TDS on rent paid to an NRI landlord, explained

What just happened

Your renter deducted tax at source and deposited it with the Income Tax Department. They did not keep it. The deduction happens because you are a non-resident: rent paid to an NRI landlord falls under Section 195, which is a different provision from the one that covers rent paid to a resident landlord.

It applies from the first rupee. There is no threshold below which it stops, and no exempt slice at the bottom.

One naming note before the detail. From 1 April 2026 the Income-tax Act 2025 replaced the 1961 Act, and the section and form numbers changed with it. This page keeps the 1961 names, Section 195 among them, because renters, landlords and most accountants still use them. The duties themselves continue under the new Act, where deduction on payments to non-residents sits in Section 393. Your accountant will map the numbers.

Why 31.2%

The rate under Section 195 is 30%, and a 4% cess is charged on that tax, which brings the effective deduction to about 31.2%. A surcharge sits on top of that only where your total Indian income for the year is above Rs 50 lakh, not the rent alone. This is the position as of August 2026. Rates change, so check the current one before you plan around it.

It is withholding, not a permanent cut

This distinction is the whole reason not to panic. The 31.2% is not your tax bill. It is tax collected in advance and credited to you against what you eventually owe.

What you actually owe is usually a good deal less:

• rental income gets a 30% standard deduction;
• municipal taxes are deductible;
• interest on a home loan against the property is deductible;
• what remains is taxed at slab rates.

For many owners the final liability is a fraction of what was withheld. The gap is not lost. It is sitting with the department until you claim it.

Getting the excess back

You file an Indian income tax return, set the tax already deducted against what you owe, and the difference comes back as a refund. Form 16A from your renter is your evidence that the deduction reached the department, so ask for it each quarter and keep it.

If the same rent is taxed again in the country you live in, a double tax treaty (DTAA) will generally let you credit the Indian tax paid against that liability. How cleanly that works depends on your country of residence and its treaty with India, which is a question for whoever files your return there.

Not waiting a year for it

If you would rather the money did not sit with the department until you file, there is a route. You can apply under Section 197, using Form 13, for a certificate setting a lower rate or nil. If one is issued, your renter deducts at the rate on the certificate instead of 31.2%. How that works, in sequence.

What your renter actually has to do

The obligation is theirs. It exists whether or not any app, agent or accountant is involved. As of August 2026 a renter paying rent to an NRI landlord has to:

• obtain a TAN, which is a separate registration from a PAN;
• deposit the deducted tax by the 7th of the following month;
• file Form 27Q, the quarterly return for payments to non-residents;
• issue you Form 16A;
• where money moves abroad, file Form 15CA, with Form 15CB from a chartered accountant where the rent is above Rs 5 lakh a year. Whether these are needed for each rent payment into an Indian account, or only when funds later leave India, is a point accountants read differently, so have one call it for your case.

A renter who does not deduct is exposed under Section 271C to a penalty equal to the amount that should have been deducted, plus interest. This is worth saying to them plainly, because the risk is theirs and they may not know it exists.

Why your renter finds this unfamiliar

Because renting from a resident landlord is a different provision entirely. That one is Section 194-IB. It bites only above Rs 50,000 a month, the rate is 2%, in force since 1 October 2024, and it runs against a PAN with no TAN needed. A renter who has done that before will recognise almost nothing in the list above. Setting out the difference in writing at the start of the tenancy is cheaper than discovering it after the first payment.

Where Door-Let stands in this

Door-Let records what was charged and what arrived. It does not deduct tax, does not file anything and does not make anyone compliant. The deduction above belongs to your renter, and the return belongs to you.

Related

Renting out property in India as an NRI covers the account the rent goes into and what can be moved out of India. Form 13 and the Section 197 certificate covers the application that lowers this rate. Both sit under the guides index.

If something here does not match your situation, write to support@doorlet.in.