German rental income for residents of India
Key facts
- Treaty
- India–Germany DTAA signed 19 June 1995, applies in Germany from 1997 and in India from 1997-98
- Who taxes the rent first
- Germany — Art. 6
- Indian relief method
- Foreign tax credit — Art. 23(2), capped at Indian tax on that income
- Indian forms
- ITR-2 with Schedules FSI, TR and FA; Form 67 for the credit
- Indian computation
- Income from house property: 30 % standard deduction plus loan interest; no AfA
- Tax years
- April–March vs German calendar year: credit split in proportion
- Returnees
- RNOR status can take foreign-accruing rent outside Indian tax — check your status first
File the German return first
Rent from a flat in Germany is German-source income under §49 Abs. 1 Nr. 6 EStG, whatever your nationality. As a resident of India you file the non-resident return: Hauptvordruck ESt 1 C with one Anlage V per property, through ELSTER, at the Finanzamt where the property is located.
- No Grundfreibetrag: §50 Abs. 1 EStG taxes the profit from the first euro.
- Deduct German Werbungskosten, mortgage interest and AfA under German rules.
- Deadline for a self-filed 2025 return: 31 July 2026. If you missed it, file now — the late-filing surcharge only becomes automatic 14 months after year-end, at the end of February 2027.
- Treatment as a German resident under §1 Abs. 3 EStG is open if at least 90 % of your worldwide income is German-taxable, or if your non-German income stays below the Grundfreibetrag (reduced for some countries of residence). With a salary at home, neither test is usually met — but a retiree with little foreign income may qualify.
- Living outside the EU/EEA, the Finanzamt may ask you to name an Empfangsbevollmächtigter in Germany. Letters posted abroad count as delivered one month after posting.
Income from house property, under Indian rules
A resident and ordinarily resident individual is taxed in India on worldwide income, so the German flat is reported as income from house property for the financial year (April to March). The annual value is reduced by the 30 % standard deduction and by interest on the loan under section 24(b); German AfA plays no role. The Indian taxable amount is therefore usually higher than the Anlage V result. If the property shows a loss, set-off against other income is capped at ₹2,00,000 under the old regime and not available under the new regime. Because ITR-1 cannot be used with foreign income or foreign assets, the return is ITR-2.
Claim the German tax as a credit
Article 23(2) of the treaty requires India to deduct the German income tax from the Indian tax on the same income, up to the Indian tax on it. The claim goes through Schedule FSI (the income, with the treaty article), Schedule TR (relief under section 90) and Form 67 with proof of the German tax — the Steuerbescheid and payment. Because the Indian year runs April to March, rent for 2025-26 straddles German 2025 and 2026, and the credit is split in the same proportion. Form 67 can be filed up to the end of the relevant assessment year when the return was filed on time or as a belated return (section 139(1) or 139(4)). With an updated return under section 139(8A) — for example to add German rent you had left out — Form 67 must be filed on or before the day you file that updated return. Without Form 67 the credit can be refused, so filing it together with the return is the safe default.
Disclose the flat in Schedule FA
Resident and ordinarily resident taxpayers must list foreign assets in Schedule FA, including immovable property abroad, on a calendar-year basis. Leaving out a foreign property exposes you to penalties under the Black Money Act, separate from any tax. Returnees who still qualify as RNOR (not ordinarily resident) are outside both the worldwide taxation of foreign rent and Schedule FA for those years, so establish your residential status first.
Example: the same flat, taxed in Germany and India
Illustrative only. Every country page uses the same German flat so you can compare. German side: tax year 2025, non-resident return, no other German income.
| Rent received incl. operating-cost advances | €12,000 |
|---|---|
| Running costs | − €2,000 |
| Mortgage interest | − €3,000 |
| AfA, 2 % of €100,000 building basis | − €2,000 |
| German rental profit | €5,000 |
| German income tax (§50 EStG, no Grundfreibetrag)Soli: 0 | €933 |
Resident and ordinarily resident, 30 % slab plus 4 % cess, €1 = ₹100 for readability (use the prescribed SBI rates in practice), German tax for 2025 and 2026 assumed equal.
| Rent (€12,000) | ₹12,00,000 |
|---|---|
| 30 % standard deduction | − ₹3,60,000 |
| Loan interest, section 24(b) | − ₹3,00,000 |
| Income from house propertyno AfA in India | ₹5,40,000 |
| Indian tax at 31.2 % | ₹1,68,480 |
| Credit for German tax (€933)Form 67, split across German years | − ₹93,300 |
| Indian tax still due | ₹75,180 |
India's flat 30 % deduction ignores real costs and depreciation, so a resident in the top slab usually pays Indian tax on top of the German tax even after the credit.
Mistakes specific to Indian residents
Assuming Germany stops taxing you once you leave
Rent from a German flat stays taxable in Germany as long as you own it. Leaving Germany only changes the form — ESt 1 C instead of the resident return — and removes the Grundfreibetrag.
Using the German net figure in ITR-2
India computes house-property income from gross rent with its own deductions. Rebuild the figure from rent and interest, converted at the prescribed rates.
Forgetting Form 67 or Schedule FA
Miss the Form 67 deadline — end of the assessment year, or the day you file an updated return — and the credit can be refused. No Schedule FA entry for the flat, penalty risk. Both are routine to file and costly to miss.
Missing the German deadline from abroad
The self-filed 2025 German return was due on 31 July 2026. File now; the late-filing surcharge becomes mandatory only after the end of February 2027.
When this page is not for you
- NRIs and RNOR returnees in their transition years — the Indian side is different.
- Property held through a company or partnership, and the year you sell.
- Holiday or short-term letting, and dual-residence cases.
In these cases, or when amounts are large, ask a Steuerberater and a tax adviser in your country of residence.
Common questions
How is German rental income taxed for Indian residents?
Germany taxes the rent first through the standard non-resident return (ESt 1 C with Anlage V), from the first euro. As a resident and ordinarily resident taxpayer in India, you also report the flat in your Indian return as income from house property — rent minus a 30 % standard deduction and loan interest — and claim credit for the German tax under the treaty, which requires Form 67 and the foreign-asset schedules of ITR-2.
Can I keep the German tax-free allowance after returning to India?
Only through §1 Abs. 3 EStG. For residents of India the non-German income limit is a quarter of the Grundfreibetrag, so with an Indian salary the option is practically never available.
Which exchange rate applies in India?
Indian rules prescribe State Bank of India telegraphic-transfer buying rates, with different reference dates for the income and for the foreign tax. Use those rates, not the rate of your bank transfer.
Last reviewed: by Yann Lephay.