NRI rental income tax in India: TDS, ITR and repatriation
NRI landlords must pay Indian income tax on rental income from Indian property. The tenant must deduct TDS at 31.2% on gross rent. The NRI claims a 30% standard deduction and deducts municipal taxes and home loan interest to arrive at taxable income. Net rental income flows to the NRO account and can be repatriated within the USD 1 million annual limit.
Tenant must deduct TDS at 31.2% on NRI landlord's rent
Tenants paying rent to an NRI landlord must deduct TDS at 30% (plus surcharge and cess — effective ~31.2%) under Section 195. The NRI can claim the 30% standard deduction and home loan interest when filing ITR-2. Net rental income is taxable at applicable slab rates, with TDS offset. The rent is credited to the NRO account.
Key points
- Tenant deducts TDS at 31.2% — Tenants of NRI landlords must deduct TDS at ~31.2% on gross rent under Section 195 and deposit it with the government.
- 30% standard deduction — NRIs can claim a flat 30% standard deduction on gross rental income when computing taxable house property income — no receipts needed.
- Rent credited to NRO — Rental income from Indian property must be credited to the NRO account — it is India-source income and cannot go directly to NRE.
How NRI rental income is taxed
Gross annual rent (actual rent or expected rent, whichever is higher, less vacancy) minus municipal taxes paid = Net Annual Value (NAV).
Standard deduction: 30% of NAV is deducted as a flat allowance (no receipts needed).
Home loan interest: actual interest paid on a home loan for the property is fully deductible — no cap applies for let-out property.
Taxable income = NAV × 70% − home loan interest. This is added to other India income and taxed at the applicable slab rate.
TDS offset: TDS deducted by the tenant (Form 26AS/AIS) is credited against the final tax liability. File ITR-2 to claim any TDS refund or pay any balance.
Tenant obligations for NRI landlord
The tenant (individual or HUF paying rent above ₹50,000/month) must deduct TDS under Section 194IB at 5% — but this section applies to resident landlords only.
For NRI landlords, Section 195 applies and TDS is 30% plus surcharge and cess on gross rent — regardless of the rent amount.
The tenant must obtain a TAN, deposit TDS to the government and issue Form 16A to the NRI landlord quarterly.
If the tenant does not deduct TDS, the default lies with the tenant — the NRI should inform the tenant of the obligation.
Frequently asked questions
Can I reduce TDS on my rental income as an NRI?
Yes. Apply to the Income Tax Assessing Officer (AO) for a lower TDS certificate under Section 197 — this is issued if taxable income after deductions is below the TDS rate. Submit Form 13 online on the Income Tax portal.
Can rental income be credited to an NRE account?
No. Rental income is India-source income and must be credited to the NRO account. Only overseas-earned funds can be credited to NRE.
Can I repatriate rental income from India?
Yes, from the NRO account within the USD 1 million annual limit, after paying applicable taxes and filing Form 15CA/15CB.