“When I moved abroad, I thought I was done with Indian paperwork. But the first time I received rent from my flat back home, I found myself Googling: ‘Do NRIs pay tax on rental income in India?”
This is the story of many NRIs like Aditya Shekhar (Singapore).
If you’re an NRI (Non-Resident Indian) and own property in India, you’ve likely faced this situation. Renting out your property is a smart move—but managing the income, taxes, and transfers across borders? That’s where it gets tricky.
From figuring out how to declare rental income to understanding the tax rules and finally transferring the funds to your overseas account, there’s a lot to navigate. But don’t worry—this guide simplifies everything.
Whether you live in the US, UK, UAE, or anywhere else, here’s everything you need to know about tax on rental income in India for NRIs in 2025.
What Qualifies as Rental Income for NRIs?
If you own residential or commercial property in India and have rented it out, the money you receive is classified as ‘Income from House Property’ under Indian tax laws.
Even if your tenant is a friend or relative (and paying you formally), that rent is taxable in India.
How is Tax on Rental Income Calculated for NRIs?
If you’re an NRI earning rental income from a property in India, you’ll need to pay tax on it under the head “Income from House Property”. Here’s how it’s calculated:
- Start with Gross Annual Value (GAV):
This is the total rent you receive in a year. If your property is self-occupied, the GAV is considered zero. - Deduct Municipal Taxes:
Any local taxes paid to the municipality can be subtracted from your GAV to get the Net Annual Value (NAV). - Apply Standard Deductions (Section 24):
- 30% of NAV: A flat 30% deduction is allowed for maintenance and repairs—no bills needed.
- Home Loan Interest: If you’re paying interest on a home loan, you can deduct that too.
- Final Taxable Income:
After the deductions, the remaining amount is your taxable income from house property, and it will be taxed as per the regular income tax slab rates. - TDS on Rent:
The person paying you rent (even if it’s your tenant) must deduct 30% TDS before transferring the amount to you. They must also have a TAN number to do this. If needed, you can apply for a lower TDS certificate from the Income Tax Department. - Claiming Refunds and Filing Returns:
If too much TDS is deducted, you can claim a refund while filing your ITR. You must file your returns on time—even if you didn’t earn rent in that year. - Other Rules to Remember:
- Rent should go into your NRO account, not NRE (unless paid from another NRI’s NRE account).
- If you’re remitting rent abroad, a CA certificate confirming taxes are paid is required.
- Losses (like if loan interest is higher than rent) can be adjusted against other income or carried forward for 8 years.
Step 1: Do NRIs Have to Declare Rental Income in India?
Yes. As an NRI, you must declare your rental income in your Indian Income Tax Return (ITR) every financial year.
Here’s how:
- File ITR-2 if you have rental income and no income from a business or profession.
- Filing is mandatory if your total income in India exceeds ₹2.5 lakh annually.
- You are eligible for a 30% standard deduction on your rental income—no receipts required.
Even if you’re not physically present in India, the income generated from Indian property is taxable here.
Also read: ITR Forms for NRIs Explained: Which One Should You File & Why?
Step 2: Tax on Rental Income – How Does It Work for NRIs?
As an NRI, your rental income is taxed in India at the same slab rates as resident Indians. But there’s one major difference: TDS (Tax Deducted at Source).
Key Points:
- You get a standard deduction of 30% for repairs and maintenance.
- You can also deduct municipal taxes paid and interest on a home loan (if applicable).
- After deductions, the net rental income is added to your taxable income and taxed as per slabs.
Understanding TDS on Rental Income:
- Tenants must deduct 30% TDS before paying rent to an NRI landlord.
- This rule applies even if the tenant is an individual.
- The tenant must deposit the TDS with the government and provide you with Form 16A as proof.
Note: If the tenant fails to deduct TDS, both parties could face penalties. Make sure your tenant is aware of this obligation.
Double Taxation: Will You Pay Tax in Both Countries?
This is a common worry, but the good news is: India has signed Double Taxation Avoidance Agreements (DTAAs) with many countries including the US, UK, UAE, Canada, and Australia.
Here’s what it means for you:
- You pay tax on rental income in India.
- You can claim tax credit or exemption in your country of residence based on the treaty terms.
- You’ll need documentation such as Form 16A, ITR acknowledgments, and rent receipts.
Step 3: Repatriation – How to Transfer Rental Income Abroad?
To legally repatriate rental income from India, you must follow certain guidelines set by the Reserve Bank of India (RBI).
Requirements:
- Maintain an NRO (Non-Resident Ordinary) account in India to receive rental income.
- File Form 15CA (self-declaration of remittance) and get Form 15CB from a Chartered Accountant, confirming tax compliance.
- Submit both forms to your bank to initiate the remittance process.
Repatriation Limit:
- You can repatriate up to USD 1 million per financial year from your NRO account after taxes are paid.
Can NRIs Reduce the TDS Burden?
Yes. If your effective tax liability is lower than 30%, you can apply for a lower or nil TDS certificate under Section 197 of the Income Tax Act.
- Apply online through the Income Tax portal.
- The certificate, once issued, can be shared with your tenant to reduce or eliminate TDS deduction.
This is especially useful if you claim deductions that significantly reduce your taxable income.
Common Issues Faced by NRIs – and How to Solve Them
| Issue | Solution |
| Tenant not deducting TDS | Educate them or appoint a property manager to handle compliance. |
| Delay in repatriation | Keep Form 15CA/CB ready in advance and work with banks familiar with NRO processes. |
| Confusion around tax slabs | Consult an NRI tax advisor or use reliable tax calculators. |
| Missed ITR deadlines | File a belated return by 31st December 2025 (with late fees if applicable). |
| High TDS rate despite low tax due | Apply for a lower TDS certificate from the IT Department. |
Final Checklist for NRIs on Rental Income
- Open and use an NRO account for rent collection.
- Make sure your tenant deducts 30% TDS and provides Form 16A.
- Declare rental income in your Indian ITR annually.
- Claim deductions (30% standard + property tax + home loan interest).
- Use DTAA provisions to avoid double taxation.
- File Form 15CA/CB for repatriation.
- Maintain documentation for audits or foreign tax credits.
Conclusion: Renting Out Property? Don’t Let Taxes Trip You Up
Earning rental income from property in India is a great way to stay financially connected to your home country. But as an NRI, it’s important to stay compliant, especially when it comes to tax on rental income.
With the right systems in place—like an NRO account, proper tax filings, and a smooth repatriation process—you can enjoy the benefits of your investment without unnecessary stress.
Need help filing your taxes or transferring your funds abroad? We make it simple, fast, and compliant for NRIs.
Talk to our NRI tax advisor today and get your rental income sorted—without the headache.
FAQs
Do NRIs have to pay tax on rental income in India?
Yes, NRIs must pay tax on any rental income earned from property in India under the “Income from House Property” head.
What is the TDS rate on rent paid to an NRI?
A flat TDS of 30% is applicable on rental payments made to NRIs, under Section 195 of the Income Tax Act.
Can NRIs claim deductions on rental income?
Yes, NRIs can claim a standard 30% deduction on Net Annual Value and deduct interest paid on a home loan, as per Section 24.
Where should NRIs receive their rent income?
Rental income should be credited to the NRO account. Only in specific cases (like rent from another NRI’s NRE account) can it go to the NRE account.
Can an NRI repatriate rental income to a foreign country?
Yes, after paying applicable taxes and with a Chartered Accountant’s certificate, rental income can be legally repatriated abroad.
Do NRIs need to file ITR if they earn rental income?
Yes, filing an Income Tax Return is mandatory for NRIs earning rental income, even if there’s no net income due to deductions.
Is rental income taxable in both India and the NRI’s resident country?
It depends on the country. However, if there’s a DTAA (Double Tax Avoidance Agreement), the NRI can avoid double taxation.
