TDS on Rent to NRI

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saida (Querist)
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10 February 2011 Dear All
Pleas through some light on this query..
One of our client has to make Rent Payment to NRI. Property situated in India and Cheque is deposited in Local Banks (personal A/c) in india in INR. What is the rate of TDS? Is it 10% U/s 194I or 30.90% U/s 195?? If it is U/s 195, do we have to obtain 15CB and file Form 15CA?? If NRI is in US, whether any special rates applicable Under DTA??
Pls clarify

Thanks in Advance
Saida

saida

saida (Querist)
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visu iyer

visu iyer (Expert)
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21 February 2011 Tds is to be deducted u/s 194 I at 10%.
195, 15ca, cb, and dtaa does not apply.

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saida

saida (Querist)
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22 February 2011 /// URGENT ///

Dear All
Pleas through some light on this query..
One of our client has to make Rent Payment to NRI. Property situated in India and Cheque is deposited in Local Banks (personal A/c) in india in INR. What is the rate of TDS? Is it 10% U/s 194I or 30.90% U/s 195?? If it is U/s 195, do we have to obtain 15CB and file Form 15CA?? If NRI is in US, whether any special rates applicable Under DTA??
Pls clarify

Thanks in Advance
Saida

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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27 July 2025 Here's a detailed explanation about **TDS on rent paid to an NRI** for property situated in India:

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### Applicable Section for TDS on Rent to NRI:

* **Section 194-I** applies to rent payments for land, building, or furniture.
* **Section 195** applies to any payment to a non-resident that is chargeable to tax in India, including rent.

### Key points:

1. **Rent paid to NRI for property situated in India** is considered income received in India by the NRI and is taxable in India.

2. The **rate of TDS under Section 194-I on rent paid to NRI is 30% + applicable surcharge and cess** (approximately 30.9%).

* This is higher than the 10% TDS rate applicable to residents under Section 194-I.

3. Since this is a payment to a non-resident, **Section 195** governs the withholding requirement for non-residents, so effectively TDS is deducted under **Section 195**.

4. **Form 15CA and 15CB are mandatory** for remittance/payments to non-residents including rent payments under Section 195.

* Form 15CB is a certificate from a Chartered Accountant confirming the correct deduction and deposit of TDS.
* Form 15CA is a declaration/statement filed online by the deductor (payer).

5. **If the NRI is a resident of a country with which India has a Double Tax Avoidance Agreement (DTAA), such as the US**, then the beneficial DTAA tax rates can apply, **provided you obtain a Tax Residency Certificate (TRC) from the NRI** and comply with other documentation.

* Under India-US DTAA, the TDS rate on rent may be reduced to 15%.
* In such case, TDS is deducted as per DTAA rates under Section 195, again with Forms 15CA and 15CB.

6. The **cheque being deposited in local bank account (in INR) does not affect the taxability or TDS provisions**. The crucial factor is the property is in India and the rent income accrues in India.

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### Summary Table:

| Situation | TDS Section | TDS Rate | Form 15CA/15CB | DTAA Benefit |
| ------------------------------------------------- | ----------- | --------------------------- | -------------- | -------------- |
| Rent paid to NRI, property in India, no DTAA | 195 | 30% + surcharge & cess | Yes | No |
| Rent paid to NRI, property in India, DTAA country | 195 | Lower DTAA rate (e.g., 15%) | Yes | Yes (with TRC) |
| Rent paid to resident landlord | 194-I | 10% | No | NA |

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### To directly answer your query:

* **TDS on rent paid to NRI is deducted under Section 195 at 30.9% (approx.)**, not 10% under 194-I.
* **Yes, Form 15CA and 15CB are required.**
* If the NRI is from the US, **DTAA benefits may apply reducing TDS to 15%**, but you must have valid documentation (TRC, Form 10F, etc.).

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If you want, I can help you with the exact process of filing Form 15CA/15CB or drafting an advisory note. Would you like that?

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