GUIDE FOR LANDLORDS AND TENANTS
Security deposit for a rented home in India: how much, deductions and refund
The security deposit is the money a tenant pays at the start to cover unpaid rent or damage. It belongs to the tenant: at move-out the landlord returns it, less anything the agreement allows them to keep.
How much deposit is usual
There is no single national rule for existing agreements, and practice differs a lot by city:
- Bengaluru: often 6 to 10 months' rent.
- Hyderabad, Chennai, Pune: usually 2 to 3 months, sometimes up to 6.
- Mumbai, Delhi NCR: usually 2 to 3 months.
- Shops and offices: often 3 to 6 months, sometimes more.
The limit under the Model Tenancy Act
The Model Tenancy Act, 2021 proposes a cap of 2 months' rent for homes and 6 months for commercial premises. It is a model law: it applies only in states that pass their own version of it, and only to agreements made under that state law. Check what your state has adopted before relying on the cap.
What can be deducted at move-out
Only what the agreement and the facts support:
- Unpaid rent up to the move-out date.
- Unpaid electricity, water and maintenance, from the final meter readings and bills.
- Damage beyond normal wear and tear, such as a broken fitting or a stained wall that needs more than routine repainting.
- Agreed charges, such as a painting or cleaning charge written into the agreement.
Fading paint, small nail holes and worn fittings after years of use are normal wear and tear, not damage.
Settling it without a dispute
Most deposit disputes come from missing records. A few habits avoid them:
- At move-in, note the meter readings and take dated photos of each room.
- Record every rent payment with its date and reference, so the final balance is clear.
- At move-out, take the final readings together with the tenant, and list each deduction with its reason and amount.
- Refund promptly, ideally on the day of move-out, with the deductions in writing.
Example
| Amount | |
|---|---|
| Deposit paid at move-in | ₹60,000 |
| Last month's electricity (final reading) | − ₹1,850 |
| Repair: broken bathroom fitting | − ₹1,200 |
| Refunded to the tenant | ₹56,950 |
How Tenowa handles it
Tenowa keeps the deposit with the tenant's record. A guided move-out records the final meter readings, each deduction with its reason, and the refund, and works out the final balance, so both sides see the same numbers.
Common questions
Can a landlord keep the whole deposit if the tenant leaves early?
Only if the agreement says so, for example for leaving before the lock-in period ends. Otherwise the deposit is returned less genuine dues.
Does the deposit earn interest for the tenant?
Usually not, unless the agreement says it does.
Can the deposit be adjusted against the last months' rent?
Only if both sides agree. Many agreements forbid it, because it leaves nothing to cover damage or final bills.
This is general information, not legal advice. Tenancy law is made by each state; check your state's rules and your agreement.