Close Menu
  • Latest News
  • Indian Events Near You
  • Local Trusted Business
  • Local Classifieds
  • Stories & Insights
  • Promote Your Business
Facebook X (Twitter) Instagram YouTube
  • About Us
  • Promote Your Business
Facebook X (Twitter) Instagram
Indian CommunityIndian Community
Trending
  • Malgudi Days Nostalgia: Why This Iconic Show Still Captivates Every Indian Heart
  • Masters in Norway for Indian Students: The Ultimate Positive Leap for Your Future
  • Phirni Recipe for Raksha Bandhan | A Creamy, Festive Indian Dessert
  • Thematic Mutual Funds for NRIs: Smart Investment Strategies for Exceptional Growth in India
  • Dirty Shoe Hack This Monsoon: Powerful DIY Tricks to Instantly Revive Ruined Footwear
  • India’s Obesity Crisis Demands Urgent Action: A Powerful Call for Preventive Healthcare
  • Son of Sardaar 2 Duja Trailer Delivers Hilarious Chaos With a Power-Packed Ensemble
  • Send Rakhi to the USA, UK, Canada, or Australia from India: A Powerful Guide for Hassle-Free and Heartfelt Delivery
  • News
  • Events
  • Entertainment
    • Indian Artists
    • Entertainment News
    • Community TV
  • Indian Food
  • Trusted Business
    • Business and Entrepreneurship
  • Sport
  • Students
  • Stories
  • NRI
    • NRI Investment
Login
Indian CommunityIndian Community
Home » NRI - Non Resident Indian Diaspora
NRI - Non Resident Indian Diaspora

Taxation on Rental Income in India for NRIs: Essential Rules, Penalties & Deductions Explained

Amit GuptaBy Amit GuptaJune 9, 2025No Comments5 Mins Read
Taxation on Rental Income
Share
Facebook Twitter LinkedIn Pinterest Email

Taxation on rental income in India for NRIs can be a complex subject—but understanding it is crucial for compliance and maximizing returns. Whether you’re living in the US, UK, Canada, or elsewhere, earning rental income from Indian property comes with its own set of responsibilities under Indian tax laws. This blog breaks down the rules, deductions, penalties, and ways to reduce your tax burden effectively.

In this Article

  • How Rental Income is Taxed for NRIs
    • Steps to Calculate Taxable Rental Income:
  • Mandatory TDS Compliance for Tenants
  • Claiming Deductions to Reduce Tax Liability
    • Common Deductions:
  • DTAA: Avoiding Double Taxation
    • Section 197: Reduce TDS at Source
  • Compliance Checklist for NRIs
  • Consequences of Non-Compliance
    • Frequently Asked Questions

How Rental Income is Taxed for NRIs

For Non-Resident Indians (NRIs), the Indian Income Tax Act mandates that rental income from property located in India is taxable. The amount is subject to Tax Deducted at Source (TDS) at a flat rate of 31.2 percent. However, the actual taxable income is determined using the Net Annual Value (NAV) method.

Check Out: 5 Costly Mistakes NRIs Make With Foreign Asset Disclosure—and How to Avoid Them

Steps to Calculate Taxable Rental Income:

  1. Start with Gross Annual Rent received
  2. Subtract municipal taxes paid during the financial year
  3. Apply a 30 percent standard deduction on the NAV
  4. Deduct interest on home loans, if applicable

The final figure is your taxable rental income, on which TDS is deducted by the tenant.

Mandatory TDS Compliance for Tenants

Your tenant is legally responsible for deducting 31.2 percent TDS from every rent payment made to you and must:

  • Obtain a Tax Deduction Account Number (TAN)
  • Submit Form 15CA before remitting rent
  • Obtain Form 15CB from a Chartered Accountant if annual rent exceeds ₹5 lakh
  • Provide you with Form 16A as TDS proof after filing Form 26Q quarterly

Rent must be deposited into your NRO account unless paid from an NRE account by another NRI.

Claiming Deductions to Reduce Tax Liability

Even though TDS is deducted at a high rate, NRIs can significantly lower their effective tax by claiming these deductions:

Common Deductions:

  • 30 percent standard deduction on NAV under Section 24
  • Full deduction of municipal taxes paid
  • Interest on home loan:
    • Up to ₹2 lakh per year if self-occupied
    • Full amount if rented out
  • Principal repayment under Section 80C (up to ₹1.5 lakh)
  • Additional ₹50,000 under Section 80EE (if applicable)

These benefits directly reduce taxable income and can result in refunds when you file returns in India.

Check Out: Aadhaar Card Guide: Experts Say This 1 Aadhaar Rule Could Simplify Every NRI’s Life in India

DTAA: Avoiding Double Taxation

India has Double Taxation Avoidance Agreements (DTAA) with over 90 countries, including the USA, UK, Canada, and Australia. If you reside in one of these, you can:

  • Claim foreign tax credit for the TDS already paid in India
  • Avoid being taxed twice on the same rental income

However, filing income tax returns in India is still mandatory to avail these benefits and claim any excess TDS refund.

Section 197: Reduce TDS at Source

If your actual tax liability is less than 31.2 percent, you can apply for a lower TDS certificate under Section 197 by filing Form 13 with income estimates and proof. Once granted, this allows your tenant to deduct TDS at the lower approved rate, improving your cash flow.

Compliance Checklist for NRIs

To stay compliant and avoid penalties, NRIs must:

  • Keep valid lease agreements with NRI status mentioned
  • Collect and store TDS certificates (Form 16A)
  • Regularly check Form 26AS for tax credits
  • File an Indian income tax return if total income exceeds ₹2.5 lakh (old regime) or ₹3 lakh (new regime)

Consequences of Non-Compliance

Failing to deduct or deposit TDS has serious penalties for tenants:

  • Penalty equal to the TDS amount under Section 271C
  • Imprisonment up to 7 years under Section 276B

For NRIs, not reporting rental income or skipping ITR filing can lead to audits, penalties, and legal complications, especially if trying to claim DTAA benefits abroad.

Check Out: Power of Attorney for NRIs: Essential Guide to Buying or Selling Real Estate in India

Taxation on rental income in India for NRIs requires careful attention—but with informed decisions and timely action, it can be managed smoothly. Make use of deductions, maintain clean records, and comply with TDS and ITR rules to maximize your rental income.

Partnering with expert platforms like iNRI can simplify your documentation, help with TDS certifications, and ensure you stay compliant across borders. Whether you’re managing one property or many, smart tax planning can go a long way in protecting your earnings and peace of mind.

Frequently Asked Questions

Q1. Do NRIs need to pay tax on rental income in India?
Yes, rental income is taxable in India for NRIs and is subject to 31.2 percent TDS.

Q2. Can NRIs reduce their rental tax liability?
Yes, through standard deductions, municipal tax deductions, and home loan interest deductions.

Q3. How can I avoid double taxation as an NRI?
By claiming foreign tax credit under DTAA and filing returns in both countries.

Q4. Is TDS deduction mandatory for all tenants?
Yes, tenants must deduct TDS regardless of the rent amount and follow proper compliance procedures.


nri Rental income Tax Taxation
Share. Facebook Twitter Pinterest LinkedIn WhatsApp Reddit Tumblr Email
Amit Gupta
  • Website
  • X (Twitter)
  • Instagram
  • LinkedIn

Amit Gupta, co-founder and Editor-in-Chief of Indian.Community, is based in Atlanta, USA. Passionate about connecting and uplifting the Indian diaspora, he balances his time between family, community initiatives, and storytelling.Reach out to him at pr***@****an.community.

Related Posts

Masters in Norway for Indian Students: The Ultimate Positive Leap for Your Future

July 23, 2025

Thematic Mutual Funds for NRIs: Smart Investment Strategies for Exceptional Growth in India

July 23, 2025

Norwegian Embassies in India: Complete & Trusted Guide to Smooth Visa and Passport Services

July 22, 2025
Join Indian Community
Join Indian Community Near You
Latest News

PM Modi arrives in London, begins 2-day UK visit

July 23, 2025

4th Test: Pant taken for scans after leaving the field due to right foot injury (Ld)

July 23, 2025

St. Francis teams shine on Day 3 of Oriental Cup 2025 with wins in both categories

July 23, 2025

MP: Labourer couple strikes fortune with eight raw diamond find in Panna’s shallow mines

July 23, 2025

51 pc of Tripura blocks now self-sufficient in food grain production: Minister

July 23, 2025

Mamata Banerjee inaugurates 134th Durand Cup, calls Bengal the ‘spiritual home of Indian football’

July 23, 2025

Bengal govt seeking legal opinion against EC’s directive seeking functional, financial independence for CEO’s office

July 23, 2025

Rajasthan CM approves revised land compensation policy for 400 kV and above transmission lines

July 23, 2025

Manipur govt declares state mourning tomorrow for theatre legend Ratan Thiyam

July 23, 2025

Indian media sector scales new heights with regional expansion and digital dominance: Govt

July 23, 2025
Sponsored Ads
Community Outreach
  • Volunteering Opportunities
  • Indian Community Ambassadors
  • Indian Community Icons
  • Appear On The Indian Community Podcast
Indian Community
Afghanistan Albania Algeria American Samoa Andorra Angola Antigua and Barbuda Argentina Armenia Australia Austria Azerbaijan Bahrain Bangladesh Barbados Belarus Belgium Belize Benin Bermuda Bhutan Bolivia Bonaire, Sint Eustatius and Saba Bosnia and Herzegovina Botswana Brazil Brunei Bulgaria Burkina Faso Burundi Cambodia Cameroon Canada Cape Verde Central African Republic Chad Chile China Colombia Comoros Congo Costa Rica Côte d'Ivoire Cote D'Ivoire (Ivory Coast) Croatia Cuba Cyprus Czech Republic Czechia Democratic Republic of the Congo Denmark Djibouti Dominica Dominican Republic Ecuador Egypt El Salvador Equatorial Guinea Eritrea Estonia Eswatini Ethiopia Faroe Islands Fiji Islands Finland France French Polynesia Gabon Gambia Georgia Germany Ghana Greece Greenland Grenada Guadeloupe Guatemala Guinea Guyana Haiti Honduras Hong Kong S.A.R. Hungary Iceland India Indonesia Iran Iraq Ireland Israel Italy Jamaica Japan Jersey Jordan Kazakhstan Kenya Kiribati Kuwait Kyrgyzstan Lao People's Democratic Republic Laos Latvia Lebanon Lesotho Liberia Libya Liechtenstein Lithuania Luxembourg Madagascar Malawi Malaysia Maldives Mali Malta Man (Isle of) Martinique Mauritania Mauritius Mexico Micronesia Moldova Mongolia Montenegro Morocco Mozambique Myanmar Namibia Nauru Nepal Netherlands New Caledonia New Zealand Niger Nigeria North Korea North Macedonia Norway Oman Pakistan Palestinian Territory Occupied Panama Papua New Guinea Paraguay Peru Philippines Poland Portugal Puerto Rico Qatar Reunion Romania Russia Rwanda Saint Kitts and Nevis Saint Lucia Saint Vincent and the Grenadines Samoa San Marino Sao Tome and Principe Saudi Arabia Senegal Serbia Seychelles Sierra Leone Singapore Slovakia Slovenia Solomon Islands Somalia South Africa South Korea South Sudan Spain Sri Lanka Sudan Suriname Sweden Switzerland Syria Syrian Arab Republic Taiwan Tajikistan Tanzania Thailand The Bahamas The Gambia Timor-Leste Togo Tonga Trinidad and Tobago Tunisia Turkey Turkmenistan Tuvalu Uganda Ukraine United Arab Emirates United Kingdom United States Uruguay Uzbekistan Vanuatu Venezuela Vietnam Virgin Islands (US) Yemen Zambia Zimbabwe

Facebook X (Twitter) Instagram Pinterest
  • About Us
  • Contact Us
  • Blog
  • Privacy Policy
  • Terms of Service
  • Book Tickets to India
© 2025 Designed by CreativeMerchants.

Type above and press Enter to search. Press Esc to cancel.

Change Location
Find awesome listings near you!

Sign In or Register

Welcome Back!

Login below or Register Now.

Continue with Google
Lost password?

Register Now!

Already registered? Login.

Continue with Google

A password will be e-mailed to you.