Rental income from India: tax for NRIs and OCIs

Are you a non-resident for tax?

Your FEMA status as an NRI is not your tax status. Under section 6 of the Income-tax Act, 2025:

• An individual is resident in India in a tax year if present for 182 days or more, or for 60 days or more in the year and 365 days or more in the four preceding years (section 6(2)).
• For a citizen of India or a person of Indian origin who is outside India and visits, the 60 days become 120 days where the total income, other than foreign-source income, exceeds ₹15 lakh (section 6(4) and (5)).
• A citizen of India is also deemed resident if not liable to tax in any other country by reason of domicile or residence, and total income other than foreign-source income exceeds ₹15 lakh (section 6(7)).

A person who is not resident is a non-resident (section 2(72)). Income from a house in India is taxed in India in either case.

How the rent is taxed

1. Annual value (section 21). The higher of the sum for which the property might reasonably be expected to let, and the actual rent received or receivable. If the property was vacant and the actual rent is lower because of the vacancy, the actual rent is the annual value.
2. Less municipal taxes levied by a local authority and actually paid by the owner during the tax year (section 21(3)).
3. Less 30% of the annual value (section 22(1)(a)).
4. Less interest on borrowed capital used to buy, build or repair the property (section 22(1)(b)). For a let-out property the ₹2,00,000 cap in section 22(2) applies to properties covered by section 21(6), that is those occupied by you, not those let.
5. Tax at section 202 slab rates, plus surcharge and cess set by the annual Finance Act (Payotte has not read the enacted Finance Act 2026, so does not state those percentages).

Two points to note. A house you occupy or cannot occupy has a nil annual value (section 21(6)) for up to two houses you specify (section 21(7)). In the default regime, section 202(2) does not allow a loss under house property to be set off against other income, and you can opt for the old regime under section 202(4).

The tenant’s duty to deduct tax

Section 393(2), Table Sl. No. 17 requires “any person” paying “any other sum chargeable” to a non-resident (not being a company) to deduct tax at “rates in force”. Note 3(b) says the duty applies whether or not the non-resident has a residence, place of business or business connection in India. The 2% rate on rent in Table 2(i) is in the table for payments to residents and does not apply to rent paid to an NRI landlord.

What this means for you:

• Your tenant, or your property manager, deducts at the rate in force and files the return of deduction.
• Lower deduction. You can apply under section 395(1) to the Assessing Officer for deduction “at a lower rate or no deduction”; the tenant then deducts at the certificate’s rate until it expires.
• Certificate. The person deducting must give you a certificate of the tax deducted (section 395(4)). Keep it for your Indian return and for any claim for credit in Canada.
• PAN. Without a valid PAN, deduction is at not less than 20% (section 397(2)). Give your tenant your PAN.

Where the rent is credited

• NRO account. Legitimate dues in India, including rent, can be credited to an NRO account. NRO balances are not repatriable except for current income, and NRIs/PIOs up to USD 1 million per financial year (RBI FAQ).
• NRE account. Under paragraph 4.7 of the Deposits and Accounts Master Direction, current income such as rent can be credited to an NRE account if the bank is satisfied that it is current income and that income tax “has been deducted/paid/provided for”.
• Sending rent abroad. The NRO account may be debited for “remittance of current income abroad” (paragraph 6.8), subject to tax compliance. See repatriating sale proceeds for the larger limits.

OCI cardholders

The Embassy of India in Qatar states that OCI cardholders can rent out their properties in India. The tax treatment depends on residence, as above, not on the card. See OCI and foreign nationals.

What differs by state

Income tax on rent is central. The state decides the rent law, the form and stamp duty of the rent agreement, the registration and any rent control; see rent agreement registration, security deposit and rent rules and TDS on rent. Property tax is levied by the municipal corporation and differs from city to city; see property tax in Indian cities.

Double tax in Canada

India taxes the rent where the property is, and Canada taxes your worldwide income if you live there, with a foreign tax credit. See the India-Canada tax treaty and property.

Which professional to consult

A chartered accountant for the Indian return, any lower deduction certificate and Canadian credit. A property lawyer (advocate) enrolled with the State Bar Council for the rent agreement (property lawyer). A registered real estate agent for finding a tenant (real estate agent).