India rent guide

More on ownership

Barred outright

Agricultural land, plantations and farmhouses, for anyone who is not resident in India, other than by inheritance.

Inheritance and gifts

NRIs and OCIs may inherit any property, including agricultural land, and may receive residential or commercial property as a gift from a relative. Citizens of the eleven restricted countries need RBI permission even to inherit.

Owning through a company

A foreign-owned company buying property follows the foreign investment rules, not the individual rules above. Outside this guide.

Letting it out from abroad

May a non-resident owner let it

Yes. An NRI, an OCI or any lawful owner living abroad may let the property without a permit or RBI approval.

Licences, permits, landlord registration

None for a long-term let. Many cities require the landlord to file the tenant's details with the local police, which Delhi takes online, and housing societies usually ask for a no-objection letter.

Local agent or representative

No. Most absent landlords appoint a relative or a property manager under a Power of Attorney, which is also what registration of a longer lease needs.

The rent agreement

Written agreement required

No law requires writing for a term under a year, but every bank, police station and court will ask for one. Treat it as mandatory.

Mandatory standard form

None nationally. The Model Tenancy Act 2021 is a template that Andhra Pradesh, Tamil Nadu, Uttar Pradesh and Assam have adopted in their own versions.

Language

Any language the parties understand. English is accepted by every registry and court.

Registry

The Sub-Registrar for the district where the property is, under the Registration Act 1908.

When registration is required

Mandatory for a lease of one year or more, or one that reserves a yearly rent. Below that, registration is optional, which is why eleven-month agreements are the norm.

Who registers

Both parties appear before the Sub-Registrar with two witnesses, or a holder of a registered Power of Attorney appears for an absent party. A landlord abroad signs the Power of Attorney at an Indian consulate and has it adjudicated for stamp duty in India. Maharashtra registers leave-and-licence agreements online with Aadhaar-based identification.

Registration cost

A state fee, often one percent of the rent for the term with a cap. Maharashtra charges a flat fee for an online leave-and-licence registration.

If it is not registered

A lease that needed registration and did not get it cannot be used in court to prove its terms. The occupant is treated as a month-to-month tenant at best.

Stamp duty

State law, paid before signing, usually by the tenant unless the agreement says otherwise. Paid by e-stamping, which StockHolding runs for 26 states and territories, or through the state's own portal. Maharashtra charges 0.25 percent of the total rent for the term plus notional interest on the deposit for a residential leave-and-licence. Other states set their own rate, usually a percentage of the rent for the term, on their registration department's site.

Notarisation and witnesses

Two witnesses sign, and registration needs them present. Notarisation is optional and adds nothing in law, though banks and police stations often ask for it.

E-signature

Valid under the Information Technology Act 2000. Aadhaar eSign, an OTP to the Aadhaar-linked mobile, is the usual route and needs an Aadhaar. A certificate-based digital signature from a licensed certifying authority works without one and can be issued to a foreign national on a passport. A plain OTP or email signature still forms a valid contract under section 10A but carries less weight as evidence. Registration itself still needs an in-person or biometric appearance.

The usual term

Eleven months, renewed, to stay below the registration threshold. Longer terms are registered, usually as a lease deed.

Rules the agreement must respect

Deposit

No national cap. The Model Tenancy Act 2021 caps it at two months' rent for residential premises in the states that adopt it. Elsewhere two to three months is usual, and some cities ask for far more.

Rent increases

Whatever the agreement says. There is no national cap, and an increase at each renewal is the norm. Older rent-control laws in some states still restrict increases for tenancies that predate them.

Notice periods

As agreed, usually one month on either side, with the deposit returned on handover less any agreed deductions.

Disputes

The civil courts, or the Rent Court and Rent Tribunal in states that have adopted the Model Tenancy Act. Eviction is a court process; a landlord may not change the locks or cut utilities.

Mandatory disclosures

Not applicable

Tax when the landlord lives abroad

Is the rent taxed here

Yes. Rent from Indian property is Indian income and is taxed in India whoever owns it, after the standard deduction for house property and the municipal taxes paid.

Withholding at source

Yes

Withholding rate

30 percent of gross rent plus 4 percent cess, so 31.2 percent, under section 195. A surcharge applies above ₹50 lakh of income. There is no threshold: it applies from the first rupee.

Who withholds

The tenant, every month, whoever they are. An individual tenant of a resident landlord deducts only above ₹50,000 a month and only once a year; a tenant of a non-resident landlord has no such relief.

What the tenant must register

A Tax Deduction Account Number, the monthly deposit of the tax by the 7th of the following month, a quarterly return in Form 27Q and a Form 16A certificate to the landlord.

How to reduce it

The landlord applies online in Form 13 for a certificate under section 197 allowing a lower or nil rate for the year, based on expected income. A tax treaty does not reduce the deduction on rent by itself.

Filing and tax ID

The landlord files an Indian return with a PAN, pays any balance and claims back excess deduction. The tenant needs both a PAN and a Tax Deduction Account Number.

VAT or GST on rent

None on a home let to an individual to live in. Letting a home to a GST-registered business has been taxed under reverse charge since 18 July 2022, and commercial rent is taxable once the landlord crosses the registration threshold.

Municipal and housing fees

Annual property tax to the municipal body, paid by the owner. Water, maintenance and society charges as the agreement allocates them.

Money inside the country

How tenants pay

UPI, NEFT, IMPS or RTGS transfer to the landlord's Indian account. Cash is legal, but a bank trail is what the tenant's tax deduction and the landlord's return rest on.

Currency of rent

INR

Bank account for a non-resident owner

An NRO account is where rent normally goes and where most banks will insist it goes. Under RBI's rules rent is current income and may also be credited to an NRE account once the bank is satisfied that tax has been paid, usually on a chartered accountant's certificate.

Paying rent to an overseas account

Possible as an outward remittance through a bank, with Form 15CA and 15CB and the tax deducted first, but almost nobody does it. Rent lands in an NRO account and the landlord moves it later.

Taking rent out of the country

Rent is current income and is repatriable after tax, outside the USD 1 million-a-year cap that applies to other NRO balances. The bank needs Form 15CA, and a chartered accountant's Form 15CB once remittances pass ₹5 lakh in a year. Many banks now offer UPI on an NRE or NRO account linked to a foreign mobile number, which makes paying Indian bills from abroad easier.

Owning property abroad from here

Buying abroad

Allowed under the Liberalised Remittance Scheme: up to USD 250,000 per person per financial year, which relatives may pool for one property. Also by inheritance, by gift from a resident who owned it lawfully, or from income already held abroad.

Reporting foreign assets and accounts

Every resident reports foreign property, accounts and the income from them in Schedule FA of the annual return, with the rent itself in Schedule FSI. Leaving it out is penalised under the black money law.

Tax at home on foreign rent

Residents are taxed on worldwide income, so foreign rent is taxed in India at slab rates after the standard deduction. Tax paid abroad is credited through Form 67, filed before the return, under the treaty with that country or unilaterally where there is none.

Bringing rent home

No limit on bringing it back. Income from an LRS investment may be retained and reinvested abroad; if it is not reinvested it must be repatriated within 180 days of receipt. The bank records the purpose as income from property abroad.

Digital identity for e-signing

Aadhaar eSign signs any Indian document and a growing number of foreign platforms accept it. Where it is not accepted, a certificate-based digital signature from an Indian certifying authority, or the foreign platform's own e-signature, does the job.

Sources

1. RBI Master Direction: Acquisition and Transfer of Immovable Property under FEMA — www.rbi.org.in
2. Ministry of External Affairs: acquisition and transfer of immovable property in India by NRIs and OCIs — www.mea.gov.in
3. RBI FAQ: Accounts in India by Non-residents (NRE, NRO, current income) — www.rbi.org.in
4. RBI FAQ: Remittance of Assets (the USD 1 million limit) — www.rbi.org.in
5. RBI FAQ: Liberalised Remittance Scheme — www.rbi.org.in
6. RBI FAQ: Purchase of immovable property outside India — www.rbi.org.in
7. Income Tax Department: TDS rates, including section 195 for non-residents — www.incometaxindia.gov.in
8. Income Tax Department: Form 13, certificate under section 197 for a lower or nil rate — www.incometaxindia.gov.in
9. Income Tax Department: Form 15CA, remittance to a non-resident — www.incometaxindia.gov.in
10. Income Tax e-filing portal: Form 67 FAQ, foreign tax credit — www.incometax.gov.in
11. Income Tax e-filing portal: guide to Schedules FA, FSI and TR — www.incometax.gov.in
12. The Registration Act, 1908 (Delhi Revenue Department copy), section 17 on leases — revenue.delhi.gov.in
13. MeitY: The Information Technology Act, 2000 (sections 3, 3A and 10A) — www.meity.gov.in
14. UIDAI: enrolment and update, who may enrol — uidai.gov.in
15. UIDAI: NRI Aadhaar enrolment — uidai.gov.in
16. PIB: Model Tenancy Act, states that have adopted it (25 July 2022) — www.pib.gov.in
17. PIB: draft Model Tenancy Act, the security deposit cap (11 July 2019) — www.pib.gov.in
18. StockHolding e-Stamping, the Central Record Keeping Agency — www.shcilestamp.com
19. IGR Maharashtra: leave and licence e-registration and stamp duty — igrmaharashtra.gov.in
20. GST Council: Notification 12/2017-Central Tax (Rate), exemption for residential dwellings — gstcouncil.gov.in
21. CBIC: Notification 04/2022-Central Tax (Rate), renting to a registered person — cbic-gst.gov.in
22. Controller of Certifying Authorities: digital signature certificates — cca.gov.in
23. Delhi Police: citizen services, including tenant registration — delhipolice.gov.in