Money
By , founder·13 min read·Published 2026-06-19·Updated 2026-10-12

Short answer: TDS on rent paid to an NRI landlord is 31.2% of gross rent: 30% under section 393(2), Table S.No. 17 of the Income-tax Act, 2025 (old section 195), plus 4% cess. There is no threshold, so it starts at the first rupee. Surcharge lifts it to 34.32%, 35.88% or 39% when the rent paid in the year crosses 50 lakh, 1 crore or 2 crore. The tenant needs a TAN, files Form 144 each quarter and issues Form 131. A Form 128 certificate cuts the rate.

TDS on Rent Paid to an NRI Landlord: 31.2%, No Threshold, and the Form 128 Fix

TDS on rent paid to an NRI landlord is 31.2% of gross rent, deducted by the tenant from the first rupee under section 393(2), Table S.No. 17 of the Income-tax Act, 2025 (old section 195). That is 30% tax plus 4% cess. Surcharge takes it to 34.32%, 35.88% or 39% once the rent paid in the year crosses 50 lakh, 1 crore or 2 crore. The tenant needs a TAN, deposits the tax by the 7th of the next month, files Form 144 each quarter and gives you Form 131. A lower-deduction certificate on Form 128 is the one way to cut the rate.

Most tenants either cannot run that chain or refuse to, and the liability lands on you. One owner put it plain: "I thought the tenant miscalculated. The deduction was accurate." The number is not a mistake. It is the non-resident TDS rule working as written.

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

Section 393(2) of the Income-tax Act, 2025, Table S.No. 17, covers "any other sum" paid to a non-resident and sets the rate as "rates in force". Part II of the First Schedule to the Finance Act, 2026 fixes that rate at 30% on "the whole of the other income" of a non-resident Indian, and rent falls there. Section 2(16) of the same Act adds the 4% health and education cess on tax plus surcharge. Thirty, plus 4% of thirty, is 31.2%.

The rule lived in Section 195 of the Income-tax Act, 1961 until the 2025 Act took effect on 1 April 2026. The rate did not change. Surcharge turns on the rent paid or likely to be paid to you in the year, not on your total income:

Rent paid in the year Base rate Surcharge Cess Effective TDS
Up to 50 lakh 30% Nil 4% 31.2%
50 lakh to 1 crore 30% 10% 4% 34.32%
1 crore to 2 crore 30% 15% 4% 35.88%
Above 2 crore 30% 25% 4% 39%

A landlord who has opted out of the new tax regime under section 202 pays 37% surcharge above 5 crore, an effective 42.74%. Owners letting one or two flats sit in the first band. So 31.2% is the figure to hold. It comes off gross rent, not rent after the standard 30% deduction and not rent after municipal taxes. Your tax on rental income, after the 30% standard deduction under Section 22(1)(a) of the Income-tax Act, 2025 (old Section 24(a)), runs far lower. The gap between what is withheld and what you owe is the cash that gets locked up.

Worked example: 60,000 a month

A Bangalore flat let at 60,000 a month to a tenant, owned by an NRI with no other Indian income and no certificate.

Item Amount
TDS each month at 31.2% 18,720
Rent reaching your NRO account each month 41,280
TDS for the year 2,24,640
Taxable rent after the 30% deduction (7,20,000 less 2,16,000) 5,04,000
Tax under the section 202 slabs: 5% on 1,04,000, plus 4% cess 5,408
Excess withheld, recoverable only through a return 2,19,232

The section 156 rebate is for residents only, so it does not cut the 5,408. Annual rent of 7,20,000 also crosses the 5 lakh line, so the tenant needs Form 146 from a CA on top of Form 145.

There is no threshold. None.

This is the line owners miss. For a resident landlord, the tenant deducts only 2% under Section 194-IB (now within section 393(1), the provision for payments to residents), and only when monthly rent crosses 50,000. Rent of 45,000 a month to a resident: zero TDS. The same flat let by an NRI: 31.2% from rupee one.

Table S.No. 17 of section 393(2) carries no exemption limit and no floor. A tenant paying 25,000 a month to an NRI still has to withhold 31.2%. The residency of the landlord is the one fact that decides which rule applies.

What the law puts on your tenant

Your tenant is the deductor. The compliance chain runs heavier than most tenants expect, and heavier than most will carry for a rented flat:

  • A TAN. The tenant must obtain a Tax Deduction and Collection Account Number before deducting a single rupee. The TAN exemption that started on 1 October 2026 does not reach rent: section 87 of the Finance Act, 2026 covers a resident individual or HUF deducting on the purchase of immovable property from a non-resident, and nothing else. Your tenant needs a TAN before and after that date.
  • Monthly deposit. The deducted tax reaches the government by the 7th of the next month, paid on Challan ITNS 281.
  • Form 144 (old Form 27Q), quarterly. The TDS statement for payments to non-residents under rule 219(1) of the Income-tax Rules, 2026. Not Form 141, which from 1 October 2026 takes a property purchase from a non-resident, not rent.
  • Form 131 (old Form 16A) to you. Rule 215 of the Income-tax Rules, 2026 gives the tenant 15 days from the due date of the Form 144 statement to download it from the portal and hand it over. This certificate lets you claim the credit when you file your Indian return.

Miss the return and the late fee runs 200 a day under Section 234E, capped at the TDS amount, with further penalty exposure under Section 271H. A tenant who agreed to pay rent did not agree to become a withholding agent with a TAN and a quarterly filing calendar. Many never start. Some deduct and never deposit. Both land on you.

Forms 145 and 146, the old 15CA and 15CB: the remittance layer

Rent credited to an NRI is a remittance to a non-resident, so it draws a second set of forms on top of the TDS return. The tenant files Form 145 on the income tax portal to report the remittance. When rent paid in a financial year crosses 5 lakh, the tenant also needs Form 146, a certificate from a chartered accountant confirming the deduction and the rate applied. Part C of Form 145 is the part that pairs with a Form 146.

Form 145 was Form 15CA and Form 146 was Form 15CB. Rule 220 of the Income-tax Rules, 2026 replaced rule 37BB and carried the Part A to Part D structure and the Rs 5,00,000 threshold across, for remittances on or after 1 April 2026. Few individual tenants have heard of either form, which is one more reason the chain breaks.

The fix: a lower-deduction certificate (Form 128)

You do not have to leave 31.2% withheld all year. Apply for a lower-deduction certificate and the tenant deducts at the certified rate, not 31.2%. The route changed on 1 April 2026. The old Form 13 under Section 197 became Form 128 under Section 395 of the Income-tax Act, 2025. You file it online through TRACES. The Assessing Officer reviews your expected income and tax for the year and, if your real liability runs below 31.2% of gross rent, issues a certificate that sets the rate the tenant must deduct. That rate can fall into the single digits.

The money never leaves your pocket, so there is no refund to chase. A DTAA between India and your country of residence can lower the rate further, so claim it where it applies.

Two facts to plan around. The certificate is rate-specific and period-specific, so apply early in the financial year and renew each year. And the certificate fixes the rate the tenant uses. It does not remove the tenant's duty to hold a TAN, file Form 144, and issue Form 131. For how the rent itself is taxed and what you can deduct, see NRI rental income tax in India.

If the tenant does not deduct, the bill comes to you

The law treats a deductor who fails to deduct or deposit as an assessee in default, and that is the tenant. But the tax on your rental income is yours. If the tenant deducts nothing, the income stays taxable in your hands, and you pay it when you file, plus interest on the shortfall. You cannot claim a credit the tenant never deposited. The tenant carries the penalty for the default. You carry the tax, often found a year late.

This is why the rent has to land in the right place and the deduction has to show. Rent should be paid into your NRO account, and the TDS should appear in your Form 26AS against your PAN. If it does not show, it was not deposited, whatever the tenant told you. For how rent flows through an NRO account and what gets taxed there, see NRO account and rent taxation.

The proof to demand

The defence is documentary. Demand it whether your manager is a company, a broker, or a relative:

  • The tenant's TAN, in writing, before the first rent is paid.
  • Challan receipts, monthly, showing the TDS deposited against your PAN.
  • Form 144 acknowledgement each quarter, and Form 131 within 15 days of its due date.
  • Your Form 26AS, checked once a quarter, so the deposit shows where it should.
  • A copy of any lower-deduction certificate (Form 128), with the rate and validity dates, so you know the lower rate is real and not a verbal promise.

If a manager or tenant cannot produce these, the deduction is unverified, and unverified means you are the one exposed. For the wider playbook on running a tenancy from another country, see managing tenants from abroad.

FAQ

What is the TDS on rent paid to an NRI landlord? 31.2% of gross rent under section 393(2), Table S.No. 17 (old section 195): 30% plus 4% cess. When the rent paid in the year crosses 50 lakh, surcharge raises it to 34.32%, then 35.88% over 1 crore, then 39% over 2 crore. There is no threshold. The deduction starts at the first rupee.

Does a tenant need a TAN to pay rent to an NRI? Yes. The tenant must obtain a TAN before deducting any TDS on rent to a non-resident. This differs from rent to a resident under Section 194-IB (now section 393(1)), which uses the tenant's PAN and needs no TAN. The 1 October 2026 TAN exemption covers property purchases, not rent. Without a TAN the tenant cannot deposit the tax or file Form 144, and the deduction has no valid path to your PAN.

What is Form 145, the old Form 15CA, for rent to an NRI landlord? Form 145 is the tenant's online declaration that reports the rent as a remittance to a non-resident. It is filed on the income tax portal. When rent paid in a financial year crosses 5 lakh, the tenant also needs Form 146, the old Form 15CB, a chartered accountant's certificate on the deduction. The two forms run alongside the TDS return, not instead of it.

How does an NRI get a lower TDS certificate on rent? File Form 128 online through TRACES under Section 395 of the Income-tax Act, 2025. This route replaced Form 13 and Section 197 on 1 April 2026. The Assessing Officer reviews your expected income and tax for the year and issues a certificate that sets the rate your tenant must deduct, often well below 31.2%. Apply early in the financial year and renew it each year, because the certificate is period-specific.

Is the landlord liable if the tenant does not deduct TDS? The tax on the rent is yours regardless. If the tenant deducts nothing, the income stays taxable in your hands and you pay it on filing, with interest on the shortfall, and you cannot claim a credit the tenant never deposited. The tenant carries the penalty for the default. You carry the actual tax. Insist on proof of deposit.

Get the deduction done right, with proof

66 MG Road runs one vetted manager per property, so a single person owns your tenancy and your compliance, not a rotating call centre. We send dated photo proof from every visit, itemized billing with vendor receipts at actuals, and rent paid straight into your NRO account. We track that the tenant's TDS is deducted, deposited, and visible in your Form 26AS, and we coordinate the Form 128 route when a lower rate is yours to claim. We run property with our own teams in Delhi NCR and Bangalore. A Property Health Check or Watch covers the rest of India through vetted local partners. See TDS & lower-deduction certificates or request a proposal for your flat.

Saurabh Garg, founder, 66 MG Road

Sources

Information on this page is as on 2026-10-12. Rules, rates, deadlines and government portals change without notice, so verify against the official source before you act. This page is for information only. It is not tax or legal advice, and it is not a substitute for a qualified adviser who knows your position.