Rental yield is the most quoted and least carefully calculated number in Indian real estate. The headline figure you see in reports and listings is almost always the gross yield: annual rent divided by property price. It is useful for comparing cities. It is not what lands in your bank account.

This guide shows the full method, from gross to net to post-tax, using ANAROCK's latest city averages as the starting point for three worked examples. The cost assumptions are ours, stated openly so you can replace them with the figures for the specific home you are considering.

The three yields, defined

  • Gross yield = annual rent ÷ purchase price. The market's shorthand.
  • Net yield = (annual rent − vacancy − owner-borne running costs) ÷ total acquisition cost, where acquisition cost includes stamp duty, registration and any other one-time costs you paid to own the home.
  • Post-tax net yield = net yield after income tax on the rent.
  • Rule of thumb: if two homes are being compared, compare them on the same definition. A 4% gross yield in one city and a 3% net yield in another tell you nothing until both are on one basis.

Where city yields stand: ANAROCK's Q2 2026 data

In an August 2026 analysis covering 2019 to Q2 2026, ANAROCK Research reported average residential rental yields rising in every major city it tracks. The figures relevant to Property Point's markets, as reported by Business Today and Upstox:

  • Bengaluru: 4.6% in Q2 2026, up from 3.6% in 2019; average capital value about ₹9,450 per sq ft.
  • Gurugram: 4.3%, up from 3.5%; average capital value about ₹13,350 per sq ft.
  • Chennai: 3.25%, up from 2.7%; average capital value about ₹7,250 per sq ft.
  • These are city-wide averages. Luxury homes in prime micro-markets often trade at higher prices per sq ft, so their yields can differ meaningfully from the average. Use comparable rents for the exact building where you can.

Our cost assumptions (replace with your own)

To keep the three cities comparable, every example uses a 1,500 sq ft apartment priced at ANAROCK's city average, rented at ANAROCK's city yield, and the same running-cost assumptions. They are illustrative, not market data:

  • Maintenance paid by the owner: ₹5 per sq ft per month (₹90,000 a year). In many societies tenants pay this; if yours does, your net rises.
  • Vacancy: one month a year.
  • Brokerage: half a month's rent a year (one month every two years).
  • Repairs, painting and insurance: half a month's rent a year.
  • Property tax: ₹25,000 (Bengaluru), ₹20,000 (Gurgaon), ₹15,000 (Chennai) a year, purely as placeholders.
  • Statutory acquisition cost: about 7.6% in Bengaluru (5% stamp duty, 2% registration after the 31 August 2025 hike, plus cess, per KS&K and Deccan Herald); 7% stamp duty plus a registration fee capped at ₹50,000 in Gurgaon for a male buyer (Godrej Capital); 11% in Chennai (7% stamp duty plus 4% registration, per Square Yards).

Worked example: Bengaluru

  • Price: 1,500 sq ft × ₹9,450 = about ₹1.42 crore. All-in cost with ~7.6% statutory charges: about ₹1.53 crore.
  • Gross rent at 4.6%: about ₹6.52 lakh a year (about ₹54,300 a month). Gross yield on all-in cost: about 4.3%.
  • Less maintenance ₹90,000, vacancy ₹54,300, brokerage ₹27,200, repairs ₹27,200, property tax ₹25,000.
  • Net operating income: about ₹4.28 lakh. Net yield on all-in cost: about 2.8%.

Worked example: Gurgaon

  • Price: 1,500 sq ft × ₹13,350 = about ₹2.00 crore. All-in cost with 7% stamp duty and ₹50,000 registration: about ₹2.15 crore.
  • Gross rent at 4.3%: about ₹8.61 lakh a year (about ₹71,800 a month). Gross yield on all-in cost: about 4.0%.
  • Less maintenance ₹90,000, vacancy ₹71,800, brokerage ₹35,900, repairs ₹35,900, property tax ₹20,000.
  • Net operating income: about ₹6.08 lakh. Net yield on all-in cost: about 2.8%.

Worked example: Chennai

  • Price: 1,500 sq ft × ₹7,250 = about ₹1.09 crore. All-in cost with 11% statutory charges: about ₹1.21 crore.
  • Gross rent at 3.25%: about ₹3.53 lakh a year (about ₹29,500 a month). Gross yield on all-in cost: about 2.9%.
  • Less maintenance ₹90,000, vacancy ₹29,500, brokerage ₹14,700, repairs ₹14,700, property tax ₹15,000.
  • Net operating income: about ₹1.90 lakh. Net yield on all-in cost: about 1.6%.
  • Why Chennai falls furthest: a fixed maintenance assumption weighs more against a lower rent, and the 11% statutory cost raises the denominator. If the tenant pays maintenance, the Chennai net yield rises to roughly 2.3%.

Then comes tax

Rent is taxed as income from house property. Under the Income-tax Act, 2025, section 22 allows a standard deduction of 30% of the annual value, plus interest on borrowed capital, per the department's section listing and TaxHeal's commentary. Municipal taxes actually paid reduce the annual value first. For a let-out home, interest on a home loan can be set against the rent even under the new tax regime, but explainers such as IIFL Home Loans note that any resulting loss cannot be set off against salary under that regime.

Illustration for a buyer with no loan, taxed at 30% plus 4% cess: the Bengaluru example's taxable income is about ₹4.01 lakh (rent less vacancy less property tax, less 30%), tax about ₹1.25 lakh, and post-tax net yield about 2.0%. Gurgaon comes to about 2.05% and Chennai about 1.0% on the same basis. NRIs should also expect the tenant to deduct TDS on rent paid to a non-resident; we cover that separately.

What the numbers are really telling you

  • In all three cities, a 3-5% gross yield becomes roughly 1-3% post-tax and post-cost for an all-cash buyer. Residential property in these markets is primarily a capital-appreciation and lifestyle asset, with rent as a contribution, not the return.
  • Statutory acquisition cost is a sunk cost that takes years of rent to recover. In Chennai, 11% equals more than three years of gross rent at the city average.
  • The biggest controllable lever is vacancy. One extra empty month a year costs as much as a year of repairs.
  • Who pays maintenance is negotiated, not fixed. Getting the tenant to pay it is worth 0.5-0.8 percentage points of net yield in these examples.
  • Compare against your alternative. A taxable fixed deposit or a REIT is a better benchmark for the income component than another flat.

A template for the specific home you are considering

  • Price: the all-in agreement value, including parking and club charges.
  • Statutory costs: stamp duty, registration and cess for that state.
  • Other one-time costs: legal fees, brokerage on purchase, furnishing if you plan to let furnished.
  • Expected rent: from at least three recent lease comparables in the same building or the nearest equivalent, not from asking rents.
  • Owner-borne running costs: maintenance (unless the tenant pays), property tax, insurance, repairs, brokerage on re-letting.
  • Vacancy: one month a year is a reasonable starting assumption in a liquid micro-market; use more for large or highly specified homes with a smaller tenant pool.
  • Tax: your marginal rate, applied after the 30% standard deduction and any interest on a loan for the let-out home.

How a loan changes the picture

The examples above assume an all-cash purchase. With a loan, the yield on your own equity can look very different. Interest on a loan for a let-out home is deductible against the rent, which reduces tax; but the interest itself is a cost that, at current home loan rates, typically exceeds the net yields shown above. In plain terms, at a gross yield of 3-5% and a loan rate well above that, a leveraged rental usually runs at a cash loss each year, with the investor relying on capital appreciation to make the return.

That can still be a rational decision, particularly in markets with strong long-run price growth. ANAROCK's data shows Gurugram capital values up about 117% and Bengaluru about 90% between 2019 and Q2 2026. But it should be a conscious bet on appreciation, not a belief that rent will cover the EMI.