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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

DTCP seeks HC nod to conduct flat allotment draw again in Gurugram

3/31/2025 10:03:00 AM

The Department of Town and Country Planning (DTCP) has found that a technical glitch in its software portal led to the faulty allotment of flats in an affordable housing project in Sohna, prompting the department to put the draw on hold. The department had initially withheld the allotment on February 18 after all 708 successful applicants were found to be from Sohna, despite over 51,000 applications being received from various locations. A departmental inquiry conducted by a committee revealed that only 2,200 applicants who had listed Sohna as their address were considered in the draw, while others were excluded due to the software error. Of these, 708 were declared successful. The glitch resulted in the exclusion of thousands of eligible applicants from other locations, violating the affordable housing policy, which does not allow preferential treatment based on residency, officials said. A senior DTCP official confirmed that the faulty draw is likely to be cancelled, but the department is awaiting directions from the Punjab and Haryana High Court. “We have submitted a reply in the court, and since the matter is sub judice, it would not be appropriate to comment further. However, only 2,200 applicants were considered due to the glitch,” the official added. One of the applicants affected by the issue approached the Punjab and Haryana High Court, seeking intervention. In its response to the court, DTCP acknowledged that the software malfunction may have deprived many eligible applicants of a fair chance at allotment. Officials noted that the affordable housing policy does not prioritise residents of a specific town and that the glitch led to an unfair process. To prevent future occurrences, DTCP has initiated a technical audit of the software portal and has halted other upcoming draws until the system is rectified. “Two scheduled draws for affordable housing projects have been put on hold to ensure transparency in allotment,” another official added. On February 18, director of Town and Country Planning, Amit Khatri, ordered a halt to the allotment process and initiated an inquiry into the e-draw system. The Chief Town Planner (IT&M) was tasked with submitting a report within 10 days. The affordable housing policy, launched by the Haryana government in 2016, allows private developers to construct and sell affordable housing units at government-fixed prices, currently ranging between ₹30 lakh and ₹35 lakh. In his order, Khatri noted that the e-draw for Licence No. 235 of 2023, Sector-36, Sohna, was conducted on January 27, 2025, for 51,586 shortlisted applicants. However, the results showed that only applicants from Sohna town were selected, despite the policy not specifying any geographic preference. As a precaution, DTCP has also directed the concerned developer to refrain from demanding further payments from the successful applicants until a final decision is made on the cancellation of the draw. Source : Times of India INDIA

Chandigarh administration announces steep hike in property tax

4/1/2025 10:02:00 AM

Chandigarh: The UT administration announced a substantial increase in property tax rates for both residential and commercial properties in Chandigarh on Monday. Residential property owners will face a threefold increase, while commercial property tax rates have been doubled. These new rates will be effective from April 1. The municipal corporation's (MC) revenue from property tax is expected to increase from Rs 45 crore to 90 crore annually. This marks the first increase in property tax since 2020. Government buildings and properties will continue with unchanged service charges. The notification said properties under the service charges category will maintain the current 3% of annual rateable value for 2025-2026. Despite the MC's opposition to the tax increase, the Chandigarh administration implemented it using special powers under the Punjab Municipal Corporation Act, 1976, after receiving approval from the Punjab governor and Chandigarh administrator. The administration has established three residential zones for tax purposes. The notification specified, "For the assessment year 2025-26, the property tax leviable on residential sites and buildings shall be increased by three times the rates already specified by the Chandigarh administration. For CHB flats, cooperative house building societies, and other residential flats (excluding SCFs) having a total covered area of 500 square feet and above falling within MC limits (irrespective of zones), the existing rate was Re 1 per square foot per annum, which will now be Rs 3 per square foot from 2025-2026 financial year." Revised Tax on Commercial, Industrial, and Institutional Land and Buildings According to the administration's notification, commercial and industrial properties will be charged 6% of the annual rateable value (ARV) for 2025-2026. Service charge category properties will continue at 3% ARV. Government buildings are exempted from property tax but must pay service charges for provided services. Box: Residential Properties Zones Zone-1: Sectors 1 to 19 and 26 to 28 will now pay Rs 7.5 per square yard for vacant plots and Rs 3.75 per square foot for covered area, increased from Rs.2.5 and Rs 1.25, respectively. Zone-II: Sectors 20 to 25, 29 to 38, Manimajra, Industrial Area, SCFs will now pay Rs 6 per square yard for vacant plots and Rs 3 per sq ft for covered area, up from Rs 2 and Re 1, respectively. Zone-III: Sectors 39 to 61, 63, and others will now pay Rs 4.5 per square yard for vacant plots and Rs 2.25 per square foot for covered area, increased from Rs 1.5 and Rs 0.75, respectively. Box: Quotes City Mayor, Harpreet Kaur Babla said, "The proposal to raise property tax rates was presented in the house but faced unanimous rejection from all political parties. While I supported a 1% hike for residential properties and 2% for commercial establishments, the opposition's political manoeuvring led to its rejection. Subsequently, the administration implemented the tax increase by invoking its authority under the Punjab Municipal Act. The residents of Chandigarh now face additional financial burden due to Congress and Aam Aadmi Party's political tactics and lack of cooperation." AAP's spokesperson and councillor, Yogesh Dhingra said, "The substantial increase in rates is excessive and difficult to manage. Residents of Chandigarh face mounting financial pressures from various directions, compelling them to relocate to Punjab, where electricity is provided without cost and high-quality services are available at minimal expense. The collected tax revenue appears to be allocated solely towards paying Municipal Corporation staff salaries, rather than being invested in the city's infrastructure and growth." Chandigarh Congress President, HS Lucky said, "The increase is extraordinarily steep. The BJP, working alongside the Chandigarh Administration, appears poised to burden the city's residents financially. The Congress party had previously cautioned about these surreptitious actions planned by the BJP and Chandigarh Administration. The Congress has pledged to mount a vigorous and comprehensive opposition to this initiative." Source : Times of India INDIA

Gurugram: ED attaches Sidhartha Buildhome's assets worth Rs 95 crore

4/1/2025 10:03:00 AM

The Enforcement Directorate on Monday said it has attached assets worth about Rs 95 crore as part of a money laundering investigation against a Gurugram-based real estate company and its promoter on charges of duping more than 950 homebuyers. The action has been taken against Sidharth Chauhan, promoter of Sidhartha Buildhome Pvt. Ltd. (SBPL), his companies and some other persons, the federal probe agency said in a statement. A provisional order has been issued under the Prevention of Money Laundering Act (PMLA) for attaching land parcels, residential house and commercial building in Gurugram (Haryana), it said. These properties are worth Rs 94.82 crore, acccording to the agency. The company or its promoter could not be contacted for their response on the allegations made by the ED against them. The money laundering case stems from a clutch of FIRs filed by the Economic Offences Wing (EOW) of Delhi Police. The EOW complaints were registered on the basis of complaints of various homebuyers of SBPL projects named Estella and NCR One in Gurugram and it was alleged that the company failed to deliver the homes within the promised timeframe. The accused company and its promoter, according to the ED, collected about Rs 520 crore from more than 950 homebuyers for these real estate projects. Sidharth Chauhan, through SBPL, "diverted" funds collected from the homebuyers to its group companies as unsecured loans and advances for investment in other avenues instead of using the same for completion of the promised homes, the agency alleged. Source : Business Standard INDIA

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