Checklist for tenants of NRI Landlords

A large percentage of the Indian population uses the rented property for residential as well as commercial purposes. In most cases, the landlords renting out the property are resident Indians. However, there are countless other tenants who rent properties belonging to NRI landlords. A majority of tenants belonging to the latter category are of the opinion that having an NRI landlord does not make much of a difference. They, in fact, feel a sense of relaxation and freedom given the fact that their landlord would not be around to supervise their use of the property. While this sense of elation is justified to some extent, it also reflects the ignorance of the tenants about the key aspects of renting the properties of NRI landlords. 

Important Facts about Renting NRI Owned Properties  

Most NRIs buying property in India do so with the primary objective of building their assets and earning some extra money through rent. Another common reason for renting out the property is to ensure its upkeep and maintenance. Check our article on: Checklists of NRI to invest in Indian property

Thus, collection of rent and proper care and maintenance of the property by the tenants are generally the two key focus areas for NRI while dealing with their tenants. In this context, the tenants on their part have to take various factors into consideration, based mostly on whether they deal with the landlord directly or through their authorized representative. In fact, there is a different checklist for tenants that tenants need to be aware of in each of cases, which are explained in detail as follows. 

Considerations while Dealing Directly With The Landlord  

In case the tenants have to deal directly with their NRI landlord, they need to shoulder some additional responsibility with respect to payment of rent. The brief details of the five most important things that tenants need to remember in this case are given below.

Deducting TDS

The tenants need to pay their rent after deducting a TDS at the rate of 30% plus an additional education cess amounting to 0.9%, under Section 195 of the Income Tax Act.

Acquire A TAN

In order to fulfill the responsibility of tax deduction, the tenants will be required to obtain a Tax Deduction and Collection Account Number or TAN. This is a 10-digit alphanumeric identity that is essential to conduct all TDS-related activities with the IT department.

Fill The Right Form

There are two types of forms, namely Form 15CA and Form 15CB, that tenants need to fill while depositing the rental amount. The form they would have to fill depends on the single transaction amount as well as the total annual amount. It is advisable to seek the guidance of a Chartered Accountant for filling the right form and submitting it online.

Credit Money In The Right Account

Tenants should make sure that they have the correct account details of the landlord and double-check the same before depositing money in it.

Provide TDS Certificate

Once TDS has been deducted, the tenants need to provide the TDS certificate to their NRI landlords. They can get this certificate from the IT department.

Dealing With A Representative Of  The Landlord

Dealing with a representative of their NRI landlord is relatively easier for most tenants. However, they still need to keep the below given important factors in mind to avoid any legal or other complications.

  • The tenants should make sure that the representative has a proper and valid Power Of Attorney issued in his/her name by the NRI landlord. It should contain the details about the reason for the execution of Power Of Attorney and should also specify the exact rights of the executioner.
  • It is important for the tenants to tally and verify the identity of the representatives with that mentioned in the Power Of Attorney. They should also verify if the representative is authorized to rent out the entire property or only some specific portion of the same.
  • The tenants also need to make sure that the representatives have completed the process of property registration and paid all the associated charges in full.
  • Finally, the tenants need to confirm whether or not the representatives are authorized to make the decisions about repairing, maintenance, receiving payments, settlement of disputes, and adjustment and deductions, etc.

The above-discussed factors can help the tenants of NRI landlords keep using the rented property in a stress-free manner. It also minimizes the chances of any misunderstanding or legal complications with the landlord.

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