# NRI Rental Income Tax

> Rent an NRI earns from property in India is taxable in India as house-property income: tax is computed on the rent less municipal taxes, a 30% standard deduction and eligible home-loan interest. The tenant must deduct TDS at 30% plus surcharge and cess on rent paid to an NRI — there's no threshold — and file a non-resident TDS return, so NRIs often recover excess TDS by filing an ITR or get a lower deduction certificate in advance.

Practice: NRI Tax Services — https://www.industax.com/services/nri-tax/

Many tenants don't realise that paying rent to an NRI makes them responsible for TDS and a TAN. When they deduct at the lower rates meant for resident landlords, or not at all, the NRI's Form 26AS doesn't match and problems surface later.

The NRI's actual tax is often far lower than 30% of gross rent, because of the standard deduction, interest and slab rates. A lower or nil deduction certificate (Form 128 from April 2026) reduces TDS at source; otherwise the excess is claimed back through the ITR.

Rent is credited to an NRO account and can be repatriated after tax, within the USD 1 million per financial year limit, with the remittance forms.

## Key facts

| Item | Detail |
| --- | --- |
| Taxable as | Income from house property |
| Deductions | Municipal taxes, 30% standard deduction, home-loan interest |
| TDS by tenant | 30% + surcharge + cess; no threshold; tenant needs a TAN |
| Reduce TDS | Lower/nil deduction certificate (Form 128) |
| Repatriation | From NRO after tax, within USD 1 million per FY |

## Who needs this

- NRIs letting out flats or commercial property in India
- Tenants paying rent to NRI landlords
- NRIs with excess TDS on rent

## What's included

- Tax computation and ITR filing
- Lower deduction certificate application
- Tenant guidance on TAN and TDS returns
- Repatriation paperwork

## Documents

- Rent agreement
- Municipal tax receipts
- Home-loan interest certificate
- Form 16A / 26AS

## Process

1. **Compute** — Taxable rent computed with deductions.
2. **Reduce TDS** — Lower deduction certificate where useful.
3. **File** — ITR filed and refund tracked.

## FAQs

### What is the TDS rate on rent paid to an NRI?

30% plus surcharge and 4% cess, with no minimum threshold, unless the NRI provides a lower deduction certificate.

### Does the tenant need a TAN to pay rent to an NRI?

Yes. TDS on payments to non-residents is deposited using a TAN and reported in the non-resident TDS return.

### Can I get the extra TDS back?

Yes, by filing an ITR showing your actual tax, which is usually lower after deductions.

## Official sources

- Income Tax e-Filing portal: https://www.incometax.gov.in/
- Reserve Bank of India — FEMA directions: https://www.rbi.org.in/

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Canonical page: https://www.industax.com/services/nri-tax/nri-rental-income-tax
Publisher: Indus Tax — CA-led tax and compliance firm (https://www.industax.com). Contact: info@industax.com, 9059139258.
This is general information, not advice for your specific facts.