How much security deposit can a landlord take?
Updated · Sources linked below
The Model Tenancy Act limits
| Premises | Maximum deposit |
|---|---|
| Residential (home) | 2 months' rent |
| Non-residential (shop, office) | 6 months' rent |
The Model Tenancy Act was approved by the Union Cabinet in 2021 as a model for states. It applies only where a state has adopted it in its own law, so check your state's rent law.
What's common where there's no cap
Without a state cap, the deposit is set by agreement. Two to three months' rent is common in most cities; some, like Bengaluru, have traditionally asked for much more. Whatever you agree, write it into the rent agreement and get a deposit receipt.
Getting the deposit back
- Agree the refund terms in writing: when it's returned and what can be deducted.
- Do a joint inspection when you move out and note any damage.
- The landlord deducts only unpaid rent, bills or damage beyond normal wear and tear.
- The rest is refunded at handover, or within the time your agreement says.
Questions people also ask
Is interest paid on a security deposit?
Usually not. Most residential deposits in India are interest-free unless the agreement says otherwise.
Can a landlord keep the whole deposit?
Only for genuine dues: unpaid rent, bills or damage beyond normal wear. Keep your receipts and the move-out inspection notes.
Does the Model Tenancy Act apply in my state?
Only if your state has adopted it into law. Many states still follow their own rent control acts.
Should I get a receipt for the deposit?
Yes. A signed deposit receipt with the amount and refund terms is your proof if there's a dispute later.
Official sources
This guide explains the rules in plain words; it isn't legal or tax advice. Rules change, so check the sources or ask a Chartered Accountant for your situation.