NRI · Money · The Propah POV
How is an NRI’s rental income from India taxed?
Your tenant withholds 31.2% of the gross rent — not of your profit. What you actually owe is computed after municipal tax, a flat 30% deduction and any loan interest, and is usually far less. The gap comes back only when you file a return, which is why NRIs who assume TDS settles the matter routinely overpay for years.
Two different numbers, and only one is your tax
Rent paid to a non-resident landlord is subject to deduction at source at a rate commonly cited as 31.2% — 30% plus 4% cess — applied to the gross rent. That is a withholding mechanism, not a tax computation.
Your actual liability is worked out under the head income from house property:
- Start with the rent received — the Gross Annual Value.
- Deduct municipal taxes actually paid by you during the year. That gives Net Annual Value.
- Deduct the 30% standard deduction under section 24(a) of NAV — a flat allowance, regardless of what you spent.
- Deduct home loan interest under section 24(b), with no ceiling on a let-out property.
- Tax the remainder at slab rates, plus cess.
TDS is a deposit, not a settlement. If you never file, you have simply made a gift to the exchequer every year.
The deduction people double-count
The 30% under section 24(a) is a flat allowance, available whether your repair bill was zero or twice that. It follows that your maintenance, repairs, society dues, management fees and brokerage are not separately deductible. They reduce your cash and not your tax.
The exception is large: interest on a let-out property is deductible in full, with none of the ₹2 lakh cap that applies to a self-occupied one, and it is available under both tax regimes. A leveraged rental can therefore show a very different tax position from an unleveraged one — sometimes a loss, which has its own set-off rules worth asking your accountant about.
Fixing the withholding rather than reclaiming it
A lower-deduction certificate under section 197 instructs your tenant to deduct something close to your real liability instead of 31.2% of gross. It has to be obtained before the rent starts flowing, in the same way the certificate on a sale must precede completion.
Where a treaty applies, the position can improve further — but a treaty rate is not automatic. You need a Tax Residency Certificate and an electronically filed Form 10F. The treaty mechanics are here.
What your tenant has to do, and why some walk
- Obtain a TAN, which most individual tenants have never needed.
- Deposit the deduction by the 7th of the following month.
- File Form 27Q quarterly and issue you Form 16A.
- File Form 15CA at each payment, with 15CB from a chartered accountant where annual rent exceeds ₹5 lakh.
- Tell prospective tenants this at the start. Discovering it after signing is how tenancies fall through, and a tenant who quietly does none of it leaves the exposure with you.
You almost certainly have to file
If your total Indian income exceeds the basic exemption limit, you are required to file an Indian return — and filing is the only route to recovering over-withheld TDS. Note that NRIs cannot claim the section 87A rebate that shelters small resident incomes, so a modest rental income that would leave a resident with nothing to pay can still produce a liability for you.
Rent accumulates in your NRO account and leaves India under the USD 1 million annual limit.
And then your own country taxes it too
India taxes the rent because the property is here. Your country of residence very likely taxes it because you live there. That is not double taxation in the objectionable sense — the treaty exists to resolve it — but it is a second filing obligation that people forget.
Typically India has the primary right to tax income from immovable property situated in India, and your resident country gives credit for the Indian tax paid. Claiming that credit is a procedure with its own forms and deadlines, and missing it is the commonest way an NRI ends up genuinely taxed twice. That is the next article.
What this does not cover
- The worked figures assume ₹36,000 monthly rent, the 30% slab and no loan interest. Substitute your own; the method is the point.
- Deemed let-out rules for additional properties, joint ownership, and loss set-off against other heads are not addressed.
- Section numbering under the Income Tax Act 2025 is in transition; references are as commonly used.
- This is general information, not tax advice. Engage a chartered accountant.
How much tax does an NRI pay on rental income in India?
Your tenant withholds 31.2% of the gross rent — 30% plus cess — but that is not your tax. Liability is computed after deducting municipal taxes paid, a flat 30% standard deduction under section 24(a), and home loan interest under section 24(b) which is uncapped on a let-out property, then taxed at slab rates. On ₹4,32,000 of annual rent at the 30% slab, roughly ₹85,176 is owed against ₹1,34,784 withheld.
Can I get back the extra TDS deducted on my rent?
Only by filing an Indian income tax return. TDS is a deposit, not a settlement, and there is no automatic refund. Better still, obtain a lower-deduction certificate under section 197 before letting begins, so your tenant deducts close to your actual liability rather than 31.2% of gross. NRIs who assume the withholding settles the matter can overpay for years without realising.
Are maintenance and repairs deductible from Indian rental income?
No, not separately. Section 24(a) gives a flat 30% deduction of Net Annual Value regardless of actual spending, and that allowance is intended to cover repairs and upkeep — so maintenance, society dues, management fees and brokerage reduce your cash but not your tax. Municipal taxes you actually paid are deducted before the 30% is applied, and home loan interest is deductible in full on a let-out property.
Does an NRI have to file an income tax return in India for rental income?
If total Indian income exceeds the basic exemption limit, yes — and filing is the only way to recover over-withheld TDS. NRIs also cannot claim the section 87A rebate that shelters small resident incomes, so a modest rental income that would leave a resident owing nothing can still produce a liability for a non-resident.
What must my tenant do if I am an NRI landlord?
Obtain a TAN, deduct at the applicable rate, deposit by the 7th of the following month, file Form 27Q quarterly, issue you Form 16A, and file Form 15CA at each payment with a CA-certified Form 15CB where annual rent exceeds ₹5 lakh. Most individual tenants have never done any of this. Raise it before signing — discovering it afterwards is a common reason tenancies collapse, and a tenant who quietly ignores it leaves the exposure with you.
Will my own country tax the Indian rent as well?
Very likely, if it taxes worldwide income. India generally has the primary right to tax income from property situated here, and your country of residence then gives credit for the Indian tax paid. The relief is real but it is a procedure with its own forms and deadlines — missing it is the commonest way an NRI ends up genuinely taxed twice on the same rent.
Withholding rate, section 24 deductions, tenant compliance obligations and the section 197 route checked across published guidance in September 2026. Worked figures are ours and reproducible from the numbers given; they assume ₹36,000 monthly rent and the 30% slab. Section numbering under the Income Tax Act 2025 is in transition. This is general information, not tax advice.
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Get the certificate before the tenant, not after.
A section 197 certificate turns a 31.2% withholding into something close to what you owe. Applied for afterwards, it does nothing at all.
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