How NRIs Can Rent Out Property in India: Legal & Tax Guide

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Renting Out Property in India as an NRI? Know the Tax, TDS & DTAA Rules Before You Earn

Renting out property in India as an NRI generates steady income but requires compliance with TDS, lease registration, repatriation and ITR filing. Tenants deduct TDS (~30% + cess), file forms and issue TDS certificates. NRIs claim deductions (30% standard, home loan interest) and repatriate up to USD 1M/FY after taxes.

This guide covers tax calculation, compliance, deductions and tips. For lease drafting, TDS certificates or repatriation, consult experts at ezyLegal.

How Tax on Rental Income Works for NRIs

Rental income is taxed under “Income from House Property”.

Calculation:

Gross Annual Value (GAV): Higher of actual rent or expected rent.
Deduct municipal taxes paid.
Net Annual Value (NAV) = GAV – municipal taxes.
Standard deduction: 30% of NAV (automatic).
Deduct home loan interest (Section 24).
Taxable income = NAV – 30% – interest.

TDS Rules:

Tenant deducts 30% + 4% cess (31.2%) on rent – no threshold.
Deposit by 7th of next month (Challan ITNS 281).
File quarterly Form 26Q.
Issue Form 16A to NRI.
Annual rent >₹5 lakh: Form 15CB (CA) + 15CA.

Filing: Mandatory if income >₹2.5 lakh (old regime) or ₹4 lakh (new regime FY 2025-26). File ITR-2; claim a refund if excess TDS.

DTAA Relief: Claim lower withholding (10–15% for US/UK/UAE) via Form 10F + TRC.

Avoid TDS Penalties on NRI Rental Income Tenants and NRIs often miss critical TDS and filing rules. Get expert legal guidance to stay fully compliant and penalty-free.

Deductions & Exemptions

Deduction	Details	Limit
Standard Deduction	30% of NAV	Automatic
Municipal Taxes	Actual paid	Full
Home Loan Interest	Section 24(b)	Full (let-out); ₹2 lakh (self-occupied)
Principal Repayment	Section 80C	₹1.5 lakh
Additional Interest	Section 80EE/80EEA	₹50,000 (eligibility)

New regime: Fewer deductions (standard ₹75,000 if salaried).

Compliance Checklist

NRI Landlord:

Valid registered lease agreement (>11 months mandatory).
NRO account for rent (NRE only if tenant NRI paying from NRE).
Monitor Form 26AS/AIS.
Apply Section 197 for lower TDS if liability is low.
File ITR-2 annually.

Tenant:

Obtain TAN.
Deduct/deposit TDS.
File Form 15CA/CB if >₹5 lakh.
Issue Form 16A.

Consequences:

Tenant non-compliance: Penalty = TDS amount; imprisonment (Section 276B).
NRI non-filing: Interest, penalties.

Pay Only the Tax You Legally Owe Unsure if excess TDS is being deducted on your rental income? Our legal experts help NRIs optimize taxes using deductions, DTAA and Section 197.

Real-World Examples

Standard Rental: ₹40,000/month – TDS 31.2%; NRI claims 30% deduction + interest.
DTAA Relief: UK NRI gets TDS reduced to 15% via Form 10F.
Excess TDS Refund: Over-deducted TDS – ITR filing refunds.
Unregistered Lease: Dispute arises – registration protects both parties.
High Rent Compliance: ₹6 lakh annual – Form 15CB mandatory.

NRI Renting Property in India? Get It Done Right From lease agreements to repatriation compliance, our online legal consultation ensures your rental income is managed lawfully and efficiently from abroad.

Practical Tips

Use registered agents/property managers for remote handling.
Draft lease with clear rent, TDS, maintenance and termination clauses.
Credit rent to NRO; repatriate via CA certificate.
File ITR-2 timely (e-filing portal).
Monitor 26AS/AIS quarterly for TDS credits.
Apply Section 197 early for lower TDS.
Ensure RERA compliance if property is under construction.
Use rent agreement templates from legal platforms.

Frequently Asked Questions on How NRIs Can Rent Out Property in India

Q1. How is rental income taxed for NRIs in India?

Ans1. Rental income is taxed under “Income from House Property” after deducting municipal taxes, 30% standard deduction on NAV and home loan interest (Section 24). Taxed at slab rates; tenant deducts TDS at 31.2% (30% + cess) on every payment.

Q2. What is the TDS rate on rent paid to an NRI landlord and who deducts it?

Ans2. Tenant must deduct TDS at 31.2% (30% tax + 4% cess) on every rent payment, regardless of amount. Tenant is legally responsible for deduction, deposit, filing Form 26Q and issuing Form 16A.

Q3. What forms are required when rent is paid to an NRI landlord?

Ans3. Tenant deducts TDS, files Form 26Q quarterly, issues Form 16A. If annual rent >₹5 lakh, tenant obtains Form 15CB from CA and files Form 15CA online before remittance.

Q4. Can NRIs claim deductions on rental income from Indian property?

Ans4. Yes, 30% standard deduction on NAV, municipal taxes paid, full home loan interest (let-out property), principal repayment up to ₹1.5 lakh (Section 80C) and additional interest deductions under 80EE/80EEA if eligible.

Q5. Is filing an income tax return mandatory for NRIs earning rental income?

Ans5. Yes, mandatory if total Indian income >₹2.5 lakh (old regime) or ₹4 lakh (new regime FY 2025-26), even if full TDS deducted. File ITR-2 to claim deductions/refunds.

Q6. Can NRIs get a refund if excess TDS is deducted on rental income?

Ans6. Yes, file ITR-2 to claim refund of excess TDS. Alternatively, apply for lower TDS certificate under Section 197 (Form 13) if liability is lower.

Q7. Can NRIs use DTAA benefits on rental income from India?

Ans7. Yes, residents of countries with DTAA (e.g., US, UK, UAE) can claim lower withholding (10–15%) by submitting Form 10F + Tax Residency Certificate. Foreign tax credit available in residence country.

Q8. Which bank account should NRIs use to receive rent in India?

Ans8. Rent normally credited to NRO account. If tenant is also NRI paying from their NRE account, can credit to NRE account.

Q9. What happens if the tenant fails to deduct TDS on rent paid to an NRI?

Ans9. Tenant faces penalty equal to TDS amount + interest; possible imprisonment (3 months to 7 years under Section 276B). NRI can still claim tax credit via ITR.

Q10. Can NRIs repatriate rental income earned in India?

Ans10. Yes, up to USD 1 million per financial year after paying taxes; requires Form 15CA/CB, CA certificate and bank approval.

Q11. Is lease agreement registration mandatory for NRI landlords?

Ans11. Yes, if lease >11 months; registration under Registration Act ensures legal validity and protection against disputes.

Q12. What is Form 15CA and Form 15CB for NRI rental income?

Ans12. Form 15CA is online declaration for remittance; Form 15CB is CA certificate required if annual rent >₹5 lakh. Tenant files them before remitting rent abroad.

Q13. Is advance tax required for NRI rental income?

Ans13. Yes, if total tax liability >₹10,000 in FY; pay in installments to avoid interest under Sections 234B/C.

Q14. What deductions are available for self-occupied vs let-out property for NRIs?

Ans14. Let-out: full interest deduction (Section 24), 30% standard. Self-occupied: interest up to ₹2 lakh (Section 24); principal up to ₹1.5 lakh (80C).

Q15. Do NRIs get fewer deductions under the new tax regime for rental income?

Ans15. Yes, new regime allows 30% standard + municipal taxes, but no 80C/80D/80G deductions (except standard deduction ₹75,000 if salaried).

Q16. How can NRIs apply for lower TDS certificate on rent?

Ans16. Apply under Section 197 (Form 13) with income details and justification to Assessing Officer for lower/nil TDS rate.

Q17. Does RERA apply to NRI landlords renting out property?

Ans17. Yes, if property is under construction or part of registered project, ensure RERA compliance (registration, buyer protections).

Q18. What are common mistakes NRIs make with rental income tax?

Ans18. Missing TDS compliance, not filing ITR, overlooking DTAA relief, wrong account (NRE instead of NRO), poor documentation.

Q19. How do NRIs e-file ITR for rental income?

Ans19. Use incometax.gov.in portal, file ITR-2, e-verify via DSC/Aadhaar OTP/net banking; upload Form 16A if needed.

Q20. What happens to rental income tax if NRI returns to India?

Ans20. Status changes to resident; worldwide income becomes taxable; NRO/NRE redesignated as resident accounts.

Need Expert Help with NRI Rental Income & Tax Compliance? Managing rental income in India as an NRI involves strict TDS rules, DTAA considerations, lease documentation and repatriation compliance. A small mistake can lead to heavy penalties or loss of tax benefits. Speak to our experienced legal professionals online for personalized guidance on NRI property rental, tax planning, lower TDS certificates, tenant compliance and end-to-end legal support, without visiting India.

Adv. Parineeti GN

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Parineeti GN is a legal consultant who prioritises ethical and professional conduct. She graduated with (B.A. and LL.B) from the K.L.E. Society Law College. With more than 8 years of experience in handling legal cases independently. She has the potential to understand and explain complicated legal words in simple terms to clients.

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