Renting from an NRI Landlord: The 30% TDS Rule Most Tenants Get Wrong

Rent paid to an NRI landlord needs 31.2% TDS from the first rupee, a TAN, monthly deposits and quarterly Form 144 returns. How tenants stay compliant.

Cars on Mumbai's coastal road with high-rise towers ahead

A tenant renting a flat in Bandra for ₹45,000 a month from an owner in Dubai does the sensible-looking thing: checks the ₹50,000 threshold, sees they are below it, and pays the rent in full. They have just created a tax default that will follow them for years, with interest running the whole time.

Rent paid to a non-resident landlord is governed by an entirely separate branch of the deduction rules. Almost none of the familiar resident-landlord logic carries over.

The five differences that matter

	Resident landlord	NRI landlord
Rate	2% (individual tenant) or 10% (business tenant)	30% plus surcharge and cess
Threshold	Rent above ₹50,000 per month	None — from the first rupee
TAN	Not needed for individual tenants	Mandatory, always
Frequency	Once a year (individual tenants)	Every month
Reporting	Form 141 challan-cum-statement	Quarterly Form 144 (formerly Form 27Q)

The rate sits in the non-resident payments table of Section 393 as the residual "other income" entry — 30%, or the applicable rate under the relevant Double Taxation Avoidance Agreement. Under the old Act this was Section 195.

Working out the actual number

Start at 30%. Add health and education cess at 4%, which takes the effective rate to 31.2%. Add surcharge where the landlord's income crosses the surcharge thresholds — for most residential tenancies it does not, but for high-value commercial or luxury lets it can, pushing the effective rate materially higher.

On a rent of ₹1,00,000 a month with no surcharge: deduct ₹31,200, pay the landlord ₹68,800, deposit ₹31,200 by the 7th of the following month.

Yes, this is a large deduction relative to the landlord's likely final liability — a resident owner would only pay tax on 70% of the rent after the standard deduction, and might be in a lower slab. That gap is exactly what the lower deduction certificate exists to close, and it is the landlord's job to obtain one.

Determining residential status is your problem, not theirs

A tenant who deducts at 2% because the landlord "has an Indian PAN and an Indian address" has no defence. PAN, Aadhaar, an Indian phone number and an Indian bank account tell you nothing about residential status under the Income-tax Act.

Protect yourself with three things: a written declaration of residential status in the tenancy agreement, a copy of the passport, and confirmation of the bank account type into which rent is credited. If rent is going into an NRO account, treat the landlord as non-resident and act accordingly.

There is no ₹50,000 threshold. Rent of ₹15,000 a month to an NRI landlord attracts TDS from the very first rupee.

The compliance sequence

Apply for a TAN (the TAN application, formerly Form 49B) before the first rent payment. This is unavoidable even for a salaried individual tenant. It takes a few working days.
Deduct every month at the applicable rate, at the time of credit or payment, whichever is earlier.
Deposit by the 7th of the following month. For March, the deadline is 30 April.
File Form 144 (formerly Form 27Q) quarterly — by 31 July, 31 October, 31 January and 31 May.
Issue Form 131 (formerly Form 16A) to the landlord within 15 days of the return due date, so they can claim credit.

If the rent is remitted abroad

Where rent leaves India, an additional layer applies. The remittance forms have been renumbered under the Income-tax Rules, 2026: Form 145 is the remitter's declaration and Form 146 is the chartered accountant's certificate, replacing the old Form 15CA and Form 15CB. Forms 15CA and 15CB submitted for remittances up to 31 March 2026 remain valid under the transitional rules.

In practice most NRI landlords avoid this by having rent credited to an NRO account in India and repatriating in larger tranches, subject to the USD 1 million per financial year limit, rather than remitting monthly.

The lower deduction certificate changes the economics

31.2% withheld against a real liability that may be a fraction of that is a serious cash-flow problem for the owner, recoverable only by filing an Indian return and waiting for a refund.

The fix is an application for a nil or lower deduction certificate, made by the landlord to the Assessing Officer, supported by a computation of estimated income — rent, less municipal taxes, less the 30% standard deduction, less home loan interest. Where a DTAA gives a lower rate, the landlord needs a Tax Residency Certificate and Form 41 (formerly Form 10F) to claim it.

Once issued, the certificate is given to the tenant, who deducts at the certified rate and quotes the certificate number in Form 144. Any NRI owner letting property in India for more than a token amount should be doing this every year.

Who actually bears the risk

This is the part worth being blunt about. The obligation is the tenant's. Failure means the tenant pays the tax out of pocket, plus 1% per month for not deducting, plus 1.5% per month for late deposit, plus ₹200 per day for late filing, plus a penalty between ₹10,000 and ₹1,00,000. The landlord's tax position is largely unaffected; the tenant's is not.

Where a property manager is in place, they normally run this on the owner's behalf — TAN, monthly deposits, quarterly returns, certificates — which is precisely why NRI-owned stock tends to be professionally managed. Whoever performs the mechanics, though, the statutory liability stays with the person paying the rent.

Checklist before you sign

Written declaration of the landlord's residential status.
Landlord's PAN — without it, deduct at 20% or the higher applicable rate.
Confirm whether a lower deduction certificate exists, and get a copy.
Apply for your TAN before the first payment date.
Agree in writing that the rent figure is gross of TDS, so there is no dispute in month one.

Frequently asked questions

Is there a ₹50,000 threshold for TDS on rent paid to an NRI?

No. TDS applies from the first rupee when the landlord is a non-resident.

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

30% plus 4% cess, which is 31.2%, plus surcharge where the landlord's income crosses the surcharge thresholds.

Does a tenant need a TAN to pay rent to an NRI?

Yes. The tenant must apply for a TAN before the first payment, deposit TDS by the 7th of the following month and file Form 144 every quarter.

Who pays if TDS on NRI rent is not deducted?

The tenant. They pay the tax plus interest of 1% to 1.5% a month, ₹200 a day for late filing, and a possible penalty of ₹10,000 to ₹1,00,000.

General information only, not tax or legal advice. Cross-border withholding is fact-specific — take professional advice before acting.

Own a flat in Mumbai while living abroad?

TND Listings manages, sells and helps you buy property across Mumbai, Navi Mumbai and Thane, with one point of contact.

Chat on WhatsApp More articles

TND LISTINGS

TND Listings is a professional real estate brokerage company serving buyers, sellers, NRIs and Private Institutes. At TND Listings, you are number one. We believe in integrity, commitment to excellence, a professional attitude, and personalised care.

→

f X Ig in