What a Bangalore rental really earns an NRI owner

The listing said a 4.5 percent rental yield. A year later your bank statement says something else, and you are not sure where the rest went. If you own, or are about to own, a flat in Bangalore from another country, this is the guide for that moment. It follows one rupee of rent from the tenant to your account abroad, and shows where it gets smaller on the way.

The tax points reflect the rules as they stand in 2026 and are written for an NRI landlord. Rules change, and your own situation matters, so treat this as the map and have a chartered accountant check your route.

Gross yield is not what you keep

Gross yield is a year of rent divided by the price. It is the number in every brochure, and it is the only one that ignores everything that happens after the rent is agreed. What you keep is the net figure: rent, minus the months nobody paid you, minus what the home costs to keep standing, minus tax.

Here is a deliberately simple example. These numbers are illustrations to show the shape, not a quote for any home.

A 4.2 percent flat became a 3.5 percent flat before a single rupee of income tax. That is not a reason to avoid renting. It is a reason to make your decision on the second number.

The costs between the rent and your pocket

• Vacancy. The gap between one tenant leaving and the next paying. Budget at least a month a year, more in a slower pocket.
• Maintenance and society dues. In many arrangements the tenant pays monthly maintenance, but not always. Read the agreement.
• Repairs and refresh. The home needs touching up between tenants, and appliances do not last forever.
• Property tax and any khata-related fees, which stay in your name whether or not the flat is let.
• Brokerage each time you find a new tenant.
• Loan interest, if you borrowed to buy, which is a cost of its own but also changes your tax.

How rent is taxed for an NRI

Rent is taxed in India as income from house property, whatever country you live in. You start with the rent, take off the municipal taxes you paid, and then a flat 30 percent standard deduction on what is left. If the flat is bought with a loan, the interest comes off as well. The result is added to your other Indian income and taxed at the slab rates.

Whether you owe tax again in the country where you live depends on that country and on the tax treaty. If you live in the UAE, which has no personal income tax, there is little relief to claim, so plan for the Indian tax on its own terms. The Dubai corridor guide covers that case.

TDS on rent paid to an NRI

This is the point that surprises most NRI landlords. When a tenant pays rent to an NRI, the tenant has to deduct tax before paying you. The rate is the 30 percent slab rate plus cess, which comes to about 31.2 percent, and more once surcharge applies at higher incomes. It is deducted on the gross rent, not on your net income after costs and the standard deduction.

In practice that means far more is withheld than you will ultimately owe. You then file an Indian income tax return and claim the difference back as a refund, which can take months. Two things help:

• A lower-deduction certificate, applied for on Form 13, can bring the deduction down to a figure that matches your actual tax. It is the same route NRI sellers use to avoid being withheld on the full sale price.
• Tenants need a TAN and have to file the returns that go with these deductions. Many tenants have never done it. If yours has not, it is worth setting up properly at the start, because errors fall on the person who should have deducted.

Getting the rent out of India

Rent from an Indian property is India-source income, so it lands in your NRO account. From there you can send it abroad, up to USD 1 million a financial year across all your NRO income and proceeds, once your bank has a chartered accountant’s certificate on Form 15CB and you have filed Form 15CA. Keep the tax paperwork tidy each year, because it is the paper trail the bank will ask for.

If you are not moving the money out, it can simply sit in the NRO account, where the interest is taxable. The money guide explains how NRO and NRE accounts differ.

Managing a tenant from another time zone

The money is the part you can model. The people are the part that goes wrong. A few habits make a large difference:

• Use a written rental agreement, and keep the signed copy where you can reach it from anywhere. Most Bangalore lets are drawn up for eleven months at a time.
• Record the condition of the flat at move-in, with dated photos, so the deposit conversation at move-out has facts in it.
• Have one local contact who can let in a plumber or sign for a delivery, with a repair limit you have agreed in advance.
• Put the rent into your NRO account by bank transfer every month, so there is a clean record of every rupee.

If that list reads like a part-time job, you have seen the real cost of owning from abroad. It is the reason owners look for a managed arrangement instead of relying on a favour.