How much security deposit can a landlord charge?

The Model Tenancy Act framework caps deposits at two months' rent for residential and six for commercial - binding only in states that adopted it. Market practice varies widely: one to three months in most cities, while Bengaluru's convention of five to ten months persists.

What deductions from a deposit are legitimate?

Unpaid rent and bills, and repair of damage beyond normal wear and tear - supported by evidence like move-in and move-out inspection records. Repainting and deep-cleaning charges hold up only where the agreement provides and condition justifies.

What is the timeline for refunding a deposit?

Refund at or promptly after possession is the norm; the Model Tenancy framework prescribes refund at the time of taking over vacant possession. Agreements commonly state 15 to 30 days - and stating it is what prevents the standard dispute.

Can the deposit be adjusted against the last months' rent?

Only by mutual agreement. Tenants unilaterally skipping final rent against the deposit breach the agreement - though in practice many exits settle exactly this way; documenting the settlement protects both sides.

What can a tenant do if the landlord withholds the deposit?

Demand in writing with the inspection evidence, then pursue the rent authority where tenancy law provides one, or civil remedies - small-cause proceedings for typical residential amounts. Documented handover condition decides these cases.

TENANCY · 11 MIN READ

Security deposit rules in India

Deposit disputes are the most common end-of-tenancy conflict in India, and almost all of them turn on evidence rather than on law. This is what the rules say and what actually decides the argument.

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K. ManiFOUNDER, KEYMATRIXLast reviewed 31 August 2026

IN SHORT

There is no single national cap on residential security deposits in India; the amount is contractual and varies by city from one to ten months’ rent. The Model Tenancy Act 2021 proposes a cap of two months’ rent for residential premises, but it applies only in states that have adopted it.

How much deposit can be charged?

For most of India the answer is whatever the parties agree, because there is no generally applicable statutory cap on residential security deposits. The amount is therefore set by local market convention, and the conventions differ enormously across the country.

In Bengaluru and parts of southern India, deposits of six to ten months’ rent have been standard, which for a family relocating represents a very large sum locked up for the duration of the tenancy. In Mumbai, Delhi and much of the north and west, two to three months is more typical. Neither reflects a legal rule; both reflect what the local market has settled on.

The practical consequence is that a tenant’s protection lies in the agreement rather than in a statute. Negotiate the amount, and negotiate the refund terms with equal care — a smaller deposit with a vague refund clause is not obviously better than a larger one with a clear timeline and a stated deduction process.

No generally applicable national cap. The amount is contractual in most of India.
City conventions vary widely. Six to ten months in parts of the south; two to three in much of the north and west.
The refund clause matters as much as the amount. Negotiate both.

State-wise norms and the Model Tenancy Act

The Model Tenancy Act 2021 was published by the central government as a template for states to adopt. It proposes a security deposit cap of two months’ rent for residential premises and six months’ rent for non-residential premises, along with a rent authority, a tenancy tribunal and prescribed timelines for refund.

The critical qualification is that it is a model law. Land and tenancy are state subjects, so the Model Tenancy Act has no force of its own; it applies only where a state has enacted legislation adopting it. Several states and union territories have moved to adopt it in some form and many have not, so whether the two-month cap binds your tenancy depends entirely on where the property is.

Some states also have older rent control legislation still in force, which can apply to certain older tenancies and premises and which carries its own rules on deposits, rent and eviction. This area is genuinely complicated and state-specific. Check your own state’s position rather than relying on the Model Tenancy Act figures, which are widely quoted online as though they applied nationally.

The MTA is a model, not a law in force. It binds only where a state has adopted it.
Two months residential, six months commercial. Where adopted.
Older rent control law may apply. Particularly to older tenancies and premises.

Deductions: what is allowed and what is not

The distinction that matters throughout is between damage and normal wear and tear. Rent is the consideration for ordinary use, including the deterioration ordinary use causes.

Common deposit deductions, whether they are generally permissible, and the evidence required to support each.
Deduction	Generally allowed?	Evidence needed
Unpaid rent for the tenancy period	Yes	Rent ledger showing what was due and paid
Unpaid utility bills in the tenant’s name	Yes	Final bills and meter readings at handover
Damage beyond normal wear and tear	Yes	Move-in and move-out condition records with photographs
Missing fixtures, fittings or appliances	Yes	Signed inventory at handover
Professional cleaning where left unclean	Usually, if the agreement provides	Photographs and the cleaning invoice
Normal wear and tear	No	Not deductible — this is what rent pays for
Repainting as a matter of routine	Generally not	Only where damage exceeds normal use
Ageing of fittings during the tenancy	No	Deterioration through ordinary use is the owner’s

Deposit terms are primarily contractual and vary with the agreement and the applicable state law. Where a state has adopted the Model Tenancy Act or has rent control legislation in force, additional rules may apply. General information, not legal advice.

AT HANDOVER

Refund timelines and the right process

Five steps. Step two is where a dispute is either avoided or created.

Give notice and agree a handover date

Serve notice per the agreement and fix a date for the joint inspection and handover, with both parties present. A handover conducted by one party alone is the origin of most deposit disputes.

Conduct a joint inspection against the move-in record

Walk the property with the move-in condition record and photographs to hand, item by item. Agree what constitutes damage and what is wear and tear at this point, in each other’s presence, rather than afterwards by message.

Settle utilities and dues

Final meter readings recorded, final utility bills settled, society dues for the period cleared, and any rent for the final period paid.

Itemise any deductions in writing

A written statement of each deduction with the reason, the amount and the supporting evidence — photographs, invoices or quotations. A single lump-sum deduction with no breakdown is what a tenant is entitled to challenge.

Refund the balance within the agreed period

By bank transfer, within the period the agreement specifies, with the itemised statement. Where the Model Tenancy Act has been adopted it prescribes a timeline; otherwise the agreement governs, which is why it should state one.

Interest on deposits: when it applies

Interest on a residential security deposit is not generally payable in India unless the agreement provides for it or the applicable state legislation requires it. In most ordinary residential tenancies, no interest is paid and none is expected.

There are exceptions worth knowing. Some state rent control legislation provides for interest on deposits in the tenancies it covers. Where a deposit is unusually large relative to the rent — the six to ten month deposits common in parts of southern India — the opportunity cost to the tenant is substantial and interest is sometimes negotiated into the agreement. And where a landlord wrongfully withholds a refund, a tribunal or court may award interest for the period of the delay as compensation.

If interest matters to you as a tenant, negotiate it into the agreement at the outset with a stated rate and payment terms. Asking for it at the end of the tenancy, when it was never agreed, is not a strong position.

Generally not payable unless agreed. Or required by applicable state law.
Large deposits are where it is worth negotiating. The opportunity cost is real at six to ten months.
Interest may be awarded on wrongful withholding. As compensation for the delay.

Terms that decide deposit disputes

Five terms, of which the second and third do most of the work.

Security deposit: A sum held by the landlord to secure performance of the tenant’s obligations, refundable at the end of the tenancy less lawful deductions.
Normal wear and tear: Deterioration arising from ordinary use over time. Not deductible, because rent is the consideration for that use.
Damage: Deterioration beyond ordinary use, whether by act or neglect. Deductible where evidenced against the move-in condition.
Model Tenancy Act 2021: A central template proposing deposit caps, a rent authority and tenancy tribunals. Applies only in states that have adopted it.
Joint inspection: The inspection at handover conducted with both parties present, compared against the move-in record. The single most effective dispute preventer.

Frequently asked questions

: The Model Tenancy Act framework caps deposits at two months' rent for residential and six for commercial - binding only in states that adopted it. Market practice varies widely: one to three months in most cities, while Bengaluru's convention of five to ten months persists.
: Unpaid rent and bills, and repair of damage beyond normal wear and tear - supported by evidence like move-in and move-out inspection records. Repainting and deep-cleaning charges hold up only where the agreement provides and condition justifies.
: Refund at or promptly after possession is the norm; the Model Tenancy framework prescribes refund at the time of taking over vacant possession. Agreements commonly state 15 to 30 days - and stating it is what prevents the standard dispute.
: Only by mutual agreement. Tenants unilaterally skipping final rent against the deposit breach the agreement - though in practice many exits settle exactly this way; documenting the settlement protects both sides.
: Demand in writing with the inspection evidence, then pursue the rent authority where tenancy law provides one, or civil remedies - small-cause proceedings for typical residential amounts. Documented handover condition decides these cases.