TDS on Rent Paid to an NRI Landlord

Rent paid to an NRI landlord follows Section 393(2), not the domestic Code 129 (194-IB) rate of 2% — the correct non-resident rate is generally 30% on the rental income, subject to DTAA relief.

FY 2026-27 · Section 393(2)

Quick answer

Indicative rate

30% (individual non-resident rate, before DTAA relief)

Section & code

Section 393(2), Sl. No. 17, Code 1057

Forms typically needed:

Form 15CA Form 15CB

Cross-Border TDS Decision Helper

Nature of payment

Payee has valid PAN?

TRC + Form 41 furnished?

Indicative Act rate

20%

Domestic Act rate under Section 393(2) for royalty/FTS to a non-resident non-company — doubled from 10% by Finance Act 2023 (effective 1 April 2023), unchanged since. Classify carefully: royalty and FTS have different treaty definitions.

Without a TRC and Form 41, the treaty rate can't be applied — the Act rate above governs until documentation is furnished.

This is a decision aid, not a filing determination — always confirm classification and the exact treaty article with a professional before remitting.

Why tenants frequently get this wrong

A resident individual renting a property deducts a modest 2% TDS under Code 129 (formerly Section 194-IB) if monthly rent exceeds ₹50,000 — a rule most tenants are at least vaguely aware of. When the landlord is an NRI, this framework doesn't apply at all: the tenant must instead deduct under Section 393(2), at the rate applicable to a non-resident's rental income, which is materially higher than 2% and applies regardless of the rent amount.

Many tenants renting from NRI landlords simply aren't aware the landlord is non-resident (rent is often paid to a local property manager or into an Indian bank account, obscuring the landlord's actual residential status), which is precisely how this compliance gap tends to happen — not through willful non-compliance, but through simply not knowing the correct classification applies.

The applicable rate and how DTAA relief works here

Rental income for a non-resident individual is generally taxed at the standard non-resident slab rates rather than a specific concessional 'rent' category (unlike the resident framework's flat 2%) — in practice, many tenants deduct at 30% as a conservative default for individual NRI landlords, though the landlord's actual liability depends on their total Indian income and applicable deductions (like the standard 30% deduction for repairs/maintenance under house-property income rules, and home-loan interest if applicable).

DTAA relief for rental income specifically is less commonly available or impactful than for royalty/FTS/interest, since most treaties treat income from immovable property as taxable primarily in the country where the property is located (India, in this case) — so the domestic rate typically governs regardless of the landlord's treaty country.

A lower-deduction certificate is the standard practical fix

Because a flat 30% deduction on gross rent significantly overstates the landlord's actual tax liability (which is computed on net rental income after standard deductions), NRI landlords commonly apply for a lower-deduction certificate specifying a reduced rate that better reflects their actual expected tax liability for the year — tenants should ask their NRI landlord whether such a certificate exists or is being obtained, rather than defaulting to the full 30% indefinitely.

Practical steps for a tenant renting from an NRI landlord

Confirm the landlord's residential status directly — don't assume based on where rent is remitted.
If NRI, apply Section 393(2), not Code 129's 2% rate.
Ask whether the landlord has (or is obtaining) a lower-deduction certificate.
File Form 15CA for the rent payments; Form 15CB if the ₹5 lakh annual aggregate is crossed.

Worked example

Monthly rent of ₹60,000 paid to an NRI landlord with no certificate

A tenant pays ₹60,000 monthly rent to a landlord who has since relocated abroad and become non-resident. Absent a lower-deduction certificate, the tenant deducts 30% TDS on each monthly payment (₹18,000), remitting ₹42,000 net to the landlord, and files Form 15CA for the payments (Form 15CB required once the annual aggregate of ₹7,20,000 crosses ₹5 lakh). If the landlord obtains a certificate specifying a lower rate based on their actual net rental income after deductions, the tenant applies that certified rate instead going forward.

Common mistakes & litigation traps

Applying the domestic 2% rate without confirming landlord residency

The single biggest risk in this category — always confirm whether the landlord is resident or non-resident before defaulting to the familiar 2% figure.

Not realizing the landlord's status changed mid-tenancy

A landlord who relocates abroad partway through the lease term changes the applicable TDS framework going forward — tenants should periodically confirm status for long-running tenancies.

Deducting 30% indefinitely without asking about a lower-deduction certificate

Many NRI landlords obtain certificates specifically because the flat rate overstates their real liability — a tenant who never asks may be over-deducting unnecessarily.