Net Rental Yield After TDS, Maintenance and Vacancy: The Honest Bengaluru NRI Math for 2026

The headline Bengaluru rental yield is 3.5 to 4 percent. The number that actually lands in the NRI buyer's bank account is meaningfully lower, and the gap is the most common source of disappointed expectations in the first year of ownership. Between Section 195 TDS at 30 percent on rental income, monthly maintenance at premium projects, realistic vacancy assumptions, property management fees and minor repairs, the headline yield typically compresses by 35 to 45 percent before the money repatriates. For a Rs 2.5 crore Whitefield 3 BHK, that turns a 3.8 percent gross yield into roughly 2.2 to 2.5 percent net post-tax. The math is not complicated, but it is rarely shown to buyers at the booking stage. This is the honest 2026 calculation.

What does the headline 3.5 to 4 percent Bengaluru yield actually represent?

The headline Bengaluru rental yield, widely cited by Anarock, Knight Frank, 99acres and Housing.com tracking, represents the gross annual rent divided by the property's market value. For a Rs 2.5 crore property with a market rent of Rs 80,000 per month, the gross annual rent is Rs 9.6 lakh, and the gross yield is 3.84 percent. This is the number that appears in developer presentations and broker pitches. It is a useful starting reference, but it is not what the buyer receives. It does not deduct any of the costs that the landlord actually bears, and it does not deduct the taxes that the NRI specifically pays. The disciplined approach is to treat the headline yield as the start of the calculation, not its conclusion.

How does the 30 percent TDS under Section 195 compress the headline?

Section 195 of the Income Tax Act requires that any person making a payment to a non-resident must deduct tax at source at the applicable rate. For rental income paid to an NRI landlord, the standard TDS rate is 30 percent plus applicable surcharge and cess, taking the effective deduction to roughly 31.2 to 33 percent depending on the rent slab. The tenant or the property manager is the deductor and must remit the TDS to the government within the prescribed timeline. For an NRI receiving Rs 9.6 lakh of gross annual rent, the TDS deduction is roughly Rs 3 to 3.2 lakh, reducing the net annual receipt to roughly Rs 6.4 to 6.6 lakh before any other costs. The NRI can recover the TDS as a refund at year end by filing an Indian tax return showing the actual tax liability based on the slab, but the cash flow impact through the year is real and the recovery is typically delayed by 6 to 12 months.

What does monthly maintenance cost at a premium Bengaluru project?

Maintenance at premium Bengaluru projects in 2026 typically runs Rs 4 to 6 per square foot per month for projects with full amenity packages including clubhouse, swimming pool, gym, landscaped grounds and 24x7 security. For a 1,800 square foot 3 BHK at Prestige Oakville Whitefield or Sobha Altair type inventory, that translates to Rs 7,200 to 10,800 per month, or Rs 86,400 to 1.29 lakh per year. The maintenance is paid to the apartment owners association, not retained by the landlord, and it is the landlord's responsibility regardless of whether the unit is rented. For a furnished unit, the landlord additionally bears furniture maintenance, appliance servicing and periodic refurbishment, which adds another Rs 30,000 to 60,000 per year on average across the holding period. These are deductible against rental income for Indian tax purposes but they still compress the cash yield.

What vacancy assumption is realistic across Bengaluru corridors?

A realistic vacancy assumption is 4 to 8 weeks per year averaged across the holding period, equivalent to 8 to 15 percent of annual rent foregone. Premium Whitefield and Sarjapur Road inventory aligned with major tech parks typically sees 4 to 6 weeks of vacancy at tenant changeovers, with the corporate-tenant pool absorbing replacement demand quickly. Newer Sarjapur outer corridor and Devanahalli projects see longer vacancy windows of 6 to 10 weeks at the early occupancy stage, narrowing to 4 to 6 weeks as the corridor's tenant base deepens. North Bengaluru projects at Hennur and Thanisandra anchored by Manyata typically run 5 to 7 weeks. The buyer who underwrites a zero-vacancy scenario is consistently surprised in year one. The buyer who assumes 6 weeks on average builds a forecast that survives reality.

What do property management fees actually run at?

Professional property management for unfurnished Bengaluru inventory typically runs 8 to 12 percent of gross annual rent, with the fee covering tenant sourcing, lease drafting, rent collection, TDS deduction and remittance, periodic property inspection and minor repair coordination. For a Rs 9.6 lakh annual rent, that is Rs 76,800 to 1.15 lakh per year. For furnished or managed inventory, the management fee runs 12 to 18 percent reflecting the heavier operational lift on furniture, appliances, utilities and tenant turnover, taking the annual fee to Rs 1.15 lakh to 1.73 lakh on the same rent base. NRI landlords who self-manage from overseas typically discover that the cost of remote management failures (delayed repairs, lost tenants, tax-filing errors) exceeds the professional fee, so the management fee is generally a worthwhile spend rather than a discretionary one.

What is the worked example on a Rs 2.5 crore Whitefield 3 BHK?

Take a 1,800 square foot 3 BHK at a Rs 2.5 crore valuation in the Whitefield core, rented at Rs 80,000 per month. Gross annual rent: Rs 9.6 lakh. Maintenance at Rs 5 per square foot: Rs 1.08 lakh per year. Vacancy of 6 weeks: Rs 1.11 lakh. Property management at 10 percent of gross: Rs 96,000. Minor repairs and refurbishment reserve at 1 percent of gross: Rs 9,600. Total pre-tax deductions: Rs 3.24 lakh. Net pre-tax rent: Rs 6.36 lakh. Section 195 TDS at 30 percent on gross: Rs 2.88 lakh (recoverable as refund at year end). Net annual receipt to NRI account after TDS deduction at source: roughly Rs 3.48 lakh in the year of receipt, with the TDS recovered as refund 6 to 12 months later. On the Rs 2.5 crore acquisition cost, the in-year net yield is roughly 1.4 percent, settling to roughly 2.5 percent after TDS recovery. Both numbers are materially below the 3.84 percent headline. None of the deductions are optional. All are visible to a buyer who runs the math before booking.

How does the comparison run for a Hyderabad Kondapur 3 BHK at 5 to 6.5 percent gross?

The Hyderabad Golden Triangle math is structurally similar but the higher gross yield gives the NRI more headroom against the same deductions. As covered in the PropNewz Kondapur and HITEC City yield read, the 5 to 6.5 percent gross at HITEC City and Kondapur translates to roughly 3 to 4 percent net post-tax after the same TDS, maintenance, vacancy and management deductions. The 100 to 150 basis points net yield premium over Bengaluru is the structural attraction of the Hyderabad Golden Triangle for NRI yield-focused buyers, but the same disciplined deduction stack should be applied to both cities for an honest comparison. The PropNewz NRI allocation framework covers the full cross-city comparison.

Can the NRI obtain a lower-deduction certificate to reduce the TDS bite?

Yes, and many NRI landlords with active rental income do exactly this. Under Section 197 of the Income Tax Act, an NRI can apply to the Indian tax authorities for a certificate authorising the tenant or property manager to deduct TDS at a lower rate than the standard 30 percent, based on the NRI's actual estimated tax liability after deductions and slab application. For an NRI whose effective Indian tax rate on rental income works out to 15 to 20 percent after deducting maintenance, interest on home loan and the 30 percent standard deduction on rental income, the Section 197 certificate can reduce the TDS rate to that level, dramatically improving in-year cash flow. The application is filed in Form 13 to the buyer's jurisdictional assessing officer, takes 30 to 90 days to process, and is typically valid for one financial year. NRI landlords with a CA on retainer should request this as a standard service. NRI landlords self-managing should know it is an option worth pursuing.

What should an NRI buyer factor into the underwriting model?

Five line items, in this order. Step one, headline gross yield, calculated as expected annual rent divided by all-in acquisition cost including stamp duty and registration on the post-revision base. Step two, maintenance at Rs 4 to 6 per square foot per month for premium inventory, applied as a fixed annual cost. Step three, vacancy at 5 to 8 weeks per year averaged across the holding period. Step four, property management at 10 percent of gross for unfurnished inventory, 15 percent for furnished. Step five, TDS at 30 percent under Section 195, with a Section 197 lower-deduction certificate as the planned mitigation. The honest net post-tax yield for a Rs 2.5 crore Whitefield 3 BHK in 2026 settles at roughly 2.2 to 2.6 percent. The honest net post-tax yield for a Rs 1.5 crore Kondapur Golden Triangle 3 BHK settles at roughly 3.5 to 4 percent. Both are workable yield investments. Neither matches the headline number. Buyers comparing Prestige Garden Breez against Sobha Altair or against Hyderabad alternatives should run the same five-step calculation on each option for a like-for-like comparison. This article is general information and not a substitute for advice from a qualified tax professional on a specific situation.

By PropNewz Team