Does the DTAA Reduce TDS on Rent From Your Mumbai Flat? What NRIs Should Rely On Instead

Rent from Indian property is taxed in India under tax treaties. Why DTAA mostly helps through credit abroad, and why Form 128 is the reliable way to cut TDS on rent.

Two teal armchairs by a window in a high-rise flat in Mumbai

NRI landlords often ask: "I pay tax where I live, so doesn't the treaty mean my tenant can deduct less?" It's a fair question, and the honest answer is: don't count on it for rent. Here's why, and what does work.

How is rent from Indian property taxed under a DTAA?

Double taxation avoidance agreements generally have an article on income from immovable property, usually Article 6, which says that income from property can be taxed in the country where the property is located. For your Mumbai flat, that's India (Rustomjee).

The treaty then avoids double tax mainly in your country of residence, which gives you credit for Indian tax paid, under its own rules.

What TDS does the tenant deduct on rent to an NRI?

Under section 393(2) of the Income-tax Act, 2025, rent to a non-resident attracts 30% plus surcharge and 4% cess. TaxHeal puts the effective rate at 31.2% where the landlord's income is up to Rs 50 lakh, rising with surcharge to a maximum of 42.744% above Rs 5 crore.

Can a treaty rate lower the TDS on rent?

Some guides say a lower treaty rate can apply if you provide a Tax Residency Certificate. Sources differ on this for rent, and treaties' immovable property articles generally let India tax the rent without a reduced rate. My view: plan on the domestic rate, and use the tool designed for this problem, the lower deduction certificate.

For rent, the treaty protects you abroad. The Form 128 certificate is what protects your cash flow in India.

The reliable way to cut TDS on rent: Form 128

Your real tax on rent is usually far lower than 31.2% of gross rent, because you're taxed on rent minus municipal taxes, minus a 30% standard deduction, minus home loan interest. A lower or nil deduction certificate in Form 128 (formerly Form 13) lets your tenant deduct at a rate closer to your real tax. Apply before the payments it should cover. We explain it in this Form 128 post; the same route applies to rent.

Where the DTAA still matters

Claiming credit abroad for Indian tax on the rent, under your country's rules.
Interest on NRO deposits, where treaties often do set lower rates; see NRO vs NRE.
Paperwork: a Tax Residency Certificate and Form 41 (formerly Form 10F) are what you'll need wherever treaty relief applies.

Sending the rent abroad

When rent is remitted, the bank uses Form 145, and a CA's Form 146 is needed above certain limits; TaxHeal notes Form 146 applies where taxable rent remittances exceed Rs 5 lakh in the year and no lower or nil certificate exists.

What this means for you

NRI landlords: apply for Form 128 each year, file your Indian return, and claim credit at home.
Tenants: deduct at 31.2% unless the landlord gives you a valid certificate. Don't apply a treaty rate on your own.

Reports screen in the TND app showing monthly income, expenses and TDS deducted for the year — Yearly rent and TDS reports for your CA, in the TND app.

Frequently asked questions

Does DTAA reduce TDS on rent paid to an NRI?

Don't rely on it. Rent from Indian property is generally taxable in India under treaties, and the dependable way to reduce TDS is a Form 128 lower deduction certificate.

What is the TDS rate on rent paid to an NRI in 2026?

30% plus surcharge and 4% cess, which is 31.2% for most landlords.

How do NRIs avoid double tax on Indian rent?

By claiming credit for Indian tax in their country of residence, under that country's rules and the treaty.

Related reading

Want help with a Form 128 application for your rent? Book a video call or WhatsApp me.

Warmly,
Yanik

General information, not tax advice. Treaty positions are fact-specific; take advice in both countries.

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