NRI Tax on Rental Income in India: TDS, Deductions and Refunds (2026)

How India taxes rental income for NRIs: normal slab rates

Rent from property in India is taxed as "income from house property" at the same slab rates residents pay. Where you live, and whether the tenant pays into an Indian or foreign account, doesn't change that.

As an NRI, you start paying tax once your total Indian income crosses ₹4 lakh under the new regime, or ₹2.5 lakh under the old one. That's lower than you might expect if you've heard income up to ₹12 lakh is tax-free. That relief comes from a rebate, and the rebate is only for residents.

"Total Indian income" matters here. Rent is added to your other Indian income, such as NRO account interest, before the slabs apply. Interest on NRE and FCNR deposits stays out because it's tax-free while you're a non-resident. If you're unsure whether you count as an NRI for tax this year, the residential status guide explains the day count.

Calculating taxable rental income as an NRI

You aren't taxed on the full rent. You start with the year's rent, subtract the property tax you paid, take a flat 30% off what's left, and then subtract any home loan interest. Here's how each step works.

The 30% is the part most people underestimate. Because it's fixed, a society maintenance bill, a painter or a property manager's fee doesn't reduce your tax any further. You can't claim depreciation on a house you rent out either, even though some older guides list it.

If you have a home loan, you can also deduct up to ₹1.5 lakh of principal repayment a year from your total income, the deduction many people know as 80C. That one is only available under the old regime. The interest goes in step 5 under either regime, but the two regimes treat a resulting loss differently, as the section on choosing a regime explains.

TDS on rent paid to an NRI landlord: 31.2% of the full rent

Anyone paying you rent while you're an NRI has to deduct tax before paying you, whether the tenant is a company or a family. The rate is 30% plus 4% cess, which comes to 31.2% of the rent. If your Indian income crosses ₹50 lakh, a surcharge is added on top. Your tenant's CA may know this as section 195, which became section 393(2) under the new Income-tax Act.

Two things make this harsher than it first looks. The tenant deducts on the gross rent, before your municipal tax, the 30% deduction or loan interest come into the picture. And there's no minimum: a resident landlord's tenant only deducts 2% once rent crosses ₹50,000 a month, while your tenant deducts 31.2% from the first rupee.

What your tenant has to do

Most of the paperwork sits with your tenant. They need to:

1. Get a TAN (tax deduction account number). People buying property from NRIs can now use their PAN instead, but tenants paying rent still need a TAN.

2. Deposit the tax within seven days of the end of each month, or by 30 April for tax deducted in March.

3. File a quarterly TDS return (Form 144, earlier called Form 27Q).

4. Give you a TDS certificate every quarter (Form 131, earlier called Form 16A).

Each deduction then shows up against your PAN on the income tax portal, in Form 26AS (now called Form 168) and your AIS. That's the figure you claim credit for when you file, so it's worth checking that every rupee your tenant deducted has actually reached the tax department. The Form 26AS and AIS guide shows how.

If your tenant doesn't deduct TDS

The tax doesn't go away. If your tenant skips TDS, the tenant is in default and can be charged the tax plus interest, but you still owe tax on the rent. You'd then pay it yourself through advance tax or self-assessment tax and report the rent in your return. Paying the tenant's share for them, or quietly agreeing to skip TDS, leaves both of you exposed if the department matches the rent to your PAN later.

How much TDS NRIs overpay on rent: three worked examples

For most NRI landlords, 31.2% TDS on gross rent is well above the tax actually due, often several times over. The examples below assume the rent is your only Indian income, you're on the new regime and you have no surcharge.

In the first case, taxable income stays under the ₹4 lakh basic exemption, so every rupee of TDS is excess. In the other two, the actual tax is a small fraction of what the tenant holds back. Your numbers will move if you have other Indian income, such as NRO interest or capital gains, because that pushes the rent into higher slabs. Even then, most landlords end up having more deducted than they owe.

That excess isn't lost. You get it back in one of two ways: stop it being deducted in the first place, or claim it after the year ends.

Reducing TDS on rental income: lower TDS certificate or refund

If you want the excess to stay in your hands during the year, apply for a lower TDS certificate before the rent starts. If you'd rather not deal with it upfront, let the tenant deduct 31.2% and claim the excess back when you file your return. A certificate suits a long lease with steady rent. A refund is simpler for a short tenancy, or if you'd rather not deal with the tax office mid-year.

Getting a lower TDS certificate before rent is paid

A lower TDS certificate lets your tenant deduct less, based on the tax you're actually likely to owe for the year. If you owe nothing, it can be nil. You apply online on the TRACES portal using Form 128 (earlier Form 13).

The application asks for your estimated income for the year, the tenant's details including their TAN, and your past returns. Once it's issued, send a copy to your tenant so they deduct at the new rate from the next payment. It covers the period stated on it, so apply again each financial year. The lower TDS certificate guide walks through the Form 128 application step by step.

Claiming excess TDS on rent back through your ITR

If TDS has already been deducted, the excess comes back as a refund once you file your Indian income tax return. NRIs can't use ITR-1, so with rental income you'll usually file ITR-2. Report the rent under house property and claim the TDS shown in your Form 26AS. The refund goes to a pre-validated Indian bank account, usually your NRO account.

File even if your income is below the taxable limit. Without a return, the tax department keeps the whole 31.2%. The TDS refund guide covers timelines and what to do if the refund is stuck, and this guide covers filing deadlines.

Old vs new tax regime for NRI rental income

For most NRI landlords without a home loan, the new regime gives the lower tax. Its slabs are wider, and the main thing the old regime adds for a landlord is the principal deduction and the use of a rental loss, both of which only matter if you're paying off a loan.

The old regime starts to pay off when loan interest is larger than the rent's net value, so the property runs at a loss. Under the old regime you can use up to ₹2 lakh of that loss against other Indian income, such as NRO interest or capital gains, and carry the rest forward for eight years. Under the new regime the loss simply lapses.

You choose the regime each year when you file. The new vs old regime guide for NRIs runs through the comparison with other income included.

Empty flats, joint owners and more than one property

Not every NRI's property situation is one flat with one tenant. Two common variations change the tax.

A flat you keep empty while you live abroad

A home you don't rent out is usually tax-free. If you can't live in it because you work abroad, it's treated as having no rental value, so there's nothing to tax. This works for up to two homes. If you own three or more that aren't let, you pick the two that stay tax-free, and you're taxed on the rent the others could fetch, even though no rent comes in.

A flat that's let for part of the year and empty for the rest is taxed on the rent you actually received, so the vacant months don't create notional income.

Property you own jointly with a spouse or sibling

Each co-owner is taxed on their own share of the rent and claims their own 30% deduction and share of loan interest. For TDS, the tenant treats each owner separately: 31.2% on the share paid to an NRI co-owner, and the resident rules on a resident co-owner's share. Each co-owner's share is also measured against their own basic exemption, which can bring the total tax down.

Indian rental income for NRIs in the US and UAE

Living in a country that has a tax treaty with India doesn't cut your Indian tax on rent. Under India's treaties, including the India-US treaty, India keeps the right to tax income from property in India, so the full Indian tax applies. What changes is how your home country treats that income.

If you live in the US

US citizens, green card holders and US tax residents report worldwide income, so your Indian rent goes on Schedule E of your US return, converted to dollars. You'll also need to claim depreciation on the flat in your US return, spread over 30 years for a rental home outside the US, even though India doesn't allow it.

The Indian tax you pay comes back as a foreign tax credit on Form 1116. The catch is that the IRS only credits tax you actually owe. Excess TDS that you could have claimed back from India doesn't count, so file your Indian return and claim the credit for the tax it shows. The India-US DTAA guide covers the credit in more detail.

If you live in the UAE

The UAE has no personal income tax, so there's nothing at home to set your Indian tax against. Your Indian tax is your final cost, which makes the lower TDS certificate or the ITR refund the only way to bring it down. The India-UAE DTAA guide covers where the treaty does help, such as residency and other kinds of income.

NRI rental income tax: questions landlords ask

Is rent from a property outside India taxable in India for an NRI?

No. As a non-resident, you pay Indian tax only on income earned or received in India. Rent from a flat in London or Dubai, paid into a bank account there, is outside Indian tax.

Do OCI cardholders and foreign citizens pay the same tax on Indian rent?

Yes. Indian tax depends on your residential status for the year, which comes from the days you spend in India. Your passport doesn't change it. An OCI cardholder living abroad is taxed on Indian rent exactly like an NRI, and the tenant deducts the same 31.2%.

What happens to the tax on rent if I move back to India mid-year?

Indian rent is taxable whatever your status, so it stays taxable after you return. What changes is the TDS: once you're resident, your tenant switches to the resident rules, which mean 2% and only when rent is above ₹50,000 a month. The residential status guide explains when the switch happens.

Is TDS on rent the same as TDS when I sell the property?

No. When you sell, the buyer deducts TDS on the capital gain at capital gains rates, under different rules and forms. The tax on sale of property guide covers it.