Why This Page Exists

Most NRI-focused content answers “should I buy” or “where should I buy” in Mohali or Chandigarh. This one assumes you’ve already bought — or are about to close — and answers a completely different question: what happens to the rent once a tenant starts paying it? That’s a mechanical, compliance-heavy question with its own forms, deadlines, and penalties, and it deserves its own guide rather than a paragraph tucked into an investment overview.

If you haven’t decided where to invest yet, our NRI Property Investment Mohali guide and NRI Property Investment in Chandigarh guide cover the buying decision. This page picks up after that — once you own the asset and a tenant is (or will be) paying you rent.

Section 195: The Rule Your Tenant Probably Doesn’t Know About

When rent is paid to a resident landlord, Section 194-IB caps in — 2% TDS, and only if the individual tenant is paying above ₹50,000 a month. When the landlord is an NRI, that entire framework is replaced by Section 195, which governs any payment made to a non-resident: rent, interest, consulting fees, all of it.

The practical difference is stark. There’s no ₹50,000 threshold. There’s no exemption for small landlords. A tenant paying an NRI ₹15,000 a month owes exactly the same 31.2% TDS obligation as one paying ₹1,50,000 a month. The government’s logic is straightforward: collecting tax from someone based in Toronto or Dubai after the fact is harder than collecting it upfront through the tenant sitting in India.

A Worked Example

The Compliance Sequence — What Actually Has to Happen

1. Tenant obtains a TAN via the Protean (NSDL) portal — this is separate from their PAN and is mandatory before they can legally deduct tax on your rent.
2. Tenant deducts 31.2% TDS from every rent payment and deposits it using Challan ITNS 281, by the 7th of the following calendar month.
3. Tenant files Form 27Q quarterly — a TDS return specific to payments made to non-residents.
4. Tenant issues Form 16A to you (downloaded from the TRACES portal) within 15 days of the quarterly return’s due date — this is your proof of tax paid, and you’ll need it when filing your ITR.
5. Rent is credited to your NRO account (or NRE if the tenant themselves pays from an NRE account, which is rare).
6. You file ITR-2 at year-end, declaring the rent under “Income from House Property,” claiming the standard 30% deduction, municipal taxes paid, and any home loan interest — then setting off the Form 16A credit against your computed liability.

Form 15CA and 15CB — When You Actually Need Them

These two forms trip up more NRI landlords than any other part of the process, mainly because they apply at the point of moving money out of India, not at the point of earning it.

• Form 15CA is a self-declaration filed online with the Income Tax Department whenever a remittance is being sent abroad from an NRO account.
• Form 15CB is a certificate from a practising Chartered Accountant confirming the nature of the remittance and that applicable tax has been paid — this is required once the remittance amount crosses ₹5 lakh in a financial year.

In practice: if you’re repatriating your rental income annually in one or two transfers and the amount is above ₹5 lakh, your bank will not process the outward remittance until both forms are in place. Below that threshold, 15CA alone (in the simpler category) may suffice, but banks vary in how strictly they interpret this — confirm directly with your NRO bank’s forex desk before initiating a transfer.

Repatriation Limits

Under FEMA, NRIs can repatriate up to USD 1 million per financial year from an NRO account, combining sale proceeds and accumulated income like rent — subject to the CA certification described above confirming the funds are tax-compliant. This is a cumulative annual cap across all your NRO-based remittances, not a per-property or per-transaction limit.

Reducing the 31.2% — The Section 197 Route

Here is the part most NRI landlords never explore, and it’s often worth ₹1–3 lakh a year in cash flow that would otherwise sit blocked with the government until refund. If your actual computed tax liability on the rental income — after the standard 30% deduction on Net Annual Value, municipal taxes, and (if applicable) home loan interest — works out to less than 31.2%, you can apply for a Lower TDS Certificate under Section 197 using Form 13, filed with the jurisdictional Assessing Officer (International Taxation).

How the Tax Itself Is Computed

Rental income for an NRI is taxed exactly the way it is for a resident, under “Income from House Property” — there’s no separate NRI tax slab. The computation runs like this:

Two things NRIs often miss: rental income is taxed on an accrual basis, meaning it’s the rent that became due, not necessarily what landed in your account after a delayed transfer. And NRIs are not eligible for a handful of resident-only deductions (Sections 80DD, 80DDB, 80U) — worth knowing before you assume your total tax outgo will mirror a resident owner’s.

DTAA — Avoiding Double Taxation

If your country of residence also taxes worldwide income (the US does; the UK and Canada have their own rules; UAE has no personal income tax), the India-your-country Double Taxation Avoidance Agreement generally lets you claim credit for tax already paid in India against your liability abroad, since the property itself is taxed where it’s located. The mechanics of claiming this credit depend entirely on your country’s filing system — this is squarely CA territory, and one where coordinating an Indian CA with your overseas tax preparer matters more than anything else on this page.

TDS at Different Rent Levels — Quick Reference

Figures assume no Section 197 certificate is in place and no surcharge applies (total income below ₹50 lakh). These are illustrative — always verify current-year rates before your tenant’s first payment.

Where NRI Landlords Actually Get Caught Out

• Tenant pays full rent, deducts nothing. Most resident tenants have never dealt with Section 195 and simply pay the full amount. Years later, an Income Tax Department notice lands — on the tenant, not just the landlord.
• No TAN, no deduction possible. A tenant can’t legally deduct and deposit TDS without a TAN; skipping this step doesn’t remove the obligation, it just delays the problem.
• Ignoring Form 15CA/15CB until the transfer is urgent. Banks won’t rush this paperwork — plan repatriation weeks, not days, ahead.
• Never applying for a lower-TDS certificate and leaving 20+ percentage points of cash blocked every month for no reason.
• Not filing ITR at all because “TDS was already deducted” — which forfeits any refund owed and creates a compliance gap for future property transactions or visa-related financial checks.

Where Royals Property Consultant Fits In

We’re not a tax firm, and we won’t pretend to be one. What we do handle for NRI owners across Mohali, Zirakpur, Panchkula, and New Chandigarh is the part that sits right next to the tax question: finding and vetting tenants, structuring the lease so TDS obligations are spelled out in writing from day one, coordinating between your tenant and your CA when Form 16A or 15CB paperwork needs chasing, and routine property oversight so you’re not managing this from a different time zone with no local eyes on the ground.

If you already own — or are close to closing — a rented property in the Tricity and want the operational side handled properly, that’s a conversation worth having before your first tenant moves in, not after the first missed TDS deposit.

Frequently Asked Questions

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