In terms of taxes, all resident and non-resident Indians who earn money in India are subject to taxation by the government of India. Non-Resident Indians (NRI) or Persons of Indian Origin (PIO) are considered abroad Indians under the legislation (PIO). People of Indian birth, descent, or origin who live outside of India are referred to as NRIs and PIOs. In this blog, we’ll explain how non-resident Indian landlords’ rental income taxes operate and how their renters can apply for the same tax and receive the remaining funds in their home countries.

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Who are NRIs and PIOs?

An Indian citizen who lived overseas for work, business, or any other reason that suggests a plan to stay there for an ambiguous length is referred to as an NRI. As is any citizen who spent less than 182 days in India throughout the course of the previous fiscal year. Non-resident Indians are those who have lived in India for at least 365 days over the course of the four most recent years and at least 60 days in the year prior.

Instead, a PIO is a foreign national (other than from Bangladesh or Pakistan) who has ever held an Indian passport, had Indian parents or grandparents, or has an Indian-born spouse.

NRI and PIO rental income taxes

According to Indian law, regardless of citizenship status, any person whose income exceeds a specified slab (as per the taxation brackets in effect during that financial year) is obligated to file an income tax return in the nation.

Any income earned on these assets is liable to Indian taxation because NRIs and PIOs are permitted to purchase both residential and commercial property in India. Property rentals that exceed the basic exemption limitation are included in this, along with capital gains on real estate investments and other sources of income from investments in shares, mutual funds, and term deposits.

If an NRI or PIO chooses to rent out their property (located in India), the rental income is credited to their NRE or NRO accounts after paying taxes and is then easily transferable back home. Income from a property in India is taxable, and the tax is determined as if the income were that of an Indian person. The interest on a Non-Resident Ordinary Rupee (NRO) account is subject to conventional taxation in India. Whereas the interest on a Non-Resident Rupee (NRE) account is tax-exempt.

How to File Rental Income Tax for NRI Tenants

Here is a quick 3-step technique that tenants can use to efficiently file their taxes on NRIs’ rental income.

• Obtain the TAN Number: The renter residing in a home owned by an NRI or PIO must first obtain a tax account number (TAN) online from the Income Tax Department’s Tax Information Network. The next portion of the text contains a full description of the TAN application procedure.

• Withhold Tax at Source: After receiving a TAN number, the renter is obligated to withhold 31.2 percent tax at the source and send the corresponding sum to the tax authorities each month (to be paid by the 7th of the following calendar month). The property owner will receive the remaining sum (NRI).
• Fill Out the Form: The renter must complete Form 15CA online and send it to the IT department together with the tax authority payment. Regardless of the amount of rent due, tax on rental revenue must be paid. Additionally, you can consult the User Manual to easily complete Form 15CA.

How to Apply for a TAN If You Pay Rental Income Tax

NRIs can pay their TDS on rent using TAN (Tax Deduction and Collection Account) and file simple returns for it. Additionally, they need a TAN account to receive their rental money from India.

Here are a few easy steps an Indian non-resident can take to open a Tax Deduction and Collection Account. For the purpose of paying tax on rental income.

1. Visit the Online Portal: To apply for a TAN and successfully transfer rent after paying TDS on rent, the applicant must first visit the Tax Information Network of the Income Tax Department’s online portal.
2. Visit the Services Section: To continue with the TAN application process, visit the Services section & click on TAN.
3. Apply for TAN: When you get to the next page, click the Apply Online link under the Quick Links heading on the left side of the screen. To continue with the application process, click New TAN.
4. Complete the Form: After selecting the New Tan option, a form will appear in the following window. This form must be completed in order to apply for a TAN account and make it simple to pay tax on rental income. To avoid making any mistakes, make sure you carefully read all the directions.
5. Submit the Form: Complete and send the form in accordance with the instructions. Depending on the criteria of the government portal, you might need to pay some costs.

We believe the methods will enable you to simply open a TAN account so that you can collect the money after TDS on rent payments. Let’s examine how to correctly complete Form 15CA for TDS on rent payments now.

Fillable Sections on Form 15CA for Tax on Rental Income Payment

The Income Tax Department of the Government of India’s E-Filing website has Form 15CA, which must be completed for paying tax on an NRI’s rental income. Parts A, B, C, & D make up the four categories that it falls under. There are some basic prerequisites and eligibility requirements for each element of the form. Taxpayers must determine their category before selecting the appropriate section of the form to complete.

• If the tax on rental income is taxable but does not exceed Rs. 5 Lakhs during the relevant financial year, the taxpayer must complete this form. The transferer (a taxpayer), the transferee (an owner of an NRI property), and the sum must be specified on the form. The form also includes a section for verification, which the taxpayer must complete before completing the form.
• If the amount being transferred exceeds Rs. 5 lakhs and is subject to taxation for the relevant financial year, Part B of the form must be completed. Additionally, if the taxpayer has received from the AO a certificate or order under Sections 195(2), 195(3), or 197 for the purpose of paying tax on rental income.
• When the amount to be transferred is taxable and exceeds Rs. 5 Lakhs, Part C of the form must be selected. It differs from Part B of Form 15CB when a certificate is obtained from the accountant. Taxpayers must fill out the form and include their personal information as well as that of the beneficiary and the CAs. The form must have a few mandatory attachments.
• This section of the form must be completed by taxpayers where the non-resident Indian’s rental income is not subject to taxation for the relevant financial year. This section also requires the completion of the verification form.

Accessing and submitting Form 15CA after Paying Rental Income Tax

After paying TDS on NRI rent, you can file the form 15CA both online and manually. The short procedures to accessing and submitting it online are listed below.

• Log in to the portal: To complete Form 15CA after paying TDS on rent. You must first go to and log in to the Income Tax Department of India’s online facility known as E-Filing.
• Locate the Form: Next, go to the e-file option & select File Income Tax Forms from the dropdown menu. When finished, type Form 15CA into the search bar to retrieve the form.
• Start: The instructions page would be the following page. To fill out the form, select Get Started.
• Select the Appropriate Section: The four Form 15CA portions that we discussed in the previous section of the post are listed on the following page. Pick the option that best suits your tastes, provide the necessary information, and continue.
• Confirm Your Information and Submit: After filling out the form, you must confirm your information by selecting “Proceed to E-Verify” and then “Yes” to proceed with the verification procedure. You will receive an acknowledgement number or a transaction ID once verification is complete. Make careful to write these details down for future use. A confirmation message might also be sent to the registered email address or mobile number.

What if NRIs do not pay their rental income tax?

Non-resident Indians may be prosecuted under Section 276B of the Income Tax Act of 1961. If they fail to pay tax on the rental income of an NRI property owner. According to the law, the taxpayer might face a sentence of 3 months to 7 years in prison. According to Section 271C of the IT Act, the tenant may also be required to pay a penalty equal to the tax that was not deducted.

Tax Exemption on Rental Income for NRIs

Those are the two main scenarios in which NRIs can receive a specified dollar amount of rental income tax exemption.

• If they have a Certificate of Exemption: If the NRI property owner has a certificate stating that his total income from India is below the exemption limit. The tax on rental income may be excused. The taxpayer will be required to pay less tax on rental income. In accordance with the AO’s order with this certificate under Section 197.
• If they are Covered by the Double Tax Avoidance Arrangement: There are some nations in the world that have this agreement with India that is referred to as the Double Tax Avoidance Agreement. According to the terms and circumstances of the contract. If the NRI landlord’s country of residency is a party to the agreement. They are exempt from paying double tax on rental income from properties in India. This agreement is in place in more than 90 nations throughout the world, including Canada, the UK, Australia, the USA, and others.

Where NRIs should deposit their rental income

The taxpayer must transfer the remaining rent payment to the property owner’s bank account after paying tax on the NRI property owner’s rental income. If the taxpayer resides in India, they must deposit the rent into the owner of the property’s NRO account. On the other hand, the rent must be credited to the property owner’s NRO account if the taxpayer is also an NRI.

The rent can be sent directly out of the country. If the property owner doesn’t have an NRE or NRO account. After obtaining a certificate from a chartered accountant stating that all taxes on this income have been paid.

Things Tenants Should Keep in Mind When Renting from NRIs

• As per the discussion with the NRI property owner, make sure the rent agreement is written and has all the terms and circumstances.
• Don’t forget to include a section in the rental agreement regarding taxes on rental income.
• For a better understanding of how they operate, read the TDS on Rent Deduction Section laws and regulations in their entirety.
• Maintain all monthly rent payment receipts and pay your rent on time. When paying tax on the NRI property owner’s rental income, you might need them.
• To determine how much tax you must pay on the NRI’s rental income, utilize an online income tax calculator.
• Examine the user manual before completing Form 15CA. By doing this, you may prevent making any mistakes and avoid having to repeat the entire process.
• Obtain the owner’s identity verification and check the property’s title. To see if they have the authority to rent it out.
• Subtract and pay the appropriate amount of tax from NRI rental revenue.
• For quick and simple transactions, discuss your rent payment alternatives with the property owner.

Reminders for NRIs When Renting Out a Property

• For easy tax on rental income deductions as well as other transactions, open a TAN and NRO account.
• In order to verify a renter, request identification documentation and PAN card information.
• Make a rent contract and get the tenant to sign it.
• To accurately calculate the TDS on rent, keep track of your annual rental income.
• Always double check the tenant’s TDS on rent deposit.
• Once the renter has paid the TDS on rent for the relevant financial year. You should obtain a copy of Form 15CA from them.

Key Takeaways Regarding NRI Rental Income Tax

• To prevent paying additional fees, TDS on rent payments must be made on time.
• After making successful TDS on rent payments. You as the renter must transfer the leftover rental sum to the property owner’s NRO account.
• A certificate provided by a CA certifying that all appropriate taxes have been paid is also required. Before transferring rental revenue to an NRO account.
• To learn more about how taxation affects NRIs, see the post on “Tax Benefits & Subsidies for NRIs.”
• Whether you have made money from the rental property or not, as an NRI property owner, you must also file TDS on rent returns.
• If you require additional assistance, you can speak with a legal counsel.

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