Key takeaways
Deposit amounts vary by city and are set by the agreement unless state law limits them.
The Model Tenancy Act, 2021 suggests a cap of two months' rent for residential premises, where states adopt it.
Deductions should be limited to unpaid dues and damage beyond normal wear and tear.
A move-in inventory with photos is the best protection for both sides.

The security deposit is the most common source of disputes between landlords and tenants. Clear terms at the start and good records at move-in and move-out prevent most problems.

How much is normal?

Practice varies by city and market. Some cities expect two or three months' rent; others have historically expected much more. The agreement decides the amount unless a state law sets a limit.

What the Model Tenancy Act suggests

The Model Tenancy Act, 2021 proposes a security deposit of up to two months' rent for residential premises, refundable at the time of taking back possession after adjusting liabilities. It is a model law; it applies only where a state adopts it. See Model Tenancy Act explained.

What deductions are fair?

Fair to deduct	Not fair to deduct
Unpaid rent	Normal wear and tear
Unpaid utility bills and maintenance	Fading of paint after years of use
Damage beyond normal use	Repairs that were the landlord's responsibility
Missing items from the inventory	Pre-existing damage recorded at move-in
Agreed professional cleaning, if in the agreement	Upgrades the landlord wants

Protecting your deposit as a tenant

Pay the deposit by bank transfer and get a receipt.
Record it in the agreement.
Do a move-in inspection with dated photos and an inventory.
Keep rent and bill receipts.
Report damage promptly in writing.
Give notice as per the agreement.
Do a joint move-out inspection and request the refund in writing.

Protecting yourself as a landlord

Use a clear agreement with deposit terms.
Record condition and inventory at move-in.
Inspect periodically with notice.
Itemise deductions with evidence at move-out.
Refund the balance promptly.

If the deposit is not returned

Send a written request listing the amount due.
If unresolved, send a legal notice.
Depending on the amount and law, approach the rent authority (where the Model Tenancy Act is adopted), consumer forum or civil court.

Adjusting the last months' rent

Tenants sometimes stop paying the final months and ask the landlord to adjust the deposit. Do this only with written agreement, since it can cause disputes if there are damages.

Frequently asked questions

What is the maximum security deposit for rent in India?

There is no single national limit. The Model Tenancy Act, 2021 suggests up to two months' rent for residential premises, but it applies only where a state adopts it.

Can a landlord deduct painting charges from the deposit?

Only if the agreement provides for it or damage goes beyond normal wear and tear. Routine repainting after normal use is generally the landlord's cost.

How soon should the deposit be refunded?

The agreement should state the timeline. Under the Model Tenancy Act, it is refundable when the landlord takes back possession, after adjusting liabilities.

Can I use my deposit as the last month's rent?

Only with the landlord's written agreement.

Related HomeAcross guides

Official sources and further reading

This guide is general information, not legal, tax or financial advice. Rules, rates and procedures change; confirm current requirements with the relevant authority or a qualified professional before you act. Read our editorial policy.

Security Deposits in India: Fair Terms for Tenants and Landlords

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