NRIs can pay for property in India by inward remittance or from an NRE, FCNR(B) or NRO account. All three are allowed under FEMA, but they are not equal: money paid from abroad or from NRE and FCNR(B) accounts is treated as foreign exchange and supports full repatriation later, within limits, while NRO funds are rupee money that can only go back under an annual cap. Choosing the right route at purchase saves trouble when you sell.
Key takeaways
- Allowed payment routes: inward remittance through banking channels, or debit to NRE, FCNR(B) or NRO accounts.
- Not allowed: foreign currency cash or traveller’s cheques.
- Payments from abroad or from NRE/FCNR(B) support repatriation of sale proceeds up to the amount paid, for up to two residential properties.
- NRO funds can go abroad only within USD 1 million per financial year, after tax and paperwork.
- Keep every remittance advice, bank statement and receipt; they are your proof at sale time.
The three accounts in one table
| Feature | NRE account | NRO account | FCNR(B) deposit |
|---|---|---|---|
| Currency | Indian rupees | Indian rupees | Foreign currency |
| Source of funds | Money earned abroad | Income in India (rent, pension, dividends) and remittances | Money earned abroad |
| Repatriation | Freely repatriable | Within USD 1 million per financial year | Freely repatriable |
| Interest taxed in India? | Generally exempt for eligible NRIs | Taxable, with TDS | Generally exempt for eligible NRIs |
| Type | Savings or term deposit | Savings or term deposit | Term deposit only |
| Use for property purchase | Yes | Yes | Yes (on maturity or premature closure) |
Interest exemption and TDS rules sit in the Income-tax Act, 2025 from 1 April 2026, which renumbered the old provisions. Your bank’s NRI desk will confirm current treatment.
Why the payment route matters when you sell
Under FEMA, when an NRI sells property bought in line with the rules, the sale proceeds can be repatriated up to the amount originally paid in foreign exchange (including payments from NRE or FCNR(B) accounts and loan repayments made from those sources). For residential property, this facility is limited to not more than two properties. Anything beyond that, including capital appreciation, is credited to your NRO account and can be sent abroad within the USD 1 million per financial year limit.
So if you paid ₹80 lakh from your NRE account for a flat and later sell it for ₹1.1 crore, the ₹80 lakh can normally be repatriated under the purchase-cost route, and the balance goes through the NRO route after tax. These figures are purely illustrative. Our guide to repatriating property sale proceeds covers the paperwork.
Which account to use for which payment
- Booking amount and instalments: Pay from your NRE account or by direct remittance where you want to repatriate later. Ask the seller or builder to issue receipts showing the account debited.
- Stamp duty and registration fee: These can be paid from any of your Indian accounts. In Tamil Nadu, stamp duty and registration fee are calculated on the higher of guideline value or sale value; check current rates on TNREGINET.
- TDS you deduct: If you buy from a resident seller, you deduct TDS and deposit it with the government. If the seller is also an NRI, non-resident TDS applies at much higher rates.
- Home loan EMIs: Can be paid from NRE, NRO or FCNR(B), by inward remittance, or from the property’s rent. EMIs paid from NRE count as foreign exchange for later repatriation.
Refunds if a deal falls through
If a booking is cancelled, for example because a project is delayed or a title issue appears, the refund of the booking amount or earnest money, with interest net of tax, can generally be credited back to your NRE or FCNR(B) account if you originally paid from there. Make sure your agreement records the account you paid from and asks for refunds to go back to it.
Common mistakes to avoid
- Paying from a relative’s resident account. This breaks your paper trail and can raise questions about who really owns the property.
- Mixing NRO and NRE money. Moving NRO funds into NRE is not generally permitted as a shortcut; transfers from NRO to NRE are subject to the same annual limit and tax formalities as remittances abroad.
- Paying cash. Cash is not a permitted route for NRIs, and large cash payments create tax problems for everyone.
- Missing the builder’s payment schedule. International transfers can take a few days. Keep a buffer in your NRE account for instalments.
A practical checklist before your first payment
- Open or update your NRE and NRO accounts with current KYC and overseas address.
- Get a PAN if you do not have one; you will need it for the sale deed and for TDS.
- Complete title and approval checks, starting with our first plot checklist or a legal opinion for flats.
- Ask your bank for remittance advices for every transfer and file them with the property papers.
- Pay the seller only by bank transfer to the account named in the agreement.
Ready to look at options? Browse flats and apartments in Coimbatore that suit NRI owners.
Frequently asked questions
Can an NRI buy property using an NRO account?
Yes. FEMA allows payment from NRE, FCNR(B) or NRO accounts or by inward remittance. The difference is that NRO-funded purchases can only be repatriated within the USD 1 million per financial year limit.
Is it better to pay from NRE or NRO?
If you want to take the money back abroad on sale, NRE or direct remittance is usually better, because payments in foreign exchange support repatriation of the purchase cost for up to two residential properties.
Can I pay stamp duty from my NRO account?
Yes. Stamp duty and registration fees can be paid from any of your Indian accounts.
Can I repay my home loan with rent from the property?
Yes. Rent from the property is a permitted source for repaying an NRI home loan, along with inward remittances and NRE, NRO or FCNR(B) accounts.
This article is general information as of September 2026, not legal, tax or financial advice. Rules and rates change; confirm with a qualified advocate, chartered accountant or the relevant department before you act.
References
- Ministry of External Affairs: Acquisition and transfer of immovable property in India (FEMA summary)
- Reserve Bank of India: Acquisition and transfer of immovable property in India
- ICICI Bank: NRIs selling real estate in India, repatriation rules
- Tamil Nadu Registration Department (TNREGINET)
Planning your payments for a Coimbatore property?
We coordinate with sellers and builders so receipts, bank transfers and agreements are in order for NRI buyers from the first booking.
