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By the NRIWallah team · Last reviewed: August 2026
31.2% is withheld on your gross rent with no threshold — but tax is owed on a far smaller figure. See the gap, and both ways to close it.
The rule most people get wrong. The ₹50,000-a-month threshold you may have read about is section 194-IB, and it only applies when the landlord is a resident. Rent paid to an NRI falls under section 195 (renumbered 393(2) from 1 April 2026), which has no threshold at all — 31.2% is due from the first rupee, on residential and commercial property alike. Meanwhile your actual tax is charged on a much smaller figure. This works out both.
Typically 5–10%. This does not reduce the TDS base — see below.
Property tax actually paid by you, not by the tenant. Deductible in full.
Interest only, not the principal. Deductible in full on a let-out property.
NRO interest, dividends, pension. Rent stacks on top of these for slab purposes.
TDS withheld over the year
Tax you actually owe
on taxable income of
Locked up as a refund claim
Withholding runs at your real liability. That money is not lost, but you only recover it by filing an Indian return after the year ends — typically 12–18 months after the first rupee was deducted. A Form 13 certificate obtained in advance stops the over-deduction at source instead. On these figures the TDS is close to — or below — your actual liability, so there is little to reclaim. Check that you have accounted for all your other Indian income; a shortfall has to be settled as advance tax.
Your manager collects the rent, keeps a commission and remits the rest. The TDS is still due on the full rent the tenant pays, not on what lands in your account — the commission is an application of your income, not a reduction of it. Agents who compute TDS on the net figure under-deduct every month.
You also cannot claim the commission as a separate expense. The 30% statutory deduction below is what covers management and maintenance — it is a flat allowance, not a reimbursement, so you take the 30% whether your actual costs are higher or lower.
Rent above ₹50 lakh a year picks up surcharge, pushing the withholding rate past the usual 31.2%.
Your interest exceeds the rental income by . Under the new regime a loss from house property cannot be set off against your other income, so it is shown as nil rather than as relief.
A resident with your exact income would pay . You pay . The difference is the section 87A rebate — renumbered section 157 under the Income Tax Act 2025 — which is available only to residents. This is why the widely-quoted "no tax up to ₹12 lakh" headline does not reach you: you still get the ₹4 lakh basic exemption, but not the rebate that wipes out the tax above it.
The payer's checklist, every month:
Getting this wrong makes the payer — not you — an assessee-in-default under section 201, with interest and penalty on top of the tax.
File ITR-2 after the financial year ends. Check the TDS appears in your Form 26AS and AIS, claim the credit, and nominate a pre-validated NRO account for the refund.
Interest-free to you for the whole period.
Apply on Form 13 under section 197 before the year starts. The officer certifies a rate matching your real liability and your payer deducts that instead.
Certificate is payer-specific, so reapply if your tenant changes.
What actually happens in practice. Plenty of NRI landlords have let property for years with no TDS deducted and never heard from anyone. That is not evidence the rule is different — it reflects two things. First, the obligation sits with whoever pays you, so you were never the party in breach; if you declared the rent and paid the tax, your own position is straight. Second, a payer who never deducts also never obtains a TAN or files a Form 27Q, so nothing enters the system to mismatch against. Enforcement concentrates where the paperwork exists: business tenants, whose auditors reconcile rent paid against TDS deducted and who lose the deduction for rent paid to a non-resident without it. Worth knowing rather than worrying about — but if no TDS is being deducted, make sure the tax is going in as advance tax, or interest under sections 234B and 234C can follow.
Estimates for FY 2026-27 (AY 2027-28) under the default new regime, whose slabs are unchanged from FY 2025-26. Assumes a single let-out property and that the rent is your only Indian income beyond anything entered above. Excludes any tax due where you live — the same rent is usually taxable there too, with credit for Indian tax under the relevant double-taxation treaty. Not tax advice; confirm your position with a qualified adviser before relying on it.
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Almost every NRI who lets a flat in India has read that TDS on rent starts at ₹50,000 a month. It is one of the most quoted figures in Indian personal finance, and for rent paid to a resident landlord it is correct. It has nothing to do with you.
That threshold sits in section 194-IB, which applies when an individual pays rent to a resident. A second threshold — ₹6 lakh a year, raised from ₹2.4 lakh in April 2025 — sits in section 194-I and covers businesses paying rent to residents. The moment the landlord is a non-resident, both provisions fall away and section 195 takes over. From 1 April 2026 the same rule is renumbered section 393(2) under the Income Tax Act 2025, but the substance is unchanged.
Section 195 has no threshold. A tenant paying ₹8,000 a month to an NRI landlord carries the same obligation as one paying ₹80,000: deduct 31.2%, deposit it monthly, file quarterly returns. Whether the property is a studio flat or a commercial unit makes no difference either, because the residential and commercial distinctions also belong to the sections that no longer apply.
The 31.2% is charged on your gross rent. Your actual liability is charged on income from house property, which is a much smaller number: gross rent, less any municipal taxes you paid, less a flat 30% statutory deduction, less the whole of the interest on any loan against the property.
Take ₹50,000 a month with no municipal taxes and no home loan. Gross rent for the year is ₹6 lakh, so ₹1,87,200 is withheld. But the 30% deduction takes the taxable figure to ₹4.2 lakh, and the ₹4 lakh basic exemption absorbs most of what is left. Tax actually due: about ₹1,040. The withholding is roughly 180 times the liability, and every rupee of the difference sits with the government until you file and claim it back.
That 30% is a statutory allowance rather than a reimbursement, which matters if an agent manages the property for you. You take the 30% whether your real costs were higher or lower, and you cannot deduct the agent’s commission separately on top of it.
There is a second trap, and it is newer. Since the 2025 budget, “no income tax up to ₹12 lakh” has been repeated everywhere. That relief is the rebate under section 87A — section 157 under the new Act — and it is available only to residents.
As an NRI you keep the ₹4 lakh basic exemption, so the first ₹4 lakh is untaxed. But nothing wipes out the tax above it. A resident with ₹12 lakh of income pays nothing; an NRI with exactly the same ₹12 lakh pays around ₹62,400. If you have been planning around the ₹12 lakh headline, the plan does not hold.
The slow way is to reclaim it. File ITR-2 after the year ends, report the rent under income from house property, claim your deductions and take credit for the TDS. Check the deduction actually appears in your Form 26AS and AIS first — if your tenant deducted the money but never filed Form 27Q, there is no credit to claim and you will need to chase them for Form 16A. Nominate a pre-validated NRO account, because an unvalidated one is the most common reason a refund stalls. Twelve to eighteen months is normal.
The fast way is to stop the over-deduction before it starts. A Form 13 application under section 197 asks the assessing officer to certify a lower rate reflecting what you will genuinely owe. Your tenant then deducts at that rate. Apply before the financial year begins — the certificate takes weeks, is not backdated, and names a specific payer, so a change of tenant means a fresh application. The mechanism is the same one used when selling Indian property , where the sums involved are larger still.
Many NRI landlords have let property for years without a rupee of TDS being deducted and have never heard from the department. That is worth addressing honestly rather than pretending otherwise.
The obligation falls on whoever pays you, so a tenant who fails to deduct is the party in breach — not you. If you declared the rent and paid the tax, your own position is sound. Enforcement is also structurally thin here: a tenant who never deducts never obtains a TAN and never files a return, so nothing enters the system to mismatch against. The cases that do surface almost always involve business tenants, whose auditors reconcile rent against TDS and who lose the expense deduction if it is missing.
None of that makes the rule optional, and it is not advice to ignore it. But it explains why the gap between the law and common practice is so wide, and it locates the risk where it actually sits. The one exposure that is genuinely yours is timing: with no TDS credited during the year, the tax was due as advance tax, and settling it only at filing can attract interest under sections 234B and 234C.
If you also hold NRO deposits or are planning to sell, the repatriation calculator covers moving the proceeds out under the USD 1 million annual limit, and the DTAA estimator shows how the rent is treated where you live.
NRIWallah does not provide tax advice. Figures are estimates for FY 2026-27 (AY 2027-28) under the default new regime and assume a single let-out property. The treatment of agents as representative assessees, and the interaction between TDS failures and a landlord’s own compliance, both turn on facts specific to your arrangement — take professional advice before acting.
