NRO or NRE? Where Your Mumbai Rent and Sale Money Should Sit, and the TDS on Each

NRO interest attracts about 31.2% TDS for NRIs, while NRE and FCNR interest is tax-free in India. How rent, sale money and deposits fit into each account in 2026.

Reports screen in the TND app showing monthly income, expenses and TDS deducted for the year

Almost every NRI with a Mumbai flat has both an NRE and an NRO account, and many aren't sure which money belongs where. It matters, because the tax treatment is completely different.

What is the TDS on NRO fixed deposit interest?

Interest on NRO deposits is taxable in India, and banks deduct TDS at 30% plus surcharge and cess, which works out to about 31.2% for most depositors (NRI Information, updated September 2026). Under the Income-tax Act, 2025, payments to non-residents fall under section 393(2), which replaced section 195.

Is NRE interest tax-free?

Yes. Interest on NRE and FCNR deposits is exempt in India, with no TDS. It may still be taxable in your country of residence, so check locally.

Which account should my rent go into?

Rent from your Indian flat is Indian income and goes into your NRO account. The tenant deducts TDS before paying you; our post on TDS on rent to an NRI landlord explains how. Any interest that rent earns while it sits in an NRO deposit is again subject to 31.2% TDS.

Where do sale proceeds go?

Usually into the NRO account too, then repatriated within the USD 1 million a year limit. See repatriating sale proceeds.

Indian income lives in NRO and pays Indian tax. Money you bring from abroad lives in NRE and stays tax-free here. Keep them apart.

Can I pay less TDS on NRO interest?

DTAA rate: if your country's tax treaty with India sets a lower rate for interest, you can claim it by giving the bank your PAN, a Tax Residency Certificate and Form 41 (formerly Form 10F), filed electronically.
Keep your PAN valid: without a valid PAN, TDS applies at the higher of 20% or the normal rate, under section 397(2) (formerly 206AA), and treaty relief is usually blocked.
Claim refunds: if TDS is more than your actual liability, file an Indian return. Banks issue Form 131 certificates (formerly Form 16A).

A simple way to organise NRI money

Money	Account	Indian tax on interest
Salary or savings sent from abroad	NRE / FCNR	Exempt
Rent from your Mumbai flat	NRO	About 31.2% TDS
Sale proceeds of a flat	NRO, then repatriate	About 31.2% TDS on any interest

What this means for you

NRI landlords: don't leave rent sitting in NRO deposits without a plan; the interest is heavily taxed. Owners we manage see rent and TDS in the TND app.
NRI buyers: fund purchases from NRE where you can; it helps later when you repatriate.
Check your numbers on our NRI TDS calculator.

A furnished living room with marble flooring in a managed Mumbai flat — See our NRI property management.

Frequently asked questions

What is the TDS on NRO FD interest in 2026?

30% plus surcharge and cess, about 31.2% for most depositors, unless a treaty rate is claimed.

Is NRE FD interest taxable in India?

No. NRE and FCNR interest is exempt in India.

Should rent from my Mumbai flat go to NRE or NRO?

NRO. Rent is Indian income and belongs in the NRO account.

Related reading

Want a second look at how your India money is set up? Book a video call or WhatsApp me.

Warmly,
Yanik

General information, not tax advice. Check with your CA in India and your adviser abroad.

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