Rent from property in India is taxable in India for an NRI, and the big surprise for most is that the tenant must deduct TDS under Section 393 (the old Section 195) — not the ordinary 2%/5% tenant rate — usually at a high rate on the whole rent. Against the rent you get a flat 30% standard deduction and a deduction for home-loan interest under the house-property rules (Sections 20–24). File ITR-2, and cut the over-deduction with a lower-TDS certificate and the correct treaty rate.
If you own a flat or house in India and rent it out while living abroad, that rent is taxable in India — India taxes income that arises here regardless of where you live. Two things surprise most NRI landlords. First, the tenant is legally required to deduct TDS before paying you, and because you are a non-resident this is done under the tough Section 393 (old Section 195) withholding rules, not the light tenant-TDS most residents face — so a big slice of your rent can be withheld. Second, the actual tax on rent is often much lower than that withholding, because the house-property rules give you a flat 30% standard deduction and a deduction for home-loan interest. The gap between the high TDS and the real tax is money that gets locked up until you file and claim a refund — which is exactly why NRI landlords benefit from planning the TDS rate and the treaty position up front. Get the deductions and the withholding right, and renting out Indian property is straightforward and tax-efficient.
Yes. Rent from an immovable property situated in India is Indian-source income and is taxable here whether you are a resident or a non-resident. It is taxed under the head "income from house property", governed by Sections 20 to 24 of the Income-tax Act, 2025 (the successors to the old Sections 22–27). Your country of residence may also tax the same rent as part of your worldwide income, but the DTAA ensures you are not taxed twice: rental income from immovable property is generally taxable in the country where the property sits (India), and your home country then gives you a credit for the Indian tax paid. So India taxes the rent first, and the treaty prevents double taxation.
The taxable rent is not the gross rent — the house-property rules give you generous deductions. The computation runs like this:
What remains is your taxable rental income, taxed at your applicable slab. Because the 30% deduction and the loan interest can be substantial, the real tax on rent is frequently far below the TDS the tenant deducts — which is the crux of the NRI-landlord problem.
This is the single biggest source of confusion and locked-up cash for NRI landlords. When a resident rents from another resident, the tenant deducts only a small TDS (and only above a threshold), or none at all. But when the landlord is a non-resident, the tenant must deduct TDS under Section 393 (the old Section 195) — the same withholding regime that applies to any payment to a non-resident. That means the tenant is expected to deduct tax on the rent at the rates in force for a non-resident landlord — typically around 30% plus surcharge and cess on the rent, unless a lower rate is authorised. In other words, the tenant may withhold roughly a third of your rent, even though your actual tax after the 30% deduction and loan interest might be a fraction of that. The excess is not lost — you claim it back as a refund when you file — but it ties up your money for months. Managing this withholding is where an NRI landlord saves the most.
Because the deduction is under Section 393, the tenant has real compliance duties, and many tenants don't realise it. The tenant paying rent to an NRI must: obtain a TAN (tax deduction account number); deduct the TDS each month and deposit it with the government; file a Form 27Q (the TDS return for payments to non-residents); and issue you a TDS certificate (Form 16A / the new Form 131). This is more onerous than the simple Form 26QC route a resident tenant uses. In practice, an NRI landlord should help the tenant get this right — or the tenant may under-deduct (creating a liability for them) or over-deduct (locking up your money) — and should make sure a valid lower-TDS certificate and the correct treaty rate are applied so the deduction matches the real tax.
The cleanest fix for the high 195 withholding is the same tool NRIs use for property sales: a lower / nil-TDS certificate under Section 395 (the old Section 197, Form 13). You apply to the Assessing Officer showing that your actual tax on the rent — after the 30% standard deduction and home-loan interest — is much lower than the default 30% withholding, and the officer authorises the tenant to deduct at that lower rate. For a landlord with a big home-loan interest deduction, the certificate can bring the TDS close to zero. Obtaining this certificate at the start of the tenancy means your rent comes in largely intact each month, rather than being withheld at 30% and refunded a year later. For any NRI with meaningful rent, this is the highest-value single step.
The Double Taxation Avoidance Agreement matters here in two ways. First, it confirms that India has the right to tax rent from Indian property and that your home country will give credit for the Indian tax, so you are not taxed twice. Second, providing your tenant (or the department) with a Tax Residency Certificate and Form 10F lets any applicable treaty rate be applied to the withholding, and — combined with a lower-TDS certificate — keeps the deduction aligned with your real liability. So the documents that unlock treaty benefits generally (TRC, Form 10F, PAN) are just as useful for rent as for interest and dividends. See our guide on DTAA and avoiding double taxation.
If you bought the Indian property with a loan, the interest you pay is deductible against the rent, and for a let-out property the deduction is generous — broadly the entire interest for the year can be set against the rental income (unlike a self-occupied property, where the interest deduction is capped). This is why so many NRI landlords with a home loan have little or no taxable rental income: the 30% standard deduction plus the full loan interest often exceed or heavily reduce the net rent. Where the interest exceeds the rent, the resulting loss from house property can be set off against other income (within the annual limit) and carried forward. Claiming the loan interest correctly is central to both a low tax bill and a low lower-TDS-certificate rate, so keep your interest certificate from the lender each year.
An NRI with rental income files ITR-2 (ITR-1 is not available to non-residents with this profile). You report the property under income from house property, showing the gross rent, the municipal taxes, the 30% standard deduction and the home-loan interest, arriving at the net taxable rent. You then claim credit for the TDS the tenant deducted — visible in your Form 26AS and AIS — against your total tax, and if the TDS exceeded your liability (as it usually does without a lower-TDS certificate), you claim the excess as a refund. Reconcile the rent and TDS with your 26AS/AIS before filing, since the department sees the tenant's Form 27Q, and a mismatch invites a notice. Filing is also what lets you eventually repatriate the accumulated rent from your NRO account — see our repatriation guide.
Suppose you live in Dubai and rent out a Bengaluru flat for ₹50,000 a month — ₹6 lakh a year — and you pay ₹4 lakh of home-loan interest in the year. Without planning, the tenant may deduct TDS under Section 393 at roughly 30% plus surcharge and cess — around ₹1.9 lakh over the year — even though your actual tax is far less. Your taxable rent is: ₹6 lakh, less say ₹20,000 municipal taxes = ₹5.8 lakh net annual value; less the 30% standard deduction (₹1.74 lakh) = ₹4.06 lakh; less ₹4 lakh loan interest = about ₹6,000 of taxable rental income. Your real tax on that is negligible. So the tenant withheld ~₹1.9 lakh while your true liability was near zero — and you would reclaim almost all of it as a refund after filing. Had you obtained a lower-TDS certificate reflecting the loan interest, the tenant would have deducted little or nothing, and you would have kept your rent through the year instead of waiting for a refund. The numbers show why the certificate is worth the effort.
Now take an NRI who owns a mortgage-free flat let for ₹6 lakh a year. Taxable rent is ₹6 lakh less municipal taxes, less the 30% standard deduction — roughly ₹4 lakh net — taxed at slab. If this is the landlord's only Indian income, the tax after the basic exemption and slabs might be modest, but the tenant's 30% Section 393 withholding (~₹1.8 lakh) would still far exceed it, again producing a large refund on filing. Here too a lower-TDS certificate — set at the landlord's genuine average rate rather than the flat 30% — keeps the monthly rent much closer to intact. The lesson is the same with or without a loan: the default withholding on NRI rent is punitive relative to the real tax, and the certificate plus the correct deductions close the gap.
A few practical points round out the picture. Municipal/property taxes are deductible only in the year you actually pay them, so keep the receipts and pay before year-end to claim them. Where a property is jointly owned — commonly by NRI spouses — the rent and the deductions are split in the ownership ratio, and each co-owner reports their share, which can spread the income across two lower slabs and effectively use two lower-TDS certificates. If you own more than one property, each let-out property is computed the same way; the rules on self-occupied and deemed-let-out property matter mainly for residents living in India, but an NRI who keeps one Indian flat for personal use and lets another should compute each correctly. Joint ownership in particular is an under-used planning lever for NRI couples, because it doubles the deductions and the withholding relief.
The house-property rules treat properties differently depending on how they are used, and this matters for an NRI who may keep one flat empty for personal visits and let another. A property that is actually rented out is a let-out property, taxed on its rent with the 30% deduction and full loan-interest set-off as described. A property you keep for your own use — even if you are abroad and only visit occasionally — can be treated as self-occupied, on which the annual value is taken as nil but the home-loan interest deduction is capped at the lower self-occupied limit rather than being fully allowed. The rules allow a limited number of properties to be treated as self-occupied; beyond that, additional empty properties can be treated as deemed let-out, meaning a notional rent is taxed even though no actual rent is received. For an NRI with two or three Indian properties, choosing which to designate as self-occupied and which as let-out — and understanding when a genuinely empty flat could attract deemed rent — is a real planning decision that affects both the tax and the loan-interest deduction. Getting this designation right, rather than defaulting to whatever the portal pre-fills, can change the outcome by a meaningful amount.
Who your tenant is changes how the withholding plays out in practice. When you rent to a company or a business — for example letting a flat to a corporate for its employee, or letting commercial space to a firm — the tenant is usually well-equipped to handle the Section 393 (195) obligations: they have a TAN, a finance team, and are used to deducting and depositing TDS and filing returns. When you rent to an individual tenant, the compliance often falls through the cracks, because a private tenant frequently doesn't know they must obtain a TAN and deduct under 195 for a non-resident landlord. This creates risk on both sides: the tenant can face penalties for failing to deduct, and you can face questions about untaxed rent. The practical answer is to make the position clear at the start of the tenancy — spell out in the agreement that TDS will be deducted under Section 393, help the individual tenant obtain a TAN, and provide your PAN, TRC and (ideally) a lower-TDS certificate so the deduction is correct and modest. An NRI landlord who sets this up cleanly avoids both the over-withholding and the compliance mess that so often accompanies renting to an unaware individual.
Income tax is not the only levy to think about; GST can also apply to rent in some situations, and NRIs are often unaware of it. Rent from residential property let for residential use is generally exempt from GST, so a straightforward flat let to a family carries no GST. But rent from commercial property, or residential property let to a business, can attract GST once the landlord's aggregate turnover crosses the registration threshold, and under the reverse-charge mechanism the tenant may in some cases be liable to pay the GST. For an NRI who owns a shop, an office, or commercial space in India and lets it out, this means there may be a GST registration and compliance obligation on top of income tax and TDS. The interaction can be intricate — the type of property, the type of tenant, and the turnover all matter — so an NRI with commercial lettings should check the GST position specifically rather than assume only income tax applies. For the common case of a residential flat let to a family, though, GST is simply not in the picture, and only the income-tax and TDS rules covered above apply.
Because the tenant deducts TDS, many NRI landlords assume their tax is fully covered and nothing more is due during the year — but that is only true if the TDS actually matches the tax. Where the TDS is less than the eventual liability — which can happen if a lower-TDS certificate was set too generously, or if you have other Indian income pushing you into a higher slab — you may need to pay advance tax in instalments during the year to avoid interest. Conversely, where the TDS is far more than the liability (the usual case without planning), no advance tax is due and you simply reclaim the excess. The point is to look at your total Indian income — rent plus any interest, capital gains or other Indian earnings — and check whether the aggregate TDS covers the aggregate tax. If there is a shortfall above the small threshold, paying advance tax on time keeps you clear of Sections 424 and 425 interest. For most single-property landlords with over-deducted rent TDS, advance tax is a non-issue; for those with several income streams, it is worth a quick annual check.
Real tenancies come with practical extras, and it helps to know how they are treated. If you let the flat furnished and charge extra for furniture and fittings, that additional amount is generally part of your taxable income, though the character can differ; the 30% standard deduction is designed to cover repairs and upkeep, so you cannot separately deduct actual repair bills on top of it. Society or maintenance charges are a common point of confusion: where the tenant pays them directly, they don't form part of your rent; where you collect them as part of the rent and pass them on, the treatment needs care so you are not taxed on money that is merely passing through. Municipal taxes, as noted, are separately deductible when you pay them. And amounts like a refundable security deposit are not income at all — they are a liability you hold and return, and only any part you forfeit becomes taxable. Keeping the rent, the deposit, the maintenance and the municipal taxes cleanly separated in your records makes both the computation and any later query straightforward.
If you are an NRI planning to buy an Indian property to rent out, a few decisions at purchase shape your tax and repatriation position for years. First, how you fund it matters: buying with funds routed through your NRE account or a fresh foreign remittance on a repatriable basis means the eventual sale proceeds can be sent back abroad more freely, whereas buying from accumulated Indian income (NRO funds) ties the proceeds to the USD 1 million NRO repatriation window. Second, taking a home loan — whether from an Indian lender or by bringing your own funds and treating them appropriately — creates the valuable interest deduction that shelters most of the rent, so financing the purchase rather than paying all cash can be tax-efficient for a let-out property. Third, consider joint ownership with a spouse from the outset, which splits the rent and deductions across two people and doubles the lower-TDS-certificate relief. And keep every document from the purchase — the sale deed, funding trail and loan sanction — because they support your interest deduction now and your repatriation later when you sell. Structuring the purchase deliberately, rather than buying first and thinking about tax afterwards, is what makes an NRI rental investment efficient over its whole life.
Many NRIs own an Indian flat that sits empty — kept for future return, for occasional visits, or simply not yet let. The tax treatment of an empty property is a genuine concern, because beyond the number of properties you are allowed to treat as self-occupied, an additional vacant property can be treated as deemed let-out, on which a notional rent — the rent it could reasonably fetch — is taxed even though you receive nothing. This surprises NRIs who assume an empty flat generates no tax. The rules give some relief for genuinely self-occupied properties and for property that could not be let despite efforts, but an NRI with multiple Indian properties should not assume that an empty one is automatically tax-free. Where a property is going to sit empty for a long period, it is often worth either designating it correctly as self-occupied within the permitted limit, or actually letting it so that the real rent (with its deductions) is taxed rather than a notional figure. Knowing the deemed-let-out risk in advance lets you plan around it rather than being caught by a notional-rent addition at assessment.
Because so much of the tax outcome depends on evidence, an NRI landlord who keeps a clean file has a far easier time each year and in any enquiry. Hold on to: the rent agreement and any renewals; the tenant's TDS certificates (Form 16A / 131) and evidence of the Form 27Q filings; your home-loan interest certificate from the lender each year; receipts for municipal taxes paid; the property's purchase deed and funding trail; and your PAN, TRC and Form 10F. Keep copies of each year's ITR-2 and any lower-TDS certificate obtained. When you eventually sell the property or want to repatriate the accumulated rent, this same file supports the capital-gains computation and the 15CA/15CB certificate, so it does double duty. Good record-keeping is unglamorous, but for an NRI managing a let property from another country it is the difference between a return that is filed in an afternoon and one that requires reconstructing years of paperwork under pressure.
The recurring, costly errors: letting the tenant deduct the full 30% under Section 393 without a lower-TDS certificate, locking up rent for a year; the tenant not knowing they must deduct under 195 at all, which creates a compliance liability that eventually lands on both parties; forgetting the home-loan interest deduction, which is often the single biggest relief; not filing ITR-2 to claim the refund of over-deducted TDS; ignoring the treaty documents (TRC, Form 10F) that would reduce withholding; and failing to reconcile with AIS/26AS, which invites a mismatch notice because the department sees the tenant's Form 27Q. Each is avoidable by setting up the withholding correctly at the start of the tenancy and filing properly each year.
Renting out Indian property from abroad touches income tax, TDS mechanics, treaty relief and — when you want the rent abroad — FEMA and repatriation. A chartered accountant ties these together: securing the lower-TDS certificate so your rent isn't over-withheld, helping the tenant set up the TAN and Form 27Q correctly, claiming the 30% deduction and full loan interest, filing ITR-2 to recover any refund, and preparing the 15CA/15CB so you can repatriate the rent. Because the default withholding is so much higher than the real tax, the value of getting this right — keeping your rent intact through the year rather than lending it interest-free to the tax department — usually dwarfs the cost of advice. For an NRI landlord managing all this remotely, one coordinated hand on the whole chain is what turns a frustrating drip of refunds into clean, tax-efficient rental income.
Yes. Rent from immovable property in India is Indian-source income and taxable in India under the house-property rules (Sections 20–24), regardless of where you live. Your home country may also tax it, but the DTAA gives credit so you are not taxed twice.
The tenant must deduct TDS under Section 393 (old Section 195), typically around 30% plus surcharge and cess on the rent, unless a lower rate is authorised. This is far higher than the small TDS on rent between residents, which is why NRI landlords should obtain a lower-TDS certificate.
A flat 30% standard deduction on the net annual value, plus the interest on a home loan taken for the property (fully deductible for a let-out property), plus municipal taxes actually paid. These often reduce the taxable rent — and the real tax — to a small fraction of the gross rent.
Apply for a lower / nil-TDS certificate under Section 395 (old Section 197, Form 13), showing your actual tax after the 30% deduction and loan interest, so the tenant deducts at that lower rate. Providing a Tax Residency Certificate and Form 10F also lets any treaty rate apply.
ITR-2. Report the property under income from house property with the 30% deduction and loan interest, claim the TDS credit from Form 26AS, and claim any excess as a refund. Reconcile with your AIS/26AS to avoid a mismatch notice.
We get your lower-TDS certificate so your rent isn't over-withheld, claim the 30% and loan-interest deductions, file ITR-2 and handle repatriation.
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