As an NRI in China renting out Indian property, how is my tenant supposed to deduct tax?

Under Section 195, because you're a non-resident landlord. The tenant has to take a TAN, deduct on the gross rent (the 31.2% non-resident rate), deposit it, file a quarterly Form 27Q against your PAN and give you a Form 16A. Section 194-IB — the simple 5% rule most tenants know — applies only to resident landlords and is the wrong section for an NRI in China.

The TDS on my rent looks far higher than my actual tax. Will I get it back?

Yes. Section 195 is deducted on the gross rent, but your taxable rental income is much smaller — you get a flat 30% standard deduction under Section 24(a) plus any home-loan interest before tax is computed. The over-deducted amount comes back as a refund when you file your Indian return, provided the tenant's Form 27Q correctly reports the TDS against your PAN.

Does the India-China treaty lower the tax on my Indian rental income?

No — Article 6, source-country taxation, so Indian rental income stays taxable in India regardless of where you live. China also taxes the rent as part of worldwide income, with a foreign tax credit for the Indian tax paid. The treaty stops double taxation; the saving on rent comes from the 30% standard deduction and reclaiming the over-deducted TDS, not from a lower treaty rate.

China NRIs · Rental Income Tax

Rental income tax for NRIs in China

Renting out Indian property from China means your tenant must deduct tax under Section 195 — set it up right and reclaim the heavy over-deduction.

When you rent out Indian property while living in China, the rent is taxed in India — under the India-China treaty, immovable-property income is taxable where the property sits (Article 6, source-country taxation), so the rate doesn't drop for living abroad. Because you are a non-resident landlord, your tenant is legally required to deduct tax at source on the rent under Section 195 (at the 31.2% non-resident rate on the gross rent), not under the lighter resident-landlord rule. The deduction is heavier than your actual tax, because you get a 30% standard deduction when you file — so most of the gap comes back as a refund.

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India-China key facts: rental income tax

Default Section 195 rate	31.2%
India-China DTAA treaty rate	31.2%
Your saving via the treaty	No rate reduction — see note below
Treaty article / basis	Article 6, source-country taxation
Your TRC issuing authority	State Taxation Administration (STA), local tax bureau

Rates reflect India's domestic Section 195 withholding and the India-China treaty. Surcharge and cess apply on top where relevant.

How it works on the India side

A tenant paying rent to an NRI landlord must deduct TDS under Section 195 — the section for any payment to a non-resident — which means the tenant has to take a TAN, deduct each month on the gross rent, deposit it, file a quarterly Form 27Q against your PAN, and issue you a Form 16A. The common, costly mistake is the tenant using Section 194-IB (the 5% resident-landlord rule), which doesn't apply to a non-resident landlord and leaves both sides exposed.

The deduction on gross rent is more than you actually owe, because your taxable rental income is much smaller: a flat 30% standard deduction comes off under Section 24(a), and home-loan interest comes off too. When you file your return, the TDS the tenant deposited is set against your real liability and the excess is refunded — but only if the tenant's Form 27Q correctly reports it against your PAN, which is why setting the tenant up right from the start matters.

What changes because you live in China

Chinese tax residents are taxed on worldwide income, but only once they cross the six-year residence line for foreigners, so track that count because the year you cross it your Indian portfolio enters the Chinese tax base. A foreign tax credit offsets the Indian tax against the individual income tax on the same income. The recurring chore is the Certificate of Chinese Fiscal Resident: it is valid only for its year of issue, so you re-apply each year to keep claiming the 10% treaty rate at your Indian bank.

Frequently asked questions

Common questions from China NRIs

Go further

Read the full guide, or see your country's complete picture

NRI landlord — setting your tenant up for Section 195 TDS China NRI tax guide — all income types & DTAA rates

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