Letting out a flat is not just finding a tenant and collecting rent. An agreement has to be written and stamped, a deposit has to be agreed with nothing in Karnataka law fixing the number, and the rent itself has tax, and sometimes GST and TDS, attached to it. None of this is complicated once you see the shape of it, but each piece sits in a different Act, and getting one wrong is either a paperwork headache or a bill from the tax department later.
This guide works through a single flat, let at ₹30,000 a month on the usual 11-month agreement, and shows the actual sums: the stamp duty, and what the rent costs you in tax. It also covers where Karnataka's rent-control law does and does not apply, the deposit, GST, TDS, and where an NRI landlord and a let-out flat's property tax differ from what our other guides already cover.
From decision to first rent
The steps are the same whether this is your first flat to let or your fifth, and most of them happen before any rent is paid.
Check where the law binds you
A flat built within the last 15 years, or renting above a very low historic threshold, sits outside the Karnataka Rent Act’s rent-control chapters. That is true of almost every flat bought from a builder.
Agree the terms
Rent, the deposit, notice period and who pays which charges are all a matter of agreement between you and the tenant – nothing in Karnataka law fixes the deposit.
Sign and stamp the agreement
Written, on stamp paper, under the Karnataka Stamp Act. An 11-month term at a monthly rent keeps it out of compulsory registration.
Tell your association
A tenant is bound by the building’s bye-laws exactly as an owner is. Most associations want the tenant’s details and issue their own access or parking passes.
Rent starts, and so does the tax
GST, TDS and income tax each turn on the rent you actually charge. File the rent as income every year it is received, whether or not any tax is deducted at source.
The law, and what it excludes
The Karnataka Rent Act, 1999 extends to the whole state, and its rent-control chapters – registration of the tenancy agreement, standard rent, restrictions on what a landlord can charge – apply, by area, inside city corporations such as Bengaluru's and within 3 km of them. On that basis alone, a flat in Bengaluru sits inside the Act's reach.
But the Act then excludes most of what it would otherwise cover. Two exclusions matter to almost every flat bought from a builder and let out today. First, nothing in the Act applies to a premises constructed or substantially renovated within the last 15 years, counted from completion. Second, nothing in the Act applies where the rent exceeds ₹3,500 a month in Bengaluru (₹2,000 elsewhere) – a threshold fixed in 1999 rupees that any ordinary flat's rent clears many times over. A flat that is both newly built and rented at a realistic Bengaluru rate is very likely outside the Act's rent-control chapters on both grounds at once. That does not mean there is no law governing your tenancy – the Transfer of Property Act and your own agreement still do that work – only that the Rent Act's specific machinery, including the registration duty in the next section, does not reach it.
Karnataka has not replaced this Act with anything modelled on the Model Tenancy Act, 2021 (covered below): it continues to amend the 1999 Act directly, most recently in January 2026, when an amendment converted the Act's fines and short jail terms into civil penalties instead – part of a wider move away from criminal penalties for this kind of default. If a fifteen-year-old building, or a rent below the threshold, does bring your tenancy inside the Act, that is the standard you would be judged against; ask a lawyer to check your specific case rather than assume either way.
Why an 11-month agreement
Almost every residential tenancy in Bengaluru runs 11 months, and the reason is a plain rule in the Registration Act, 1908, not custom. A lease must be registered only if it runs from year to year, for a term exceeding one year, or reserves a yearly rent. An agreement for 11 months, at a fixed monthly rent, meets none of those three conditions, so it is never compulsorily registrable under this section. A 12-month agreement, or one priced as a yearly sum rather than a monthly one, can tip into the registration duty depending on how it is worded – which is the real reason landlords keep to 11 months rather than a round year.
This is separate from the Karnataka Rent Act's own registration duty, covered above: where that Act's rent-control chapters do reach a tenancy, its section 4 requires the agreement to be registered regardless of the term. For the great majority of flats, which sit outside those chapters, the Registration Act's year-based rule is the one that actually decides whether registration is compulsory.
Stamp duty on a residential lease of a year or less is capped at ₹500, whatever the rent or deposit. No registration fee, no compulsory appearance at the sub-registrar's office. This is what almost every landlord signs, and it can simply be renewed or re-signed when it runs out.
Stamp duty on a lease of one to ten years runs at 1% of the average annual rent, premium and deposit together – uncapped – and the lease has to be presented for registration at the sub-registrar's office, with both parties appearing, much like a sale deed. Landlords rarely choose this for an ordinary flat.
Stamp duty on the agreement
The Karnataka Stamp Act sets the duty on a lease by its term. For a residential lease of a year or less, the rate is 0.5% of the total of the average annual rent, any premium or fine, and any deposit – but subject to a cap of ₹500. That cap is what actually governs almost every 11-month residential agreement in Bengaluru, because 0.5% of a realistic annual rent alone already exceeds ₹500 well before any deposit is added.
| Item | Basis | Amount |
|---|---|---|
| Rent for the 11-month term | ₹30,000 a month × 11 | ₹3,30,000 |
| Average annual rent | ₹30,000 × 12, for stamp duty purposes | ₹3,60,000 |
| Security deposit* | Illustrative – 10 months, by agreement | ₹3,00,000 |
| Stamp duty on the agreement | 0.5% of rent and deposit, capped at ₹500 (Art. 30(1)(i)) | ₹500 |
| Registration | Not compulsory: 11-month term, monthly rent | ₹0 |
| GST on the rent | Exempt: residence use, tenant not GST-registered | ₹0 |
| TDS on the rent | Below the ₹50,000-a-month threshold | ₹0 |
| Annual value for tax | Rent received in the tax year | ₹3,60,000 |
| Standard deduction | 30% of the annual value | −₹1,08,000 |
| Added to your taxable income | Before any interest deduction on a home loan | ₹2,52,000 |
Two things fall out of this worked example. One, the ₹500 cap means the exact deposit you agree with a tenant makes no difference to the stamp duty, so there is no reason to under-state it on the agreement. Two, everything in this table changes at a higher rent: at ₹55,000 a month, for instance, TDS starts to apply, and a bigger deposit or a longer lease can push the stamp duty past the capped figure entirely – the next two sections cover both.
The deposit, and the bye-laws
Karnataka has no statutory cap on a residential security deposit. The Karnataka Rent Act bars a landlord from charging a premium or "pugree" – a lump sum on top of or instead of rent, a rent-control-era practice – but that is a different thing from an ordinary refundable deposit, and in any case only where the Act's rent-control chapters reach the tenancy at all, per the section above.
The number many Bengaluru landlords ask for, commonly eight to ten months' rent, is market practice, not a legal requirement. The central government's Model Tenancy Act, 2021 – a model law circulated for states to adopt, not itself binding anywhere until a state enacts it – caps a residential deposit at two months' rent, refunds it on the date vacant possession is handed back, after deducting any liability. Karnataka has not adopted this Act; the two-month figure is not the law here, and a landlord and tenant remain free to agree a higher figure. If you would rather work to it anyway as a matter of fairness or to attract a wider pool of tenants, nothing stops you, but do not present it to a tenant as a legal ceiling in Karnataka.
Whatever you agree, your building's own rules still apply on top. Under the Karnataka Apartment Ownership Act, 1972, a tenant is bound by the association's bye-laws in exactly the same way the owner is, even though the tenant never signs the deed of declaration. Most associations register a new tenant's details and issue their own visitor, vehicle or access passes; ask your association what it needs before the tenant moves in, since this is separate from anything in the tenancy agreement itself.
Tax, GST and TDS on the rent
The 30% standard deduction
Rent you receive is taxed as income from house property. The starting figure is the higher of the rent you actually receive and what the property could reasonably let for, less any municipal taxes you actually paid in the year; from that, a flat 30% standard deduction is allowed regardless of your actual expenses on the flat, and the interest on any home loan against it comes off the rent in full, with no ₹2 lakh ceiling – that cap applies only to a home you live in yourself. If the interest is more than what is left of the rent, though, the loss is limited: the old regime sets off up to ₹2 lakh of it a year against your salary or other income and carries the rest forward; the new regime sets off none. Our guide to home loan tax benefits covers the full mechanics, both tax regimes, and joint ownership; this guide does not repeat it.
GST: usually exempt
Renting a residential dwelling for use as a residence is exempt from GST. Since 18 July 2022, that exemption carries one exception: where the tenant is themselves registered for GST, the letting is no longer exempt, and it is the tenant, not the landlord, who must account for the GST under reverse charge, whatever the landlord's own GST status. In practice this affects a company renting a flat for an employee, or a GST-registered individual renting one, far more than an ordinary flat let to an ordinary tenant living in it. An individual landlord letting one or two flats to tenants who are not GST-registered has no GST to worry about on the rent at all.
TDS above ₹50,000 a month
Where the tenant is an ordinary individual not otherwise required to have their accounts audited, they must deduct 2% TDS on the rent once it exceeds ₹50,000 for a month or part of a month – but only once, at the earlier of the rent being credited or paid, for the last month of the tax year or the last month of the tenancy, not every month. Below ₹50,000 a month, as in the worked example above, nothing is deducted. A tenant that is a business, or an individual or firm large enough to be liable for a tax audit, deducts on a different, more frequent basis: 10% for land, a building or furniture, at the same ₹50,000 threshold, but as part of its ordinary monthly TDS compliance rather than a once-off deduction. Either way, the deduction is the tenant's obligation, not yours; what you should check is that the tenant actually deducts it and gives you Form 16A, since the credit is yours to claim against your own tax.
An NRI landlord, property tax
If you are an NRI letting out a flat you own in Bengaluru, the mechanics above change in one respect: your tenant must deduct TDS on the rent under a different rule that applies to payments to a non-resident, at the "rates in force" rather than the flat 2%, and needs a Tax Deduction and Collection Account Number (TAN) to do it, which an ordinary resident tenant paying a resident landlord does not need. Our guide for NRIs buying in Bangalore covers this, along with repatriating the rent once it has been taxed; it is not repeated here.
Property tax is also different once a flat is let out. Bengaluru's Unit Area Value table carries a separate, roughly double, rate for a tenanted flat against an owner-occupied one in the same zone and category, and the 50% cut the Greater Bengaluru Governance Act, 2024 gives a self-occupied home applies only where you live in the flat yourself – not where a tenant does. Our guide to property tax on a new flat works through the zones and rates in full; once you let the flat out, you are paying the tenanted rate, not the owner-occupied one, and should update your return to say so.
Before you sign a tenant
- Check whether the Karnataka Rent Act's rent-control chapters actually reach your flat before assuming they do, or don't – the 15-year and rent-threshold exclusions cover most flats bought from a builder.
- Keep the agreement to 11 months if you want to avoid compulsory registration, and reserve the rent monthly, not as a yearly sum.
- Stamp the agreement before either party signs, not after; the duty is capped at ₹500 for most residential lets of a year or less.
- Agree the deposit in writing: nothing in Karnataka law fixes it, so the figure and its refund terms are only as good as what you put in the agreement.
- Tell your association before the tenant moves in; a tenant is bound by its bye-laws whether or not anyone told them so.
- Check your tenant's GST and turnover status before assuming the rent is GST-free or below the TDS threshold.
- File the rent as income every year, whether or not TDS was deducted, and switch your property tax return to the tenanted rate once the flat is let.
Sources, checked 10 Sep 2026. Where the Karnataka Rent Act, 1999 applies, its exclusions for newly built premises and for rent above a fixed threshold, registration of a tenancy agreement, and the January 2026 decriminalising amendment: Karnataka Rent Act, 1999, ss.1–4 and the First Schedule, and the Karnataka Rent (Amendment) Act, 2025 (Karnataka Act 7 of 2026) (indiacode.nic.in). Compulsory registration of a lease exceeding a year: Registration Act, 1908, s.17(1)(d) (indiacode.nic.in). Stamp duty on a lease, by term: Karnataka Stamp Act, 1957, Article 30(1). The security-deposit cap in the Model Tenancy Act, 2021, and its non-adoption in Karnataka: Ministry of Housing and Urban Affairs, s.11 (mohua.gov.in). A tenant bound by the association's bye-laws: Karnataka Apartment Ownership Act, 1972, s.24(1) (dpal.karnataka.gov.in). GST on renting a residential dwelling, exempt unless the tenant is GST-registered, and reverse charge from 18 Jul 2022: Notification Nos. 04/2022 and 05/2022-Central Tax (Rate) (cbic-gst.gov.in, gstcouncil.gov.in). TDS on rent, the ₹50,000-a-month threshold and the once-a-year deduction for an individual tenant: Income-tax Act, 2025, s.393(1), Table serial number 2 (egazette.gov.in). The 30% standard deduction and property tax on a let-out flat are covered in full, with their own sources, in our home loan tax benefits and property tax guides. The worked example is our own arithmetic on an illustrative ₹30,000-a-month rent. This is a general guide, not legal or tax advice; ask a lawyer before signing a lease over a year, and a chartered accountant before filing rental income.