Tax guide for India: tax on rent and sale

What you need to know

1. How much tax does a tenant hold back from my rent?

   In India a tenant paying rent to a non-resident Indian landlord must deduct tax from each payment, with no threshold, at 30% plus 4% cess (31.2%, plus surcharge above Rs 50 lakh) on the gross rent under section 393(2) of the Income-tax Act 2025 (formerly section 195), unless the landlord produces a lower-deduction certificate in Form 128 (Finance Bill 2026, First Schedule Part II, 'the whole of the other income').

   Where this comes from

   • Income Tax Department: Form 141 FAQs (cannot be used for non-resident deductees), read 8 October 2026

2. At what rates is rent taxed for an owner abroad?

   In India a non-resident individual's rental income is taxed at slab rates under the default new regime: nil up to Rs 4 lakh, 5% to Rs 8 lakh, 10% to Rs 12 lakh, 15% to Rs 16 lakh, 20% to Rs 20 lakh, 25% to Rs 24 lakh and 30% above, plus surcharge (10% above Rs 50 lakh, 15% above Rs 1 crore, 25% above Rs 2 crore) and 4% cess, with no rebate, because the rebate is for residents only (Income Tax Department e-filing portal, Non-Resident Individual for AY 2026-27).

   Where this comes from

   • Income Tax e-filing: Non-Resident Individual for AY 2026-27, read 26 October 2026

3. What can I take off my rent before tax?

   Under the Income-tax Act 2025 the annual value of a let property is reduced by local-authority taxes actually paid by the owner in the tax year (s.21(3)), and income from house property allows 30% of that annual value plus interest on borrowed capital (s.22(1)(a) and (b)) (Income-tax Act 2025 as amended by Finance Act 2026, Income Tax Department).

   Where this comes from

   • Income-tax Act 2025 as amended by Finance Act 2026 (ss.21, 22), read 26 October 2026

4. What tax do I pay on the gain when I sell?

   In India a gain on selling a home held for more than 24 months is taxed at 12.5% without indexation for sales on or after 23 July 2024, and a gain on a home held 24 months or less is taxed at slab rates, plus surcharge and 4% cess (Income Tax Department, tax on long-term capital gains).

   Where this comes from

   • Income Tax Department: Tax on long-term capital gains, read 17 October 2026

5. Does the buyer hold back tax when I sell?

   In India a buyer of a home from an NRI seller deducts tax at 12.5% on a long-term gain plus surcharge and 4% cess (Finance Bill 2026, First Schedule Part II), on the whole price unless the seller obtains a lower-deduction certificate in Form 128 from the Income Tax Department.

   Where this comes from

   • The Finance Bill 2026 (Bill No. 3 of 2026, as introduced), First Schedule Part II, read 26 October 2026

6. Who pays the yearly city property tax on a let home?

   In India municipal property tax is assessed on the owner's property and the owner stays liable to the city whether the home is let or empty; passing it to a tenant is only a private term of the tenancy (Haryana S.O. 39/2026 and MCGM capital value rules).

   Where this comes from

   • Haryana Gazette (Extra.) 30 Jul 2026: S.O. 39/H.A.16/1994/S.87/2026, property tax in municipal corporations, read 26 October 2026

7. Does India charge a tax when an owner dies?

   India abolished estate duty for deaths on or after 16 March 1985 (Union Budget speech 1985-86, para 88).

   Where this comes from

   • Union Budget 1985-86, Budget Speech (para 88), read 8 October 2026

8. Can I send the sale money back abroad?

   In India an NRI or OCI may repatriate the sale proceeds of residential property paid for in foreign exchange or from NRE or FCNR(B) funds, up to the amount paid in foreign exchange, for no more than two residential properties (NDI Rules 2019, rule 29; RBI FAQ on Purchase of Immovable Property).

   Where this comes from

   • FEM (Non-debt Instruments) Rules 2019, Gazette, rules 24 and 29, read 7 October 2026

9. How much money can I send abroad each year?

   In India an NRI or person of Indian origin may remit up to USD 1 million per financial year (April to March) from NRO balances or the sale proceeds of assets, after tax, under the FEM (Remittance of Assets) Regulations 2016, regulation 4(2) (Reserve Bank of India).

   Where this comes from

   • RBI: FEM (Remittance of Assets) Regulations 2016, reg. 4(2), read 7 October 2026