Quote From:http://www.tribuneindia.com/2010/20100612/real.htm
"The rental income from a commercial property will be credited to NRO account. It cannot be credited to NRE account. The deposits made in NRE account are repatriable and carry a low rate of interest as against this NRO account is basically a rupee account in which the income earned in India is required to be deposited. The payments in rupees can be made out of such an account.
You would be entitled to claim a deduction of municipal taxes paid, interest paid/payable on loan raised for buying the commercial property and a standard deduction of 30 per cent to cover repair and maintenance expenses. The resultant figure would be added to your other income arising in India so as to arrive at the total taxable income. "