How NRI should Pay Rent?

My colleague is an NRI, and almost 3 weeks ago, he shifted to India for his job. He stays in a rental property and recently asked me, how NRI pay rent online in India? As I was unsure about this, I asked my cousin, a bank employee, about the same. She said he must ensure his rent payments are made under Indian legislation. He can make the payment through these methods:

1. NEFT

2. RTGS

3. UPI transfers linked to the NRO account

4. Post-dated cheques (if possible)

5. A rental payment platform like NoBroker.

It is allowed only if the landlord is a resident Indian. Also, it completely depends on what method is mentioned in your rental agreement. 

In the case that your landlord is an NRI, you will have additional responsibility. Before transferring the rent to their NRO account, you must deduct 30% of the rent (plus any relevant surcharge and cess) as TDS (Tax Deducted at Source). I hope you found this helpful.

Get End to End NRI Property Service, including On-Time Rent Collection via NoBroker NRI Service.

In order to rent a home in India as an NRI, you must be aware of tax laws, TDS deductions, and the appropriate payment options. Among the main issues is: How NRI should pay rent in India while ensuring compliance with legal and financial norms? If an NRI (Non-Resident Indian) is renting a property in India, paying rent to the owner involves following the proper banking channels and adhering to NRI taxation requirements.

Can NRI Pay Rent in India?

NRIs can pay rent to the property owner through regular banking methods. Key factors to pay rent in India as an NRI are:

1. It includes wire transfers, direct bank deposits, or online transfers (NEFT/RTGS/IMPS) to the owner’s bank account in India.

2. There are also international payment methods like SWIFT transfer available. It can also be used if the payment is made from a foreign bank account. If the NRI made the payment from a foreign account, the amount will be converted to INR at the prevailing exchange rate. 

3. Whereas, if the NRI holds a Non-Resident External (NRE) or Non-Resident Ordinary (NRO) account in India, payments can be made directly from these accounts.

4. For the surety, it is better to have a valid rental agreement clearly stating the rental amount, payment terms, and duration of tenancy. Always keep receipts or proof of transaction for future reference and compliance.

5. Rent paid by NRIs is subject to Tax Deducted at Source (TDS) if the property owner is an NRI. 

If the rent exceeds a certain threshold, Form 15CB from a Chartered Accountant may also be required. Make sure to comply with Indian laws by following RBI guidelines for remittance and tax reporting.

Renting an NRI property is absolutely okay if you follow some rules. My colleague lives in a rented apartment owned by an NRI, so I was curious to know how NRI should pay rent. The transaction is bound to happen online since they do not meet each other more than twice a year. But I was interested to know whether any TDS is deducted or not. I believe it is important to know such aspects, as many of us move to new cities for job purposes and might need these details. So let me share how NRI tenant pay rent and what aspects they need to consider. These rules are prescribed by Budget 2017, and by far, they are only followed. I am sure this comment will be helpful to you all.

NRI tenant can pay rent through NEFT, net banking, money transfers, and all, but they are required to deduct 31.2% TDS or tax at source and submit the total amount to the tax authorities. Once they pay, the tenant is required to submit Form 15CA online to the income tax department. Please note that TDS is mandatory and does not depend on how much amount he/she is paying. 

The tenant must have a tax account number through the

. Once the TAN number is issued, the tenant is required to deduct TDS at 31.2% through the Challan ITNS 281 within the 7th of the month. Once the TDS gets deposited, the tenant must also furnish a quarterly TDS return in Form 27Q and issue a TDS certificate in Form 16A within 15 days of furnishing the TDS returns.

How NRI should pay rent might seem a bit confusing, but it is not. Just seek an expert’s aid initially and after paying the rent for 3-4 times, the tenant will understand everything.