Rental Yield in Indian Cities

We do not publish city-average yield figures on this page. We do not hold a rent and price dataset we have verified. A made-up city table is exactly what misleads a buyer. Use the method below on your own numbers instead.

How do you calculate rental yield?

Gross yield is simple. Take the annual rent. Divide by the total acquisition cost. Multiply by 100.

The mistake is in the denominator. Brokers divide by the headline price. Your real cost includes stamp duty, registration and brokerage. Add GST where it applies, parking and club charges. Add the fit-out you did before anyone would rent it.

Net yield is the honest number. From the annual rent, subtract society maintenance, municipal tax, insurance, repairs, an allowance for vacancy and any property management fee. Then divide by the same full acquisition cost.

Run both. The gross number tells you how the market prices the asset. The net number tells you what lands in your bank account.

What the arithmetic looks like

The table below is illustration, not market data. Every input is a stated assumption, so you can replace it with your own.

The pattern holds whatever numbers you use. Costs and vacancy typically remove a quarter to a third of the gross yield before income tax touches it.

The common misreading

Buyers compare a gross rental yield against a fixed deposit rate. That comparison is wrong twice over.

First, it compares a gross figure with a net one. The FD rate arrives with no maintenance, no vacancy and no repairs. Compare net yield with the deposit rate, not gross.

Second, it ignores capital appreciation, which is the actual case for property. Rental yield is the income leg only. A property on a poor yield can still be a fine investment if the price rises. On a good yield it can still be a bad one if the price does not.

Read the two together. If you are buying for income alone, the numbers usually favour a deposit or a bond. Our pages on FD rates and bonds give you the comparison, and is property a good investment takes the argument further.

What tax does to your rental yield

Rent is taxable as income from house property. You get a standard deduction of 30% of the net annual value under Section 24(a) of the Income-tax Act, 1961. Municipal taxes actually paid are deducted before that. Home loan interest is deductible under Section 24(b).

The 30% deduction is generous when your real costs are low, and inadequate when they are not. It is a flat allowance, not a reimbursement.

Your tenant may also be deducting TDS. Under Section 194-IB, an individual or Hindu undivided family not subject to tax audit deducts 2% where rent exceeds ₹50,000 a month. Other payers deduct under Section 194-I at the prescribed rate. The threshold there is ₹50,000 a month. It replaced an annual limit of ₹2,40,000 with effect from 1 April 2025.

That TDS is not a cost. It is credit against your tax, provided the tenant files correctly. Check it in your annual information statement. Details are on our TDS on rent page.

What to do before you buy for yield

Get the real rent, not the asking rent. Ask three brokers what comparable flats in that building actually let for, and how long they sat empty.

Cost the acquisition properly. Stamp duty alone varies widely by state; use the stamp duty calculator. Then read the hidden costs of buying, because most of the denominator lives there.

Assume vacancy. One empty month a year takes roughly 8% off your rent. Two takes 17%. A model with zero vacancy is not a model.

Then run your own figures through the rental yield calculator and put the result next to a deposit rate. If it does not clear that bar, you are buying for capital appreciation, and you should say so out loud.