Indian rental income when you are a UK tax resident

In India the rent is income from house property. It is taxed after a flat 30% standard deduction under Section 24, which you get regardless of what you actually spent, and after home-loan interest, with the balance at slab rates. As a non-resident landlord, your tenant must deduct TDS under Section 195 on the gross rent, which over-deducts against your real Indian tax, so you recover the excess by filing an Indian return or reduce it up front with a lower-deduction certificate.

Under the India-UK treaty, Article 6 gives India, as the country where the property sits, the first right to tax the rent. So the India charge is correct and expected. The generous part of the Indian computation is that flat 30% deduction plus full interest relief, which, as the next section shows, is exactly where the UK is stricter.

The UK taxes a resident on worldwide income, so the Indian rent is an overseas property business on your UK return, and it is computed under UK rules, not Indian ones. There is no flat 30% deduction; you deduct only actual allowable expenses, repairs, agent fees, insurance. More painfully, mortgage interest on residential property is no longer a deduction at all: it gives only a basic-rate 20% tax reduction, so a higher-rate UK taxpayer gets far less relief on the interest than India allows.

Because of these two differences, the UK taxable profit on the same rent is usually higher than the Indian one. The UK then gives credit relief for the India tax, but the credit is capped at the lower of the India tax and the UK tax on that income. So the India tax is credited, but since the UK is taxing a larger profit, the credit rarely covers the whole UK bill, and a UK top-up remains. The old escape, keeping the rent in India under the remittance basis, is gone since April 2025, so this now applies as the rent arises.

The practical work is a clean Indian computation and the right paperwork for the UK credit. That means the Indian return with the 30% deduction and interest, the actual India tax after recovering the over-deducted TDS, and a clear record of the India tax paid and when, converted to sterling, so your UK accountant can claim the credit.

It also means computing the UK profit correctly, on actual expenses with the interest treated as a 20% reducer, so the residual UK tax is right and not overpaid. A practising CA files the Indian side, reclaims the gross-basis TDS, and hands your UK accountant the India-tax-paid detail, and flags that a UK top-up is normal here because of the stricter UK expense and interest rules, so it is not a surprise.