Renting Out Your Indian Property While Living Abroad: Tax Compliance

NRI Rental Income Tax Guide

If you own property in India and rent it out while living abroad, you have specific tax compliance requirements. Getting them wrong can result in penalties and complications.

TDS on Rent

Tenants paying rent to an NRI landlord must deduct TDS at 31.2% (including surcharge and cess) on the gross rent. This is much higher than the 5-10% for resident landlords. Most tenants are unaware of this obligation. As the NRI landlord, you should educate your tenant and help set up the TDS process.

Reducing TDS

Apply for a Lower TDS Certificate under Section 197 from the Income Tax department. This requires filing an application with your projected income and deductions. If approved, the tenant deducts TDS at the lower certified rate instead of 31.2%. The certificate is valid for one financial year.

Tax Filing

NRIs must file income tax returns in India if their Indian income exceeds Rs 2.5 lakh. Rental income is calculated as: gross rent minus municipal taxes minus 30% standard deduction minus home loan interest (if any). DTAA (Double Taxation Avoidance Agreement) benefits may apply to avoid being taxed twice.

Repatriation

Rental income deposited in your NRO account can be repatriated up to USD 1 million per financial year after paying applicable taxes. CA certificate under Form 15CA/15CB is required for repatriation. Manage your Indian rental property listings on Infratyke.