Each co-owner is taxed on their own share
The starting rule is favourable. Where a house property is owned by two or more people whose shares are definite and ascertainable, they are not taxed jointly as an association of persons; instead each co-owner's share of the rental income is included in that co-owner's own total income (Section 26). So the rent is divided by ownership share and each person is taxed on their part.
The benefit is that each co-owner computes their share the full way: each gets their own 30% standard deduction on their share of the annual value, and each deducts their own share of any home-loan interest. So two co-owners each get a 30% deduction on their halves, not one 30% on the whole, and a self-occupied nil-value treatment, where it applies, is available to each individually.
The TDS splits by owner, not the property
The withholding follows the same split, and this is where mixed-residency co-ownership needs care. The tenant does not apply one rate to the whole rent; the deduction is worked out for each co-owner as a separate payee in their ownership ratio. On a non-resident co-owner's share, the tenant deducts under Section 195, because that is the section for paying a non-resident. On a resident co-owner's share, the tenant uses the resident rules instead.
So a flat owned half by an NRI and half by a resident sibling has two deductions running: Section 195 on the NRI's half, and the resident rule on the resident's half, each with its own paperwork. Treating it as one blended deduction, or applying a resident rate to the NRI's share, is the common error, and it leaves the tenant exposed on the NRI portion.
Why the split usually means a refund
On the NRI's share, the Section 195 deduction is on the gross rent at the non-resident rate, which is heavier than the tax you actually owe, because when you file you get the 30% standard deduction on your share and can deduct your share of any loan interest. So the withheld amount is typically more than your real liability.
That gap comes back to you. You compute your real tax on your share of the rent after the 30% deduction and interest, set the Section 195 TDS against it, and the excess is refunded, or you reduce the deduction up front with a Form 13 lower-deduction certificate. A practising CA sets the tenant up to split the deduction correctly, files each co-owner's return on their share, and reclaims the over-deducted TDS on the NRI's portion.