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Difference Between NRE and NRO Bank Account and Their Uses

1/11/2025 4:45:00 PM

India, being home to a large number of Non-Resident Indians (NRIs), offers several banking solutions tailored to their unique financial needs. Two of the most common types of bank accounts available to NRIs are Non-Resident External (NRE) accounts and Non-Resident Ordinary (NRO) accounts. Both serve distinct purposes, with differences in terms of their features, benefits, taxation, and fund management. Understanding the key differences between NRE and NRO accounts is essential for NRIs to manage their finances effectively in India. NRE Account : An NRE account is a type of bank account that allows NRIs to deposit their income earned outside of India. The primary purpose of an NRE account is to manage foreign income in India. The funds in an NRE account are held in Indian Rupees, but the account holder is free to transfer money from abroad into India. The key feature of the NRE account is its repatriability, meaning that both the principal and the interest earned in the account can be transferred back to the NRI’s country of residence, in foreign currency. Features of NRE Accounts: 1. Currency: An NRE account is maintained in Indian Rupees (INR), but deposits are made in foreign currency. 2. Repatriability: The funds in the NRE account can be repatriated back to the NRI’s country of residence. 3. Taxation: The interest earned on an NRE account is completely tax-free in India. Moreover, there is no wealth tax or gift tax imposed on the funds in an NRE account. 4. Joint Account: NRE accounts can be held jointly with another NRI, but not with a resident Indian. 5. Deposits: Only income earned outside India can be deposited into an NRE account. 6. Interest Rates: Banks offer competitive interest rates on NRE accounts, often higher than those offered on regular savings accounts. NRO Account : An NRO account, on the other hand, is meant for NRIs who have income sourced from within India. This could include rent, dividends, pensions, or any other income generated in India. NRO accounts are used by NRIs to manage their income earned in India while keeping it separate from their foreign income. Unlike NRE accounts, the funds in NRO accounts cannot be freely repatriated abroad without limitations. Features of NRO Accounts: 1. Currency: Similar to an NRE account, an NRO account is maintained in Indian Rupees. 2. Repatriability: Funds in an NRO account can only be repatriated to the NRI’s country of residence after fulfilling certain conditions. For instance, only up to USD 1 million per financial year is allowed for repatriation, and the funds must be in compliance with Indian tax laws. 3. Taxation: The interest earned on an NRO account is subject to Indian income tax and is taxed at source. Tax deductions are applicable at the rate of 30% (plus applicable cess), which is deducted at the time of interest accrual. 4. Joint Account: NRO accounts can be held jointly with a resident Indian or another NRI. 5. Deposits: Income earned in India, such as rent, dividends, and other local earnings, can be deposited into an NRO account. 6. Interest Rates: Interest rates on NRO accounts are generally similar to those on regular savings accounts and tend to be lower than those on NRE accounts. Key Differences Between NRE and NRO Accounts 1. Source of Funds: NRE Account: Only income earned outside India can be deposited into an NRE account. NRO Account: Can accept income from India, such as rent, pension, dividends, etc. 2. Repatriability: NRE Account: Both principal and interest can be freely repatriated outside India, and there are no restrictions. NRO Account: Repatriation of funds is limited to USD 1 million per financial year, subject to applicable taxes. 3. Taxation: NRE Account: Interest earned is tax-free in India. No wealth or gift tax is applicable on funds in an NRE account. NRO Account: Interest earned is subject to taxation in India at the rate of 30% (plus applicable cess). Income in the account is also subject to wealth tax. 4. Currency: NRE Account: Funds are held in Indian Rupees, but deposits are made in foreign currency. NRO Account: Funds are also held in Indian Rupees, but deposits can be made from both foreign and Indian sources. 5. Joint Account Holders: NRE Account: Can only be held jointly with another NRI. NRO Account: Can be held jointly with a resident Indian or another NRI. 6. Interest Rates: NRE Account: Typically offers higher interest rates compared to NRO accounts. NRO Account: Interest rates are generally lower than those on NRE accounts. Uses of NRE and NRO Accounts Uses of NRE Accounts: 1. Foreign Income Management: NRIs can use NRE accounts to manage and park their overseas income securely in India. 2. Repatriation: Since both principal and interest can be repatriated, NRE accounts provide a convenient way to transfer money to and from India. 3. Tax Benefits: The tax-free status of interest on NRE accounts makes it an attractive option for NRIs looking to maximize their savings. 4. Remittances to India: NRIs can transfer money from their foreign earnings to India, which can be used for investments, family support, or other purposes in India. Uses of NRO Accounts: 1. Management of Indian Income: NRIs with income sources in India (like rent, pensions, or dividends) should use an NRO account to manage these earnings. 2. Paying Indian Taxes: Since interest on an NRO account is taxable in India, it helps NRIs comply with their tax obligations in India. 3. Limited Repatriation: While repatriation is allowed, the restrictions ensure that NRIs don’t transfer large sums out of the country without due process. Conclusion : Choosing between an NRE and an NRO account depends largely on the nature of an NRI’s income and financial goals. If the NRI’s primary income is sourced from abroad and they seek to enjoy tax benefits, an NRE account is the ideal choice. However, if the NRI receives income from Indian sources, such as rent or dividends, an NRO account is more suitable. Both types of accounts offer unique benefits and play a crucial role in managing finances across borders. By understanding the features and distinctions of these accounts, NRIs can make informed decisions about their banking needs in India. INDIA

Union Budget 2025: Transformative Measures to Boost India’s Real Estate Sector

2/7/2025 11:35:00 AM

The Union Budget for 2025, presented by Finance Minister Nirmala Sitharaman, has set the stage for transformative changes in the Indian real estate sector. With an economy that is rebounding from previous disruptions and a real estate market that continues to evolve, the government’s proposals for the sector are designed to boost growth, enhance affordability, and increase transparency. Here’s an analysis of the key offerings from the Budget 2025 that impact real estate. 1. Enhanced Infrastructure Spending The Budget 2025 has earmarked significant funds for infrastructure development, which is expected to provide a strong impetus to the real estate sector. A focus on upgrading urban infrastructure, including smart cities, affordable housing, and transportation networks, is expected to spur demand for residential and commercial real estate. The allocation of funds for highways, metros, and regional connectivity projects will improve urban mobility, making suburban areas more accessible and desirable. This, in turn, will help in the growth of satellite towns, creating new hubs of economic activity. The announcement of the establishment of 100 new industrial corridors is another important feature, which will contribute to the growth of real estate in these regions. By investing in these infrastructure developments, the government aims to boost both residential and commercial real estate activity, ensuring balanced growth across the country. 2. Affordable Housing Boost In Budget 2025, the government has reaffirmed its commitment to affordable housing, continuing the momentum built through the Pradhan Mantri Awas Yojana (PMAY) and other housing initiatives. With a focus on increasing the availability of low-cost housing, the government has allocated substantial funding for the development of affordable homes in both urban and rural areas. An important highlight is the introduction of tax incentives for developers who focus on affordable housing projects. Developers will now be eligible for additional benefits if they incorporate energy-efficient measures into their projects, helping reduce costs for both builders and end-users. The government has also proposed to extend the tax holiday for affordable housing projects by another five years, allowing developers more time to avail of tax exemptions and making housing more affordable for the middle and lower-income segments. Moreover, the reduction in GST rates for the construction of affordable housing and new incentives for construction in Tier 2 and Tier 3 cities will further encourage investment in these areas. This will not only make housing more affordable but will also address the ongoing housing shortage in rural and suburban regions. 3. Incentives for Green Real Estate In line with global sustainability trends, Budget 2025 places a significant emphasis on promoting green buildings and eco-friendly real estate projects. Real estate developers are being incentivized to adopt green construction techniques through a range of tax benefits. These include exemptions from certain taxes for developers who incorporate renewable energy solutions, water conservation systems, and sustainable materials in their projects. The government has also announced the introduction of a new "Green Building Fund," which will provide financial support to projects that meet environmental standards. These steps are expected to encourage real estate developers to adopt green technologies and reduce the carbon footprint of new developments. This is also likely to appeal to eco-conscious buyers, further boosting the demand for sustainable residential and commercial properties. 4. Digital Transformation in Real Estate One of the most progressive measures announced in the Budget is the digital transformation of the real estate sector. The government is pushing for the adoption of technology in the real estate space, which includes the digitization of property records, online registration systems, and the creation of a central registry for real estate transactions. This will help curb property fraud, streamline the buying and selling process, and increase transparency in the sector. Furthermore, the government has announced the creation of a digital platform for real estate transactions where buyers, sellers, and developers can engage in real-time transactions and view available properties through virtual reality tools. These measures aim to simplify the real estate transaction process, making it easier for buyers and sellers to interact. Additionally, the launch of a National Data Center for Real Estate is expected to help better manage housing data, land records, and regulatory information, enabling smoother project approvals and reducing bureaucratic delays. 5. Tax Reforms for Home Buyers and Developers Tax relief measures for both developers and homebuyers have been an important part of the Budget’s offerings. A key proposal is the extension of the Rs 2 lakh tax deduction on home loan interest payments, which was initially set to expire in 2025, for another three years. This will provide a significant boost to home buyers, especially those looking to purchase their first homes. For developers, the Budget proposes to extend the capital gains tax exemption on reinvested profits from the sale of residential property for another two years. This provides an incentive for individuals to reinvest the proceeds from the sale of their properties into new real estate ventures, stimulating liquidity and development in the sector. Another notable reform is the establishment of a Real Estate Investment Trust (REIT) fund dedicated to promoting investment in rental housing, offering an attractive avenue for investors to participate in the rental property market. 6. Housing for All by 2030 Aligned with its vision for inclusive growth, the government has laid out a roadmap for achieving "Housing for All" by 2030. A significant portion of the Budget allocation for the real estate sector is dedicated to urban housing schemes, especially for economically weaker sections (EWS). A particular focus is being placed on rural housing, with provisions made to ensure the availability of safe and affordable housing in less developed areas. The announcement includes the development of 10 million new houses under the PMAY for rural areas, addressing the housing needs of millions of families. 7. Support for Commercial Real Estate Commercial real estate, particularly in the office, retail, and hospitality sectors, is also expected to benefit from the Budget 2025 provisions. The proposal to lower the GST rate for office spaces and retail outlets is expected to increase demand for these properties. The establishment of business hubs, supported by improved transportation connectivity and tax incentives, will create opportunities for the commercial sector to expand and diversify. Conclusion The Union Budget 2025 is a game-changer for the Indian real estate sector. With a clear focus on infrastructure, affordable housing, sustainability, and digital transformation, the government has laid a strong foundation for growth. The tax incentives, focus on green real estate, and plans for enhancing transparency in property transactions are poised to drive investment and improve affordability. As these initiatives come to fruition, the real estate market in India is set to witness positive and sustained growth in the coming years, contributing significantly to the economy and the well-being of millions of citizens. INDIA

India’s Economic Growth Projections For 2025

2/7/2025 11:37:00 AM

The annual budget of a country is a critical tool for economic management, influencing everything from fiscal policy to national development. For 2025, India’s Union Budget is expected to present ambitious projections aimed at fostering growth amidst a complex global environment, addressing domestic challenges, and capitalizing on emerging opportunities. The economic growth outlook for 2025 is especially important as it will lay down the policy and fiscal foundations for the nation's progress in the next phase of economic development. Economic Growth Forecast The Indian economy is projected to grow at a rate of 6-7% in 2025, according to initial estimates. This growth rate reflects the government's efforts to strengthen macroeconomic stability while supporting long-term structural reforms. The growth is expected to come from multiple sectors, including manufacturing, services, agriculture, and exports. However, the road to achieving this growth is fraught with challenges that will need careful management in terms of policy intervention, fiscal planning, and structural reforms. Key Factors Influencing Growth 1. Domestic Consumption and Investment: India’s economy is heavily driven by domestic consumption, which has been growing steadily in recent years. A growing middle class, rising disposable incomes, and urbanization trends are expected to fuel consumer demand, thereby contributing to economic growth. The government's focus on infrastructure development through the "Gati Shakti" program and the National Infrastructure Pipeline (NIP) is likely to support private sector investment in various sectors like construction, logistics, and real estate. With an increased focus on boosting manufacturing and promoting "Make in India" initiatives, India can expect a surge in investments in the manufacturing sector, contributing to job creation and GDP growth. 2. Global Trade and Exports: The growth projection is also reliant on India’s ability to capitalize on global trade opportunities. With the rise of China-centric disruptions, such as the US-China trade war and the global pivot to diversifying supply chains, India stands at a unique position to tap into international markets. The government’s focus on free trade agreements (FTAs) with key markets like the European Union, the UK, and Australia will strengthen the nation's trade performance. Export-led growth, especially in IT services, pharmaceuticals, textiles, and chemicals, will be crucial in meeting the growth targets. 3. Inflation Control: The Reserve Bank of India’s (RBI) monetary policy will also play a significant role in shaping growth projections. Inflation control is critical for maintaining purchasing power and fostering confidence among investors and consumers. Though inflation is expected to remain within the RBI’s target range of 4%, external factors such as global commodity prices, food prices, and oil prices will continue to affect domestic inflation. The government’s efforts to ensure food security, provide subsidies for essential goods, and strengthen supply chains will also be vital in controlling inflationary pressures. 4. Structural Reforms: Over the last few years, India has introduced several structural reforms aimed at improving the ease of doing business, boosting competitiveness, and attracting foreign direct investment (FDI). Reforms such as the Goods and Services Tax (GST), the Insolvency and Bankruptcy Code (IBC), and initiatives to formalize the labor market have been positive steps toward creating a business-friendly environment. However, the effectiveness of these reforms in achieving higher economic growth will depend on their proper implementation and continuous streamlining of regulations to reduce bureaucratic bottlenecks. 5. Technological Advancements and Digital Economy: The digital economy is another driving force for India’s economic growth. With the rapid adoption of digital technologies in sectors such as fintech, e-commerce, and telecommunications, India is poised to become a global leader in technology-driven growth. The government’s emphasis on artificial intelligence, blockchain, and data privacy will encourage innovation and improve productivity across various industries. Digital infrastructure investments, such as the expansion of 5G networks and internet penetration, are expected to further enhance the digital economy and create new opportunities for growth. 6. Employment Generation: The budget for 2025 will likely focus on employment generation, especially for the youth. The Government's push for Skill India and the Atmanirbhar Bharat (self-reliant India) programs will focus on training individuals and creating employment in non-farm sectors, including renewable energy, electric mobility, and the green economy. Large-scale projects in infrastructure and renewable energy are expected to be significant contributors to job creation, thus addressing the issue of unemployment. Risks and Challenges Despite optimistic growth projections, India’s economy faces several risks and challenges that may temper its growth prospects: Geopolitical Tensions: India’s economic growth is highly dependent on the global landscape, which remains unpredictable. Tensions in the Middle East, supply chain disruptions, and the possibility of an economic slowdown in major developed economies (such as the US and EU) could affect trade, exports, and foreign investments. Climate Change: As one of the world’s most vulnerable countries to climate change, India must contend with the increasing risks posed by extreme weather events. Budgetary measures to address climate adaptation, renewable energy transitions, and sustainable agricultural practices will be crucial. Debt Sustainability: The fiscal deficit and the public debt burden are important considerations in the upcoming budget. A key aspect of the growth projection will depend on maintaining a balanced fiscal approach, ensuring that borrowing does not exceed sustainable limits while providing sufficient funds for social and developmental programs. Conclusion India's projected economic growth of 6-7% in 2025 reflects the government's strategic efforts to drive inclusive and sustainable development. The growth outlook hinges on key factors such as domestic consumption, investments, global trade, inflation control, and technological advancements. While the country faces challenges, such as geopolitical risks and inflationary pressures, the focus on structural reforms, digital infrastructure, and employment generation positions India to harness new opportunities. By taking decisive action on the risks and challenges and continuing its momentum of reforms, India has the potential to achieve its growth targets, positioning itself as a leading global economy in the coming years. In sum, the Budget 2025 will play a pivotal role in setting the course for India's economic trajectory in the years ahead, focusing on balancing growth with sustainability and inclusivity. INDIA

LATEST NEWS

Residents of DLF areas in Gurugram protest against demolition orders

4/24/2025 10:17:00 AM

Gurgaon: Residents of DLF areas on Wednesday staged a protest seeking govt intervention in preventing demolition of their homes during chief minister Nayab Singh Saini's visit to a grievance redressal meeting in Civil Lines. The CM, who interacted with the protesters and accepted their memorandum, also met with representatives of all five DLF phases at the PWD rest house after the meeting and assured them that their issues would be addressed. Soon after, teams from CID visited the DLF phases to assess the on-ground situation. They are to submit a detailed report to the CM within two days, sources confirmed. Protesters, who raised concerns over the recent sealing notices issued by DTCP in view of the alleged illegal constructions on their properties, said authorities were targeting genuine homeowners alongside commercial violators. The DTCP action followed a Punjab and Haryana high court order directing the department to act against unauthorised constructions and illegal commercial activities in DLF areas. Meanwhile, protesters said some among them had invested their life savings to purchase EWS category plots and build homes on them. Construction rules may have been violated, they said, but the govt should regularise the houses by issuing orders for some modifications instead of demolition. Vipin Kumar of DLF-2 said, "We are in stress due to these notices. We are not criminals—we're ordinary families. If the govt intervenes, thousands of people here can be saved from losing their homes." A DLF-1 resident Baljeet Rathee said, "We built our homes with our hard-earned savings. We never imagining that one day we'd face demolition notices. All we ask for is the govt to give us a chance to rectify the irregularities and regularise our properties." Floors over the permissible limit were built in some cases, residents said, but if the govt revised the rules, they would remove the illegal portions. Meanwhile, cabinet minister Rao Narbir Singh also commented on the issue, stating that while the govt would explore all possible avenues of relief for the residents, court orders must be followed. "Action will be taken against those who have built seven-storey houses. I am firmly against encroachments," he said. Source : Times of India INDIA

Greater Noida, pay stamp duty at time of booking flats now

4/25/2025 10:07:00 AM

Noida: Homebuyers will now have to pay stamp duty for a property upfront as Greater Noida Authority has made it mandatory for builders to register flats at the time of booking in all new housing projects, rather than upon project completion. The new rule, aligned with Section 13 of the Real Estate (Regulation and Development) Act (RERA), 2016, also requires builders to execute a registered bipartite ‘agreement to sell' with buyers once 10% of a flat's cost is paid, with applicable stamp duty based on the property's value. A separate ‘possession deed' is to be signed on a Rs 100 stamp paper at the time of the flat's handover. Stamp duty on a property is usually around 6% to 7% of the total cost of a flat. While homebuyers, so far, paid stamp duty once their property was handed over by builders, they will now need to pay the money right at the time of booking. With several group housing projects stalled over legacy dues in Greater Noida, some for over a decade, homebuyers have been struggling to get possession of their properties even after partial or full payment. Developers, too, flagged that the new policy does not clarify if govt would refund the stamp duty in case a buyer cancels the booking. It may lead to legal disputes if buyers default on payment, they said. The Authority, which adopted the rule in its 136th board meeting last Oct 27, however, hopes to protect homebuyers against multiple transfers of unregistered units besides helping mop up stamp duty quicker. "Between the start of its construction and final handover, a flat is usually sold or transferred to different buyers. The Authority, or govt, comes in only when a developer obtains occupancy and completion certificates for a project. We have seen that despite permission, many flats are not registered, at least not at the expected pace. The new rule is expected to protect buyers' interests and improve revenue collection," an official said. Last Nov, the Noida Authority implemented a similar rule for registration of sale agreement at the time of initial purchase of a flat. YEIDA, too, has a similar rule in place. On Sept 9, 2024, UP govt directed authorities to enforce RERA guidelines that bar developers from accepting more than 10% of the unit cost without a registered sale agreement. "This is completely impractical as it requires a builder to pay 100% stamp duty on an agreement to sale, and not on possession. There is also no clarity on what happens in case a buyer cancels the booking. On average, 20-25% of flat bookings are cancelled for reasons like death, transfer, financial constraints or simply whim. In such cases, will the stamp duty be refunded? Without any clarity on this, such an order is not feasible," Manoj Gaur, CREDAI's NCR chapter president, told TOI. Gaur also questioned the insistence on collecting stamp duty upfront. "For all flats that are handed over, stamp duty is eventually paid. So why this insistence on collecting it upfront? In many other states, initial registration can be done with just Rs 5,000 to Rs 10,000. A similar approach can be adopted here." Hawelia Group managing director Nikhil Hawelia said the new rule could lead to a rise in property disputes. "If a homebuyer defaults on payments after registration, what recourse will developers have? The property would already be registered in the buyer's name, complicating matters further," he said. Hawelia also raised concerns about its impact on non-resident Indian (NRI) buyers. "NRIs may not be able to travel for registration at the initial stage, which could discourage them from investing. This decision could have a negative impact on the real estate market overall." Abhishek Kumar, president of Noida Extension Flat Owner Welfare Association, also called the decision arbitrary and unjust, saying it will only add to the financial burden on homebuyers. "There is no certainty about when possession will be given, yet buyers are being asked to pay full stamp duty upfront. How is that fair? A more balanced approach instead would be to execute an agreement to lease on just 10% of the property's cost." Kumar also criticised the Authority's decision not to consult stakeholders, including homebuyers, before rolling out such a major change. "There are several flaws in the current order, and it's the buyers who will suffer the consequences," he said. Source : Times of India INDIA

Haryana freezes circle rates amid soaring property prices

4/25/2025 10:08:00 AM

Gurgaon: Property prices in the city and other parts of Haryana are expected to remain stable and people will not have to pay extra money at the time of registration for stamp duty. The Haryana govt has decided not to make any increase in the circle rate — in a move that is likely to stabilise the overheated property market in the city and adjoining areas. Chief minister Nayab Singh Saini has rejected the proposal of the revenue department to revise the circle rate. So now, the old circle rate will remain applicable. The circle rates were last increased in Dec 2024 by 10-30%, which was effective till March 2025. The decision — set to "boost buyer confidence and promote broader participation across housing segments", as per realtors — comes at a time when owning a house or flat in the city has gone out of the reach of common people due to unaffordable pricing. Residential plots cost around Rs 2 lakh to Rs 3 lakh per square yard and the cost of flats starts from Rs 2.5 crore to Rs 3 crore. The govt revises circle rates twice a year, but it can use its special power to change circle rates at any time or stall it as long as it wants. Govt officials said it has been decided not to increase the circle rates in 2025. The circle rates are already on the higher side in the city and Faridabad, and any further increase could have angered the masses. Founder & chairman of Signature Global (India) Ltd. Pradeep Aggarwal hailed the govt's decision to keep circle rates unchanged, calling it a timely move that ensures stability in the property market. "This decision offers relief to homebuyers by keeping registration costs in check, particularly benefiting active markets like Gurgaon. It will help sustainable growth and a balanced real estate ecosystem, ultimately supporting ongoing developments and reinforcing momentum in the housing sector." Govt officials said, in March 2024, the circle rate could not be revised due to the Lok Sabha election. After the election, the rate could not be revised as the date for the assembly election was announced. The new govt was formed in Oct and the new circle rate was implemented in Dec 2024. An official of the revenue department said, "We have not sought any report from the districts about revision in rates." Source : Times of India INDIA

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