Tds on rent payment to non residents
This query is : Resolved
22 June 2016
Dear Professionals,
Please help me to clarify the following:-
1. At what rate TDS should be deducted on payment of Rent made to a person who stays in london (NRI).
Property rented is in India, but landlord stays in london.
Landlord is also carrying PAN in India.
please clarify urgent....
Please help me to clarify the following:-
1. At what rate TDS should be deducted on payment of Rent made to a person who stays in london (NRI).
Property rented is in India, but landlord stays in london.
Landlord is also carrying PAN in India.
please clarify urgent....
Rupesh Jain
(Expert)
22 June 2016
You have to deduct full rate of tax as tds 30.90% pols check his PAN status on NRI or resident . in resident its not workable. TDs to be deducted u/s 195.
22 June 2016
what if person is of indian origin and pan card is made in india after wards he (landlord) shifted to london..?
27 July 2025
Here’s a clear explanation on **TDS on rent payment to Non-Residents (including NRIs):**
---
### 1. **Which Section Applies?**
* Rent paid to a non-resident landlord for **property situated in India** is covered under **Section 195** of the Income Tax Act.
* This means **TDS must be deducted** on such rent payments.
### 2. **What is the Applicable Rate of TDS?**
* The **basic rate for non-residents is 30%** plus applicable surcharge and cess.
* So effectively, TDS rate can be around **30.9%** (30% + 4% health & education cess).
* However, **the rate may be reduced if a Double Taxation Avoidance Agreement (DTAA) exists between India and the country of residence of the landlord**.
### 3. **What if the NRI has an Indian PAN?**
* Even if the landlord has a PAN card issued in India, they are still a **non-resident** if their residential status as per Income Tax rules is NRI.
* PAN card only facilitates identification and filing of returns but **does not change residential status**.
* TDS deduction under **Section 195 applies regardless of PAN** if the landlord is a non-resident.
### 4. **What if the landlord is of Indian origin but shifted abroad after obtaining PAN?**
* The **residential status for tax purposes depends on physical presence in India** during the financial year (as per section 6 of IT Act).
* If they qualify as a **non-resident**, then Section 195 applies and TDS at non-resident rates must be deducted.
* If they qualify as a resident (based on stay in India), then Section 194-I applies (TDS on rent to residents at 10%).
---
### **Summary:**
| Scenario | Applicable Section | TDS Rate |
| --------------------------------------- | ------------------ | ---------------------------------------------------- |
| Rent paid to resident Indian landlord | 194-I | 10% |
| Rent paid to Non-resident/ NRI landlord | 195 | 30% + surcharge + cess (approx 30.9%) or as per DTAA |
---
### **Important:**
* Deduct TDS at the **time of payment or credit**, whichever is earlier.
* You may have to **obtain a lower or NIL deduction certificate from the Income Tax Department** if the landlord wants to reduce TDS.
* The landlord will have to file returns in India and claim credit for TDS deducted.
---
If you want, I can help you draft a formal communication or provide the relevant legal references. Would you like that?
---
### 1. **Which Section Applies?**
* Rent paid to a non-resident landlord for **property situated in India** is covered under **Section 195** of the Income Tax Act.
* This means **TDS must be deducted** on such rent payments.
### 2. **What is the Applicable Rate of TDS?**
* The **basic rate for non-residents is 30%** plus applicable surcharge and cess.
* So effectively, TDS rate can be around **30.9%** (30% + 4% health & education cess).
* However, **the rate may be reduced if a Double Taxation Avoidance Agreement (DTAA) exists between India and the country of residence of the landlord**.
### 3. **What if the NRI has an Indian PAN?**
* Even if the landlord has a PAN card issued in India, they are still a **non-resident** if their residential status as per Income Tax rules is NRI.
* PAN card only facilitates identification and filing of returns but **does not change residential status**.
* TDS deduction under **Section 195 applies regardless of PAN** if the landlord is a non-resident.
### 4. **What if the landlord is of Indian origin but shifted abroad after obtaining PAN?**
* The **residential status for tax purposes depends on physical presence in India** during the financial year (as per section 6 of IT Act).
* If they qualify as a **non-resident**, then Section 195 applies and TDS at non-resident rates must be deducted.
* If they qualify as a resident (based on stay in India), then Section 194-I applies (TDS on rent to residents at 10%).
---
### **Summary:**
| Scenario | Applicable Section | TDS Rate |
| --------------------------------------- | ------------------ | ---------------------------------------------------- |
| Rent paid to resident Indian landlord | 194-I | 10% |
| Rent paid to Non-resident/ NRI landlord | 195 | 30% + surcharge + cess (approx 30.9%) or as per DTAA |
---
### **Important:**
* Deduct TDS at the **time of payment or credit**, whichever is earlier.
* You may have to **obtain a lower or NIL deduction certificate from the Income Tax Department** if the landlord wants to reduce TDS.
* The landlord will have to file returns in India and claim credit for TDS deducted.
---
If you want, I can help you draft a formal communication or provide the relevant legal references. Would you like that?
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