What is TDS deducted on rental income paid to NRIs?

TDS (Tax Deducted at Source) on rental income paid to NRIs is deducted at a flat rate of 30% (plus applicable surcharge and cess) under Section 195 of the Income Tax Act, which is higher than the TDS rate applicable to resident landlords.

Key Rules on TDS for NRI Rent

• Tenant is responsible for deducting TDS before paying rent, not the landlord
• TDS applies regardless of the rent amount :no minimum threshold, unlike resident landlords
• Tenant must obtain a TAN (Tax Deduction Account Number) to deposit TDS
• TDS certificate (Form 16A) must be issued to the NRI landlord

Ways to Reduce TDS Burden

• NRI can apply for a Lower or Nil TDS Certificate from the Income Tax Department under Section 197
• Excess TDS deducted can be claimed as a refund while filing the annual income tax return

Practical Tips

• Ensure the tenant deposits TDS on time to avoid penalty complications
• Keep TDS certificates and rent agreements organized for tax filing

In summary, tenants must deduct 30% TDS on rent paid to NRI landlords, regardless of the rental amount. NRIs can lower this burden through a certificate under Section 197 or claim refunds during tax filing.