Skip to content
Got a notice? Emergency response

Japan

Indian rental income when you are a Japanese tax resident

Whether Japan taxes your Indian rent turns on how long you have been there, and whether you bring the money in.

You own a property in India that earns rent, and you are a tax resident of Japan. India taxes the rent, and Japan may too, but not always. Japan splits residents into tiers, and for your first years there, as a non-permanent resident, it only taxes foreign income you actually bring into Japan. So whether your Indian rent is taxed in Japan depends both on how long you have been resident and on what you do with the money. Here is how the two sides fit.
Request a free CA call
Last reviewed: 26 July 20267 min readReviewed by Preetesh Maloo, CA

The short answer

Your Indian rent is taxed in India, after a flat 30% standard deduction, with the tenant deducting TDS under Section 195 on the gross rent. Whether Japan taxes it depends on your resident tier. If you are a non-permanent resident, a non-Japanese national resident in Japan for five years or less, Japan taxes the Indian rent only to the extent you pay it into or remit it to Japan, so rent kept in India is outside Japanese tax. If you are a permanent resident, over five years, Japan taxes the rent on its worldwide income basis, giving a credit for the India tax.

Is this your situation? Get a senior CA on it.

Free 15-minute call. We tell you what applies to you and what it costs, then you decide. You stay abroad.

Senior CA who specialises in NRI tax · we deal with the tax officer, you don't

Chat with a CA on WhatsApp

Related situations

The India side

In India the rent is income from house property, taxed after a flat 30% standard deduction under Section 24, which you get whatever you actually spent, and after home-loan interest, at slab rates. As a non-resident landlord, your tenant must deduct TDS under Section 195 on the gross rent, from the first rupee with no threshold, which over-deducts against your real Indian tax. You recover the excess by filing an Indian return, or reduce it up front with a lower-deduction certificate. India taxes the rent whatever Japan does.

Japan: which resident are you

Japan does not tax all residents alike, and this is the key to your Indian rent. If you are a non-permanent resident, meaning you are not a Japanese national and have been resident in Japan for five years or less within the last ten, Japan taxes your foreign-source income, and Indian rent is foreign-source, only to the extent you pay it into or remit it to Japan. So rent that stays in your Indian account is outside Japanese tax during those years.

There is a catch in how remittances are read. If you send money to Japan in a year, the tax office treats the remittance as coming from your foreign income first, up to the amount remitted, so even a general transfer of savings can drag the rent into the Japanese net. Once you become a permanent resident, over five years, Japan taxes the rent on its worldwide basis whatever you do with it, computing its own net figure and giving a credit for the India tax. So the same rent is outside Japanese tax for a non-permanent resident who leaves it in India, and taxed with a credit once you cross into permanent residence.

What's involved

What the CA actually does

  1. 1

    We file the Indian return

    We compute the rent after the 30% deduction and interest and file to recover the gross-basis TDS the tenant deducted under Section 195.

  2. 2

    We check your resident tier

    We work out whether you are a non-permanent or permanent resident, since that decides whether Japan taxes the Indian rent at all.

  3. 3

    We flag the remittance point

    As a non-permanent resident, we make clear that keeping the rent in India keeps it outside Japanese tax, and that a transfer to Japan can pull it in.

  4. 4

    We provide the credit paperwork

    Once Japan taxes the rent, we give your Japanese accountant the India-tax-paid detail for the credit.

What to have ready

Documents you'll typically need

  • The Indian rental income and any home-loan interest
  • The TDS the tenant deducted (Form 16A)
  • Your date of arrival in Japan and nationality, for the resident tier
  • Your PAN and Japanese tax details

References on this page

  • India: house-property income after a flat 30% deduction (Section 24) and interest; TDS on gross rent under Section 195
  • Non-permanent resident (up to 5 years, non-Japanese national): Japan taxes the Indian rent only if remitted to Japan
  • Permanent resident (over 5 years): Japan taxes the rent on worldwide income, with a credit for the India tax (treaty Article 23)
  • A remittance to Japan is treated as coming from foreign income first, so a general transfer can pull the rent into Japanese tax

Frequently asked questions

Common questions

It depends on your resident tier. As a non-permanent resident (a non-Japanese national resident five years or less), Japan taxes the rent only if you remit it to Japan. As a permanent resident (over five years), Japan taxes it on worldwide income with a credit for the India tax.

A non-Japanese national who has been resident in Japan for five years or less within the last ten. Such a person is taxed on foreign-source income, like Indian rent, only to the extent it is paid into or remitted to Japan.

As a non-permanent resident, yes, while it stays in India. But be careful: a remittance to Japan is treated as coming from foreign income first, so even a general transfer of savings can bring the rent into Japanese tax.

No. Section 195 TDS is on the gross rent, before your 30% deduction, so it over-deducts. You recover the excess by filing an Indian return, or reduce it up front with a lower-deduction certificate.

The exceptions that change the answer

Where the general rule stops applying to you

Every rule below has a carve-out, a cut-off date or a condition that flips the answer. These are the ones that decide real cases.

House property standard deduction and interest cap

Right now: 30% standard deduction on net annual value

Where it works differently

The property is self-occupied
Interest deduction is capped at Rs 2 lakh under s.24(b).
Second proviso to s.24(b).
The property is let out
Full interest is deductible against rent, but the resulting LOSS that can be set against other heads is capped at Rs 2 lakh a year, with an 8-year carry-forward.
s.71(3A), from AY 2018-19. Frequently missed by leveraged NRI landlords.
The new tax regime applies
No set-off of house-property loss against other income at all.
s.115BAC restriction. NRIs are in the new regime by default.

Commonly got wrong

  • Full home-loan interest can be set against salary. Capped at Rs 2 lakh in the old regime, and disallowed entirely in the new regime.In the old regime you may deduct home-loan interest, capped at Rs 2 lakh for a self-occupied property, with the set-off against other income capped at Rs 2 lakh a year. In the new regime, which is the default, there is no set-off at all.

Related

If this matched your situation, these go further

Indian interest and dividends when you are a Japanese tax residentSelling Indian property while you are a Japanese tax residentProving the tax you paid in India, to claim a foreign tax credit abroadNRI ITR filing (we file for you)DTAA TDS recoveryForm 13 lower-TDS certificate (property sale)Rental income TDS calculatorForm 10F generator

Indian rent and a Japanese tax return?

Send us the rent and your arrival date. A practising CA will file the Indian side and check your resident tier on a free call, no obligation.

Request a free CA call

No card, no obligation. All certification and filing work is handled by ICAI-registered practising Chartered Accountants.