How NRIs Can Manage Rental Property in India Without Ever Visiting
Your tenant is bound by a completely different — and much stricter — TDS rule than the one that applies to resident landlords. Most tenants don't know it exists.
Owning rental property in India while living in Dubai, Houston, or Singapore comes with a specific set of frictions: verifying a tenant you can't meet, signing documents across time zones, and — the part that surprises almost everyone — a completely different tax deduction rule that applies the moment your landlord status changes from resident to non-resident.
- Why Section 195 — not the familiar 194-IB — applies to your rent, and what it actually costs
- How to reduce the deduction with a lower-TDS certificate
- Verifying a tenant and signing a lease without visiting India
The TDS mistake nearly every tenant makes
Here's the number that catches people off guard: 31.2%. That's the flat TDS rate — 30% plus a 4% health and education cess — a tenant must deduct from rent paid to an NRI landlord under Section 195. Tenants who've rented from resident landlords before assume the same 194-IB rules apply, including its ₹50,000-a-month threshold. They don't. Section 195 has no threshold at all — it applies from the very first rupee.
What the tenant is required to do
- Obtain a TAN via Form 49B on the NSDL/Protean portal — a PAN alone isn't enough here.
- Deduct TDS at 31.2% (or the rate in a lower-deduction certificate) from every rent payment.
- Deposit using Challan ITNS 281, by the 7th of the following month.
- File Form 27Q quarterly — the return specifically for payments to non-residents.
- Issue Form 16A to the landlord within 15 days of the Form 27Q filing due date.
- File Form 15CA (and 15CB where the remittance exceeds ₹5 lakh) if the net rent is also being remitted abroad.
Reducing the 31.2% deduction
The flat 31.2% is a default, not a fixed cost. If your actual Indian tax liability is lower, you can apply for a Lower or Nil TDS Certificate under Section 197. Once issued, share it with your tenant, who then deducts at the reduced rate instead of the default — avoiding the need to claim a large refund later.
| Resident (194-IB) | NRI (195) | |
|---|---|---|
| Threshold | ₹50,000/month | None — applies from ₹1 |
| Default rate | 2% | 31.2% |
| Tenant needs TAN? | No | Yes |
| Return filed | Form 26QC | Form 27Q, quarterly |
| Rate reducible? | Not applicable | Yes, via Section 197 |
Verifying a tenant and signing without visiting
- Tenant KYC can be completed entirely on the tenant's device — Aadhaar-linked verification and consent — with the report available for remote review.
- Lease signing doesn't require physical presence: an e-signed Leave & License agreement is legally valid under Section 10A of the IT Act.
- Registration, where legally required, may still need a local step — a Power of Attorney, or a state e-registration workflow with video-based verification.
- Rent tracking should happen on a dashboard in your own timezone, not through a relative or agent.
- Section 195 applies with no threshold — not the 194-IB rules your tenant may expect.
- A Section 197 certificate can lower the deduction below the 31.2% default.
- KYC and e-signing can both be done remotely; registration may still need a POA or e-registration.
Frequently asked questions
Does the ₹50,000/month threshold apply to my smaller rent?
No. That threshold belongs to Section 194-IB, for resident landlords only. Section 195 applies to NRI landlords' rent regardless of amount.
Can my tenant just deduct at 2%?
No — this is a common, costly mistake. The tenant must use the Section 195 rate of 31.2%, unless a valid Section 197 certificate has been provided.
Do I need to be physically present in India to register my lease?
Not necessarily — a Power of Attorney, or a state e-registration option with video-based verification, are common alternatives.