Updated 2026: NRI Tax on Rental Income in India
The Direct Answer
Rental income earned in India is taxable in India, regardless of your residency status. However, NRIs enjoy a 30% Standard Deduction. This means if you earn ₹10 Lakhs rent, you only pay tax on ₹7 Lakhs. Additionally, you are taxed based on the slab rates. If your total Indian income is below the basic exemption (₹2.5L or ₹3L depending on regime), you pay zero tax—but you should still file an ITR to maintain a clean record.
The Tenant's Duty (TDS)
If your tenant is paying rent > ₹50,000/month, strict TDS rules apply. However, for NRIs, tenants are technically supposed to deduct TDS at 31.2% (30% + cess) regardless of rent amount, unless you provide a lower deduction certificate. In practice, this is often missed, leading to notices later.
How to Calculate Taxable Rent
- Gross Annual Value (GAV): Total Rent Received.
- Less: Property Tax: Deduct municipal taxes paid.
- Net Annual Value (NAV): GAV - Property Tax.
- Less: Standard Deduction: Flat 30% of NAV (for repairs/maintenance).
- Less: Home Loan Interest: Up to ₹2 Lakhs (if self-occupied/vacant) or Full Interest (if rented out - subject to set-off limits).
Formula:
Taxable Income = (Rent - Prop Tax) * 70% - Home Loan Interest
Double Taxation Avoidance Assessment (DTAA)
Most countries (USA, UK, UAE, Singapore) have a DTAA with India.
- You pay tax in India first.
- You claim a credit for that tax paid in your home country (e.g., on your US 1040 form).
- Result: You don't pay double tax; you just pay the "higher" of the two rates.
Why File ITR?
Even if you owe zero tax, filing ITR creates a "white money" trail. When you eventually sell the property and want to repatriate huge sums, the bank will ask for past ITRs to prove the asset was maintained legally.
Kanav Arora
Real Estate Investor
Read Next
Repatriating Property Sale Proceeds: The NRI Guide to Getting Money Out
