From Live Mint
—Indian exchange control regulations permit an NRI to acquire immovable property in India, other than agricultural land or plantation property or farm house. Any income from letting out this property shall be taxable under the head, income from house property, in the hand of your sister and you, in the proportion of investment made. If rental income is below the taxable threshold, you are not required to file income tax return. A deduction of municipal taxes and standard deduction of 30% is available against rent received. Interest paid for a loan availed for purchase of the property is also available as a deduction against income. For vacant or self-occupied properties, the deduction for interest on loan is restricted to Rs.2 lakh.