Westcliff RealtyRent goes into your NRO account
Rent is income earned in India, so tenants must pay it into your NRO account. From there you can pay maintenance, EMIs and property tax, or repatriate it after tax within the USD 1 million per financial year limit.
TDS on rent paid to an NRI
A tenant paying rent to a non-resident must deduct TDS, generally at 30% plus surcharge and cess, whatever the amount, and needs a TAN to deposit it. Many individual tenants are unaware of this, so explain it at the start or ask your property manager to handle it.
If your actual tax will be lower, for example because of home loan interest and the standard deduction, you can apply for a lower deduction certificate so the tenant deducts less. Otherwise, claim the excess back by filing an Indian tax return.
How rental income is taxed in India
- A 30% standard deduction is allowed on the rent after municipal taxes, whatever you actually spend on repairs
- Interest on a home loan for a rented property is deductible; a resulting loss can be set off against other Indian income up to ₹2 lakh a year, with the rest carried forward
- File an Indian tax return each year you earn rent
And in the US
Report the rent on Schedule E of your US return, deduct expenses and depreciation (30 years for foreign residential property), and claim a foreign tax credit for the Indian tax. See our guide on US taxes on Indian property.
The rental agreement
- Most homes are let on an 11-month leave-and-licence agreement, renewable, which keeps stamp duty low and the arrangement flexible
- Pay the stamp duty and register the agreement where the state requires it; many states offer online registration
- Record the deposit, rent, notice period, maintenance charges and the condition of the home, with photos
- Complete the tenant's police verification, which most cities require
Managing the home from the US
- Use a property management company or a trusted relative with a specific power of attorney for renting
- Ask the society or developer's facility team to keep your contact details current
- Keep annual maintenance contracts for lifts, generators and water purifiers in the owner's name
- Inspect, or have someone inspect, the home between tenancies
The new Income-tax Act
A note on the law: from 1 April 2026 India's Income-tax Act, 2025 replaced the Income-tax Act, 1961. The rules described here carried over, but section and form numbers changed, so your chartered accountant may use different references from older articles you read online.
FAQs
Can my tenant pay rent into my US account?
No. Rent must be paid into your NRO account in India. You can then repatriate it after tax.
Does the tenant really have to deduct TDS?
Yes, when the landlord is a non-resident. The tenant deducts TDS and deposits it with the government, and you get credit for it in your Indian return.
Is rent from India taxed in the US too?
It is reported in the US, but the foreign tax credit for Indian tax usually prevents paying twice.
How long should the rental agreement be?
Most NRIs use an 11-month renewable leave-and-licence agreement, registered where required.
This guide is general information, not legal or tax advice. Rules change; confirm the details with a chartered accountant or lawyer before you act.