NRI rental income tax & tenant-TDS calculator

Short answer: A tenant paying rent to an NRI landlord must deduct TDS at 31.2 percent under Section 195 and deposit it, unless the landlord obtains a lower-deduction certificate. The rent is taxable in India at slab rates after the 30 percent standard deduction; excess TDS returns as a refund after filing.

Rent paid to an NRI has two confused parties. The landlord thinks the tax is brutal because 31.2% vanishes from every rent cheque. The tenant often has no idea they were the one meant to cut it, until a notice arrives. Both are looking at the same Section 195, from opposite ends.

This calculator runs both. As a landlord, it shows your real tax after the 30% standard deduction and loan interest, against the 31.2% withheld, and the refund you are usually owed. As a tenant, it tells you whether you must deduct, how much, and which form, because getting that wrong makes you liable for the tax plus penalty.

What it does

Landlord: taxable rent after 30% deduction and loan interest, versus the 31.2% withheld
The refund a landlord is usually owed, and why a Lower Deduction Certificate helps
Tenant: are you liable to deduct, at what rate, under which section
The NRI vs resident landlord fork that changes everything
A downloadable report for either side

Same rent, two confused people

Rent paid to an NRI creates two misunderstandings at once. The landlord watches a third of every rent cheque disappear and concludes India taxes rental income at a punishing rate. The tenant, meanwhile, usually does not know they were legally the one who had to withhold that third, and finds out when a demand notice arrives with interest attached. Both are staring at Section 195 from opposite ends and drawing the wrong conclusion.

The truth is milder for the landlord and stricter for the tenant than either expects. The landlord's real tax is well under 31.2 percent, so the withholding is mostly a loan to the government that comes back as a refund. The tenant's duty is real and unforgiving, and skipping it is expensive. The calculator above runs both sides so each party sees their own number.

The landlord's real tax: lower than the withholding

Rental income is taxed as income from house property, and the method is generous before the slab ever applies.

Start with the gross annual rent.
Subtract municipal taxes you actually paid, to get the net annual value.
Subtract a flat 30 percent standard deduction under Section 24a. No bills, no proof, it is automatic.
Subtract home-loan interest under Section 24b.

What remains is taxed at your slab. For most NRI landlords that taxable figure is a fraction of the gross rent, so the tax is a fraction of the 31.2 percent the tenant withheld under Section 195. The gap is a refund. That is why two moves matter: giving the tenant your PAN so nothing is deducted at a higher rate, and applying for a Lower Deduction Certificate so less is withheld in the first place rather than chased back later. The full method sits in the NRI rental income tax guide.

The tenant's duty: it forks hard on who the landlord is

If you are the tenant, one question decides everything: is your landlord an NRI?

Landlord is an NRI. You must deduct 31.2 percent under Section 195, from the first rupee, no threshold. You need a TAN, you file Form 27Q every quarter, and you file Form 15CA. Miss it and you are an assessee-in-default, on the hook for the tax plus interest and a penalty under Section 271C.
Landlord is a resident, and you are an individual. You deduct only if rent exceeds ₹50,000 a month, at 2 percent under Section 194-IB (down from 5 percent since 1 October 2024), once a year or when you vacate, no TAN, Form 26QC.
Landlord is a resident, and you are a business. Section 194-I applies: 10 percent if annual rent exceeds ₹2.4 lakh, with a TAN and Form 26Q.

The trap is a tenant treating an NRI landlord like a resident one and deducting nothing, or 2 percent. The department comes to the tenant, not the landlord, for the shortfall. The TDS on rent to an NRI landlord guide lays out the tenant's checklist.

The account matters as much as the tax

Where the rent lands changes the paperwork. Rent from Indian property is Indian income and belongs in an NRO account, where it is taxable and where the 31.2 percent TDS applies. Trying to route it into an NRE account, which is meant for foreign-sourced funds, creates a mismatch that surfaces later. From the NRO account, the rent, being current-year income, is freely repatriable over and above the USD 1 million capital cap once tax is settled. The NRO account taxation guide covers what has to sit where, and the repatriation calculator handles moving it out.

Where 66 MG Road fits

For NRI owners letting property from abroad, we run the rent chain so both sides of this calculation are handled: rent collected to your NRO account on schedule, the tenant's TDS position sorted so you are not fighting a wrong deduction, TDS certificates collected, and the Lower Deduction Certificate coordinated with a CA so less is withheld from the start. Dated proof, billing at actuals, one vetted manager per property, in Delhi NCR and Bangalore. See the services or request a proposal.

Common questions

How is NRI rental income taxed in India?

As income from house property: gross rent, less municipal taxes, less a flat 30 percent standard deduction, less home-loan interest, taxed at your slab. Because the tenant withholds 31.2 percent of gross rent under Section 195, most NRI landlords have more tax withheld than they owe and are due a refund.

Does a tenant have to deduct TDS when paying rent to an NRI?

Yes, always. A tenant paying an NRI landlord deducts 31.2 percent under Section 195 from the first rupee, with no threshold, needs a TAN, and files Form 27Q and Form 15CA. Failing to deduct makes the tenant liable for the tax plus interest and penalty.

What is the TDS on rent to a resident landlord?

An individual tenant deducts 2 percent under Section 194-IB only if rent exceeds ₹50,000 a month (reduced from 5 percent on 1 October 2024), once a year, no TAN, Form 26QC. A business tenant deducts 10 percent under Section 194-I if annual rent exceeds ₹2.4 lakh.

How can an NRI landlord avoid 31.2% being deducted from rent?

Apply for a Lower or Nil Deduction Certificate under Section 197, so the tenant withholds closer to your actual tax rather than 31.2 percent of gross. Also give the tenant your PAN, without it, deduction can be at an even higher rate. The real tax after the 30 percent deduction is usually far below the withholding.

Is the 30% standard deduction on rent available to NRIs?

Yes. The flat 30 percent standard deduction on net annual value under Section 24a applies to NRI landlords the same as residents, with no need to prove actual expenses. Home-loan interest under Section 24b is also deductible.

How accurate is this rental tax calculator?

It applies the house-property method (30 percent deduction, loan interest) and the correct TDS section for the landlord's status, including the 194-IB rate change to 2 percent. Your exact tax depends on your total income and slab, and the old-versus-new regime affects loan-interest set-off, so confirm with a chartered accountant.

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