The rental income will form part of the total income and taxed according to the tax slabs currently prevailing.
So, if your other income is Rs 2 lakhs and your rental income for leasing out your property is Rs 2 lakhs, you would have to file income tax returns for Rs 4 lakhs.
The rent proceeds will have to be credited to the NRO account of the NRI. It cannot be credited to the NRE account, unless the person crediting the account is also an NRI and is getting it debited from his NRE account.
Is the rental income taxed in the country of residence?
It's possible that the income could be taxed in the country of residence as well. Remember, that many countries charge income on global income as well. However, if the country of residence has a double taxation avoidance agreement (DTAA) treaty with India then you could avoid paying tax in the country of residence, when filing your returns there. What DTAA means is that you are already taxed in India, so the other nation where you are residing should exempt you from paying taxes.
For example, India and the United States have a double taxation avoidance agreement treaty. Now assume you are a resident of the US and filing your tax returns there. You can show the Indian rental income and then claim an exemption on the Indian rental income while filing your tax returns in the US, because India has signed a double taxation avoidance treaty with the US and your have paid taxes on rental income in India. You certainly cannot escape paying tax on rental income in India, because it's income earned in India.