What Is a Security Deposit?
A security deposit is an advance amount collected by a landlord before a tenant moves in. It protects the landlord against unpaid rent, property damage beyond normal wear and tear, or breach of the rental agreement. It is fully refundable — minus any legitimate deductions — at the end of the tenancy.
In India, security deposits have traditionally ranged from 2 months to 10 months' rent depending on the city and property type. The Model Tenancy Act, 2021 attempts to standardize this with legally enforceable caps.
Security Deposit Limits Under the Model Tenancy Act (2026)
The Model Tenancy Act sets the following maximum deposit caps:
Maximum deposit is 2 months' rent for flats, houses, apartments and villas.
Maximum deposit is 6 months' rent for offices, shops and commercial units.
State laws may override the MTA
The Model Tenancy Act applies only in states that have formally adopted it. States like Maharashtra, Karnataka and Tamil Nadu have their own Rent Control Acts which may allow or restrict different deposit amounts. Always verify the applicable state-level law for your property.
Security Deposit Refund Rules in India
Under the Model Tenancy Act, landlords must refund the security deposit within 30 days of the tenant vacating the property, after deducting any legitimate dues.
Refund process — step by step
- 1 Conduct a joint move-out inspection with the tenant
- 2 Document any damages with photographs and written report
- 3 Collect repair and cleaning invoices within the 30-day window
- 4 Share a written deduction statement with the tenant
- 5 Transfer the balance amount within 30 days
What Can Landlords Legally Deduct from the Security Deposit?
Not every cost can be charged against the deposit. Here is what is allowed and what is not:
✓ Valid deductions
Unpaid rent or outstanding dues
Utility bills left unpaid by tenant
Repair of tenant-caused damage beyond normal wear and tear
Cleaning charges if explicitly stated in the agreement
Replacement of missing fixtures or fittings listed at move-in
✕ Not valid deductions
Normal wear and tear (paint fading, minor scratches)
Repairs the landlord is responsible for under the agreement
Upgrades or improvements not related to tenant damage
Costs not backed by receipts or invoices
Deductions not mentioned or allowed in the rental agreement
How to Handle Security Deposit Disputes
Most deposit disputes happen because of missing documentation — no move-in inspection report, no photographs, no written record of the property's condition when the tenant arrived.
Landlord's dispute-prevention checklist
Conduct a joint move-in inspection and document the property condition in writing
Take dated, timestamped photographs of every room at move-in and move-out
Include deposit amount, refund timeline and deduction rules explicitly in the rental agreement
Provide a written deposit receipt when collecting the deposit
Share a written deduction breakdown with supporting invoices before refunding
Refund within 30 days — late refunds can invite complaints to the Rent Authority
If a tenant disputes a deduction, both parties can approach the Rent Authority under the Model Tenancy Act. The authority can order refunds with interest and impose penalties on landlords who withhold deposits without valid reason.
How Properte.ai Makes Deposit Management Dispute-Proof
Properte.ai handles every step of the deposit lifecycle digitally — so you always have the records to back you up.
Track deposit digitally
Amount, date received and property linked automatically
Auto-calculate refund balance
Deductions applied against deposit with running balance
Store inspection photos
Move-in and move-out photos attached to tenancy record
Generate deposit receipts
Instant digital receipt sent to tenant on collection
Maintain dispute-ready records
All documents and history stored and downloadable anytime
30-day refund reminder
Automated alert keeps you compliant with the MTA deadline
Frequently Asked Questions
What is the maximum security deposit a landlord can charge in India?
Under the Model Tenancy Act, the maximum is 2 months' rent for residential properties and 6 months' rent for commercial properties. State-specific rent control laws may apply instead in some states — always verify the law applicable in your city.
Within how many days must a landlord refund the security deposit in India?
Under the Model Tenancy Act, landlords must refund within 30 days of the tenant vacating, after adjusting legitimate dues like unpaid rent, utility bills or documented repair costs.
What deductions can a landlord make from the security deposit?
Valid deductions include unpaid rent, outstanding utility bills, repair costs for tenant-caused damage, and cleaning charges if stated in the agreement. All deductions must be backed by receipts and invoices. Normal wear and tear cannot be charged.
What happens if a landlord does not refund the deposit in India?
The tenant can file a complaint with the Rent Authority under the Model Tenancy Act. The landlord may be ordered to refund the deposit along with interest and face penalties for non-compliance.
Is a 10-month security deposit legal in India?
A 10-month deposit exceeds the Model Tenancy Act's 2-month cap for residential properties. However, in states with their own rent control laws or where the MTA has not been adopted, higher deposits may be common practice. Check the applicable state law for your property location.