Top performing plans for NRIs/OCI/PIO

Get High Returns** upto 18%

+91

We don’t spam

Your personal information is secure with us

By clicking on "View Plans" you agree to our Privacy Policy
and Terms of use

Get Updates on WhatsApp

We are rated^~

7.7 Crore

Registered Consumer

Insurance Partners

4.2 Crore

Policies Sold

Disclaimer: # The investment risk in the portfolio is borne by the policyholder. Life insurance is available in this product. The maturity amount of Rs 1 Cr. is for a 30 year old healthy individual investing Rs 10,000/- per month for 30 years, with assumed rates of returns @ 8% p.a. that is not guaranteed and is not the upper or lower limits as the value of your policy depends on a number of factors including future investment performance. In Unit Linked Insurance Plans, the investment risk in the investment portfolio is borne by the policyholder and the returns are not guaranteed. Maturity Value: ₹1,05,02,174 @ CAGR 8%; ₹50,45,591 @ CAGR 4%. All plans listed here are of insurance companies’ funds.

TDS Deduction on Rental Property Owned by NRI

In India, when tenants pay rent to Non-Resident Indian (NRI) landlords, they are legally required to deduct a portion of the rent as Tax Deducted at Source (TDS). This withholding tax is a crucial mechanism for the Indian government to collect income tax on the rental income earned by NRIs from properties within the country.

Plans starting from ₹1000/month

Best Investment Plans

Invest 18k/month & get 2 Crore^# on maturity
Manage your funds online60k + happy customers across 25+ countries
Compare & Choose 30+ Plans and 150+ Fund options

Who are NRIs?

An NRI is an individual of Indian origin or an Indian citizen who does not reside in India as per the criteria defined in Section 6 of the Income Tax Act. According to this section, an individual is considered a resident of India if they meet either of the following conditions:

They have stayed in India for at least 182 days during the previous financial year.
They have stayed in India for at least 60 days during the previous financial year and at least 365 days during the four preceding financial years.

Therefore, an NRI is someone who does not fulfil either of these residency conditions.

TDS on Renting a Property by NRI

The Budget 2017 brought changes in TDS rules for rent payments in India. If you're renting a property owned by an NRI, you are legally obligated to deduct TDS at a specific rate and deposit it with the Indian tax authorities. This deduction is mandatory regardless of the rent amount.

Specifically, tenants must deduct 31.2% tax at source from the rent paid to the NRI landlord. After deducting the TDS, the tenant is required to complete Form 15CA and submit it online to the income tax department.

In situations where the total remittance to the NRI exceeds Rs. 500,000, an additional step is required. The tenant must also submit Form 15CB before submitting Form 15CA. Form 15CB is a certificate providing details of the remittance and the applicable tax.

Applicable Tax Rates on Renting a Property by NRI

The standard TDS rate applicable on rent paid to an NRI landlord is 31.2%. This rate applies unless the NRI possesses a certificate stating that their total income from Indian sources falls below the taxable exemption limit.

An NRI landlord can obtain a certificate under Section 197 of the Income Tax Act for lower TDS deduction. If such a certificate is received from the Assessing Officer (AO), the tenant is obligated to deduct TDS at the lower rate specified in the certificate.

Process to Deduct Tax on Renting a Property by NRI

If you're renting a property in India from a Non-Resident Indian (NRI), it's important to understand the process for deducting Tax Deducted at Source (TDS) on the rental income. Here's a breakdown of the steps involved:

Obtain a Tax Account Number (TAN):

The first step for the tenant is to acquire a TAN (Tax Deduction and Collection Account Number). This can be done online through the NSDL website: https://tin.tin.nsdl.com/tan/form49B.html.
Deduct TDS and Deposit:

Once you have a TAN, you're obligated to deduct TDS at a rate of 31.2% from the total rent paid to the NRI landlord. This deducted amount needs to be deposited to the government within the seventh day of the following month using Challan ITNS 281. Remember, you'll then pay the remaining rent amount (after TDS deduction) to the NRI owner.
File TDS Return and Issue Certificate:

After depositing the TDS, the tenant must file a quarterly TDS Return in Form 26Q on the Income Tax Department's website. Additionally, the tenant needs to issue a TDS certificate in Form 16A to the NRI landlord. This form can be downloaded from the TRACES website (Tax Regulation for Correction of Assessment Errors Scheme) within 15 days of the due date for furnishing TDS returns.

How Can NRIs File Returns?

Filing by Tenants: Tenants are responsible for filing quarterly TDS returns with the tax authorities. The filing deadline is within a month of the end of each quarter. For instance, the TDS paid for the months of April, May, and June must be reported by July 31st of the same year.
Issuing TDS Certificates: Along with filing the returns, tenants are required to issue Form 16A, which is a TDS certificate, to the NRI landlord within 15 days of the TDS return filing deadline. This certificate provides the landlord with details of the TDS deducted and remitted to the government.

Penalty Charged for Not Paying TDS

Consequences of Late Payment: If the tenant fails to remit the deducted TDS to the government within the prescribed timeline (usually by the 7th of the following month), they may face severe penalties. Section 276B of the Income Tax Act, 1961, can lead to imprisonment for a period ranging from three months to seven years.
Penalty for Non-Deduction: In cases where the tenant entirely neglects to deduct TDS from the rent paid to the NRI landlord, Section 271C of the Income Tax Act imposes a penalty equivalent to the amount of TDS that should have been deducted.

Points to Consider for Tax on Rental Income for NRIs

Key Considerations:

Form 15CA: It is mandatory for tenants to fill out Form 15CA on the income tax portal every time rent is paid to an NRI landlord. This form declares that the tenant has made necessary inquiries about the tax status of the NRI landlord.
Form 15CB: If the total rent paid per annum exceeds Rs. 5 lakh, the tenant must obtain Form 15CB from a Chartered Accountant. This certificate verifies that the NRI landlord has complied with their tax obligations in India.
Loss Carry Forward: If the interest paid on the housing loan exceeds the rent received during a specific assessment year, it can be set off against income from other sources. The 'loss' under income from rent on house property can be carried forward for up to eight years, to be adjusted against income from various sources in the following assessment years.
NRI Account Credit: The rent earned by the NRI should be credited only to their Non-Resident Ordinary account. However, if the payer is also an NRI and is using their NRE account to make the payment, it can be credited to the NRE account of the landlord.
Remittance Mode Certificate: When the NRI opts for the remittance mode to receive the rental income, they should obtain a certificate from a Chartered Accountant stating that relevant taxes have been paid and that no further tax liability exists.
Comprehensive Income Reporting: NRIs must provide income from all sources in their Income Tax Return (ITR) along with the TDS deducted from the rental income.
Identifying NRI Landlords: When taking a house for rent, it is the tenant's responsibility to ascertain if the landlord is an NRI. This helps ensure proper TDS deduction and adherence to the Income Tax Act.
Staying Updated: Keep track of any changes in tax rules related to NRI rental income.

Exemptions and Agreements:

Certificate of Exemption: The tax on rental income can be exempted when the NRI property owner possesses a certificate stating that their total income from India falls below the exemption limit. If the NRI owner holds this certificate under Section 197, the taxpayer will be liable for lower tax on rental income as per the order of the Assessing Officer (AO).
Double Tax Avoidance Agreement (DTAA): If the NRI property owner's country of residence has a DTAA with India, they may not be subject to double taxation on rental income from properties located in India. Over 90 countries, including the USA, Canada, UK, Australia, and many others, have such agreements with India.

Filing Income Tax Returns:

Filing Requirement: NRIs are obligated to file their income tax returns in India, irrespective of whether they have earned any rental income during a specific assessment year.
Deduction Claims: NRIs can claim deductions available under Section 24(b) (interest on home loan) and the standard deduction on rental income while filing their returns.
Refund Claims: If excess TDS has been deducted, NRIs can claim a refund by filing their income tax returns.

FAQs

What should a tenant do if an NRI landlord does not provide their PAN?

In the absence of the NRI landlord's PAN, the tenant must still deduct TDS at a rate of 31.2%, remit it to the government, and file the TDS return using "PANNOTAVBL."
Can an NRI obtain a certificate for lower or nil TDS deduction on rental income?

Yes, an NRI can apply for a lower or nil TDS deduction certificate from the Income Tax Department by submitting Form 13, provided they believe their tax liability is less than the standard TDS rate.
How does the Double Taxation Avoidance Agreement (DTAA) impact TDS on rental income for NRIs?

NRIs living in countries with which India has a DTAA may qualify for tax relief or a reduced rate, depending on the agreement's provisions. Proper documentation and compliance are necessary to benefit from this arrangement.

†Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by any insurer. This list of plans listed here comprise of insurance products offered by all the insurance partners of Policybazaar. The sorting is based on past 10 years’ fund performance (Fund Data Source: Value Research). For a complete list of insurers in India refer to the Insurance Regulatory and Development Authority of India website, www.irdai.gov.in
*Past 10 Year annualised returns as on 01-02-2025
*All savings plans are provided by the insurer as per the IRDAI approved insurance plan. Tax benefit is subject to changes in tax laws. Standard T&C Apply
^The tax benefits under Section 80C allow a deduction of up to ₹1.5 lakhs from the taxable income per year and 10(10D) tax benefits are for investments made up to ₹2.5 Lakhs/ year for policies bought after 1 Feb 2021. Tax benefits and savings are subject to changes in tax laws.
#The investment risk in the portfolio is borne by the policyholder. Life insurance is available in this product. The maturity amount of Rs 2 Cr. is for a 30 year old healthy individual investing Rs 18,000/- per month for 30 years, with assumed rates of returns @ 8% p.a. that is not guaranteed and is not the upper or lower limits as the value of your policy depends on a number of factors including future investment performance. In Unit Linked Insurance Plans, the investment risk in the investment portfolio is borne by the policyholder and the returns are not guaranteed. Maturity Value: 1,06,79,507 @ CAGR 4%; 2,12,15,817 @ CAGR 8%. All plans listed here are of insurance companies’ funds. *Tax benefits and savings are subject to changes in tax laws. All plans listed here are of insurance companies’ funds.
¶Long-term capital gains (LTCG) tax (12.5%) is exempted on annual premiums up to 2.5 lacs.
**Returns are based on past 10 years' fund performance data (Fund Data Source: Value Research).