Security deposit and rent rules for tenants in India

The deposit: what the texts say

Model rule. Clause 11 of the draft Model Tenancy Act, 2020 says the deposit “shall be such as may be agreed upon” in the tenancy agreement, and shall:

• not exceed two months’ rent for residential premises; and
• not exceed six months’ rent for non-residential premises.

It “shall be refunded to the tenant on the date of taking over vacant possession of the premises from the tenant, after making due deduction of any liability of the tenant”. Section 11 of the 2023 Dadra and Nagar Haveli and Daman and Diu Regulation uses the same words and the same caps. That Regulation is a Gazette of India text and applies in that Union territory only. For the model itself, see the Model Tenancy Act.

Maharashtra. In the Maharashtra Rent Control Act, 1999 (the text I read) I found no clause capping a deposit. Section 56 says it is lawful for a landlord to receive “any fine, premium or other like sum or deposit” in respect of the grant or renewal of a lease. A deposit is therefore a matter for the written agreement, which the Act requires to be registered (section 55).

Other states. The Delhi, Karnataka, Tamil Nadu, Telangana and West Bengal texts could not be read on 14 October 2026. Do not assume that the two-month rule, or the absence of a cap, applies. Look for your state’s tenancy or rent control Act and for any state notification amending it.

How a deposit is treated for stamp duty

In Maharashtra, Article 36A of the Stamp Act taxes leave and licence agreements of up to 60 months at 0.25 per cent of the rent, plus any non-refundable deposit, plus notional interest at 10 per cent a year on a refundable deposit. A larger deposit therefore raises the duty slightly. The method is in rent agreement registration.

Rent: receipts, revision and payment

• Receipts. Under section 31 of the Maharashtra Act, every landlord must give a written receipt for any amount received for premises; failure is punishable with a fine of up to ₹100 for each day of default. The draft Model Tenancy Act (clause 13) and the 2023 Regulation (section 13) also require a signed receipt on payment, and say a bank acknowledgement of an electronic payment is conclusive proof of payment.
• Revision. Under section 9 of the 2023 Regulation, rent is revised “in accordance with the terms of the tenancy agreement”; a landlord who agreed in writing with the tenant, before the work, to carry out improvements may raise the rent by an agreed amount; and the Rent Authority decides if the parties dispute a revision (section 10).
• Refused rent. Under clause 14 of the draft Model Tenancy Act, if a landlord will not accept rent or give a receipt, the tenant sends it by postal money order or another prescribed method for two consecutive months, then deposits it with the Rent Authority.
• Maharashtra rent control. The Maharashtra Act regulates rent through “standard rent” and “permitted increases” (section 6 refers to them). Section 6 says those provisions do not apply to premises not let or given on licence for a continuous period of one year in a building, with exceptions (for example certain Government and housing authority schemes). Whether your rent is controlled depends on the premises and the date.

When you leave

1. Give notice as the agreement provides, and keep proof.
2. Hand over vacant possession; under the model texts, the refund is due on that date.
3. Ask what is deducted and why: the model texts allow only “due deduction of any liability of the tenant”.
4. If the deposit is not returned, the forum that hears the claim (Rent Authority, Rent Controller or civil court) depends on your state.

Which professional to consult

A property lawyer (advocate) enrolled with the State Bar Council can read your agreement against your state’s Act. The sub-registrar’s office can confirm what it requires for registration.