TDS on rent paid to an NRI landlord: what tenants and owners must do

If your landlord is a non-resident, you, the tenant, are generally required to deduct income tax from the rent, deposit that tax with the government, file periodic statements and give the landlord a certificate of the tax deducted. India's income-tax law changed on 1 April 2026, when the Income-tax Act, 2025 replaced the Income-tax Act, 1961, so the section numbers, form numbers, rates and due dates that older guides quote may no longer be current. This guide explains how the obligation works in outline, for both sides of the tenancy.

This is general information for tenants and owners, not tax advice. Applicable tax, registration and procedural requirements can change. Owners and tenants should verify the current position with the Income Tax Department or a qualified chartered accountant before the first rent payment.

Which law applies now

The Income-tax Act, 2025 came into force on 1 April 2026 in place of the 1961 Act, which continues to govern tax years that began before that date. Many guides, calculators and agreements in circulation still refer to sections and forms under the old Act. The underlying obligation on a tenant who pays rent to a non-resident owner has carried over, but the numbering of the provisions, and of the forms used for deposits, statements and certificates, has changed. When you read any guide on this subject, including this one, check that it refers to the law in force for the tax year in question.

The new Act also uses the term "tax year" in place of the old "previous year".

Who has to deduct

The rule for payments to non-residents is not limited to companies or businesses. An individual tenant renting a flat for their family is generally covered too. The duty sits with the person responsible for paying the rent, which is normally the tenant, even when a relative or manager collects the rent for the owner; in that case ask your CA how the paperwork should be handled.

Residence here means residence for income tax, worked out mainly from the time a person spends in India, not from their passport or citizenship. Ask the owner to confirm their status in writing at the start of the tenancy, and again if their circumstances change.

Many tenants have heard of a separate rule for rent paid to resident landlords, which applies only above a monthly rent threshold. That threshold does not carry across to a non-resident owner, where the obligation generally applies whatever the amount of rent. Confirm the current position for your tenancy with your CA.

How much to deduct

The rate for rent paid to a non-resident is set by the tax law in force for each year, and it is materially higher than the rate most tenants know from resident landlords. A surcharge can apply above certain amounts, and a cess is added on top. Because rates, thresholds and the way they combine can change with each year's Finance Act, this guide does not quote figures. Ask a chartered accountant to confirm the rate for your tenancy before the first payment, and check again at the start of each tax year.

Two things can change the amount. If the owner obtains a certificate from the Income Tax Department allowing a lower or nil deduction, the tenant deducts at the rate in the certificate for as long as it is valid. And if the owner does not provide a PAN, the law generally requires deduction at a higher rate, and the owner will find the tax much harder to claim credit for. Getting the PAN at the start avoids both problems.

What the tenant has to do

1. Confirm the owner's status and get their PAN in writing, before the first rent payment.
2. Get a TAN. A person deducting tax generally needs a Tax Deduction and Collection Account Number and must quote it on payments, statements and certificates. Ask your CA to confirm what applies to you.
3. Deduct at the right time, which is generally when the rent is credited or paid to the owner, whichever is earlier.
4. Deposit the tax with the government by the due date, quoting your TAN.
5. File the quarterly statement for payments to non-residents by its due date.
6. Give the owner a certificate of the tax deducted, downloaded from the TRACES portal, within the time allowed after each quarterly statement.
7. Ask your CA about information needed before money goes abroad. A person paying a non-resident may have to file information, sometimes with an accountant's certificate, before money is sent outside India; your CA can say whether it applies to how you pay.
8. Keep the records: the agreement, the owner's PAN and status confirmation, payment challans, statements and certificates.

Due dates for deposits, statements and certificates are set by the income-tax rules and can change. Confirm the current dates with your CA or on the Income Tax Department's portals.

If tax is not deducted

A tenant who fails to deduct, or who deducts but does not pay the tax to the government, can be treated as being in default for that tax. Interest runs from the date the tax should have been deducted or paid, and a penalty can also be considered. There is limited relief in some cases where the owner has already paid the tax due on the rent, but it is narrow and interest can still apply. Deducting correctly from the first month costs far less than putting it right later.

The owner's options

A lower or nil deduction certificate. The owner can apply to the Income Tax Department for a certificate allowing deduction at a lower rate, or none, where their total income justifies it. Apply well before the rent payments it should cover, because the department may not be able to process an application once the payment has been made, and a PAN is essential.

A tax return in India. The deduction is a flat rate on the gross rent, while the owner's tax is worked out on taxable income: for a let property, after the deductions the law allows, such as the standard deduction on the annual value and interest on a loan taken for the property, and at the rates that apply to the owner. The amount deducted can therefore be more than the tax due, and a return is how the difference is claimed back.

Treaty relief. A tax treaty decides which country may tax which income and how double taxation is relieved. A treaty does not necessarily stop India taxing rent from a home in India: treaties commonly let the country where the property is situated tax income from letting it. Claiming treaty benefits generally needs a tax residency certificate from your country of residence and the prescribed supporting form. Your CA can check whether your treaty changes anything in India and how you claim credit where you live.

Who does what

Practical steps for NRI owners

• Tell the tenant in writing, before the agreement is signed, that you are a non-resident, and give your PAN.
• Write into the agreement that the rent stated is the gross figure, that the tenant pays it net of the tax deducted, and that they will hand over the certificate of tax deducted each quarter.
• Check your Annual Information Statement on the income-tax portal each quarter to see that the deductions reached your PAN.
• Keep the monthly rent statements and the certificates together for your CA.
• If you move back to India and become resident, tell the tenant: the rules for resident owners are different.

The rest of the paperwork for letting from abroad is in the NRI landlord checklist, and the wider picture is in managing a rental home from another city or abroad. If someone signs documents for you in India, read power of attorney for NRI property owners. The NRI property management page explains how Nest Partners runs tenancies for owners abroad; Nest Partners does not give tax advice, so your CA remains the right person for these questions.

Common questions

The rent is modest. Does the tenant still deduct?

Generally, yes. The monthly threshold many tenants know belongs to the rule for resident landlords; for a non-resident owner the obligation generally applies whatever the amount of rent. Confirm the current position with your CA.

Can the tenant pay the full rent and leave the tax to me?

The law places the duty on the person paying. A tenant who does not deduct can be treated as in default, with interest, even if you later pay the tax yourself; the relief described above is narrow and still leaves interest. Agree from the start that the tenant deducts.

Does this apply if a company leases my flat?

Yes. A company tenant deducts too, under its own TAN, and gives you a certificate of the tax deducted in the same way.