000 on OPT in 2025.

Without treaty (other countries):

Taxable income: $30,000

Itemized deductions: Maybe $1,000 in state taxes

Net taxable: $24,000

Federal tax: ~$2,657

With India treaty:

Taxable income: $30,000

Standard deduction: $15,750

Net taxable: $9,250

Federal tax: ~$928

Savings: ~$1,729

Who Qualifies for Article 21 Benefits?

To claim treaty benefits under Article 21, you must be:

A citizen or resident of India immediately before coming to the U.S.

Temporarily present in the U.S. for education or training

Primarily a student (not someone who came to work and is taking classes on the side)

What About After 5 Years?

Even after you become a "resident alien" for tax purposes (after your 5-year exempt period), Article 21 benefits continue to apply as long as you remain primarily a student.

How to Claim Article 21 Benefits on Your Tax Return

On Form 1040-NR:

Schedule OI (Other Information): Item L asks about tax treaty benefits. Enter "India" and "Article 21(2)"

Standard Deduction: On the line for deductions, write: "Standard Deduction Allowed Under US/India Income Tax Treaty" and enter the standard deduction amount.

Do You Need Form 8833?

Form 8833 is the "Treaty-Based Return Position Disclosure" form. For the Article 21 standard deduction, most guidance says it's not required, but filing it doesn't hurt and can prevent IRS questions later.

Important Limitations

1. This Is NOT an Income Exemption

Unlike the China treaty (which exempts $5,000 of wages), the India treaty doesn't exempt any income from tax. All your U.S.-source income is still taxable - you just get to reduce it by the standard deduction.

2. State Taxes

Tax treaties apply only to federal taxes. California, New York, Illinois, and other states do not honor federal tax treaties. You cannot claim the Article 21 standard deduction on your state return.

Common Questions About Article 21

Can I claim the standard deduction AND itemize?

No. You must choose one or the other. For most F1 students, the standard deduction is significantly larger.

What if I'm on OPT? Does the treaty still apply?

Yes. OPT is still part of your F1 status, and you're still "primarily a student." The treaty continues to apply.

What if I change to H1B mid-year?

This gets complicated. For the portion of the year you were an F1 student, you may still claim treaty benefits. Consult a tax professional for dual-status years.

Eligibility Checklist

I was a citizen or resident of India before coming to the U.S.

I am in the U.S. primarily for education (F1 visa)

I am temporarily present (not a green card holder)

My visit is for a "reasonable period" to complete my education

If all boxes are checked, you qualify for Article 21 benefits.