Furnished Apartment Lease (India)

In the Indian rental market, the degree of furnishing in an apartment is a critical factor affecting the rental price and the lease terms. There is no statutory definition in Indian law, but market practice distinguishes between three levels:

Fully Furnished: A fully furnished apartment typically includes all furniture (beds, wardrobes, dining table, chairs, sofa set, study table, centre table, curtains and rods, shoe rack), all major electrical appliances (air conditioner/s, refrigerator, washing machine, microwave oven, television/s, geyser, exhaust fans), kitchen equipment (gas stove, chimney, basic utensils), and often smaller items (iron, mixer grinder). Rents for fully furnished apartments are typically 20%–40% higher than unfurnished equivalents in the same location. The security deposit for a fully furnished apartment is also typically higher — often 3–5 months' rent — to cover the risk of damage to the furnishings. Semi-Furnished: A semi-furnished apartment typically includes basic fixtures such as wardrobes (built-in), curtain rods, and sometimes a few appliances (geyser, one air conditioner) but does not include furniture or all appliances. The tenant is expected to bring their own furniture and most appliances. Rents for semi-furnished apartments are typically 10%–20% higher than unfurnished equivalents.

Handling liability for damage to furnished items is one of the most common sources of disputes in Indian furnished apartment leases. A well-drafted lease should address this comprehensively. Inventory at Commencement: Both landlord and tenant should sign an inventory schedule at the time of handing over possession, noting the condition of each item. Photographs or a video walkthrough should be taken and acknowledged by both parties. For electrical appliances, the working condition at commencement should be tested and noted. Normal Wear and Tear: The tenant is not liable for normal wear and tear — this includes minor scuffs and marks on walls from normal use, gradual deterioration of furniture from regular use, fading of curtains from sunlight, and natural depreciation of appliances over time. The landlord cannot deduct the cost of normal wear and tear from the security deposit. Damage Beyond Normal Wear: The tenant is liable for damage that goes beyond normal wear and tear — this includes broken furniture, cracked appliances, burns on furniture or flooring, major stains on upholstery or carpets, broken window panes, and damage caused by negligent or deliberate acts. Annual Maintenance Contracts (AMCs): Air conditioners and other major appliances may require annual servicing. The lease should specify whether the landlord or tenant is responsible for maintaining existing AMCs and for the cost of servicing during the tenancy.

Renting a furnished apartment in India has specific income tax implications for the landlord, particularly in relation to the characterisation of the rental income and the deductibility of expenses. Characterisation of Income: Rental income from a residential apartment (whether furnished or unfurnished) is generally assessed as 'Income from House Property' under Sections 22–27 of the Income Tax Act 1961, subject to the standard deduction of 30% for repairs and maintenance. However, if the landlord also provides services with the furnished apartment (e.g., housekeeping, linen change, concierge services — making it more like a serviced apartment), the income may be characterised as 'Business Income' rather than 'Income from House Property.'

Furnishings: The cost of furnishings (furniture, appliances) used in a rental apartment is a capital expenditure. The landlord cannot deduct this directly from rental income (under the 'Income from House Property' head) but may claim depreciation if the income is assessed as 'Business Income.' Under the Income from House Property provisions, only the 30% standard deduction and home loan interest are deductible. TDS under Section 194-IB: If the monthly rent paid by the tenant exceeds ₹50,000, the tenant (if an individual/HUF) must deduct TDS at 5% under Section 194-IB. For a furnished apartment with a high rent, this threshold is easily exceeded. The landlord should provide their PAN to facilitate correct TDS deduction.

The inventory schedule attached to a furnished apartment lease in India is a critical document that protects both the landlord and the tenant. It should be comprehensive, accurate, and signed by both parties at the time of possession. The schedule should include:

Bedroom(s): For each bedroom — number and type of beds (single/double/queen/king), mattresses (make and size), bed linen (sheets, pillow covers, blankets), wardrobe/cupboard (number of shelves, drawers, and mirror condition), study table and chair, bedside tables and lamps, air conditioner (make, model, capacity in tons, remote control), ceiling fan, curtains (number of panels and condition), curtain rods. Living Room: Sofa set (number of seats and material), centre table, side table, TV unit, television (make, model, screen size), DTH set-top box (if any), carpet, curtains and rods, decorative items (if included). Dining Area: Dining table and chairs (number), crockery unit or sideboard. Kitchen: Modular kitchen cabinets and countertop condition, gas stove (number of burners), chimney (make, working condition), refrigerator (make, model, capacity, working condition), microwave oven (make, model, working condition), RO water purifier (if installed, service date), mixer grinder, exhaust fan. Bathroom(s): Geyser (make, model, capacity), shower fittings condition, sanitaryware condition (WC, washbasin, bathtub if any), exhaust fan. Laundry: Washing machine (make, model, capacity, working condition), dryer (if any).

A Furnished Apartment Lease (India) does not legally require a lawyer in India, and individuals and businesses may draft and execute the document independently. The Transfer of Property Act, 1882 does not mandate legal representation for the creation or signing of this type of document. However, seeking independent legal advice from a qualified India lawyer is recommended for transactions involving substantial financial value, complex regulatory requirements, or cross-border elements where multiple legal jurisdictions may apply. A lawyer can verify that the document complies with all applicable statutory requirements, identify potential risks specific to the transaction, and confirm that the terms adequately protect the interests of all parties involved. The Supreme Court of India and the High Courts have jurisdiction over disputes arising from this type of document. Professional legal review is particularly advisable where the document will be submitted to government agencies or used as evidence in legal proceedings.