For many NRIs, a home loan in India is more than just a monthly EMI. It is often tied to a family home, a dream to return someday, or a long-term investment. When global tensions rise, that emotional and financial link begins to feel uncertain. The loan agreement in India does not change because of a war. What changes is everything around it such as income stability, ease of sending money home, currency movements and the ability to keep up with repayments.
Iran–US–Israel conflict has added a new angle of uncertainty to NRIs. Rising oil prices are pushing inflation higher, which is making it harder for the RBI to cut interest rates. Home loan rates are staying elevated in the range of 8.4%–9.5%. This is already affecting the housing market, with sales falling by about 7% in early 2026, according to a research report by ANAROCK.
Many NRIs, especially in Gulf countries, are also becoming cautious as job and income visibility weakens. Since a large share of India’s remittances comes from the Gulf, any slowdown there directly affects the ability of NRIs to service their EMIs. Travel disruptions are also making it harder to visit India and complete property transactions.
How income, remittances and EMI stress come into play
The impact of such global events usually shows up in three ways which are income disruption, remittance delays and repayment pressure. CA Sagar Soman, Consultant, NRI Taxation & Cross-Border Wealth Advisory explains that once income becomes uncertain or transfers slow down, the EMI comes under strain and missing even one installment shifts the issue from global conditions to a lender-side default in India.
Soman says that “Usually the impact comes through three channels: income shock, remittance friction and repayment stress. If overseas income becomes uncertain, the EMI comes under pressure. Even where income continues, transfers can become slower or costlier in volatile periods. And once an instalment is missed, the problem stops being geopolitical and becomes a lender-side default issue in India. Which is why a home-loan EMI should never depend entirely on a just-in-time remittance from abroad; a small India-side buffer, typically through NRE or NRO balances, can make all the difference.”
CA Hitesh Kumar, specialised In Direct Taxation, adds that repayment behaviour also directly links to tax outcomes. If EMIs are not paid on time, certain deductions are impacted because some benefits depend on actual payment rather than accrual.
Currency movements and interest rate pressure
Home loans in India are in rupees, though most NRIs earn in foreign currency. This gap means the EMI itself does not change due to a war, but the burden can vary depending on currency movement and income stability. If the rupee weakens, repayment may feel easier. If the earning currency weakens or income becomes irregular, the pressure increases.
CA Sagar Soman notes that there is also a second layer of risk where higher crude prices can keep inflation elevated in India and delay rate cuts, making floating-rate loans more expensive over time through higher EMIs or longer tenures. At the same time, CA Hitesh Kumar points out that this kind of environment can make financial planning harder for NRIs who depend on stable exchange rates and predictable income to manage long-term liabilities.
Tax benefits depend on the regime choice
Tax benefits on home loans continue to be available, but the outcome depends on the regime an NRI chooses. CA Sagar Soman explains that under the old regime, deductions such as interest under section 24(b) and principal under section 80C remain available, while the new regime offers lower tax rates but fewer deductions, especially for self-occupied property.
“NRIs can still claim the usual home-loan tax benefits, but the outcome depends on the tax regime. Under the old regime, eligible interest under section 24(b), principal under section 80C, and in qualifying cases section 80EEA remain available. Under the new regime, now the default and often beneficial because of lower tax rates, these benefits are narrower, especially for self-occupied property. So the real question is not whether benefits survive, but whether the chosen regime suits the borrower’s deduction profile,” says CA Sagar Soman.
CA Hitesh Kumar explains that the timing of payment plays a key role in how these deductions work in practice. He says, “While banks focus on credit scores, the income tax act does not allow certain tax benefits. Section 24(b) (interest on housing loan) is deductible on an accrual basis, meaning you can claim the interest deduction for the year based on the interest that has accrued, even if you have missed one or more EMI payments, provided the interest is actually due and is supported by the interest certificate from the lender,”
He further adds, “Payment-basis under Section 80C- Deduction under Section 80C for the principal component of a home-loan EMI is allowed only for the year in which the payment is actually made, not on an accrual basis. So, if the principal housing loan is paid on or after April 1, 2026, the principal can be claimed only in FY 2026-27, not in FY 2025-26.”
In simple words, interest can still be claimed even if there is a delay, but principal repayment benefits shift to the year in which the payment is actually made.
What happens if EMIs are delayed
Missing an EMI first affects the borrower’s standing with the lender. Penal charges may apply and continued delays can affect credit history or push the loan into NPA status if dues remain unpaid for more than 90 days.
“The first fallout is with the lender, not the tax department. A delayed EMI can trigger penal charges, weaken the borrower’s repayment record and, if the overdue continues beyond 90 days, push the loan into NPA territory. A missed EMI, by itself, is not a separate income-tax offence. Tax exposure arises separately only if Indian return filing or tax payment is also delayed,” says CA Sagar Soman.
From a tax angle, CA Hitesh Kumar’s explanation on accrual versus payment becomes important, as delayed principal payments can reduce deductions in the current year even if interest benefits continue.
Possibility of relief remains uncertain
There is no clear sign of any special relief for NRI borrowers at the moment. Any support, if it comes, is likely to be announced formally based on how the situation evolves.
CA Hitesh Kumar notes that in past situations such as COVID-19, the government provided limited relief by adjusting rules around residential status when people were unable to travel. A similar approach could be considered if disruptions continue. CA Sagar Soman adds that borrowers should not assume any automatic relief and should plan based on existing rules.
“Yes, but only if it is specifically announced. India’s past approach has been to extend borrower support through formal regulatory packages, not by default. So unless such a framework is actually notified, NRIs should assume that EMI obligations and ordinary tax rules remain unchanged,” says CA Sagar Soman.
EMI may remain unchanged on paper, but the ability to pay can change when global conditions turn uncertain. Keeping funds in India, planning tax choices carefully and building some buffer can help manage this phase better.
Disclaimer: This article is for informational purposes only and does not constitute professional tax advice. Tax laws and regimes are subject to frequent changes by the government. Readers should verify details with official Income Tax Department notifications or consult a Chartered Accountant before making any financial decisions.