New Delhi, June 1 -- I'm a US NRI. I am currently in the process of purchasing land in my hometown in India. I have funds available in both my NRE and NRO accounts in India. From a tax perspective, would it be more beneficial to make the payment for the land purchase through my NRE account or through my NRO account?

From an Indian income-tax perspective, the taxability of capital gains on the subsequent sale of the property does not depend on whether the original investment was made out of funds lying in the NRE account or the NRO account. The rate of tax would remain the same in either case.

In case the land is held for more than 24 months, the gains arising on transfer would qualify as long-term capital gains and would be taxable at 1...