TDS deduction when renting property owned by NRI

The rules of Tax deduction at source {TDS) for rental property in India changed under the budget 2017 proposals. Effective June 1, 2017, tenants are required to deduct TDS  and submit the money to the tax authorities if rental amount is Rs. 50,000 or more per month. Landlord must provide their PAN details to their tenant. Failure to provide PAN to tenant can result in TDS withholding @ 20% instead of 5%.

Understanding TDS rules on rental income in India

Effective 2017, tenants who pay rent over Rupees 50,000 per month are required by law to deduct TDS @ 5% on rental payments and pay the money deducted as TDS to the tax authorities through online payment or deposit via bank to the tax authorities account. Tenant must also issue a tax withholding certificate in the prescribed format (Form 16C) to the landlord as proof of the taxes being deducted and deposited with the tax authorities.

Renting from NRI landlord - Tenant to deduct TDS @ 30%

The Rs. 50,000 or above rental value does NOT apply if the rental property is owned by an NRI. Tenants who are renting property owned by a non-resident (NRI) are required to deduct 30% TDS on the rental payment and submit the deducted TDS amount to the tax authorities. Tenant must also complete and submit Form 15CA online to the tax department. Example: Raj is renting a flat in Delhi owned by a NRI at a monthly rental of Rs. 35,000. Instead of paying the full rental of Rs. 35,000 monthly, Raj must deduct TDS @ 30% which works out to Rs. 10,500 and pay the landlord Rs. 24,500 monthly. The TDS deduction of Rs. 10,500 must be submitted by Raj to the tax authorities and he must also complete and file Form 15CA online. NRI renting property need PAN but may be exempt from providing Aadhaar. Taxes in India can be filed by NRIs using PAN card.

Determine Residential Status in India

A person is considered to be an Indian resident for a financial year if: They are in India for at least 6 months (182 days or more) during the financial year OR Are in India for 2 months (60 days) for the year and have lived in India for one year (365 days) in the last four years.

Claiming Refund of TDS by NRI

NRIs can claim refund of TDS by filing a tax return in India. Currently income up to Rs. 2.5 Lakh is allowed tax free in India. Income over this amount becomes taxable. NRIs who have paid excess TDS can file a tax return to claim refund of any excess tax withheld.
Disclaimer: Information provided is for general knowledge only and should not be deemed to be professional advice. For professional advice kindly consult a professional accountant, immigration advisor or the Indian consulate. Rules and regulations do change from time to time. Please note that in case of any variation between what has been stated on this website and the relevant Act, Rules, Regulations, Policy Statements etc. the latter shall prevail. © Copyright 2006 Nriinformation.com
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Disclaimer: Information provided is for general knowledge only and should not be deemed to be professional advice. For professional advice kindly consult a professional accountant, immigration advisor or the Indian consulate. Rules and regulations do change from time to time. Please note that in case of any variation between what has been stated on this website and the relevant Act, Rules, Regulations, Policy Statements etc. the latter shall prevail. © Copyright 2006 Nriinformation.com
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TDS deduction when renting

property owned by NRI

The rules of Tax deduction at source {TDS) for rental property in India changed under the budget 2017 proposals. Effective June 1, 2017, tenants are required to deduct TDS  and submit the money to the tax authorities if rental amount is Rs. 50,000 or more per month. Landlord must provide their PAN details to their tenant. Failure to provide PAN to tenant can result in TDS withholding @ 20% instead of 5%.

Understanding TDS rules on rental

income in India

Effective 2017, tenants who pay rent over Rupees 50,000 per month are required by law to deduct TDS @ 5% on rental payments and pay the money deducted as TDS to the tax authorities through online payment or deposit via bank to the tax authorities account. Tenant must also issue a tax withholding certificate in the prescribed format (Form 16C) to the landlord as proof of the taxes being deducted and deposited with the tax authorities.

Renting from NRI landlord - Tenant to

deduct TDS @ 30%

The Rs. 50,000 or above rental value does NOT apply if the rental property is owned by an NRI. Tenants who are renting property owned by a non- resident (NRI) are required to deduct 30% TDS on the rental payment and submit the deducted TDS amount to the tax authorities. Tenant must also complete and submit Form 15CA online to the tax department. Example: Raj is renting a flat in Delhi owned by a NRI at a monthly rental of Rs. 35,000. Instead of paying the full rental of Rs. 35,000 monthly, Raj must deduct TDS @ 30% which works out to Rs. 10,500 and pay the landlord Rs. 24,500 monthly. The TDS deduction of Rs. 10,500 must be submitted by Raj to the tax authorities and he must also complete and file Form 15CA online. NRI renting property need PAN but may be exempt from providing Aadhaar. Taxes in India can be filed by NRIs using PAN card.

Determine Residential Status in India

A person is considered to be an Indian resident for a financial year if: They are in India for at least 6 months (182 days or more) during the financial year OR Are in India for 2 months (60 days) for the year and have lived in India for one year (365 days) in the last four years.

Claiming Refund of TDS by NRI

NRIs can claim refund of TDS by filing a tax return in India. Currently income up to Rs. 2.5 Lakh is allowed tax free in India. Income over this amount becomes taxable. NRIs who have paid excess TDS can file a tax return to claim refund of any excess tax withheld.
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