The account you pay from today decides what you can take out of India in fifteen years. Almost nobody is told that at the start.
Owners living abroad spend weeks choosing a builder and about four minutes choosing which bank account the money leaves from. Then, a decade later, when a house is being sold or a child is being settled somewhere else, the question of repatriation arrives and the answer depends entirely on paperwork nobody kept.
This is the money side of building in Hyderabad or Goa from outside India: which account, what the rules actually say, what to keep, and the one tax mistake that costs the most.
We build houses. We are not tax advisers or foreign exchange consultants, and nothing here is advice for your situation. Every rule below is named with its source so you can take it to your CA. Do that — the cost of an hour with a good one is nothing against what it protects.
Can an NRI build a house in India?
If the land is residential and lawfully yours, yes. FEMA controls how a non-resident acquires and transfers immovable property. It says nothing about construction. Once a residential plot is legitimately in your name, building on it is a municipal approval question, not a foreign exchange one.
The rules that do apply sit on the purchase. Under the Foreign Exchange Management (Non-debt Instruments) Rules 2019, an NRI or OCI cardholder may buy any immovable property in India except agricultural land, a farmhouse or plantation property. Those three can only come to you by inheritance — never by purchase, never by gift. And since the RBI’s clarification of December 2021, following the Supreme Court’s decision in Asha John Divianathan v. Vikram Malhotra, no prior RBI approval is needed for an ordinary residential purchase. You are governed by the rules, not by a permission counter.
So the honest framing is this. Get the land question right and the construction question largely disappears. Get the land question wrong — buy something that is recorded as agricultural — and no amount of good building fixes it. This is why we read plot papers before we talk about design, and why in Goa we look at the zone before anything else.
Which account should you pay from — NRE or NRO?
Pay from NRE wherever you can. Money in an NRE account came into India as foreign exchange, and that fact is what makes taking the proceeds out again straightforward years later. NRO money is Indian-source money, and anything paid from it is later subject to the USD 1 million per financial year ceiling.
| Account | What goes in | Coming back out | Use it for |
|---|---|---|---|
| NRE | Your foreign earnings, remitted in | Fully repatriable, principal and interest | The land, and every construction payment |
| FCNR(B) | Foreign currency term deposit | Fully repatriable | Fine to debit, usually held as a deposit |
| NRO | Indian rent, dividends, sale proceeds, gifts | Capped at USD 1 million per financial year | Indian-source money you already hold here |
Whichever account you use, the mode is fixed. Payment has to be in rupees through normal banking channels — an inward remittance, or a debit to an NRE, FCNR(B) or NRO account. Not foreign currency notes. Not traveller’s cheques. You cannot carry dirhams or dollars in a bag and settle a contractor’s running bill with them, and a builder who suggests you might is telling you something about how he works.
Source: RBI FAQs, Remittance of Assets
Is money you send to your own NRE account taxable in India?
No. Moving your own already-taxed foreign earnings into your own Indian account is a transfer of capital, not income. India taxes a non-resident on income that accrues or is received in India. There is no tax on the remittance itself. Interest earned on an NRE balance is separately exempt.
The Income Tax Department states it directly: income from interest on balances in NRE accounts is exempt under section 10(4)(ii), while interest earned in an NRO account is taxable in the hands of the NRI. That is the whole of it, and it is worth knowing because the myth of a “remittance tax” causes people to do genuinely expensive things — routing money through relatives, splitting transfers to stay under imagined limits, paying in cash. All of those create problems that the thing they were avoiding never had.
One note on currency of the rule itself: the Income-tax Act 2025 came into force on 1 April 2026 and renumbers much of the old Act. The substance here is unchanged; the clause number may be cited differently by your CA. Ask which numbering they are using so you are both reading the same rule.
Source: Income Tax Department — NRE and NRO taxability
The TDS mistake that costs NRI buyers the most
The familiar 1% TDS on a property purchase applies only when the seller is a resident. If you are buying a plot from another NRI, that provision does not apply at all — a different one does, you must obtain a TAN, and the deduction is calculated on the seller’s gain, not on 1% of the price.
This is the single most expensive thing we see overseas buyers get wrong, and it is easy to see why. Every article, every broker and every WhatsApp forward says “1% TDS”. The statute is narrower than that. The 1% route sits in what used to be section 194-IA — now section 393(1) under the Income-tax Act 2025 — and its own words limit it to a sum paid to a resident transferor. It also disapplies the TAN requirement, which is why buyers in that situation can simply file Form 26QB and move on. None of that carries over when the seller is a non-resident.
Get it wrong and the buyer — you — becomes liable for the shortfall plus interest. The seller has already taken the money and left. Two things protect you: ask the seller’s residential status in writing before the agreement, and if the seller is an NRI, let your CA handle the deduction, not the broker. The seller can apply for a lower-deduction certificate so the deduction is calculated on the real gain rather than the gross price; that is in their interest and it makes your compliance simpler too.
Source: Income Tax Department — TDS on purchase of immovable property
Can an NRI get a construction loan, and how are the EMIs paid?
Yes. Under the FEMA borrowing and lending regulations, an authorised dealer bank or a registered housing finance institution may lend to an NRI or OCI cardholder for acquisition of residential accommodation in India, which covers building on a residential plot you own. Quantum, margin and tenure are at par with what a resident would get.
Three conditions shape how it works in practice. The loan cannot be credited to your NRE or FCNR account — it is disbursed in rupees against the work. Repayment has to come through one of four routes: an inward remittance from outside India, a debit to your NRE, FCNR(B) or NRO account, rent from the property the loan financed, or payment by a relative in India. And construction of a farmhouse is an expressly barred end use, which is another reason the land classification question decides everything upstream.
A construction loan also disburses in stages against certified progress, not in one go. That has a side effect worth using deliberately: the bank’s engineer becomes a second pair of eyes on the site. On a remote build, we treat that as an asset rather than an inconvenience, and we plan the stage certificates into the programme instead of chasing them afterwards.
Source: FEMA (Borrowing and Lending) Regulations, 2018
What to keep, from the first transfer
This is the part that costs nothing now and is impossible to recreate later.
- The Foreign Inward Remittance Certificate for every tranche. Ask the bank for it each time. It is the document that proves the money came in as foreign exchange, and it is what makes repatriation of sale proceeds simple a decade from now.
- Bank statements showing each construction payment, matched to the stage it paid for.
- Every stage invoice from the builder, with what it covers written on it — not “3rd instalment” but the work it represents.
- Material bills in your name where you are paying for materials directly. No bills is the oldest warning sign there is.
- TDS challans and Form 16B or 27Q, filed and stored with the sale deed, not in email.
- One folder, cloud-hosted, shared with whoever holds your power of attorney. If it only exists on your laptop, it does not exist.
The habit behind all of it: money that moves for a reason should have a document saying what the reason was. That is also the discipline that makes a build honest, which is why our stage payments are tied to defined completed work rather than to a calendar — the detail of that is in how a construction payment schedule should be built.
Two limits worth knowing before you need them
The USD 1 million a year rule. An NRI or OCI may remit up to USD 1,000,000 per financial year out of NRO balances, sale proceeds of assets, or assets acquired by inheritance, subject to taxes being paid and an undertaking on the source of funds. Within that limit your bank clears it — no RBI counter. Above it, or on hardship grounds, RBI approval is needed.
The two-property rule. Repatriation of the sale proceeds of residential property, where the purchase price was met in foreign exchange, is available for up to two such properties. Worth knowing if a house in Hyderabad and a house in Goa are both on the plan.
Where we are not the right fit
If what you want is a builder who will accept cash to keep a number down, we are not that. Every rupee on our projects moves through the bank against an invoice, because on a remote build the paper trail is not an administrative formality — it is the only thing standing between you and a dispute you cannot attend.
We also will not advise you on your tax position, and we are wary of builders who do. What we will do is give you documentation shaped so your CA can work from it without chasing us.
Questions we get asked
Can I pay the contractor in dollars or dirhams?
No. Payment for property and construction has to be in rupees through normal banking channels — inward remittance or a debit to your NRE, FCNR(B) or NRO account. Foreign currency notes and traveller’s cheques are expressly outside the permitted modes.
Do I need to be in India to open an NRE account?
Most Indian banks now open NRE and NRO accounts remotely with video verification and attested documents. Your bank’s requirements differ by country of residence, so ask them directly rather than assuming from a general answer.
Is there a limit on how much I can bring in to build?
There is no limit on bringing money into India through banking channels. The limit that exists is on taking money out of an NRO account — USD 1 million per financial year. That asymmetry is exactly why NRE is the better account to build from.
Can my parents pay for part of the construction?
They can, and it happens often. Treat it as what it is and document it — a gift or a loan, recorded, so that the source of funds is clear if it is ever asked about. Unrecorded family money is where otherwise clean files become messy.
Can an NRI buy agricultural land and convert it?
An NRI or OCI cannot purchase agricultural land, a farmhouse or plantation property at all. Conversion is not a route around that, because the purchase itself is the step that is not permitted. In Goa there is a separate state restriction on paddy land that applies to Indian residents too — see buying land in Goa as an outsider.
Does a construction loan change how the builder is paid?
Yes, and usefully. The bank disburses against certified stages, so the payment schedule has to be written in terms of defined completed work. Tell your builder at quotation stage that a loan is involved, so the schedule is drafted for it rather than renegotiated later.
Where to go next
Money is one of three problems for an owner who lives elsewhere. The other two are authority — who can sign for you — and supervision, which decides whether the house is any good.
Read next: power of attorney for building from abroad, and building in a city you do not live in. City by city: Hyderabad as an NRI, Goa from abroad.
If you are at the stage of working out what a build will actually cost, send us the plot details and the brief. You will get an itemised bill of quantities, not a per-square-foot number. Talk to our team, or read how to read a construction BOQ.
