Renting out property in India: landlord guide

Costs of buying

• Stamp duty is set by each state, typically 5–7% of the higher of the agreement value and the government's circle (ready reckoner) rate. Registration is usually another 1%. Some states charge women buyers less.
• Under-construction homes carry 5% GST (1% for affordable housing). Completed homes with an occupancy certificate carry no GST.
• When the price is ₹50 lakh or more, the buyer deducts 1% TDS from a resident seller. Buying from an NRI seller means deducting TDS on the seller's capital gain instead, which is much higher.

Buying as an NRI, OCI or foreigner

• NRIs and OCI cardholders can buy residential and commercial property without permission, but not agricultural land, plantations or farmhouses (except by inheritance).
• Foreign nationals who are not resident in India generally cannot buy property, except by inheritance.
• Payment must come through normal banking channels, for example from an NRE, NRO or FCNR account.
• Sale proceeds held in an NRO account can be sent abroad up to USD 1 million per financial year, with Forms 15CA/15CB.

Official guidance: Reserve Bank of India: FEMA rules for NRIs and OCIs · Income Tax Department: NRI services

How rental income is taxed

• Rent is taxed as income from house property at your normal slab rates. The tax year runs from April to March, and most individuals file by 31 July.
• The Income-tax Act, 2025, in force from 1 April 2026, replaced the 1961 Act; the treatment of house property income stays the same.
• Resident landlords: an individual tenant paying more than ₹50,000 a month deducts 2% TDS from the rent.
• NRI landlords: the tenant must deduct TDS on the full rent (about 30% plus surcharge and cess) before paying you. You can apply for a lower deduction certificate and claim any excess back in your return.
• Advance tax is due in instalments (15 June, 15 September, 15 December, 15 March) if your tax for the year, after TDS, is ₹10,000 or more.

Expenses claimable against rental income

• Municipal (property) tax you paid during the year, deducted from the rent first.
• A flat 30% standard deduction on what remains. It replaces actual repairs, upkeep and insurance, which are not claimed separately.
• Interest on a home loan for a let-out property. A loss from house property can reduce other income by at most ₹2 lakh a year; the rest carries forward for 8 years.
• Interest paid before construction finished, claimed in five equal parts from the year the property is completed.

Tenancy rules and customs

• Security deposits vary by city: two to three months' rent is common in Delhi and Mumbai, and Bengaluru has traditionally asked for much more. The Model Tenancy Act, 2021 caps residential deposits at two months, but only where a state has adopted it.
• Eleven-month leave and licence agreements are common because longer leases must be registered. In Maharashtra every leave and licence agreement must be registered, whatever its length.
• Many cities require police verification of tenants.

Key dates

• 15 June, 15 September, 15 December, 15 March: Advance tax instalments, if tax due after TDS is ₹10,000 or more
• 31 July: Income tax return for the April–March year (most individuals)
• Set by your municipal corporation: Property tax, often with a discount for early payment
• Before the agreement starts: Register the leave and licence agreement where required, and complete police verification

Questions landlords ask

What is a good rental yield in India?

Residential yields in large Indian cities are low, commonly 2–4% gross, because prices are high relative to rents. Returns depend more on price growth. Use the rental yield calculator for India to check a specific flat with the loan included.

Can NRIs buy and rent out property in India?

Yes. NRIs and OCI cardholders can buy residential and commercial property and rent it out, but not agricultural land, plantations or farmhouses. The tenant must deduct TDS from rent paid to an NRI landlord.

Which expenses can I claim against rental income in India?

Municipal tax paid, then a flat 30% standard deduction that covers repairs and upkeep, plus interest on a home loan for the property. Repairs, insurance and society maintenance are not claimed separately.

How much TDS does a tenant deduct for an NRI landlord?

Tax at about 30% plus surcharge and cess on the rent, unless the landlord has a lower deduction certificate. The tenant needs a TAN, deposits the tax and gives the landlord a TDS certificate.

When is the income tax return due in India?

For most individuals, 31 July after the April–March tax year ends. Advance tax is due during the year if your tax after TDS is ₹10,000 or more.

Official sources

• Income Tax Department (e-filing portal)
• Income Tax Department: Acts and rules
• Reserve Bank of India: FEMA and NRI property